IUL for a Kid?
- Thread starter MINewBeginning
- Start date
What parameters to qualify for preferred? Curious...
Jeremy Hill
New Member
- 3
Cause you can use an IUL as a way to start saving for your child's college savings and for their retirement. Did you know that if you were to start when they are born and set the IUL up correctly with making an initial deposit of 1500 and 175 to 200 a month, by the time they are 65 the cash value could be 1.5 million or above? Also, once they start working if the monthly premium is increased they could use the cash for college and still have over a million dollars by age 65 and you are leaving it to them tax-free and protected from the estate tax or aka death tax.
- 2,195
I challenge the idea that IULs are a great way to save for college if the creation of the product is within the child's lifetime.- [Within an 18 year old time frame] in comparison to other options.
Jeremy Hill
New Member
- 3
What he/she means by the max fund has nothing to do with the benefit's size. A better description is Maxfund/ minimum death benefit with increasing benefits.
This means that the maximum amount of the monthly premiums are going into the cash account vs. having a higher death benefit and having the majority of the premium going to the benefit.
A MEC policy means that the death benefit will keep increasing every time the cash value gets too close to the benefit value.
This means that the maximum amount of the monthly premiums are going into the cash account vs. having a higher death benefit and having the majority of the premium going to the benefit.
A MEC policy means that the death benefit will keep increasing every time the cash value gets too close to the benefit value.
- 10,328
If your IUL isnt performing at its max by year 18 then you did something wrong or its a crap product in the first place. (renewal rates aside)
If you compare an IUL (or a WL) to alternatives with the same risk tolerance, it should be a neck and neck comparison. But that means comparing it with fixed rate investments that do not take on market risk.
Jeremy Hill
New Member
- 3
While IUL's are not always the best choice to choose for college savings. They do usually perform at or above the rate of a 529 plan. Maybe a 529 college savings plan is what's best for one family and not for another.
For someone who wants to put back more than a 529 plan would allow and doesn't have children to pass it onto if one child doesn't go to college and doesn't want to pay the penalties that a 529 would charge for not using it for college than an IUL is a great choice.
For someone who wants to put back more than a 529 plan would allow and doesn't have children to pass it onto if one child doesn't go to college and doesn't want to pay the penalties that a 529 would charge for not using it for college than an IUL is a great choice.
- 4,573
No, that is not what a MEC is and isnt anywhere close to what it means
- 4,573
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.
Listen, I own a lot of permanent life on myself, my wife & all my kids and over-fund many of those plans. however, I hate reading these kinds of threads that are fraught with factually wrong information on how plans do or dont work. Considering load fees, annual policy fees, internal COI, it is near impossible to get enough growth in a life product in 5-18 years to make it work for college. on some occasions maybe a grandparent can insure themselves & max fund enough, but almost impossible to do so when using the child as the insured, especially in todays lower cap/spread marketplace
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