No. of Recommendations: 1
Why is 100% safety of one's principal getting such short shrift in this discussion?

Why is no one mentioning the huge tax-free payoff--much more than I put in--to heirs when (not if) I die?

I would much rather have my $100,000 (upfront policy premium) guaranteed against market risk with a 17% cap and a $400,000 tax free payoff to my heirs than collecting dividends that may or may not cause that taxable strategy to be better than the IUL.

But that's just me. I'm a security addict.


You got some good replies -- all correct and all pointing out important factors that you are either overlooking or giving short shrift to.

The problem with over-emphasizing "safety" is that you can fall for an illusion. The fact of inflation means that getting 100% of your money back in 20-30 years is a large loss in purchasing power.

The exclusion of dividends is also a large cost. Over the last 25 years, that cut the total return of the S&P by more than half. Your final account value would have been only 4 times the initial value instead of 8 times. That's a *very* expensive price to pay for the guarantee.

Not sure how accurate that "17% cap" is, either. From what I read, many policies allow the ins co to unilaterally reduce the cap.
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