Is anyone familiar with this type of insurance? I know the basics of it, but wanted to know if anyone is actually utilizing it or if they would recommend it in any type of way.

Basically, the whole premise of EIUL (Equity Indexed Universal Life) is this:


Buy an insurance policy and also get a "retirement" plan. Money invested in plan tied to equity index (S&P 500)
Tax-free withdrawals (only the cash value of the investment) since the insurance policy is still active.
Variable cap (Assume 12%...if the index does better, you can only make 12%)
Investment floor (Guaranteed 2% gains, never go lower)
Get insurance when you die.


There's more to it, but that's what I know off the top of my head.

The cons are obvious with the limited cap, the fact that premiums for insurance would be higher, etc.

But are tax-free withdrawals and the ability to never "lose" on your investment worth it?

I want to reason that it's not, but only if you have a decent knowledge of investing. However, this would probably be perfect for someone who's not as knowledgeable, of which I know many that fit into that category.

Thoughts?

9/21/2008 1:36:51 AM

it looks like just another flavor of whole life insurance.

it makes the agents a lot of money.

that's about it.

1) buy life insurance
2) invest for your retirement.

don't try to combine the two.

9/21/2008 9:22:37 AM

i agreed with that^

although whole life is not always a bad idea if you buy just enough for final expenses (~$25K)

term insurance is way less expensive, but the downside is that you may be uninsurable when your term is up, leaving you unable to purchase another term policy

i think the best way to do it is purchase a 20-pay (payed up in 20 years) $25K whole life policy and add a 30yr term rider of $500K-$1mil. that way when the term is up you've still got a paid up $25K policy and hopefully a nice portfolio of investments by then

9/21/2008 4:16:30 PM