Don't Buy an IUL Until You Listen to This Podcast!
10/04/23 • 9 min
1 Listener
David breaks down a recent article by financial advisor Brian Manderscheid on what insurance agents don’t tell you about Indexed Universal Life (IUL).
David talks about the risk of consuming financial content online without seeking professional advice when making significant financial decisions.
David reveals how the claims made by financial influencers tend to be overly promissory and exaggerate what the IUL can actually do for your retirement portfolio.
He further adds that IULs were never exclusively available to the wealthy, and you should not expect 10% plus returns.
In Brian’s article, he describes why you must have a life insurance need before investing in an IUL.
If the IRS is willing to give you the benefit of a nearly unlimited bucket of tax-free dollars, you have to be willing to pay for life insurance and have the need for life insurance.
According to Brian, you need to structure your IUL correctly if you are to enjoy all the perks that come with owning an IUL.
David agrees with Brian’s views on the proper way to structure an IUL.
In order for the IUL to work, you must buy as little death benefit as the IRS requires and pump in as much money as the IRS allows. Your goal is to go after all the benefits of a Roth IRA without all the limitations of owning a Roth IRA.
According to David, IULs only work when considered as part of a balanced, comprehensive approach to tax-free retirement.
David talks about the lies peddled by financial influencers online - they focus less on creating reliable and accurate content and more on likes and views.
As an investor, it’s very important not to conflate actual historical returns with retro-engineered returns when considering an IUL. Anyone can create a retro-engineered index that looks great on paper.
David is much more impressed with an actual track record, even if that track record nets you only 5 to 7% net of fees over time.
One of the things not discussed in Brian’s article is how most solid IUL carriers give you the ability to receive a death benefit in advance of your death to pay for long-term care.
For David, Brian’s piece is one of the more accurate IUL articles on the internet today.
Mentioned in this episode:
David's books: Power of Zero, Look Before You LIRP, The Volatility Shield, Tax-Free Income for Life and The Infinity Code
PowerOfZero.com (free 3-part video series)
@mcknightandco on Twitter
@davidcmcknight on Instagram
David McKnight on YouTube
Get David's Tax-free Tool Kit at taxfreetoolkit.com
David breaks down a recent article by financial advisor Brian Manderscheid on what insurance agents don’t tell you about Indexed Universal Life (IUL).
David talks about the risk of consuming financial content online without seeking professional advice when making significant financial decisions.
David reveals how the claims made by financial influencers tend to be overly promissory and exaggerate what the IUL can actually do for your retirement portfolio.
He further adds that IULs were never exclusively available to the wealthy, and you should not expect 10% plus returns.
In Brian’s article, he describes why you must have a life insurance need before investing in an IUL.
If the IRS is willing to give you the benefit of a nearly unlimited bucket of tax-free dollars, you have to be willing to pay for life insurance and have the need for life insurance.
According to Brian, you need to structure your IUL correctly if you are to enjoy all the perks that come with owning an IUL.
David agrees with Brian’s views on the proper way to structure an IUL.
In order for the IUL to work, you must buy as little death benefit as the IRS requires and pump in as much money as the IRS allows. Your goal is to go after all the benefits of a Roth IRA without all the limitations of owning a Roth IRA.
According to David, IULs only work when considered as part of a balanced, comprehensive approach to tax-free retirement.
David talks about the lies peddled by financial influencers online - they focus less on creating reliable and accurate content and more on likes and views.
As an investor, it’s very important not to conflate actual historical returns with retro-engineered returns when considering an IUL. Anyone can create a retro-engineered index that looks great on paper.
David is much more impressed with an actual track record, even if that track record nets you only 5 to 7% net of fees over time.
One of the things not discussed in Brian’s article is how most solid IUL carriers give you the ability to receive a death benefit in advance of your death to pay for long-term care.
For David, Brian’s piece is one of the more accurate IUL articles on the internet today.
Mentioned in this episode:
David's books: Power of Zero, Look Before You LIRP, The Volatility Shield, Tax-Free Income for Life and The Infinity Code
PowerOfZero.com (free 3-part video series)
@mcknightandco on Twitter
@davidcmcknight on Instagram
David McKnight on YouTube
Get David's Tax-free Tool Kit at taxfreetoolkit.com
Previous Episode
1-minute Summary of Every David McKnight Book on Retirement
David gives a 1-minute summary of all his books on retirement.
The Power of Zero: How to Get to the 0% Tax Bracket and Transform Your Retirement.
- The book outlines a step-by-step plan for getting to the 0% tax bracket in retirement, because if tax rates double, as some experts predict, two times zero is still zero.
Look Before You LIRP: Why All Life Insurance Retirement Plans Are Not Created Equal, and How to Find the Right One for You.
- David explains that while various LIRPs may help get you to the 0% tax bracket, not all will do so with the same efficiency or effectiveness. In fact, finding the right LIRP for your tax-free retirement plan can be just like finding the ideal spouse. Just as you likely had a list of qualities you were looking for in a life-long partner, you should have certain attributes and provisions in mind when looking for the ideal LIRP.
The Volatility Shield: How to Vanquish the 4% Rule & Maximize Your Retirement Income.
- In this book, David breaks down financial truths that challenge conventional wisdom and reveal the gaping hole in people’s retirement picture. He also reveals how you can open a volatility shield account that allows you to pay for your retirement living expenses in the year following a down market.
Tax-Free Income for Life: A Step-by-Step Plan for a Secure Retirement.
- David lays out a comprehensive, step-by-step roadmap for a secure retirement and how to shield yourself from longevity risk as well as the unintended consequences of higher taxes.
The Infinity Code.
- This book speaks of the evils of the modern monetary theory, which says that we can print an unlimited amount of money to pay for our nation’s burgeoning debt load.
David shares insights from his upcoming book, Guru.
- Americans love charismatic gurus who dish out one-size-fits-all financial advice that is easy to digest and implement.
- However, the dumbed-down financial advice offered by Dave Ramsey and other gurus is good for bad investors but bad for good investors. David believes that while these financial gurus sometimes dispense good advice, it’s nearly always at the expense of the best advice.
Mentioned in this episode:
David's books: Power of Zero, Look Before You LIRP, The Volatility Shield, Tax-Free Income for Life and The Infinity Code
PowerOfZero.com (free 3-part video series)
@mcknightandco on Twitter
@davidcmcknight on Instagram
David McKnight on YouTube
Get David's Tax-free Tool Kit at taxfreetoolkit.com
Comeback America: Turning the Country Around and Restoring Fiscal Responsibility by David M. Walker
Next Episode
Dave Ramsey Beat the S&P 500 Over the Last 30 Years Because “It’s not hard to do.”
In a recent interview, Dave Ramsey claimed he beat the S&P 500 over the last 30 years because “it’s not hard to do.”
The big question is, is it really that easy to beat the S&P 500 over time?
According to David, it’s not. In fact, most active fund managers fail to do it over time.
A recent study revealed that 85% of fund managers underperformed in the S&P 500 in the last ten years - this underperformance caused the disappearance of mutual funds altogether.
Based on these stats, how do we rate Dave Ramsey’s claims that he outperformed the index by 12% and 13% in some years?
David believes it’s not advisable to collect all your money and move the index fund route. The first step should be seeking the services of a financial advisor.
Good financial advisors will more than offset whatever fees they charge you in the form of enhanced returns that stem from sticking to your investment goals.
Unfortunately, most investors let their emotions undermine their investment decisions. We’re supposed to buy low and sell high, but most investors do the opposite. Fuelled by emotion, they buy high and sell low.
For David, a good financial advisor will help protect you from yourself and remind you of the plan you created and why you need to stay on track toward your goals.
It doesn’t matter how much money you have. It only matters how much you actually get to spend after taxes.
The three main takeaways from Dave Ramsey’s claims about beating the S&P 500:
Take everything Dave Ramsey says with a grain of salt. His entire business is built on making investing seem easier than it actually is.
Beating the S&P 500 is not as easy as Dave Ramsey claims.
You need a qualified financial advisor to help you yield much higher returns over time to increase the likelihood that your life savings will last through life expectancy.
Mentioned in this episode:
David's books: Power of Zero, Look Before You LIRP, The Volatility Shield, Tax-Free Income for Life and The Infinity Code
PowerOfZero.com (free 3-part video series)
@mcknightandco on Twitter
@davidcmcknight on Instagram
David McKnight on YouTube
Get David's Tax-free Tool Kit at taxfreetoolkit.com
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