Are you spooked yet? 👻 Let’s talk about IULs, but first? Be sure to follow @clobaremoneycoach for money tips daily. Enter: Indexed Universal Life Insurance. These life insurance policies put a portion of the premium you pay toward a term life insurance policy and the rest of the money is put into a cash value of the policy... after fees are taken out. That cash value is then credit with interest based off an index, like the S&P 500. The amount of interest the account is credited with// well it’s up to the insurance company and it can change at anytime. It kind of serves as a forced savings and if you pass— not only do your beneficiaries get the policy but they also get the cash value of the policy- tax-free. One of the cool features of an IUL is that you can borrow against that savings account— again, tax free. But if you fail to pay it back, it’ll take that out of the death benefit. Seems decent right? Well here are my issues with IULs. 1. Fees on fees on fees on fees. Any profits you may gain with the cash value are eroded by sales commissions, sales charges, administration fees, mortality charges and surrender charges. So sellers love to announce the tax free growth of your policy, but they often fail to equally highlight just how high the fees in the policy are. According to Forbes, those fees can be as high as 8% so you really need to do your due diligence when checking these out. 2. Capped earnings Remember that Index the policy gets credits against? Well, that is capped. So let’s say the S&P 500 earned 30% like it did last year, If your life insurance policy is capped at 15%? Well. You only earn 15% cause insurance companies gotta get paid, man. 3. Rising premiums. The older you get the more expensive term life insurance becomes so the amount that’s getting socked away in that cash value dwindles away- cause you gotta pay your premiums for life insurance that you may or may not need. Personally— I’m team max out all your tax advantaged accounts, and get term if you need it. Hbu? Opinion only, always do your own research. #investingforbeginners #wealthbuilders #financetips #fintoks