Ok, so IUL's have gotten my attention ...

[Golfnut2112]

The bottom line I really question the credibility of the guy making the video. How does a life insurance policy have more cash than a Roth 401k in 20 years? He is not being honest in his presentation because I’m sure he is adding a persistency bonus on the IUL and never mentions that the IUL does not include dividends which are being paid at 1.85% on the S&P 500 index. He conveniently excludes this info which can mislead both consumers and new agents watching his videos. Why not add the 1.85% to the Roth rate of return since the bonus is being added.

 

[DHK]

You can ask him.

@lglabash

 

[Golfnut2112]

You can ask him.

@lglabash

I already know the answer. Is there any company that will show past performance of an IUL over the last 20 years like you can on a VUL? It can’t be that hard to develop I would love to see how they actually performed.

 

[DHK]

I wouldn't dare trust a past-performance of an IUL illustration.

Why? Because of the costs of options and the interest rate changes on the general account would fluctuate year to year.

Illustrations are just meant to show how the product works conceptually. IUL is a concept sale, not an illustration sale.

 

[Golfnut2112]

I wouldn't dare trust a past-performance of an IUL illustration.

Why? Because of the costs of options and the interest rate changes on the general account would fluctuate year to year.

Illustrations are just meant to show how the product works conceptually. IUL is a concept sale, not an illustration sale.

They should be able to factor all of that in. The video it is ABSOLUTELY an illustration sale that’s why he’s using Insmark. The problem I have, as you know is when a product is being pushed without all the information being provided like in the video. There is no way an IUL can be sold conceptually when retirement income is the primary goal. There is a place for IUL for INCOME but only after all the Roth options are maxed out. If you know of a reason please let me know because I may be missing something.

 

[DHK]

1. You cannot collateralize a Roth IRA for cash flow. You can only withdraw from it.

2. A Roth IRA is a stripped down, government regulated, benefit-reduced imitation of cash value life insurance to help banks and brokerages offer accounts with somewhat similar tax benefits.

https://davidkinderfinancial.wixsite.com/davidkinderfinancial/post/roth-ira-on-steroids

You may find this video with Emily Prendiville intriguing:

 

[Golfnut2112]

1. You cannot collateralize a Roth IRA for cash flow. You can only withdraw from it.

2. A Roth IRA is a stripped down, government regulated, benefit-reduced imitation of cash value life insurance to help banks and brokerages offer accounts with somewhat similar tax benefits.

https://davidkinderfinancial.wixsite.com/davidkinderfinancial/post/roth-ira-on-steroids

You may find this video with Emily Prendiville intriguing:

You kidding right? How many class action lawsuits have been filed against insurance companies for selling life insurance as a retirement plan or some other sort of retirement savings plan.

 

[DHK]

If I'm showing how a max-funded life policy works, I'm calling it life insurance (although *I* would call it "investment-grade life insurance"), and I'm talking about the tax code as it relates to life insurance... and I'm not misrepresenting anything... what would the grounds be for a lawsuit?

However, if you would post some links to some of those lawsuits, I would certainly appreciate reading about them.

I'm reading this one right now: Taking On Insurance Giants

In fact - per that article:

The accusations of wrongdoing fall into three general categories.

The first involves churning, which is the improper replacement of a policy with a new one to generate fresh commissions, often by a sales pitch offering "free" insurance that is actually paid by drawing cash from an existing policy. There are sometimes legitimate reasons to replace an existing policy with a better one. But in many cases when the money accumulated under the old policy is gone, consumers are surprised to learn that they must pay larger premiums on the new policy to keep their insurance in force. Customers lose the accumulated value of the old policy and are forced to begin building up cash value again in the new policy.

Not an issue with what I'm talking about.

Then there is selling insurance policies as an investment without adequately informing the buyer that much of the investment will go to buy a life insurance death benefit and pay the agent's commission.

Again, not an issue with what I'm talking about.

The third category is misleading customers by oral promises that premiums on certain policies would "vanish." In the 1980's many policies were marketed aggressively by presenting projections that double-digit dividends would accumulate in as little as five years to a level where they would pay all future premiums. Those forecasts proved to be wildly optimistic after interest rates fell sharply and insurers cut the dividends paid on cash-value policies.

Also not an issue with what I'm talking about. The days of "vanishing premiums" or "premium offset" are over.

 

[DHK]

Then there's this one that I discussed with Roccy Defranseco over back when there was ProducersWeb:

New Lawsuit Against Agent for Selling a VUL | Strategic Marketing Partner

Liza and the other Plaintiffs were told that the insurance would be a great “tax shelter,” and that “at some point” there would be no further premium payment. They were not advised of the actual fees and risks associated with maintaining such policies, other than those for LFG services. LFG also told Plaintiffs that that they could borrow against, or pull money out of, the account. That was later discovered as not true.

Unless the policy was illustrated with a reduced DB at some point, that could be an issue. Otherwise, it looks like it could be a "less-than-MEC-funded" policy?

The allegations are that “Defendants failed to disclose fully, up-front and in plain English, the charges, fees and risks associated with the policies. It was not until the policies were placed in-force and substantial premiums – subject now to massive surrender charges – had been paid, that Defendants disclosed the true charges and fees of the policies.”

I think that's a case of "selective memory" because if people forget WHY they bought what they bought... then they think they were "taken".


To me, if we're not misrepresenting what the policy is and does... and how it works in relation to taxes... there's no grounds for a lawsuit.

 

[DHK]

A person doing this much production, if it was wrong, would certainly get the attention of the compliance department and "shut him down".

Actually, he talks with the chairman of the company regularly. I've followed him for a while and recently we've become friends.

Note: He's doing this with whole life, not IUL, but the concepts are the same.