You should NOT get an IUL if...

Hey guys, welcome back to the channel Cash Value Life Insurance Reviews. I'm Brady Watkins here with Matt Decker and Aaron Benson. And today we are going through reasons not to get an IUL. Matt, you want to share the first reason? I would love to take it away. Thank you, Brady. We do talk to a lot of people. I think we're up to about 20 reviews every single week from new clients that are just looking for some help. And we're happy to provide that help. And throughout that process, we talked to a lot of people that should not be purchasing an indexed universal life insurance policy. And so the reason that I came up with, and just to provide some context for what we're doing here today, each one of us is going to kind of give you a little, our own flavor of the type of person that shouldn't be looking at this as a strategy. And so the one that I came up with is IUL as the savior. And what I mean by that is we get a lot of people that for whatever reason, maybe there's someone in their life, a financial advisor, or a friend has given bad advice and they've made maybe a mistake with their finances, or maybe someone has a lot of credit card debt, or maybe they have a hundred thousand dollars in student loans, or it could be any number of reasons. But the point is they come to us expecting that an indexed universal life insurance policy is going to solve all of their problems. And unfortunately, we have to be the bearer of bad news in that situation, because there's no such thing as a product that can solve all your problems. We love indexed universal life. It certainly serves a role, but it doesn't necessarily solve problems that were created in the past. It can be a tool to use to solve some problems, but it's not going to solve all your problems. It's not a magic wand that they can just wave around. That's exactly what I'm saying. It's definitely not a magic wand. And we've seen everything from, I'm going to use this to pay off bad debt in a year or two. I think we just did a video about early access to an IUL policy. I think it was the real estate video. And all the same critiques there apply here with IUL being a savior. It's absolutely not a savior. It can be a great thing. It can be a great addition to your portfolio. But if you're buying an IUL to help cover up the sins of the past, I would say it may not do that very well. Anything that you guys have to add on using indexed universal life insurance as a savior? I think you said it perfectly. I think that it's a great complementary tool to what else you're also doing. It's crucial to have that sort of framework in considering this as a And I think this is really popular because you see so many people on Instagram, TikTok, any social media who are pitching it, who only can sell that or obviously trying to sell a product. And they're pitching it like it's this perfect vehicle. That's exactly right, Brady. In fact, I would say most people that see this product as the thing that's going to solve all their problems. And a lot of times too, it's not only going to solve all my problems, but it's going to take very little resources from me to fix the problem that I've created. And most oftentimes they come from a TikTok or they come from an Instagram or some social media channel where they see a one minute video with absolutely no context provided, 100% sales pitch. And man, you should avoid that. Because those personalities, they often aren't true advisors. And when you're a hammer, guess what? Everything's a nail. This is the answer to your problem. Just not real. That's exactly right. Yep. So we got other reasons. Aaron, do you want to share maybe another reason that someone might not get an IUL? Yeah, absolutely. Well, as Brady mentioned, there's so many good reasons too. But I think it's important to show both sides of the story here. And I think one that we also see often is the person who wants to compare the returns or the performance of this type of product to their other investment portfolio, whether it's a stock portfolio, their 401k, a mutual fund portfolio, any sort of market-linked or equity-linked type of investment. And the criteria they're going to use to judge this is, well, does it outperform? Does it do better than what I'm already doing? And I think starting off from that perspective, you can only end in the wrong place because this type of vehicle, one of the things we love about it, the versatility, the different options, the way you can mold it and change it to fit your goals and your needs makes it a completely different category of solution than a stock portfolio, a mutual fund portfolio, or another retirement account. And so I think starting off with the wrong expectations, you are going to look at this opportunity or this IUL policy through the lens of, will it outperform? Is it a way to beat what I'm currently doing? And the irony is, depending on the market conditions of that swath of time, let's just use 10 years, for example, it's possible if it's a rough 10 years in the market, your IUL could actually outperform a mutual fund portfolio, for example. Probably would. It probably would in that category, in that 10 years. Yeah. But to only decide or to set your expectations on, well, I will do this if it performs like that, I think is just starting off in a bad place to begin with. And so really this is a way to look at diversifying what someone's currently doing, both from a tax perspective and maybe from a fixed investment, limiting your downside risk, all of those kinds of things. But adding those details and keeping those important details in mind when comparing it to your other investment or planning options out there is crucial, not weighing this or judging this based on will it outperform my other portfolios? I wish that I would have came up with that. Well, we see it all the time. The reason I like your story is because it's not so much about the answer to the question, can this beat what I've got? That's not the reason not to. The reason not to in the story you're telling is it shows that you have the wrong mindset because you're saying, I'm doing this, but if I wholesale change this and do this instead, will I be better? And that tells me that that's someone who's looking at this in a silo. They're not looking at this comprehensively. And Aaron and I actually just did a video on diversification and that would be the exact opposite of diversification. Hey, I'm doing this, but if I stop doing this and do this instead, will that be better? Well, maybe, but you're still in the same place of having all your eggs in one basket and hoping that the one thing that you've chosen is the best thing that you could have chosen when no one in the world can tell you what the one best thing to do is because no one has a crystal ball. I love that as an example. Yeah. And I think going back to what people are sold on, if a TikTok video starts with, do you want to gain 12 to 14% on your money and have no downside risk? Is that how they start? Probably. I mean, I think a lot of them do start and you know, Hey, this is the policy for you. You know, if that's like you were saying, it's just the wrong mindset as you're approaching what vehicle to use. That's right. Brady, what you got for us? So, uh, one big reason that I, uh, have seen from doing a lot of discovery calls kind of plays at a lot of different ages, but really the reason not to get an IUL is if you have a short time horizon, uh, for accessing or using your dollars. So the main goal would be to use it in a relatively short time horizon. So we get, for example, that's a good one. How short, you know, I would say if you're definitely, if your money is wanting to be accessed within five years, then this is not the product for you. And we have a lot of people, for example, who are wanting to maybe pay for their kids' college next year or retire next year. Uh, we, we have a lot of people who are thinking I can put dollars in and I can take it right back out to take advantage of the loan provisions or positive arbitrage or things like that, that absolutely can happen, but they take time. And, you know, another thing is these policies, the reality is they have fees on the policy and they are, uh, you're paying majority of the fees, the first 10 to 15 years, depending on the product. And so when you're taking out dollars and trying to count on those, as you're paying the heavy part of the fees, that potentially could be a problem. And you're probably going to be left with less than what you think. I like yours too. I tell people all the time index universal life or life insurance in general might be the worst short-term vehicle that's ever existed, uh, because it has all the fees in the early years. Now that doesn't mean it's a bad vehicle. It's a phenomenal long-term vehicle. It's incredibly efficient long-term. It's one of the most efficient income generators when you factor in the tax reality and the risk reality. However, it's a terrible short-term vehicle. And I love how you said that it's all about expectations. You know, you can access your money in year one, but if you're paying $500 a month, you might have $700 in your cash in year one. And so by its very nature, like there's no, there's nothing there really to show for in those early. I like this one too, because it, it kind of, uh, covers the fad we've seen lately about using IUL as a means to store your real estate investment savings that you've got, you've got money for a down payment. Maybe it's for your, your first home or it's for an investment property and you're not ready to buy it yet. You haven't found the place yet. And your money's parked somewhere. You're not really excited about what it's returning. And you come across this IUL idea. I know I want to buy a house in the next 12 to 24 to 36 months. Let me put this money in the IUL because it's obviously awesome in every way, right? So let me just use this and then find out the hard way a year or two or three years later that it was a bad idea. And I would add to that most oftentimes when it's the wrong, there's a right way and a wrong way to do it. And we actually just covered this in the real estate video that Greg and I just did. So if you guys have, if you're looking at real estate and you want to purchase real estate using an IUL, you absolutely can. Don't hear us say that you can't. We did a whole video on it. You should check it out. We'll link it in the description below. Maybe we'll put a call tag above. Uh, but it's, it's all about your expectation. It's all about how much access you expect to have in those early years. And if you're paying a large enough premium, you might very well be able to purchase, uh, use your IUL as a down payment for real estate in year three. You could, but you gotta be paying a heavy premium. You're not going to do that on a thousand dollars a month. You're not going to do that on $2,000. And you're going to want some decent index returns in those first few years, which no one knows that's going to happen in advance or not. Yep. Yep. So I think another thing just hitting on this is it's all about, like you said, setting expectations, knowing exactly what strategy makes most sense for you. And if you're not working with someone who's doing that, who's just selling you on what it can do versus actually seeing it play out. I think that's really important as well. That's huge. I would just add, uh, if you want to explore IUL as a solution for you and you're not sure, Hey, is this going to be right for me or not? The last thing anybody at our office wants to do is sell you a policy. That's the last thing we want to do because selling you a policy doesn't do anything for anyone. Because if you have short term time horizon, we could be giving you the worst thing possible for your situation. And that creates a problem for you, creates a problem for us, creates a problem for the insurance company. So that's not what we're interested in. What we're interested in is helping people make good decisions with their dollars. And so if this is something that you're considering, you should talk with somebody who's an expert in this space, who's going to look out for your best interests, who's going to be a fiduciary, who's going to listen to what your goals are and give you honest, objective advice on whether or not this is something that's going to actually get you closer to accomplishing your goals or make it harder to accomplish your goals. And you should want the answer to that question. And if you're not getting that from the people that you're currently working with, you should book a discovery call with us. My guarantee is this, you're going to like us because we're going to take care of you. So you can book a discovery call. You can use the call out card above. You can go to our website, leveragewm.com. Up at the top, you'll see the navigation. There's a spot to ask us a question. There's also a spot to book a meeting. You'll probably talk to one of us and we can't wait until that happens. Until then, take care.