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EIUL-What are the drawbacks???

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OK -- remind me next week.

Post Sat Dec 02, 2006 6:25 pm
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EIUL  Reply with quote  

To me it seems as though the Financial Advisor may have an agenda. Is he the one administering the 401K or 529(As in Assets under Management). He is telling you to max out your 401K and 529, both excellent programs but the challenge with the 401K is its growing tax deferred but when you start taking distributions you are taxed (401K's provide instant gratification with yearly tax deductibility, but you will end up paying much more in taxes over the years of distribution then you saved all the years of tax deductibility). Second of all, I think everyone will agree tax rates are not going down, money put into a EIUL are taxed at a known rate today(meaning after tax money is put into an EIUL); that money then grows tax deferred and then can be taken out in the form of a loan which is then considered tax free distribution(Example:$100,000 taken from a 401K, taxed at 25%=$75,000 after tax(25% is low), money out of a EIUL $100,000=$100,00 tax free) plus everytime you take money out of the 401K you disturb the compound growth and deplete the account). Depending on the company and product you use, loans taken out in the form of a loan that don't disturb the compound growth of your EIUL and are only paid back after death)
Post Fri Dec 08, 2006 10:44 pm
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Originally posted by mxjbt
First and foremost the EIUL is life insurance. Everyone needs insurance of some sort if you have a family that depends upon you. The drawback to Term is that it expires. As you get older the cost of term rises so much no one can contribute when they most need it. The purpose of a cash value life insurance policy is to be in effect for your life time. If the cost rose as dramatically as term no one would use it and a policy that lasted your entire life would be pointless. Congress passed the laws for the cash value life insurance. I highly doubt they did for us. However, I am not suggesting that you dump all your money into one. You need to diversify. But relying on only 401k, only stocks or only Life insurance is not a good idea.

My friend has one of these EIUL's. He front loaded it over the past 4 years at $65k/yr. He is 41 and at age 64 he will have accumulated $1.5m and will be able to pull out $109k a year tax free until age 100. This is at the conservative 8.2%, not the 10.5% it is at now. He does not care about leaving money to beneficiaries cause he has none. But even if he lives to 100, he is still making money. He's pulling interest out only. If he is pulling interest out the cash value stays the same. He is no longer paying for insurance as he front loaded it to start. And the cost of insurance will not deplete his cash value. His cash value rises to 2.8m when at age 90.

This is not a typical scenario as not everyone has $200k to start it. This is especially beneficial to the wealthy as they get sued a lot. Money in here is protected. I plan on oppening a VUL on both my wife and I soon. When it hits $30k I can put it into an IA program where my money is managed for me daily in high yield accounts.

Sounds like WFG Very Happy

BTW, I am a licensed rep and have an EIUL prospectus and Western Reserve Life's software to generate some numbers. I'll have to run some illustrations later, my computer wants to take a nap now.
Post Wed Dec 13, 2006 4:44 am
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I thought I got enough information from the posting and did not check it for a while. I don't want to disclose the name of the Financial Advisor because 1) He did not charge me for the 1 hour conversation because I attended his seminar. 2) It is violation of his privacy. I am not his target as he is looking for something with at least $2M cash to invest in diversified funds. He also highly advocate for 529 Education Fund. When I question if there is any draw back on 529, he said "None." After asking a few more questions, he finally admitted that if the money is not used up and no grandchildren to inherit the fund, the policy owner can withdraw the rest of the fund by paying 10% penalty. I know each professional has his fixed (perhaps biased) way of thinking.

To satisfy your curiosity about how I got the number on cost of insurance, I have the Western Reserve Life (WRL) Software. Use your imagination to figure out why I have it. (Hint: I did not steal or copy from someone). I know EIUL is not an investment, but rather a protection with tax advantage. After reading all these threads, I decide to go for EIUL but cut down on the face value of the insurance.
Post Thu Dec 21, 2006 7:23 pm
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He is no longer paying for insurance as he front loaded it to start. And the cost of insurance will not deplete his cash value. His cash value rises to 2.8m when at age 90. B2B-Commerce-Administrator Exam Questions
Post Tue Oct 06, 2020 7:25 am
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