How To Choose The Right Permanent Life Insurance Policy | IUL vs Whole Life

whole life versus IUL, which one's better? Which one should you sell? Which one should you buy? Should you be on a side? Should you be angry at the other side? I'm laughing internally because we have friends on both sides of the aisle that are hardcore whole life all the way. You are a horrible human being if you mention anything else but whole life. And then I have other people on the exact opposite side that are like, if you talk about whole life, you are back at 30 years ago, and you need to innovate and you're doing horrible things for your clients. And if you have whole life, you're just in a terrible place. And so Dom and I are here, we're going to give you our thoughts. We haven't, we've been around the block a couple times now, just being in this space, we've seen a lot. We're going to share with you what our thoughts are, our opinions. I want to be very clear that I'm not trying to be an expert. I'm not trying to say anything. Definitely, I'm just going to share from my experiences. And so is Dom. And so if this is helpful, wonderful. But I'll be the first to say there are so many other people out there that are giving you the better definitions and maybe can give you a more technical version of what is whole life, what is IUL, we'll make sure that there's a video linked below to someone that does a way better job explaining the difference between whole life and IUL. We're going to be talking to the person that knows those two products and share like where we stand and why we do what we do. So for my personal opinion, I started off in the IUL space. I sold it. I consumed it. I thought that it was the greatest thing. I thought that you shouldn't put your money anywhere else, not a Roth IRA, not the market, not real estate, because I would look at the numbers and I would say, wow, this thing is amazing. It's beautiful. The growth on this is, the projection on this is unbelievable. Anybody's dumb to put their money anywhere else. And then I would look at whole life insurance contracts and I would compare them side by side. And I was like, wow, this whole life is trash. And a lot of that also had to do with, I was looking at the wrong whole life policies. You know, you have to look at a company that is a mutual carrier. I was looking at whole life contracts. It was also with a stock company, so they didn't provide dividends. And when you have a whole life policy that doesn't provide dividends, it is not pretty. Let's just say that. And so I essentially wrote off whole life as like people that are selling whole life or that's just, it's just bad, bad, bad, bad, bad. Then I ended up seeing a whole life contract that was with a company actually called Foresters at the time. They were a mutual company. And I was like, you know what, this is actually interesting. This is performs way better than anything I've ever seen before. So it was kind of like my first glimpse into like, how is whole life doing this? It's like, are they lying or what's going on? And then I met another guy that sold whole life for New York life. And he talked really bad about IULs. And he said that whole lives were the greatest thing and you shouldn't sell IUL. And I was like, okay, now that's a second time that I'm hearing that. Then this beautiful kid called Caleb Williams comes into my life and he starts telling me that whole life is the greatest thing since sliced bread and that IULs are a terrible place to store capital. And I'm like, okay, how do I have a lot of really smart people saying that whole life is amazing. And from what I know, and from what I've seen and what other people that I'm working with are telling me that IULs are the greatest thing since sliced bread. So I went down this path of destruction in my head and incompetency of, I don't know what to do. And I'm sure a lot of you are in that same boat right now where you're in this constant debate with your own mind of like, should I buy whole life? Should I buy IUL? Which one's better? Because you have, like Caleb said, people that are so strong on the left and so strong on the right. It's like you've got the blue versus the red. But with that being said, I went down a whole year of no longer selling insurance. I saw myself like, I just cannot morally sell insurance knowing that I'm going to put somebody in a contract. If it's an IUL, that could be really bad for the person and the whole thing can collapse. So I just went down for a year of learning from the best of the best, Garrett Gunnarsson, Kim Butler, reading all of Caleb's stuff. And I just went down this path of, okay, I need to find out the truth in what I believe and I feel in my heart and soul. And so I ended up coming to a conclusion. Long story short, I started working for better wealth. I started leaning heavily towards whole life. And I then started thinking that IUL was actually not a great thing. And then I started maturing more and more and more in the industry. And I started learning from really, really smart people. I started becoming like more right in the middle. Yeah, I think the mature person, and I think we've all come full circle because like four or five years ago, when I was first getting involved in this, I was like, way more convicted in certain things about life insurance. And I would say my conviction about what we do and why we do is actually grown. But the way I communicate it is, and just the way the outlook is just less like maybe dramatic. And it's because, and this will make sense, because life insurance really is not the end all be all. And I think one of the paradigms that a lot of people that get into this debate is they make life insurance bigger than it should be. They make life insurance be the thing. And I think we both see life insurance as a tool. Life insurance is a tool. It's a tool to help you accomplish what you want to accomplish. My favorite definition of efficiency is removing friction to get to where you want to go. And and when I just start thinking of like our time, our money, our relationships, our skill sets, is all mini inputs that help us get to where we want to go. I start, start asking the question, okay, where do I want to be spending my time? Who do I want to be spending my time with? What do I, where do I want my money? Where do I want it to be? What kind of characteristics do I want? And I, the other thing that I've noticed, and I'm not, I'm not super old, but I've been in the space for, for a couple of years now. And I've just noticed that there's a lot of pitches, whether it's crypto, whether it's real estate, whether it's insurance, and a lot of people are sold on the sizzle, but they don't want to put in the time to actually get and reach their goals. And, and so I have a feeling, and again, this is, this is all my opinion. There's a lot of more immature advisors and agents that like IUL because it looks better and it looks way better if you look at the numbers and you base things on illustrations. And if you're selling life insurance as an investment, as the, as the sizzle, man, life insurance, IUL is just a way sexier thing to talk about, especially if you're basing on illustrations, especially if you take it a step further and look at arbitrage in those illustrations, it just looks way better. But in, in our journey, and I'll just speak for myself, I've never been more convicted in life insurance and I've never been more convicted by saying it's, it's life insurance is an, and it's the foundation. And so because of that, why would I want to create any more variables to my policy? I'll go as far as to say, there are probably some IUL carriers and Chris, you're probably watching this, which is a great friend of both Dom and I's like, there are probably some IUL carriers and contracts that will outperform whole life. I would not be shocked by that. And I know many people that are doing IUL, I believe the right way, they're putting a lot of time and energy into it. And I wouldn't be shocked at all. If an IUL contract outperformed whole life, not just from an income standpoint, but from a cash value standpoint, that doesn't make it something that that's why everyone should do it. That actually is like my exact point of like, that's not why I have whole life. That's not why I use life insurance. I use it as a place to store and use my capital. And because of that, I want as few variables to mess with that as possible. So while the IUL has the upside, it also has a heck, a heck of a ton of potential variables and downsides. And for those reasons, when you start putting 15, 20, 30, 40 years, I don't necessarily want to trade the potential upside with the potential levers on the back end. And then the last thing I'll say is, I'm also giving the benefit of the doubt because we know some phenomenal people that represent IUL. For every phenomenal human being that does IUL, there's a lot of people out there that are selling you something they have no idea what they're selling. They're not going to be in business three years from now. And you are literally sold a contract you don't understand. It's not serviced well. And IUL's unserviced are a train wreck. I think everyone would probably agree with me on that. Whole life not serviced isn't great, but it's not a train wreck. IUL not serviced well could be a huge problem. Yeah. For me, one of the biggest factors that made me be like, aha, I need to be more from an agnostic standpoint of like, it's just a tool at the end of the day, was there's a very, very smart mentor of ours that we work with, that he works with family offices, and he sells both whole life and IUL. And what he does is he shows it from a very conservative standpoint. So in whole life insurance, you can show what happens if you reduce the dividend, and then what is the end result by doing so. In IUL, you can do the same exact thing. You can reduce the overall rate of return. And you can say, okay, if we reduce this, what reduced the caps, what is essentially going to happen to this policy? Will it lapse? Will it collapse? Here's what the cash value looks like. Here's the worst case scenario. Are you okay with that? And then what he does is he allows the client to decide what they would prefer. And I really resonate with that of like not selling anybody on one thing or the other, but educating clients on the risks in whole life, the risks in IUL, allowing them to understand it fully, and then allowing them to make the decision accordingly. And the problem with the industry is not many people actually understand how IULs work. And I have Chris, you know, to thank for this, to really opening up my eyes around that it is an option strategy, and there is a lot more levers that are moving. The video that he did with you at the house was unbelievable. That should be another video that you or thing that you should put in the link, because I think that was a great video, by the way, of explaining par rates, cap rates, the disadvantages, what could potentially happen. And for me, people in the space, all they're selling is arbitrage and this massive upside potential and uncapped and that there's no risk on the downside and that you can't lose any money. And, you know, there's a really amazing, smart individual out there. His name is Bobby Samuelson, and I've heard him speak multiple times. And he did a presentation where he showed the projections back in like 2011 of what the IULs were going to do or supposed to do, quote, unquote, and then what the actual performance was. And it was mind blowing how different they were. And it was unbelievable how little less cash value there was from the projections. So there was today because caps were astronomically high. Caps came way down. Option strategy became more expensive. So essentially produced less results. So as a whole, I think it comes back to, again, is understanding the tool, presenting it correctly and understanding and asking the question is, will this tool solve the problem that I'm trying to fix? Yeah. And I also want to just talk about this from a standpoint of life insurance. If people are selling it as like, again, the main it or like a lot of people, we know some people in the space that are like massive fans of retirement income using life insurance and they're using arbitrage and they have a calculator that, you know, shows you what kind of retirement income you're going to get. And I just look at that and go, there is no shot that that's even going to be close. And that's what I have a problem is, is like, I actually believe that this person might believe that it's going to happen, which is even more scary because they are like advocating something that's so not going to happen. Like, I am so certain that it's not going to happen, that it's like, it's kind of frustrating to be like, okay, we're intentionally using majority of whole life for examples, because I actually think it's a more conservative way to talk about life insurance in general. And then you have other people on the internet that are just going like, doing something that if you know anything about this, this game, you just go like, I can't believe that's what they're actually teaching. And they're using it as a way to, whether it's prey, or whether it's aggressively sell, or whether it's just ignorance, it's just one of those things where it's like, don't elevate life insurance to be the thing that's going to solve all your problems. And probably the biggest mistake that I made early on is as big of a fan as I am, in life insurance, I don't think all your money should be in there. I think I think that there's also wisdom and seeing it as an asset class, seeing it as a, you know, be diversified, maybe it's a solid, a massive part of where you're storing your money. But if all your money is in one asset, whether it's real estate, crypto, the market, life insurance is probably not a great idea. And while life insurance is way better off than so many other asset classes, a lot of times you're just, it's not going to translate in the efficiency of your money. And so those are those are just things that I just want to caution you, if you don't understand it, if you can't, like whiteboard it out and actually understand how all the things work, I would just really encourage you to maybe be less aggressive, maybe fund less money into it, dip your toes, and make sure you really understand because at the end of the day, there's there's a lot of people that are selling it that don't understand that may think they understand. Yeah, and I think there's actually a lot of really cool things that are happening in the industry as a whole for a consumer protection standpoint. Whole life has been around for forever, right? And so there's numbers to back up that it works and that it's safe. There's guarantees involved with it. So you know what you're getting. IUL is relatively a new concept. And because of that, there's been a lot of changes that have happened because people were overselling it. People were getting lawsuits, people were losing a lot of money in regards to it. Policies were lapsing, and it caused a lot of friction in the industry as a whole in regards to it. But at the same time, the internet ramped up the amount of sales that were happening in regards to this product. So it just caused more problems within it. And some of these insurance carriers were also being very deceptive and not telling the whole truth and putting bonuses on that were projecting higher returns than they really were going to. And it just caused a big disadvantage to the insurance industry as a whole. And what the insurance commissioners essentially did when they came in is created AG49 and B to essentially help out with this IUL raise, which meant that they couldn't project higher than a certain number to show more conservative numbers. And I think that there's something that just got put in place, was about to get put in place to where it mimics more of like a IUL interest rate as well, which I think is great for the industry for put the ceiling down again on the IUL craze to make it realistic of what it actually was meant for. Because IULs, illustrated wise, look great, but they really look amazing when you take income because of the arbitrage. And so just beware of that. But let's talk about where ULs are amazing. Well, the income piece is something to be careful of too when you start to look at it, right? Because somebody said that, told me once, which was amazing that life insurance is meant to have expectations, like risk expectations on it, managed expectations. Thank you. That's exactly what it was. And you can't manage your expectations very well with an IUL, especially if you look at the 2011 to 2021. If I thought I was going to have a million dollars of cash value in today, but I only had $400,000 of cash value. Well, how did you manage those expectations? Not very much. So now you have to put in more money or get double rate of return somewhere else for your income and lifestyle that you're looking for. And then on top of that, the interest rate environment increasing, the variable loan rates are going up. And so when people start taking distributions and their loan rates are going up and their cost of insurance is also going up, there's no protection loan on these policies. There's a chance that these policies could lapse, starting to use it for retirement. If you're in retirement and your policy lapses, you're not going to have this massive tax bill as well. And so I don't think people are really tuning into a lot of these moving levers at the retirement piece either. And here's the other thing that's like the dirty secret is very few people are actually getting, using their policy for income. Like that's how it's sold. But how many people do we know that are getting their monthly check from their whole life or IUL? It's being sold that way, but there's not a lot of people actually using it that way. I know that that might, that might sting, but it's, it's just the truth. Let's talk on the flip side though. And let's talk about why someone would want to use a chassis, especially if you have a lot of money like universal life, especially guaranteed universal life could be the most efficient way to buy death benefit long-term. And if it's managed properly, the people that really know what they're doing like universal life or even index universal life, because they can tweak it, but they have so much money. It's all an efficiency plan. A lot of times it's less about the income or cash value. It's more about the death benefit. And there's a pretty solid argument to be made where using a universal chassis for a death benefit, if you know what you're doing and you have plenty of money is a more efficient way than using whole life. Yeah. Universal life, actual, like actual UL and whole life, they're essentially the same product. Like they have guarantees built into them that are essentially the thing that makes the whole life a little bit more attractive is when you have dividends that are coming on top of that to produce some cash value, but you want something that's cheaper, right. But you don't have to produce so much out of your pocket to have that permanent death benefit. Then a UL is actually a very good strategy. Yep. And then there's, there's people that use variable universal life and there's other strategies that use a life insurance wrapper. And this is, this is what I would say is if you really know what you're doing and you really are confident in your underlying investment, this is not investment advice. I'm not endorsing anything, but there's a world where instead of messing around with index universal life, maybe go straight to variable life, use life insurance chassis and actually get in the investment upside. But you, you potentially have a lot more risk in that, in that situation. And it goes back to why do you have life insurance to begin with? Is this a glorified investment? If that's the case, then you have a different paradigm and you're looking at this asset differently. The way that I look at life insurance is a place to protect, place to store, place to continue to grow, place to be able to use, um, give, giving the options. I look at it more from a bond or portfolio from a standpoint of overall asset and investments. And because of those reasons, I don't know why in the world I would want to put my money in a place that created more variables and could potentially allow one of my safest assets not to be there. That isn't crazy to me. And that's why I'm at better wealth. We do primarily whole life because majority of people are using it as a tool for what we talked about. It's not that we don't believe in it in IUL. It's not that we don't understand it. It's for those reasons because we would actually be incentivized to sell IUL. You get paid a lot more money doing IUL. I'm not saying that's because it's bad. It's just that it's the truth right now. Yeah. I mean, there is more fees and things like that that are involved, which is a big reason why you can, you make more money in regards to the, the IUL levers and things like that. Um, it's just interesting as a whole, like for myself with the VUL, I remember when I first got into the space, uh, I was watching an amazing friend of ours, Garrett Gunnarsson, and he was telling stories around, uh, the VUL and how, you know, there's like a 97% chance that those things can essentially fall, fall apart and things like that. And at the time it probably was, uh, the thing that I think is really cool is if a product sticks around long enough, these insurance companies innovate and they become better for the consumer. And the IUL has been around long enough that I think it's starting to become better. And it was used to be really terrible. And the same thing with the VUL, like they were really bad at one point and the insurance companies are innovating to help protect you as the consumer. Again, it's what is the goal? What are you trying to accomplish? And then let's fit the puzzle into helping you solve that. One thing we want to do is, uh, further this conversation because there's people that represent life insurance companies that watch our videos. There's people, consumers that you're trying to figure out what kind of policy should I, should I get? What should I use? And, and we want to continue this conversation. So we'd love to hear your thoughts in the comments. Um, we appreciate the feedback. We appreciate you sharing these videos. And if you're someone that has an opinion and wants to be nice about it, we'd love to have you on the show and talk about it. And my hope is to host a debate, um, where I get both sides and I, I would love to display that because I think you should hear both sides. Cause I'm never going to take a super, super, super, uh, extreme side and attack the other, but that doesn't make it right or wrong. Like I have people on both sides of the aisle there, and I would love to host that because I think there's a lot more that you can learn instead of being semi middle of the road, like we are. Um, and so with that, yeah. Yeah. And just because we're in the middle of, from an agnostic standpoint, I think Caleb and I both, we are, we could be biased from a standpoint of like, we, we believe in whole life. Probably we believe in whole life more, like just going to be bluntly say that, like we both have whole life. Um, we, we understand how it works. We understand the and it's a, it's a safe place as business owners to be able to store our capital and know it's going to be there. And so we believe in whole life wholeheartedly. That's why we sell it at 99.9% of all of our stuff is whole life stuff. Um, but we do think that there is a place for IUL, uh, if it's sold right and educated correctly. See you in the next video.