A collection of insightful and informative articles from Myerson Wealth's “Recipes for Success” newsletter
Ever hear about the mathematician who hated negative numbers? He would stop at nothing to avoid them. (Relevance to be explained…)
Imagine a really great meal: hors d’oeuvres, appetizer, pasta, main course and dessert, all matched with a perfectly paired wine. A meal like this, perhaps coupled with great company, has wonderful upside. Now imagine if you could enjoy this meal without any of the downside: zero calories, zero sluggishness, and zero hangover.
Similarly, wouldn’t it be great to own an investment that generated stock market-like returns in years when the market performed positively, but never lost any money in years when the market took a dive? And what if the growth of that investment and all distributions from it were income tax-free? Better still, what if the investment was self-completing in the event of death?
I know what you’re thinking, but guess what? One of them is absolutely possible. Zero becomes the hero through Indexed Universal Life (IUL), the fastest growing permanent life insurance product in the United States (according to LIMRA).
How does IUL work? Simply stated, the cash value of the policy will increase over periods that the index to which the cash is linked (e.g., the S&P 500) rises (subject to a cap), but have (at worst) a minimum zero percent floor over periods the index declines.
Furthermore, this strategy is tax-favored.
Forget everything you may have heard about permanent life insurance being a bad investment. If properly engineered (which is essential to avoid a cost drag on growth), and using the right product from a very reputable carrier, there are very few investment products (with similar low risk profiles) that will provide the kind of returns inherent in IUL. When you layer on the tax-efficiency provided by the life insurance “wrapper,” there are none that can compete!
If you’ve ever considered owning whole life insurance but didn’t care for their bond-like returns, or you own some whole life and are curious about how it would compare, ask your agent about IUL. But, make sure they’re permitted by their carrier to sell it! Some captive whole life companies prohibit their agents from selling IUL as they don’t manufacture this product, and hence . . . you might imagine the stance they take on it.
An online search of IUL will produce a myriad of varied opinions ranging from the absurdly pejorative, to the cautious, to the outrageously exuberant. For the uninitiated, this is not only unhelpful; it’s extremely frustrating given the vastly conflicting opinions. Hence, in an attempt to separate the wheat from the chaff, I’ve written an easy-to-read white paper on Indexed Universal Life, which clearly lays out its inherent advantages over other life insurance accumulation products. Should you wish to obtain a copy of the white paper, simply email me directly.
In a volatile world, it’s wonderful to know there are investment options that can take the risk out of investing and allow you to sleep at night, while not missing out on the action that others might be cashing in on. Thank you, Zero.
And as always: Eat Well, Drink Well, Live Well!