IUL for a Kid?

[ATM]

That just isnt true. If the 529 plan is invested in the exact same indexes, a 529 will almost always have more funds in it than an IUL. the IUL will miss out on all the index dividends that IUL & FIA dont receive, the IUL will have internal costs for the insurance. Most states give a tax deduction for contributions, so instead of paying an IUL load of 6% on every payment, they may actually get paid 4-10% in state tax deduction. lastly, a 529 distribution is tax free if used for college whereas an IUL is only tax deferred or tax free if you borrow from it, not merely take the money out.

So I am going to quibble with the first part of your argument regarding dividends.

Dividends are built into the stock price. A stock that has a 5% dividend and is $100 the day before it trades ex-dividend will trade at $95 the day after. If we measure the index value at any time during the year we trade with accrued dividends of some amount.

It is why dividend selling can be a FINRA violation.

 

[Allen Trent]

So I am going to quibble with the first part of your argument regarding dividends.

Dividends are built into the stock price. A stock that has a 5% dividend and is $100 the day before it trades ex-dividend will trade at $95 the day after. If we measure the index value at any time during the year we trade with accrued dividends of some amount.

It is why dividend selling can be a FINRA violation.

no. I am merely saying if you take a look at every year for the last 100 years say, there is a chart that shows how the S&P 500 stock prices moved & also a separate chart that shows how those same years posted with not just the stock price move, but also the credited dividends. If I recall, the dividends are nearly 40% of the returns of S&P 500.

IUL & FIA dont get those dividends.

Here is chart below showing the impact of reinvested dividends that you wouldnt see in an IUL. for the last 50 years, dividends reinvested was a 78% difference on returns. $10k invested would have a difference of $1.3M over the 50 years even counting the negative years. Again, an IUL might make up some by having 0 for the negative years, but I dont believe you can overcome missing out a tax deduction for 529 contribution, true tax deferral & tax free without borrowing, COI v no COI, dividends of the underlying stocks.

Again, I own tons of permanent life, annuity, stocks, funds, but for all the previous reasons, I also own large 529 on all my kids & dont believe there are any reasons to justify an IUL on a kid for college savings (one on the parents or even better the grandparents might be a better option)