Equity Indexed Universal Life is, when simplified, investment grade insurance. It’s a tool, a vehicle used by folks to create retirement income. I’ve written of this before, much to the chagrin of Mr. Swann. I’ve since put many clients into them using industry experts. Why? ‘Cuz it’s the right thing to do. Every dollar a client spends on this vehicle is a buck they’re not spending with me. I make zip, nada, zilch. They understand this, and appreciate it. They’ve come to rely on our consistent congruency when it comes to keeping their agenda #1. And their agenda is a magnificently abundant retirement. We make use of what I’ve called a Purposeful Plan. Sometimes that Plan includes investment vehicles other than real estate. We do what works."

"Soon, I’ll be writing a piece referencing a recent 20 year study showing mutual fund returns inside 401(k)’s have been less than 5% annually. And this study is used as a marketing tool. Go figure. I’ll make the study available, probably in dual form with David’s site. This study sheds light on the dirty little truth about mutual funds and their performance inside taxpayers’ qualified retirement plans.

·  Folks aren’t starting with realistic numbers. Mutual fund returns in 401(k)’s not good.

·  Front loading EIUL is best — drives down the cost of the insurance.

·  Your combined income tax rate is over 15%? Then numbers skew toward EIUL.

·  The higher the combined retirement income tax bracket, the more the numbers favor EIUL

·  EIUL never tells you when you can access your money or force you to pull it out.

·  Insurance component: 50% die before 84 — 25% before 75 years old.

·  Average return rate reported my mutual funds don’t allow for ‘down’ (negative) years

·  Negative years hurt more than positive years help — EIUL’s don’t have negative years."

"It’s been my contention since I learned about the EIUL that 401(k)’s are Uncle Sam’s own retirement plan. It begins by saddling Boomers with bigger tax bills than they ever paid while working. Those who believe their tax bite in retirement will be less are either ill informed, or not candidates for an EIUL. Why? ‘Cuz their retirement plan was so bereft of any real planning, their income will in fact not be high enough to put them into a higher tax bracket. They won’t be entering retirement as much as they’ll be beginning their life sentence."

"Roth’s are pretty cool — when compared to the alternative qualified retirement plans for sure. No argument there. The tax free nature of the EIUL is what give it the edge most of the time."

"I will make this simple for now. Ask away as your questions will lead to greater detail. Risk? Yes, all plans have risk. What EIUL’s do is give a guarantee, say 2% and give you a ceiling on rate of return typically 12%. The general investments of the insurance company provide the guarantee (bonds, mortgages, treasuries, etc.) and then they put the rest of the money in futures for an index. So say your rate is connected to the S&P 500 stock index. Each year as the index is positive you get that return up to 12%. If it goes negative then your account stays at the same amount. Each segment (5 or 6 years) is subject to the guarantee. This is key as you don’t go negative as all indexes do 3 out of 10 years on average. And if you do the math you understand that negative numbers have to be made up by larger positive numbers to get to even. Because it is an index you get the broad stock market movement, not the risk of any particular sector like financial companies or technology companies. The insurance companies have back dated their policies looking at historical averages and come up with a rate of return around 8%. I use 6.5% to illustrate for safety sake. The bottom line is that if the S&P only averages 2% rate of return for 30 years the insurance costs eat up the policy. You would need to add more money under this situation. But, if the S&P 500 only returns 2% your mutual funds will be worth little anyway. So to answer your risk question directly, if our economy implodes, then this as well as every other strategy will fail!
But the greater issue is that if you think you are going to build wealth using mutual funds either inside a 401K/IRA wrapper or not, the data suggests you are very wrong. So EIUL’s are a hedge against inflation and a way to avoid the tax man down the line."