Is 25k a Year Enough?

[sallynorth]

I am 50 years old. I have 13-15 years to retire, with very little saved, due to bad decisions in the past. I am now in a position where I can invest 25k a year for 13-15 years. Would an IUL be the place to put the cash and if so which company? Thank you.

 

[rousemark]

I am 50 years old. I have 13-15 years to retire, with very little saved, due to bad decisions in the past. I am now in a position where I can invest 25k a year for 13-15 years. Would an IUL be the place to put the cash and if so which company? Thank you.

Only if you are also in need of the life insurance.

 

[scagnt83]

I am 50 years old. I have 13-15 years to retire, with very little saved, due to bad decisions in the past. I am now in a position where I can invest 25k a year for 13-15 years. Would an IUL be the place to put the cash and if so which company? Thank you.

An IUL could be a great place to save the money. It just depends on your situation and needs.

If you need life insurance, or like what the life insurance policy will do for your financial situation, then it is a good product to consider. It will avoid income taxes and capital gains taxes on the money, so it is a great tax play. You can expect the rate of return to be in the 4%-6% range long term. But since that is tax free it is equal to about an 8% return in a taxable account.

Right now Midland National/North American Life (sister companies with basically the same product) has the most competitive IUL on the market in my opinion. When you run accumulation/income scenarios and compare carriers they are almost always on top. They also have stellar financial ratings that are higher than most all of their competition.

If you reply with your tobacco use status I can run the numbers for you and show you what your policy would look like in 15 years.

I am a big fan of IUL. I mainly use it for businesses looking to fund executive benefits, and individuals who need tax advantaged savings over the $6k that an IRA allows them to save each year (which seems to be your situation).

 

[briko3]

An IUL could be a great place to save the money. It just depends on your situation and needs.

If you need life insurance, or like what the life insurance policy will do for your financial situation, then it is a good product to consider. It will avoid income taxes and capital gains taxes on the money, so it is a great tax play. You can expect the rate of return to be in the 4%-6% range long term. But since that is tax free it is equal to about an 8% return in a taxable account.

Right now Midland National/North American Life (sister companies with basically the same product) has the most competitive IUL on the market in my opinion. When you run accumulation/income scenarios and compare carriers they are almost always on top. They also have stellar financial ratings that are higher than most all of their competition.

If you reply with your tobacco use status I can run the numbers for you and show you what your policy would look like in 15 years.

I am a big fan of IUL. I mainly use it for businesses looking to fund executive benefits, and individuals who need tax advantaged savings over the $6k that an IRA allows them to save each year (which seems to be your situation).

A very important consideration.

 

[sallynorth]

If you reply with your tobacco use status I can run the numbers for you and show you what your policy would look like in 15 years.

I am 48 years old and never smoked in good health, husband is 51 and also non smoker. No meds , height /weight proportionate. Do not know who the policy would work best for. Thank you

 

[ATM]

An IUL could be a great place to save the money. It just depends on your situation and needs.

If you need life insurance, or like what the life insurance policy will do for your financial situation, then it is a good product to consider. It will avoid income taxes and capital gains taxes on the money, so it is a great tax play. You can expect the rate of return to be in the 4%-6% range long term. But since that is tax free it is equal to about an 8% return in a taxable account.

Right now Midland National/North American Life (sister companies with basically the same product) has the most competitive IUL on the market in my opinion. When you run accumulation/income scenarios and compare carriers they are almost always on top. They also have stellar financial ratings that are higher than most all of their competition.

If you reply with your tobacco use status I can run the numbers for you and show you what your policy would look like in 15 years.

I am a big fan of IUL. I mainly use it for businesses looking to fund executive benefits, and individuals who need tax advantaged savings over the $6k that an IRA allows them to save each year (which seems to be your situation).

There are significant differences in the products. Midland has higher costs but higher performance with higher caps/par rates etc. NA has lower costs but lower performance. Historically Midland would have done better but past performance is no guarantee of future results.....

 

[pfg1]

IUL would be one choice and could certainly do well with that premium/timeframe.
A solid max funded WL would be my personal choice, if I was in your situation. Primarily because of the guarantees. There are several that will do VERY well with that type of premium/timeframe.

 

[scagnt83]

There are significant differences in the products. Midland has higher costs but higher performance with higher caps/par rates etc. NA has lower costs but lower performance. Historically Midland would have done better but past performance is no guarantee of future results.....

I would hardly call the differences significant. On a historical basis they are both top performers in the market.

 

[maxherr]

I am 50 years old. I have 13-15 years to retire, with very little saved, due to bad decisions in the past. I am now in a position where I can invest 25k a year for 13-15 years. Would an IUL be the place to put the cash and if so which company? Thank you.

First, if you're asking about any insurance contract (life or annuities), then you need to delete the term "invest". Insurance contracts are . . . insurance.

Investments are something completely different. Investments are connected to capital gains taxes. Insurance contracts are not.

If you need life insurance, perhaps this might work, but you need a policy with a face amount calculated so that the $25,000 is just under the "7-pay premium" amount. Most agents won't do that. Instead, they'll calculate that as the minimum "planned premium" which will do you no favors. And be wary of the hypothetical interest rate being assumed as a straight line rate of return over an extended period of time.

If you are simply looking for a tax-deferred savings vehicle, an annuity could be a better choice.

In general, as a Life & Disability Insurance Analyst, I would advise you to forget the nonsense about "tax-free income" from cash value policies, especially with a UL of any kind. When you borrow money from a bank, do you consider it "income"? Of course not, it's a "loan". Why would an insurance policy loan be anything other than a loan? Only the insurance company and its agents talk about loans as income. That makes no sense at all if you really think about it.

When you start drawing out policy loans, you upset the delicate balance between rising COI rates and the cash accumulation, which could ultimately lead to policy collapse and taxes on the cash distributions in excess of the cost basis in the policy. And even worse, if you don't pay premiums and you don't pay the annual loan interest, thinking the cash accumulation is doing that for you, you accelerate the demise of your cost basis cushion.

What?

Yeah, it's something your agent probably didn't mention, mostly because he/she doesn't understand it. Besides, they showed you an illustration that shows pie-in-the-sky cash accumulations with ridiculous numbers that time has proven rarely occurs. Not unless you are max funding the UL contract from Day 1.

If you are even thinking about some form of "Bank on Yourself" scenario, you have to use a Whole Life policy to avoid the increasing COI component of UL. Sure, the policy is more expensive, but you won't face premiums you cannot afford because the cash value is gone and you're now a much older person.