What is Indexed Universal Life (IUL) and How Does It Work?
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- Опубліковано 27 сер 2024
- There are a lot of financial advisers that don't understand indexing, and in today's episode, I'm going to simplify it for you! Stay tuned as I explain to you want indexed universal life is and how it works. I'll explain it to you as simply as possible, so watch on to learn more!
To your abundance!
Doug Andrew
Key Moments In This Episode
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00:45 I'm a big proponent of Universal Life
02:53 You have the flex-ability to do this
05:17 Here's what happens when you link
08:27 I didn't lose a dime!
10:46 Key takeaways
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I love the way you teach Doug. Keep up the good work.
Thank you!
Yeah me 2. How do we reach him?
Great breakdown!
I just opened my IUL in October 2021. I understood these principles when I first got started but I figured I'd reacquaint myself.
Doug, you're a great speaker and teacher. I'm impressed with how easy you made it to understand IULs and I really enjoyed the production value of this video too!
Whoever is in charge of producing your videos - GREAT JOB! Love the editing and pace.
100% subscribing
Glad it was helpful!
when you opened your UIL, i assume they didnt let you fund it in one big payment. my question is, did your money start accumulating interest as soon as you started funding it or did it only begin to earn interest after it was completely funded?
@@CLOUD.STEPPING Interest accumulated right away
I just ordered your book. I’m a new agent. And your videos have helped me tremendously
Amazing break down. Learned so much. Definitely looking into this more!!!
Glad it was helpful! If you would like to explore the LASER Fund options, go ahead and schedule a time to speak to an IUL Specialist that we work with here: www.3dimensionalwealth.com/getstarted
Wow! What an amazing video. Real good information here. More people should watch and like it.
Thank you!
I love these videos!
You’re a great teacher
Thank you!
you explained this beautifully. Thank you for the info
just perfect video on understanding a IUL
very good
sounds great. I will be looking more in to this These seem like the strategy I need.
Hey! If you would like to explore the LASER Fund options, go ahead and schedule a time to speak to an IUL Specialist that we work with here: www.3dimensionalwealth.com/getstarted
Absolutely astounding! Much to learn, where do I start? Very impressed and interested in learning more. Thank you
Yes I just purchased an index policy it is worth it! Now I have joined the business and helping others get an index policy. Let me know if I can help you!
Interesting want to learn more
This is a very good lesson, but how is this advantageous over a straight life policy with additional money going into options yourself? Is tax avoidance your only advantage because you’re borrowing from your death benefit instead of taking gains?
You’re inaccurate with your statement. You’re saying you can borrow from your death benefit ? No, that’s not true. You’re borrowing from your cash value, not the death benefit. The death benefit is used to pay the loans off if you decide to not pay them off yourself. COI will help replenish that death benefit if it is in fact used for paying loans off. Whole life ROI is only between 1.5%-2%. IUL averages between 10-15% depending on the company and index option you link to. It’s a no brainer your client will have way more money in the IUL than any whole life policy.
@@Jdirtadventures yes you’re right, I said death benefit but meant cash value of the policy. IUL is usually better than straight life, but IUL is NOT better than straight life + additional deposits going into VOO shares. I cannot understand why people choose to overstuff IUL policies instead of just buying shares of indexed ETFs. The only reason I can think of is that you can avoid some extra tax by borrowing from the cash value instead of liquidating sheared.
Great explanation! Thank you Doug 🙏
Doug, love the information! I need someone that could write the iul policy. Also I thought about Allianz. Does the book Laser fund cover this info? I net a few hundred thousand a year and want to fund policy quickly, say 5 to 7 years to get interest gaining as fast as possible.
I can help you. I’m a licensed life insurance agent & I help people do this DAILY.
Hello Doug! Thank you for this awesome video! I do have a general question though. Would your recommend an IUL or Whole Life for clients between 21-23 years old.
IUL.
@@queeny5336 indexed universal life (IUL)
Not once in the video does he mention advisory/broker fees which often eat away at an IUL’s death benefit (rendering it useless). If you want to get coverage and you’re on a budget I recommend term life that has whole life convertibility privileges so that you can start converting to whole life (and grow a cash value component within your whole life policy) when your budget allows for it
Right off the bat i like your dissemination of knowledge. Id like to know how to start this if i don’t have the funds to feed it up to 500000. Can this strategy work effectively on a micro scale?
You can typically get started with $1,000 a month if your younger than 45. As you get older that number goes up. If you're in that situation, go ahead and book a time at 3dimensionalwealth.com/getstarted to speak with a recommended IUL Specialist
When someone takes a loan out of an IUL on the DB side now that is put in a bank account will it have to be recorded to a persons taxes at that time?
Mr. Andrew never lived up to his hype when I purchased a UL policy from him in the early 90's. Promising 10% returns. Highest return I ever got was 6.5% one year. Bought a policy with Kentucky Central, who went bankrupt. Jefferson Pilot assumed the policy and they left the insurance industry. Lincoln National took over the policy and has never paid more than 3%. Meanwhile, the insurance costs have gone up yearly. I am now uninsurable and am stuck with this loser policy.
Iul only works if you're a multi millionaire
That’s why you have to buy term and invest the difference, jokers like this are just trying to sell these over priced life insurance policy’s
@@johnpandza5358 😂😂
@@fortyonesavage I’m not into fucking people over like that for a buck
@@johnpandza5358 exactly!
Can you pull from the Annual Total 1M IUL Every Month 50,000, or you can Only Pull the $50,000 Once Annually?
Also, Must you Pay the $500 Monthly Fee for a Year, Before having Access to the $50,000 IUL? Or Once you make your 1st Payment Do you Have access to the $50K???
What is minimum and maximum investment you can put in per year?
You get to set your own maximum. Once you know your maximum, your minimum will be a factor of that. With some insurance companies, it can be as little as 10% of the maximum.
Which insurance company is the best for IUL ???
These policies are getting a lot more attention with interest rates so low. These can be used as alternative to fixed income since your principal is secure. The worst thing that can happen is you get your money back. Since interest rates are at pretty much zero anyway, the gamble isnt much of a gamble.
I am in this industry for last 20 years writing and helping people understand IUl concept every day on constant basis 90% of my business is IUL . Please let me know how I can be part of your expert IUL team would love to work with you
What company is the best insurance company to open a IUL Policy with ?
Is there a debate between Doug Andrew and the guy from Life180 anywhere? If so, please let me know? Anybody?
Doug, you said The money you borrow is tax-free, and all your money (that is still in your Laser Fund) can continue growing tax-deferred. What do you mean by tax-deferred? Do I pay tax later?
Great question, under section 72e of the Internal Revenue Code, money in an insurance contract grows tax-deferred. Depending upon how you access the money from the policy you may or may not pay taxes. If you pull it out "the sad way" that means you've passed away and are passing on a tax free inheritance. If you pull it out "the dumb way" you're taking a withdrawal from your cash value which is subject to tax. If you pull it out "the smart way" you're accessing your cash value via a policy loan which is tax free under section 7702 of the IRC. This is the money you borrow tax free that you never have to pay back because the life insurance contract is the collateral for the loan and you can't loan out more than the cash value.
Hope that helps! If you need to clarify this for your particular situation, you can speak to one of the IUL Specialists we work with here: 3dimensionalwealth.com/getstarted
@@missedfortune Are there any other fees if you borrow? What is the interest fee?
What about people that only have 10K to put into an IUL and want to borrow from the life insurance contract the same year?
You will need to work with a specialist to make sure that your IUL is designed correctly to let you do this. I would suggest not touching the money in your IUL though until year two in order to take advantage of the spread loans.
@@missedfortune Thank so you much for this information. I'm an Agent with PHP Agency Matt Sapaula.
Did you ever find the answer to this?
What’s the maximum amount you can fund per year ? Great video! Thank you!
Depends on the client circumstances but you can fund policies with millions of dollars every year if you have the financial wherewithal.
@@missedfortune how can you be my agent?
Can you please post your broker check
Love it
“You don’t lose due to market volatility”. Maybe a true statement, but it’s only stated to create fear. The cost to own these are way too high and there is a cap and you will miss out on bill runs. I liked my 20% returns and even though I’m down this year I’m still way up over an IUL.
Do you have your book on Audio? I've learned a ton from you thanks for your info. When you are talking about companies who is your go to for IULS?
I do have it on audio. If you would like to purchase just the audio book, you can get it here: laserfund.com/audio-upgrade
Actually, here is a link to a discount: learn.3dimensionalwealth.com/offers/NPD5BMRf?coupon_code=DIGITALSPECIAL
I’ve never been the smartest one in school but this makes a lot of sense
Hey Doug, would you say that Nationwide would be one of the good companies to use for IUL?
it's a good company, but there're better options
It’s a good option because they can give you full access to your cash value quicker. But their cap is lower. Depends on what you’re trying to accomplish.
So would having a policy paying $150 a month be beneficial to someone 40 years old?
Whos a good carrier ?
This video is so confusing for me. I just order the book, hopefully the book can explain it with language that I can understand. Thank you Doug Andrew fro you knowledge and experience.
I hope so too! The book should be a great resource for your knowledge and learning. It is hard to explain enough to understand everything in short videos. Good luck!
Can a non US citizen who lives overseas be eligible for IUL?
How can I invest?
See the other reply to your comment. Thanks for tuning in!
What’s the difference between an IUL and a VUL? Thanks
Indexed vs Variable Universal Life. Indexing gets your cash value out of the market. With Variable your cash value can go up and down with the market.
as a 15 year old understanding this is hard, what would you recommend to me so I could start learning about this stuff
In my opinion, I prefer to get an IUL starting young because of the cash accumulation portion which will go towards your retirement account. The younger you start, the more money will accumulate or add over the years because of compound interest! This is all opinion once again
@@jesikakubeserian8968 I agree. I opened an IUL for my young daughter. The earlier you open one the better. This product is good if you have excess monthly surplus income. I can't contribute to Roth IRA and max out my IRA and 401k so next option is UIL. UIL is called the rich man's roth
Yes. You do lose money because no matter what they charge you fees. If not, please let me know.
Lol. What fees? The agents commission that only pays out in year 1? What you earn from the compounding interest at nearly 10% is far greater than any “fees.”
Doug is there a company you recommend to invest with?
It's more important that the policy is structured correctly, than which carrier you use. You'll want to work with someone who knows how to do that. If you need to speak to someone who understands these concepts, you can schedule a time to speak to an IUL Specialist we work with here: www.3dimensionalwealth.com/getstarted
Can you make a video of an example of someone putting 3000 a year on a iul policy
Great question. You may want to schedule some time with an IUL specialist who can answer more of your questions and even run this very example for you: 3dimensionalwealth.com/getstarted/
If you were a starter and your making minimum wage or perhaps you lost a job, is it better to have a whole life insurance or ULI?
Not once in the video does he mention advisory/broker fees which often eat away at an IUL’s death benefit (rendering it useless). If you want to get coverage and you’re on a budget I recommend term life that has whole life convertibility privileges so that you can start converting to whole life (and grow a cash value component within your whole life policy) when your budget allows for it
Best is to have a job. Buy insurance only(For things you cant afford to loose, Final expenses Insurance, House(The morgtage will force you to have insurance), Car(The lender will force you to have insurance), Liability). Covertability priviliges are for people that need a tax dodge and only people who pay hefty Incometax need a dodge. You will only need a finance guy if you have money...
@@claytonrandalliithere’s no broker or advisor fees with an IUL. Nothing lowers the death benefit unless it’s being used to pay off policy loans. Not sure where you got your info about IULs but it is precisely 110% wrong.
@@Jdirtadventures there are absolutely fees and commissions associated with an IUL
Damn well explain
What's your honest opinion on WFG world financial Group selling IUL??
WFG doesn’t sell anything. All agents are contracted with different companies like Nationwide, Transamerica, PacLife, and more. Every agent is independent so their knowledge can vary.
WFG is like the Amazon of financial services. Like the previous comment, WFG does not own any financial vehicles. They pattern with 70+ different companies which offers any financial vehicle you can think of!
@@thierriepatterson you’re everywhere. 😉
@@terrenceholt44 bahahaha! You know I have to come Iisten to Doug every now and then. Sometimes I read the comments 😃
What is the minimum IRR that you think would make an IUL worth having? That is to say, if you could somehow know ahead of time what your average IRR would be over a 30 year span, what is the lowest average IRR where you would think that a IUL is worth getting? For example, if you knew your IRR would average 6% yearly for the entire duration of the policy would you still get one? What's the lowest average IRR you would accept?
When in a low interest rate environment, my alternatives will typically have low interest rates as well. Back in the 1980s banks were paying 10% on CDs! I want to position myself so that if inflation happens it will help me, not hinder me, and as we're in such a low an interest rate environment there's a high likelihood of seeing higher rates in the future, be that 10 or 20 years or whatever you might think, so I want to be in a strategy that can move with those rates and be flexible, not necessarily choose a commodity based on the moment. I don't want to buy the golf clubs, I want to have the golf swing!
Are there known disadvantages of IUL?
Yes, of course there are. The two largest disadvantages of IUL are:
1. They must be structured correctly otherwise you will not get the results, too much will go out the door in expenses. I like to compare an IUL to a piece of real estate. If you were interested in buying a five story office building, what is the most important thing to consider? LOCATION, LOCATION, LOCATION! You need to make sure that it is strategically located where there is more than enough demand to lease out all of that space. This is the same truth with an IUL. You must structure it so that you are able to truly maximum fund the policy under the TEFRA/DEFRA tax corridor.
2. It must be fully funded! Just like your five story office building needs to be fully leased out. Once you have the right building in the right location, you must still make the effort to lease out all the office space! Same thing with the IUL; once it is structured properly, you must maximum fund it. So simply put, think, no vacancy!
If you do these two things right, you will have an asset that will be one of the cheapest assets you have over your lifetime with the backing of one of the strongest financial institutions in the world with the best money management strategies available to you! Hope that helps!
@@missedfortune is thier any financial institutions that you would recommend that are most capable in handling IUL'S? This would be really helpful.
@@rhodeisme279 TransAmerica has great IUL services! If you’d like, I can sit with you and we can actually go through and see what works best for you! So we can get the best deal!
my biggest question from this because Uncle Sam wants his money, WHO PAYS THE TAX?, i understand that it's tax free money but is the tax factored into our payments that are made every month?
The payments you make to an IUL (Laser Fund) are after tax dollars. From there you can GROW, ACCESS, and TRANSFER your money tax-free.
Fees?
At the end of the day, a properly structured and max-funded IUL should net within 1% of the average gross rate of return. If you average 11% (like I have) your net internal rate of return should be about 10% (like mine have). That 1% would include all fees (cost of insurance, administrative and policy fees). In a 33% tax bracket, you’d have to earn 15% to net 10% after tax.
Hey Doug. How can I connect w/ your firm to do business w/ you?
Hey there, you can setup a time to speak directly to an IUL Professional we work with here: www.3dimensionalwealth.com/getstarted
"Let's say they're earning 6%"
That's a pretty hefty earning for life insurance companies, don't you think?
The insurance companies are utilizing a strategy called indexing. So the carrier is not making those kind of returns on their general portfolio fund, which is closer to 4% right now. But instead, you are able to link your returns to a specified index without having any of your money actually in that index. I would suggest watching this series to get a full understanding: ua-cam.com/play/PLF8af6gsBLfluNIRv7jllRl43tfIUGlmQ.html
@@missedfortune why on earth would you invest into a life insurance policy for 4% when a good mutual fund can get you 9-12% everyone I know who had these policies said they have less money then they put in.
I’m interested in having life insurance but have been shying away from IUL due to the possibility of the COI going up later in life. I know that’s based on the net amount of risk. Is there a way for me to make sure my cost of insurance doesn’t go up as I get older? U keep talking about a “max founded” IUL but let’s say I’m NOT able to max found a policy 😂 I can only put 10K upfront and 12K per year. Would I still be able to have a policy structured in a way to avoid a rising cost of insurance when I get older? (I’m 38 now)
Hello there I’m in the financial service industry and I’ll be able to help you out and you can put 12k a year and once your 60 and want to retire you can activate your lifetime income rider to get monthly payments up to 120 years
The "Cost of Insurance" will always go up as you get older. There is nothing much you can do about it. However, what the insurance company do is they will deduct the amount you are short from your Cash Value to supplement your monthly premium to keep the policy in-force. Example, you are 70 years old and the monthly premium is $250. Cost of insurance is $400. Insurance company will deduct $150 from your Cash Value to supplement the $250 so your policy doesn't die.
Hello Ayikatho. That’s a great question. The cost of insurance does go up as we grow older because of higher likelihood to get sick and possibly die from said illness. To build your wealth a few factors are needed to consider like time, rate of return, inflation rate, market performance. When should you start that life insurance ? About 10 years ago. But you are only 38 yo . So take advantage of your present health. Message me if you have any questions.
@@lasereyes555not necessarily true, you can level the death benefit out when your client stops funding the policy towards their retirement so the COI doesn’t climb and eat into the ROI.
Also I would never recommend lump summing 10k into an IUL. Needs to be funded properly remember
Who offers IUL?
Hey there, you can setup a time to speak directly to an IUL Professional we work with here: www.3dimensionalwealth.com/getstarted
Hello,
I have been seen several videos you made on IUL.
Can this strategy work?
Put a Lumpsum of $50,000 in year 1 in a IUL with the most cash value and least death benefit possible under IRS code(for Tax Free Purposes). To a S&P 500 index fund.
Lets say, The maximum cap is 10/11% and floor of 0%.
I do not put any more money towards this for the next 30 years.
Will the insurance company allow me to setup a plan like this with them?
While the insurance company may allow you to do this, usually it's most efficient to set it up over about 5 years. If you would like you can you can schedule some time with an IUL specialist who can answer more of your questions and even run some examples for you: 3dimensionalwealth.com/getstarted/
I would love to help you!
🔥
"I can diversify like crazy with this thing" How? When you dont even have to have your security license to sell an IUL? IUL have nothing to do with the market- they go into the general account and cannot be attached to the market hence why you dont need any security licenses to sell them.
You get the diversification of the general portfolio of the insurance company. In other words, you get to put your money with the insurance company's money. So you naturally get all the diversification that they insurance company has with their own money. The insurance companies have proved over and over again over the last 100+ years to be the best and smartest money managers in the world! They have weathered the great depression and great recession better than any other company and industry!
@@missedfortune your response just contradicted so many parts of your video!! Insurance companies having so much regulation on how aggressive they are allow to be. i agree correct insurance companies have weathered 150+ years and why their whole life policies are so impressive. An IUL does NOT allow you to track the S&P 500 or the Dow or whatever other fund you want because it is NOT in the market it is the insurance companies general portfolio just like you mentioned. I just wish you would tell the truth about IULs.
@Keej Vang The truth is an IUL is a product that was just recently created in the last 20 years. It is NOT correlated to the stock market. The cost of insurance will continue to increase causing a breaking point where your monthly payment will no longer be enough to maintain the insurance in which the company will either pull from your cash or send you a hefty bill to keep the policy in force. an IUL may be the right vehicle for someone in a given situation but not very often. If you are wanting to investment use and investment.
Keej Vang nothing to do with Poot structure. All IUL policies are insurance not investment. And all IUL policies have increasing cost of insurance. Those are just the facts of the policy. Nothing to do with structure.
@@tannersharp1188 What do you think the Index part of IUL means then if it's not that you can link to an index in order to risk the interest you would make from the general portfolio rate? And by diversify he meant you can link to multiple indices instead of just one. He explained that in the video. Please just delete your original comment if you have no idea what you're talking about, because clearly you don't.
IUL is an increasing premium policy, MEANING YOUR MONTHLY PAYMENTS GO UP EVERY YEAR!. It is not an "Investment".
That is a common mistake made by agents and a myth perpetuated by the industry. When structured correctly to maximize for cash value, the policy maintains great cost efficiency throughout it's lifetime.
Doug, Thanks for the video...Love it. Who can help me ...I want to invest my $1M cash into IUL and get the income....Please help me ...who specifically can help me
Hi Jason I am in the financial industry and licensed professional and I help individuals set up their IUL's i would be happy to meet with you to explain more
I like how he keeps there ing 100k in there each yr. All i can throw is 6k at this point. At this rate, I will never be a millionaire
okay but nobody has 500k
IUL is also known as the Rich Man's Roth.
9 I
IULs are garbage with their high fees/commissions and capped gains.
Is this legal? lol
This follows IRC section 101(a), IRC section 72(e), and IRC section 7702. You can study those sections of the internal revenue code to verify.
Imop , your video are not very much clear.
I thought it was very clear. And your grammar isn't very clear. Pot meet kettle
Hi Doug, I have a couple of questions how can we chat by phone I really want to open an Indexed account
Hey Lewis, you can speak to an IUL Specialist that we directly work with here: www.3dimensionalwealth.com/getstarted or you can call 385-257-2577
They will be able to speak with you and help you get started with an Indexed account.