You are viewing a single comment's thread from:
RE: Junk bond funds (corporate bonds) in your 401K.
Smart moves, @whitesj40! Making just Roth contributions, contributing just enough to max out the company match, and utilizing other tax-free strategies. By the way, what type of universal life do you have? Fixed, indexed, or variable? My understanding of Infinite Banking (as a specific system) is that it calls for the use of participating whole-life policies (whole-life policies from a mutual insurance company that pays dividends to policy-holders) rather than any type of universal life. Or are you just using "infinite banking" to refer to the general concept of using permanent life insurance to build tax-free wealth and a source of funds to borrow money from under much more favorable terms than other types of loan?
Indexed Universal life. Not whole life. Infinite banking can be structured either way but it grows faster earlier on using Universal life. Later it becomes more expensive but by then its big enough to carry the increased expenses and still grow strongly.
Yes, the level premiums of whole life make those policies more expensive in the early years, while the fact that universal life gets more expensive later on means you'll want to max out your contributions in the early years. Some folks prefer whole life for its predictability, while others prefer universal life for its flexibility and the chance to amass a larger cash value. The way I see it, it comes down to knowing what you want and what you're comfortable with.
I do like IULs. Out of curiosity, who's the insurance company behind your IUL? And what type of indexed account are you investing in? One that's tied to a single index like the S&P 500, or one that's tied to multiple indices?
Life Insurance of SouthWest National Life Group. I am using S&P500 index but you can change to whatever you want (Fixed, S&P Indexed or MSCI Index) S&P has done just fine :).
Yes, every IUL I've seen offers at minimum a fixed account and an S&P 500-indexed account, and most people I know who invest in the latter type of account have been happy with it. Some IULs offer a more convoluted type of indexed account that, each month, compares the results of three different indices (like S&P 500, EuroStoxx 50, & Hang Seng) over the preceding 12 months and credits you a weighted average of the three (weighted based on how each index performed over the look-back period). But that means less transparency than a simple S&P 500-indexed account, and some people don't like that.