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No. of Recommendations: 6
Ray is running numbers with 100% S&P. Dave suggested a better comparison would be to have a 33% reserve and 66% invested in the market.

That would be a worse comparison. IULs were flogged as a long term investment vehicle (long term meaning horizons like saving for college or retirement) that provide market returns without market risk.

Therefore, in order to evaluate that claim one must compare the performance of an IUL with the market over some long period of time. That is the relevant comparison. That's the claim we're examining. And it turns out, that claim is false. IULs don't provide anything close to market returns over those time periods. Not even close.

Worse, the supposed safety feature is an illusion. Even if a major draw down occurs at the worst possible time--like right before retirement--you still have more money with B&H than the IUL. Unless you think there is safety in having less money, that is.

Now the goal posts have moved radically from the original claims. It is no long term vehicle for things like retirement or college that provides market returns without market risk. Now a IUL is being touted a place where you can park money until you can find other things to invest in that are better, and/or for people who want to have a guarantee of $100,000 of liquid cash, etc. Honestly, I lost track of all the side conditions that have been added since the original claims. I think it is easiest just to back up and look at the original question.

Q: Is an IUL a good way to save for retirement or for college?

A: Yes. But only for people who don't actually intend to invest in the IUL itself, and/or wish to have vastly less money over their time frame.

I humbly submit, that's not very many people. For everyone else, IULs are horrifically bad investments that should be avoided in all circumstances.
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