Whole Life vs Indexed Life Insurance Comparison (part 2)

Recently we compared whole life vs indexed life insurance. We're returning to the topic since folks are often asking us about Whole Life and how it compares to Indexed Life insurance And we're getting even deeper into the weeds this time. It's important to understand your goals when it comes to using Cash Value Life Insurance.

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[WWIIPacificHistory]

Great video. I usually allocate about 25% of my funds to the fixed account to cover the fees and COI in case of a zero year on the indexes I choose.

[johnwebb]

Thank you for finally making this video!!! Great work!!

[TheOpinionSports]

The same Whole Life agents that say IUL won’t perform are the same ones who don’t have any actual examples of an IUL not performing. The best they have are theories and predictions. There are actual annual statement examples out there of IUL beating the original illustration.

[vikalp]

Thanks Mat for making these videos and clearing the basics...before this I did not find a single video which talks based on fact.. whole life gang just bash with a very bad design example as basis and all IUL fav agents do the same with whole life...

Both has its own value and utility and it's ultimately depend on clients goals and need and which product serves it better... If one don't understand both the concepts well, they will always be in favour of one or another.

[timcox]

The problem I have with IUL illustrations is that they do not / cannot show zero years. Financial advisors make a big deal (rightly) about sequence of return risk on investments and tout the benefits of IUL in terms of protection against loss (zero is your hero). But then, on the IUL illustrations, they never show the effect of those zero years. How can you fix that?

[linnyh]

I'm pretty sure returns from wl dividend is higher than fixed account rate since mutual carrier has to give you the profit they make with wl and you are profit source for iul carrier.

[DallinBunnell]

Hmm, interesting. You aboslutely can choose the fixed account. With IUL, the underlying expenses grow every single year, and with Whole Life, they're fixed. Does that change the conversation at all (for purpose, use, risk, etc)?

As far as infinite banking goes, I'd say Whole Life is still more suitable. You can't take loans in most IULs for several years, so you can, but you'll have to wait. And having an indexed loan is more risky than a Whole life participating loan for that purpose. Fixed loans have similar risk, but won't be wash loans for usually 10 years (even though I know WL isn't 100% a wash loan usually, but very close). Like, with Allianz fixed loan, it's not the full fixed account rate that gets credited, but rather 1.97%. So, Iguess what I'm saying, with a fixed loan risk profile, a WL will grow more with loans out than IUL.
When looking for retirement income though, the higher growth in an IUL over the long term does make it a more suitable product (in my opinion).