No. of Recommendations: 13
Just as before, I'll say again;
With a zero annual floor, at a 20 year average all-in expense ratio under 1%, and a 90% leveragability at net zero cost (and actually often a positive credit arbitrage,)... nobody's brought forth anything that can outperform.

It doesn't always outperform accounts with deper loss tolerances...

You know, you keep touting that there is 'zero risk' in an IUL, as long as you are willing to pay the fees and limit yourself to the imposed caps. But you seem to ignore a huge risk, especially if one has all of their money in a single IUL.

You are counting on the insurance company to continue paying you. But what if they go belly up? You don't even own any of the stock that your investment returns are based on - all you own is a contract with an insurance company that is belly up. A 'zero floor' on losses isn't going to help you much if your IUL is more than the coverage that your state provides on your policy (and some states don't even cover variable insurance products with their insurance funds).

Sure, it doesn't happen often. But it does happen - check out Executive Life. It almost happened to AIG during the financial crisis, until they got bailed out. And with insurance companies making promises to 'take all the losses' and only guarantee you 'positive returns' (for a fee, of course), the derivatives that the insurance companies offering these type of contracts are hedging themselves with are only as good as their counterparties.

There will be another financial crisis - for 'black swan' events, they seem to happen fairly regularly - it's just a different black swan each time. I'd have to question if the risk of having all of my money invested in an IUL during the next one.

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