Mar 9, 2023Liked by Daniel May, CFP®

I think it would be valuable for a follow-up article to go deeper on why IUL is terrible. In my understanding, the underlying insurance component is a 1-year auto-renewing term policy. So as the insured ages, the premiums can only increase. In a long bear or flat market for 2-3+ years at the 0% floor, those premiums can cannibalize the cash/investment portion and/or require additional premiums to avoid lapse and a possibly a huge tax bomb.

I think a follow-up to explain when it might be worth considering Whole Life; the content team usually does a great job being fair and explaining both sides of the coin. I 100% agree that insurance is not an investment vehicle. It's insurance first and a wealth preservation tool second. I heard a rule of thumb to not bother with Whole Life until you can max all retirement accounts and have a good chunk of savings leftover. You have a lot of mutants who fall into, or are striving for, this category.

Please touch one some scenarios such as...

- how a real estate investor or serial entrepreneur could leverage WL (infinite banking; Walt Disney)

- how & why corporations use it (Bank of America, for instance)

- estate planning & generational wealth (Rockefellers vs. Carnegies)

- riders, such as Long Term Care (vs. stand-alone insurance)

Thanks for loading us up! Love ya team,

Shea (Go Bills)

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Hi Shea! We are more of the opinion that a taxable brokerage account is worth considering for most over permanent life insurance. Obviously contributions to a taxable brokerage are unlimited, so when exactly does whole life become a consideration? Generally when estate tax comes into play permanent insurance is worth taking a look at. The estate tax exemption for a married couple is currently $25.84 million and $12.92 million for a single person. So it is something that affects very few folks, especially with the limit going up each year. This could change if the estate tax threshold is lowered like some have proposed.

And about infinite banking - it can be more persuasive when interest rates are low or near zero, but even then might be more trouble than it is worth. Most people don't carry that much cash, so hypothetically earning 2-3% on cash instead of 0% isn't a huge deal. Online savings account to earn 2-3% more on savings? Super easy and worth it. Infinite banking to earn potentially 2-3% more on cash but only when interest rates are near 0%? These insurance products can be so complex that it probably wouldn't be worth it for most folks, not to mention the fees and charges, and the fact that most people don't have or need an extraordinary amount saved in cash.

And yeah, I wanted to keep the IUL example simple and be more than fair to IUL (higher cap, participation rate, static premium, total fees/expenses of just 1%). No doubt there are situations out there where an IUL policy could come out looking a lot worse.

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What about life insurance with a long term care rider?

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Great read as always. I like the way you explained it is a benefit that you don't receive a payment, not a disincentive. I don't want to die just so someone can have that money lol. I did very little right before I found Dave Ramsey and then graduated to The Money Guys but I'm thankful I bought term life insurance instead of an alternative. Any little thing I got right before learning is just a win in my book.

P.S- I definitely would pay to support this as I believe in supporting companies, not just ideas. I just don't understand the pre pledge setup. Keep up the good work though and love all the research you provide to the team each week!

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Thanks for the heads up! I don't understand the pre-pledge thing either, that's something that got turned on automatically but I've disabled it now.

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