Need advice on moving forward or not with this offered IUL

[missmae]

@superdan I have a Roth 401K, almost maxed out. What is a mega backdoor roth option?

 

[superdan]

@missmae You need to have a 401(k) that allows you to make after-tax contributions. If yours allows this, you can use these to contribute up the annual max of employee+employer contributions, which is $66k in 2023. Then you take the after-tax contributions and do an in-service non-hardship withdrawal, if your plan allows these. Then you immediately roll over that money to a Roth. It’s kinda complicated so you’ll want to find a better explainer. You can also do a regular (non-mega) backdoor Roth. It’s a lot easier and I would do it first for that reason, then consider mega. But you may not even have the option.

 

[888_apologetics]

@missmae What rate of return is this illustrated at? This is very, very important… What is the floor? 0% or 1%?

What kind of bonuses are being illustrated? Are they guaranteed bonuses or non-guaranteed bonuses? Non-guaranteed bonuses would mean the carrier can make changes to them (usually means they lower the bonus, or stop paying it all together)

What does this look like when it’s stress tested? Run at a lower rate of return and/or hitting floors once or twice every 10 years? Average floor would hit 2-3x every 10 years.

Cap rates - what kind of carrier, stock or mutual? How has the carrier adjusted their caps in the past on both inforce business and new products? Some carriers lower caps on inforce business in order to prop up the caps on new products for better marketability / better illustrated values. Aka - drive new sales.

Again, stock or mutual? - do you understand the difference between the two? Stock carriers have stock holders to answer to (profitability) and mutual carriers do not.

Piece all of that together and ask yourself if you are comfortable with it.

At the very least you should be shown more than one carrier of the same product type if you’re really dead set on IUL.

IUL can be great, I own one myself - but it is one of the most complex financial products that exists… seriously. And it’s very important, at least in my eyes - that the policy holder understands it’s basics, the moving parts, and variability in outcome.

 

[missmae]

@888_apologetics It’s calculated as an estimate at 8.9% from the average past 20 years. The floor is 0%.

Not sure there are any specified bonuses though.

I understand it’s index fund on S&P500, don’t know if it’s mutual or stock. I dont understand the difference.

Although I asked my agent many questions, I still don’t feel I quite understand it. I feel as if they want people to decide/sign with the least amount of information.

 

[888_apologetics]

@missmae Mutual carrier vs stock carrier

A Mutual company is policy holder owned
A Stock company is just like any other publicly traded entity

 

[888_apologetics]

@missmae Is this all you’ve been shown/given? These are only ledger pages.

I could be wrong about this.. but these appear to be extracted values from an excel and put into their own ledger presentation but it is missing critical info — like the illustrated rate of return. The full illustration is very important for disclosure purposes and your education.