Jeremy Schneider--All CPAs, CFPs and FInancial Advisors Hate IUL (My Response)

Jeremy Schneider is a financial guru who claims to have retired at the age of 36 with four million dollars.

He recently shared an anecdote about a young millionaire who owned around $90,000 in cash value life insurance. The reaction of the host was quite interesting, as none of the other millionaires interviewed for the show brought up life insurance as a means of building or holding their wealth.

If you scroll around on social media though, there is a huge number of financial gurus recommending investing in Indexed Universal Life Insurance because of lax legislation that allows the conflation of the insurance product as an investment vehicle.

The trouble with Jeremy's dismissal of the IUL product is that he fails to distinguish between the deceptive practices of unscrupulous insurance salesmen and the product itself.

He also makes the incorrect comparison by saying indexed funds outperform the IUL over time, but that's like comparing stocks to bonds. They aren't the same thing.

If he were to acknowledge that IULs had a proven track record of between 5%-7% net of fees over time without taking any more stock market risk than you are accustomed to in your savings account, then he would undermine his anti-IUL narrative.

His gimmick only really works when he compares the IUL to a portfolio entirely composed of stocks, but when you consider bonds, an entirely different narrative emerges.

Jeremy Schneider also fails to acknowledge the reason that 70% of all people over the age of 50 buy the IUL is for the long-term care advantage. IUL plans with a chronic illness rider give you the opportunity to access up to 25% of your death benefit to pay for long-term care.

In the event you die without ever having the need to use the long-term care coverage, your heirs still get the death benefit, so there isn't that sensation of paying for something you hope you never have to use.

As for his claim that no financial advisors would ever recommend an IUL, there are a number of experts and advisors that support the recommendation of the IUL.

Ed Slott, America's IRA expert, is a big fan of cash value life insurance as a part of retirement planning.

What Jeremy is really addressing is the number of financial gurus on TikTok claiming that historically only the rich used cash value life insurance to build their wealth. The narrative is clearly false, and it's important to realize that the IUL is not in competition with stock market investments and has some unique features that make it an attractive compliment to tax-free investment strategies.

For almost all the millionaires mentioned, there is a case to be made for the IUL in their retirement strategies.

 

Mentioned in this episode:

David's books: Power of Zero, Look Before You LIRP, The Volatility Shield, Tax-Free Income for Life and The Infinity Code

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