I've heard some intriguing things about EIULs which are basically investment grade life insurance policies that can build up cash value for tax free use later in life.
Does anyone on here have an EIUL policy? If so, would you please explain your experiences with it?
If you have entertained the notion of getting an EIUL but concluded you'd be better without one, why did you come up with such a solution?
The thought of tax-free money from an EIUL combined with tax-sheltered real estate investment income sounds like a great recipe for a comfy retirement, but I'm not sold on the EIUL. Your take?
@Kevin Yeats nice discussion.
BP I enjoy this thread re: permanent life insurance.
I would recommend folks read Investopedia
https://www.investopedia.com/terms/u/universallife...
https://www.investopedia.com/terms/t/traditionalwh...
buy term and invest the difference vs. permanent http://www.investmentnews.com/article/20150728/BLO...
Guardian Life has a IPF rider on their WL policy https://www.guardianlife.com/news/guardian-introdu...
"The IPF is an innovative rider that individuals and their financial advisors have been looking for during this low interest rate environment. It offers a unique opportunity for index-linked upside potential, while still supporting the robust guarantees that policyholders have come to expect with Whole Life. And best of all, clients can change their IPF allocations as their needs change, so they are never locked in"
Wealthy people have bought permanent life insurance for over 150 years for many reasons.
Here are 12:
The perfect retirement plan - 12 features
1. The plan should allow for tax-deferred growth
2. The plan should provide for income tax free withdrawls
3. The plan should earn competitive returns as much as possible but still have guarantees.
4. The plan should allow any taxpayer to put in as much money as they want.
5. The plan should provide a taxpayer to use the account as a collateral for a loan.
6. The plan should protect against market losses.
7. The plan should assure access to loans should the taxpayer need money before age 59 1/2.
8. The plan should allow for these loans to be paid at the taxpayers discretion, at any rate of repayment or even not paying them back at all.
9. The plan should be protected from creditors.
10. The plan should eliminate early withdrawal penalties, late withdrawal penalties, and excess contribution penalties —- there just shouldn’t be any penalties at all.
11. The government should continue the contributions to the plan at the same level the taxpayer was contributing if the taxpayers should become disabled and cannot continue to put money into the plan.
12. The government should accelerate the expected retirement account balance to the taxpayers family if the taxpayer dies prior to retirement
If you compare these characteristics of an ideal plan and compare it with a Roth IRA,
you can’t do number four, put in as much money as you want
you can’t do number five, use it as collateral for a loan
you get to number six, protect from market losses (see rider above)
you can’t do number seven, assure access to loans before 59 1/2
you can’t do number eight, allow for loans to be paid at the taxpayers discretion or not at all
you can’t do number nine, be protected from creditors
you can’t do number 10, eliminate early withdrawal penalties, late withdrawal penalties, and excess contribution penalties
you can’t do number 11, making the government continue the contributions to plan at the same level the taxpayer was contributing if the taxpayers should become disabled and cannot continue to put money into the plan
lastly, you cannot do number 12, the government should accelerate the expected retirement account balance to the taxpayers family if the taxpayer dies prior to retirement
Permanent life insurance is much better than a Roth IRA for these reasons.
hello my name is bobbie dancy and i am unfamiliar with eiuls can someone help me
Hi Bobbie:
Equity indexed Universal life insurance
This is part of the life insurance family, let’s start with the basics:
This is part of the life insurance family, let’s start with the basics:
There is term insurance and there is permanent insurance
The two basic types of permanent insurance are whole life insurance and universal life insurance, each having a cash savings component.
Universal life insurance can be tied to an index that mirrors generally fortune 500 companies.
There is generally a floor which means you can’t go below a certain amount which is usually 0% (you cant lose principal)
And there is a cap which is generally between 8 and 12% ( if you are more than the insurance company makes that difference)
In a regular mutual fund you pay for gains and losses. You can make money and lose money.
It is the losses that makes it difficult for a true rate of return to be terrific.
So if you have an equity indexed Universal life insurance policy, your cash value will grow between zero and 8 to 12%, and you can get access to those funds by borrowing money.
The thing that is unique to cash value life insurance is that the cash value growth will always continue even if you borrow money from it or not. Think of it like collateral for a loan. You put up a cash value for collateral to borrow your money but the collateral keeps growing like the loan doesn’t exist .
It is more expensive to buy permanent insurance whether it’s whole life or universal life.
It is the ability to build cash value in the policy with safety features of no losses and if you get disabled and can’t pay the insurance company will pay that make it an important tool in financial planning.
There is a movement in this country to buy policies that are permanent and build cash value that you have access to down the road in 10 or 15 or 20 years versus trying to put money into 401(k) or IRAs where there’s a lot of rules as far is withdrawing the money and paying penalties if your timeframe isnt incorrect.
A lot of stockbroker types will say that you should buy term insurance and invest the difference.
It is not an either or a conversation, but what life insurance tool works the best and in different situations and when in your life do you need it.
A young family with small kids should have a lot of term insurance to protect in case there was an untimely death and save six months of emergency funds in case somebody loses their job or has an illness, and take advantage of their employers’s matching program in their 401(k) .
Because we are living longer and longer, medical bills are going to be approximately $200,000-$250,000 that we did not have to plan for past age 65. Sandwich generation folks that have parents in their 70s and 80s are finding that they need to help out their parents with long-term care and other issues. The new policies that are now available will allow you to have living benefits payments to handle some of these bills. The older policies did not have these living benefits available.
Protecting your paycheck is another need especially for self-employed people that if they can’t go work their business then They have to go bankrupt or at least get into a lot of trouble with their credit rating. Disability income insurance helps people protect their paycheck,
I hope this helps somewhat.
One clarifying point. Policy loans are loans from the insurance company with your cash value as collateral. the cash value of a policy represents the policy owner essentially saving up their own death benefit over the course of their expected lifetime. The insurance company invest that money in safe, principal protected asset classes such as Us treasuries, corporate bonds, and mortgages. One other investment that they can make is a policy loan to policyholders. These loans are safe because they are secured by the cash value of the policies.
This blog post explains what goes on under the hood of a permanent life insurance policy and shows the difference between an indexed universal life and a whole life policy...
Great thread. To add my experience, I had a prospectus created and seeing the cash value build up over time was very tempting. Even with the fees and premiums the many benefits was clear but ultimately I decided not to do it because I couldn't make it fit a more aggressive timeline. If I could I would go back 10-years and start one. It all depends on what your goals are.