Equity-indexed life insurance products promise stock market-like returns with no risk of losing money (if market returns are negative, the return of the life insurance product will be 0%).
Thanks for covering this subject, it’s something I’ve been pitched in the past and wasn’t 100% sure if I was reading the situation correctly but it seems I made the right choice!
There may not be a great option for getting out of an IUL - they can be designed to keep you in with high surrender fees. You may want to run the numbers and see when you would "breakeven" from getting rid of the policy. Maybe it's one year, two years, five years. Knowing the timeline for making up those costs might make the decision a little bit easier.
Equity index annuities are fixed income products thus the word equity is deceiving. They are basically very illiquid CD type products with a huge surrender charge and a large commission for the agent selling them as well as large ongoing expenses
Great Job, Daniel! You covered the topic well and given me a great white paper to point to when the discussion comes up.
Thanks Charles!
Excellent, clearly-written article on what can be a confusing topic. Thank you Daniel!
Thanks for covering this subject, it’s something I’ve been pitched in the past and wasn’t 100% sure if I was reading the situation correctly but it seems I made the right choice!
What is the best option for getting out of an IUL?
There may not be a great option for getting out of an IUL - they can be designed to keep you in with high surrender fees. You may want to run the numbers and see when you would "breakeven" from getting rid of the policy. Maybe it's one year, two years, five years. Knowing the timeline for making up those costs might make the decision a little bit easier.
I once invested in a PPN and they operate similarly.
Equity index annuities are fixed income products thus the word equity is deceiving. They are basically very illiquid CD type products with a huge surrender charge and a large commission for the agent selling them as well as large ongoing expenses