Comments on: An Attempt to Understand My EIUL

By: David Shafer

David Shafer — Thu, 04 Mar 2010 21:16:56 +0000

Feel free to contact me on your policy. I own an EIUL, sell them, and understand how they work [an unfortunate rare occurrence among their sales people]. Usually critics don’t understand how they work so they try to compare them to other products like 401ks funded with mutual funds [buy term and invest the difference advocates].
By the way the AVIVA product is in my opinion not the best out there. However, my personal EIUL is an AVIVA, which I bought before I started to sale them and really learned about them.
PS You might look at the Dalbar studies on mutual fund investing returns to get an appropriate comparison for any savings strategy. It is very hard to strip away all the hype from financial products and strategies, but it is possible.

By: Brad

Brad — Mon, 01 Mar 2010 03:13:32 +0000

How long have you had your EIUL policy?

By: Chun

Chun — Wed, 10 Feb 2010 14:19:09 +0000

I currently have an EIUL at the age of 27. I’m thinking about bailing out since I don’t see anything going on with it. I can put that money towards investment towards a business or savings. Any thoughts on bailing?

By: Brad Manuel

Brad Manuel — Sat, 23 Jan 2010 23:22:37 +0000

I have my EIUL with Aviva. It’s funny because my sister-in-law just talked to some guy trying to sell her whole life insurance, and he was saying that I had a risky policy. It reminded me to check this post. Aviva actually has a 313 year history surviving 9 panics, 8 recessions, 3 depressions, 11 bubbles, and 10 crashes. The caps depend on what indexed strategy you are talking about. I have mine set up on a 2yr. point to point with the cap being 27%. I don’t see any earnings every year though. It is only every 2 years that I see my earnings. The minimum guaranteed is 2%.

By: susan

susan — Wed, 30 Dec 2009 04:02:09 +0000

i have an EIUL with Western Reserve Life. My cap is 12.5% and floor is 1%. Who do you have yours with?

By: Kyle

Kyle — Mon, 19 Oct 2009 02:45:05 +0000

I certainly understand the “banking” aspect of the account. I liked the YouTube video and I appreciate the additional information and links on the subject. I would love to see a response from some of the professional advisers out there. I am still not sold on the concept entirely but we are sticking with it for now.

By: Brad Manuel

Brad Manuel — Sun, 18 Oct 2009 06:21:16 +0000

These are three different people who have no interest in each other that I have followed over a few years regarding Indexed Universal Life Insurance. This is a comment from David’s article “So financially astute executives own it, banks own it, corporations own it, why do the so called experts tell you not to own it? Even some of the corporations that own a lot of it (GE), have their employees giving out advice not to own permanent life insurance!!” By the way, this is an honest guy who checked on our life insurance policies to make sure they were structured properly without trying to sell me anything. Douglas Andrews is a short 3 minute youtube. Wayde’s presentation is an hour. It gives an in depth explanation on the policy you have.

The 401K/Trad. or Roth IRA/Mutual funds have more downsides than the EIUL. When choosing an investment put it through this test.
1) Is it liquid? Can I access the money when I need it? EIUL=YES; Trad. investment=NO
2) Is it safe? Will I lose my principal? EIUL=Cannot lose principal; Trad. investment=Can lose principal (as seen during dotcom bust, during 9/11, and this recession) I know the stock market is coming back but remember…if you lose 50% of your money, it takes 100% to get back to even. Even though it has recovered, it has not recovered fully so a lot of people out there are not back to even. And what is to say that this won’t happen again in the future if triggered by something else.
3) Is there a good rate of return? EIUL may average 7.5% at this time but I would take that all day knowing I will never lose any principle and have a good banking system. And you have to realize that this policy is not about getting rich or being a great investment…it is a great investment tool when used as a banking system which is the part that all of those financial gurus like Dave Ramsey, Susie Orman, and David Bach don’t understand.
4) Will I incur taxes? How much? In a 401K, you can’t take money out until you reach a certain age and when you do take it out, you get taxed on it. Roth IRAs don’t get taxed on withdrawal, but you have to wait until 59 and a half to access it without penalty. Taxes in the future will stay the same, increase, or decrease. I really don’t think they will decrease. There is a good chance they can only increase. With the EIUL, you can borrow money tax free.

http://shaferfinancial.wordpress.com/2008/05/27/life-insurance-who-owns-it-and-why/

http://www.youtube.com/watch?v=JSi5_qooDZw&feature=player_embedded

http://contacttracs.com/uploads/users/3/2009-05-27-1902-Creating-Your-Own-Personal-Banking-System-Can-Make-You-Rich-.wmv

Take the time to learn what you don’t know before following the sheeple. I suggest you stick with your policy as long as it has been structured properly with a minimized death benefit. Like I said, this is a very powerful banking system when used properly. And by the way, I don’t sell these things in case anyone else is wondering.

By: Ed Hinerman

Ed Hinerman — Fri, 01 May 2009 17:43:57 +0000

Find an agent that can fully illustrate all of the prudent ways out of your dilemma. You’re going to need a lot of factual information in order to walk from your mother in law and salvage your marriage. But also keep in mind that our wives are very savvy partners and she may have just gone along with the IUL because of family pressure. She may be right on board for looking for a way to cut your losses and get into something more sane.

Aaron’s idea of an internal 1035 exchange has some merit but isn’t a likely happening. Companies can be extremely bull headed to the point of blowing off perfectly good money rather than bend a bit and hang on to the cash flow.

Stupid tax may be the best way out and remember, there is a pretty good chance that your wife is already thinking in that direction.

By: Aaron

Aaron — Fri, 01 May 2009 15:26:23 +0000

Usually, people buy life insurance for the death benefit and they expect to have some high level of guarantees if they make their premium payments on time.

Having said that, I have seen Equity Indexed Universal Life policies from quality companies with guaranteed premiums below or near the competition. If you need or want permanent life insurance, an EIUL with this type of guarantee might make sense because it allows you the possibility of making more cash value on the side (potentially reducing future required premiums to keep the guarantee).

Outside of that scenario, I’m not sure it makes sense. Buying one of these to try to “make money” is crazy because the highest average credit to your account *might* be 7% – and that’s before the charges come out. The thing about Universal Life policies is that the internal costs can change at any time for any reason the company sees fit. Company quality and stability has nothing to do with it. I’ve seen high quality companies jack up the internal costs on 5 or 20 year old policies.

To really see what’s going on, ask for a few “in force” illustrations. Make sure one of them shows 0% crediting to your account and “maximum” or “guaranteed” charges to see how guaranteed your contract really is. (Oh, and please notice the huge swing in cash value between 0% and current charges and 0% with guaranteed charges.) In force illustrations are speculative, but should help put things in perspective.

I won’t comment on what you should do now – I’m not in the business of giving advice. If you were to consider moving to another policy before the surrender charges were up, you might be able to save your cash value. See if you could do an “internal 1035 exchange” to a non-qualified annuity with the same company and get them to waive the surrender charge on the transfer. Annuities have significantly lower costs than life insurance policies, and your only hope to avoid the surrender charge is to keep it with the same company.

If that sounded confusing, hit me back. Good luck.

By: MB

MB — Fri, 01 May 2009 01:37:27 +0000

Do you guys listen to/read Dave Ramsey? You could email him or call into the show and tell your situation and then he’s sure to bag it (he hates whole life policies) and to tell you to cut and run and call it a stupid tax (just like Kelly said!) and then if your wife hears that, maybe she will listen and agree.

Just an idea. Good luck!