How do numbers play out for an IUL in terms of cash accumulation

[tannerking1]

IULs are simple. They aren't overcomplicated or bad. People just don't understand what situation to use them in, but in all honesty that is simple as well.

1. Did person already max out their 401k? If yes continue
2. Did person already max out or make too much money to contribute to their Roth IRA if yes continue
3. Can person invest X amount of money probably around $500-$1500 depending on policy if yes continue.
4. Does person already have a life insurance policy, but wants additional protection or doesn't have a life insurance policy. If yes to either one continue.

All of this is very simple. My brain was overcomplicating it, but in reality the target prey is a very niche audience, but simple to hunt and take down. My only question is...

The number potential. I need to be able to make a decent guess into how much money someone can make from this policy or use it for tax free loans. This is where it gets very complex and I can't get a really good answer from this and the numbers aren't really make sense here as well.

Example:

Mary Sue takes an IUL for with a 300k death benefit. She decides to max fund the policy at $1500 a month and does this for 15 years. Her money is contributed to an S & P.

S&P 500® One-Year 100% Participation – those who believe the index will perform at an average or slightly above average rate might be more comfortable with this strategy.

She used the S&P 500 One Year 100% Part for 15 years straight while paying $1500 monthly for her policy. How much money does she accumulate in value over the course of the 15 years.

The S&P for simplicity magically stays at a rate of 7% for each of those 15 years.

(1500 x 12) x 15 = 216,000 of total money spent into the policy (max funded).

Using the example above what are the strategies she can partake in with this policy now? How much money did she accumulate in cash? What can she do with the death benefit?

 

[ativyl]

@tannerking1 I did some posts on how to estimate likely returns from various investment options in an IUL assuming someone does not know options:

https://www.reddit.com/r/IncomeInvesting/comments/1b5nk8h

and

https://www.reddit.com/r/IncomeInvesting/comments/1bewfrx

I certainly would not consider this "simple" as an investment. You are talking the return on option spread strategies. And for today's IULs spreads often off synthetic volatility-controlled indexes like you would get in a hedge fund. Options spreads and hedge fund portfolio design are not "simple".

 

[resjudicata]

@tannerking1

1. Earn to much? Do a back door Roth.
2. Do you know how to balance these out to not create a MEC?
   Cause in your example you just created one. Do you know what happens when it becomes a MEC?
3. If there is 100% participation rate there is going to be a cap. Which is going to lower the returns way down on this.
4. Did you just call them prey??

lies agents use to sell IUL

 

[tannerking1]

@resjudicata

1. What is a back door Roth?
2. Yes
3. I know.
4. Yes they are prey and we are the hunters that feast on their hides.

That article was a good read.

 

[resjudicata]

@tannerking1 A back door Roth is a way to contribute to one no matter your income level.

If you do then why did you make a MEC in your example?

Then if you know, then why did you use 7% in your example. It’s never going to average that.

 

[clewis]

@tannerking1 The 7% return every year will never happen. While it may the “average” it is not the actual. iULs are complicated and they are garbage. Wall Street attempt to get into life insurance

 

[clewis]

@tannerking1 “Target prey” is a horrible way to describe a potential customer. Further demonstrating how garbage IULs are