Give me an example…
Let’s look at a young couple who has a new baby. Like most parents, they want to make sure their child will always have the ability to be insured, given the fact that so many kids grow up and by age 10 or 30 or 40 have medical conditions that make them uninsurable or at best a very expensive person to insure.
The parents are also thinking ahead and want their child to have a secure retirement, and enough insurance to protect their own kids they may have some day.
So, they reach out to their trusted agent and purchase an IUL and decide that from age one until their baby gets to age 17 they will pay $500 per month, (that’s four latte coffees per day), then from age 18 to age 26 until the kid (or kids) are in college they will drop the premium to $250 per month, and finally, from age 27 to age 50 the kid (now a young working responsible adult) will pay for their own protection and future retirement just $750 per month. At age 50 there are done, no more premiums paid (unless of course, they want to continue).
The following results are from a major insurance carrier, with returns at 3.25% and around 6%, very common nowadays only to go up hopefully.
The death benefit from day one is $2.1 million (yes million).
By age 22 the kid has accumulated between $116K to $160K.
By age 27 between $146K to $231K.
By age 52 between $530K to $1.5 million, (remember, he stopped paying premiums at age 50).
At age 65 (time to retire??) between $700K to 3 million while the death benefit has increased to 3.5 million.
At age 85 the cash is up to 10 million with an 11 million death benefit.
At age 95 (he is really taking care of himself with all that cash!) the number is up to 19 million.
Those parents have not only given their child a secured life, they actually changed the course of life for them, their grandchildren and their children. And of course, the parents have access to that same cash (being the policy owner) at any time should they have a need.
And all that cash has NO tax liability folks.
I don’t know about you, but I’d rather have at retirement $100k with no taxes that I can access anytime and I know I will never lose it, instead of hoping to have $150 k from a mutual fund or IRA that I have no access to them without penalties and taxes, and know that I can lose most of it any time the market blinks the wrong way.