Tl:dr : IUL is not an efficient investment product. The only people promoting whole/universal life insurance are those that sell it. When challenged about the quality of their product, things turn nasty.
Background
A couple days ago, there was a post from a nondescript user asking what they should do in their current financial situation. As I went to comment about getting out of debt and making a budget, I saw that someone suggested indexed universal life (IUL) insurance. The commenter went on a long tirade of how he was a life insurance agent and and how the benefits of the policy are second to none. Not to be out done, I countered his points as such (parts of his post are what is quoted):
Original Post
These policies are tied to the S&P 500 and are currently making around 7%
The S&P has doubled that (14.74%) in the last 5 years. Buy an index fund.
Your premium dollars are used to provide a death benefit as well as cash accumulation features.
As well as line the pockets of insurance agents.
The policy will be jeep because your so young
But term insurance will be 10-20x cheaper!
The growth is also tax deferred.
The growth is tax deferred up to the basis of the investment. So it's only deferred until it gets a positive return.
You can borrow money against this policy and you never have to repay the loan
You have to borrow your own money? What? Also, if you don't repay it, the money is taken out of the death benefit.
AND when your 65 you could easily have a million dollars sitting in a life policy
You'd have to cancel the policy to get the 'million dollars', which would completely defeat the purpose of taking out the policy.
Fallout
Afterwards, I didn't think much of it (maybe he would counter with points on where I was incorrect?).
I then got this beautiful personal message (edited for swearing):
You're one mouthy little f-er, aren't you? You should f-ing shut up, no one wants to hear what you have to say. You should delete your account.
Followed by:
Checking in to see how you little f- are doing. I hope you burn in h-
This is the definition of the logical fallacy Ad Hominem: attack the person instead of the argument.
Conclusion
Buy insurance as a transfer of risk, and invest money in investments. Don't mix the two, and don't ask a life insurance agent to explain why this is so.
Submitted October 25, 2017 at 12:52PM by kuningas51 http://ift.tt/2lfEcV5
