@iuladvocate @mbontrager5 Oh ok well you misunderstood then. I just want to see the historical performance of this uncapped index with 0.75% floor. Please share!
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Nicholas VanGeest, CFP®, CPFA
3.2K posts
Nicholas VanGeest, CFP®, CPFA
@vangeestguy
https://t.co/JjC51kYdkf
เข้าร่วม Eylül 2009
299 กำลังติดตาม140 ผู้ติดตาม
@vangeestguy @mbontrager5 This was a comment to your request: “Careful. He’ll show index returns but not the actual…”.
That kind of comment is implying to publish actual performance to X.
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Shoving $2.5 million into a life insurance policy at age 64 requires a massive death benefit to clear IRS guidelines. The fees on a death benefit that large at that age would completely eat the cash value alive. The IUL doesn't sit flat, it goes negative because fees are still deducted while zero growth is credited.
Assuming that this 64 year old was about to retire, a fiduciary financial advisor would have assisted with a gradual more conservative asset allocation and the market drop would not have been so steep.
But let's say it was left in the market from then until now, it would be worth almost $12 million today.
These IUL hypotheticals are entertaining though.
IUL = Illustrations Usually Lie
IUL advocate@iuladvocate
In October 2007 a 64 year old had $2.5 million set aside for retirement. By November 2008 it was $1.2 million. Thirteen months. Cut nearly in half. He did nothing reckless. The market fell 37 percent and took his retirement down with it. Now run that same $2.5 million inside a properly structured max funded IUL. 2008 credits zero. Not negative. Zero. The 0% floor means a down year doesn't subtract. The index drops 37 percent and the cash value just sits there and waits. 2009 the index recovers and his money compounds forward from $2.5 million. Not from $1.2 million. That is the whole thing. He never had to climb back from a loss he never took. Sequence of returns is what quietly wrecks a retirement. A zero you can retire on.
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@mbontrager5 The past performance of these proprietary volatility controlled indices is a secret 🤫
You just have to commit to a lifetime strategy and then hope it works out.
Properly structured!
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@Blackoutjoe2 @mbontrager5 Always be compounding!
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@mbontrager5 Curtis Ray! I remembered his name. Hopefully he’s still compounding those premiums
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@iuladvocate @mbontrager5 You’re saying this “uncapped index” historical returns are a secret until the policy is in force?
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@vangeestguy @mbontrager5 No, you want to see returns in an actual policy. Do you recommend to screenshot an actual policy and share here?
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@iuladvocate @mbontrager5 You’re taking a long time to prepare this one. The returns must just be that fantastic.
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@iuladvocate @mbontrager5 Ok so since you cherry picked TA for the 0.75% floor, show me the performance of their uncapped indices that offer the 0.75% floor.
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@iuladvocate You keep saying these indices are uncapped. Can you give me performance info for the last 10 years of these uncapped indices?
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Many carriers have indexes without cap these days.
Sequence of return matters for someone who retired in the 2000s
The fees on is minimal in a max-funded policy, usually less than 1% per annum over the life of a well structured policy.
Interest on a variable loan is usually paid back into the policy by yearly crediting over the interest rate.
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A §401(k) deduction at 32 percent feels like a tax cut. It isn't.
It's a deferral.
The tax didn't vanish. It moved down the calendar.
At 73 the RMDs begin and you pay whatever the rate is that year on a balance that compounded for four decades. You deducted the seed.
The whole crop gets taxed.
Run a max funded IUL beside it.
Premium pushed to the §7702A MEC line. Death benefit held down under the §7702 corridor so the per unit charges stay small.
Cash value credits off the index with a 0% floor. No 1099 in April.
At 65 you draw income through a participating loan under §72(e). Tax free.
The cash keeps crediting as if the loan were never taken.
Now retirement runs on two spigots.
The years you want a lighter RMD you lean on the policy instead.
You pick the bracket. That is the entire point.
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@iuladvocate @mbontrager5 Can you show us what the cost of insurance was for the 65 year old in that year that he got 0% return but still ended up with a lower balance?
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You’re arguing against something I never said.
The example wasn’t “take $2.5 million at age 64 and dump it into an IUL.”
It was a retiree with $2.5 million of accumulated value.
A properly structured max funded IUL is typically built over decades to reach that cash value. Nobody is suggesting a single $2.5 million premium at age 64.
And yes, charges exist. The point of the example wasn’t that an IUL has no costs. The point was that a 37% market loss requires a 59% gain just to get back to even, while a 0% crediting year doesn’t create that hole in the first place.
It’s hard to critique the argument when you’re critiquing a different argument.
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@iuladvocate Sequence of returns doesn’t matter during accumulation. An 8% average return.
You’re also forgetting the capped gains which would have limited your returns in 2023, 2024, 2025.
And also forgetting all the fees, including interest on the loan.
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Your model runs a straight 8% with zero down years. That line doesn't exist in a live index, the S&P closed 2022 at -19.4%. In a max-funded IUL that year credits 0% instead of handing back a fifth of the base, and the next gain compounds off an intact number.
That's what flat-line math can't price: the floor strips out sequence risk, not just the tax piece. And that $6,300 seed grows and distributes tax-free under §72(e), you keep the whole distribution, no second haircut on the way out.
Same seed, no down years. That's the design.
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@BennHillBall @iuladvocate @FINRA Unfortunately he isn’t regulated by FINRA. There’s essentially no oversight on the CVLI contracts or fixed annuity only producers
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@iuladvocate Cherry picking data to not include anything above the gains cap. This is completely misleading to talk about floor protection and not mention upside limits. @FINRA
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Start with $100,000 and run it down a five year index path: +8 0 +6 4 +10.
Inside a properly structured IUL the 0% floor only matters in one of those years.
Year one credits to 108,000. Year two sits flat at 108,000.
Year three lifts to 114,480.
Year four the index falls 4%. The floor holds you at zero.
Still 114,480.
Year five adds 10% on the whole balance. 125,928.
The same dollars riding the raw index give back that 4% in year four then spend all of year five just climbing back to even. They land near 120,900.
Identical gross path. A $5,000 spread on $100k.
The difference was the year you never had to recover from.
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@joshwaxman__ That’s crazy. Banks get paid but life insurance companies don’t I guess
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You put $100,000 in the bank. They pay you almost nothing..
That's the entire model. Your deposit funds their loans. Your interest funds their profit. The credit cards, the mortgages, the lines of credit, all built on capital you handed them for free. In that equation you're not the customer. You're the inventory.
The question isn't where to put your money. It's who's earning it.
Comment "BANK" to flip the spread.
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@iuladvocate So what incentive does the insurance company have to keep the caps high? Risk controlled indexes with 3-4% caps in a lifetime strategy… exciting!
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Day 11 of 15. IUL Reality Check.
"Caps are whatever the carrier feels like." Half true. The carrier sets the current cap.
It can't drop below the guaranteed minimum printed in your contract the day it's issued.
Allianz Nationwide Transamerica all disclose both numbers. The guaranteed minimum cap runs 3 to 4 percent.
That's the floor under your ceiling.
No bad year no rate environment no internal decision lets them go beneath it. Ever.
The current declared cap sits above that floor. Right now that's 9 to 11 percent at A rated carriers.
Two numbers. Both belong on your in force ledger.
One they can move one they contractually cannot.
Ask for the guaranteed minimum cap in writing before you sign anything.
Tomorrow Day 12: the multiplier riders that can push crediting above the cap and what they actually cost you.
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@mbontrager5 @iuladvocate Did we get sucked into one of those Finance Guy-esque accounts that is deliberately posting bad things to farm responses?
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@vangeestguy @iuladvocate Reading comprehension is very difficult for this poster. Tries to appear credible but can’t even list their name.
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Reality Check
S&P 500 Returns:
2022: -18.1%
2023: +26.3%
2024: +25.0%
2025: +17.9%
IUL advocate@iuladvocate
Day 3 of 15. IUL Reality Check. IRC §72(e) lets cash value inside a properly structured IUL compound with zero annual tax drag. No 1099 showing up every spring to take a bite. $200,000 of cash value crediting 8% keeps the full $16,000 that year. Nothing skims off the top while it sits inside the wrapper. Run untaxed compounding like that across 40 years and the gap runs into six figures. Tomorrow Day 4: the 0% floor. Quick gut check before then, what did the S&P do in 2022 and what would a 0% floor have done sitting next to it?
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@iuladvocate The long US Treasury fund you pointed to yesterday would have been +25% in 2008
A balanced portfolio can give you options to control sequence of returns risk. Nobody would recommend a 100% equity portfolio when you’re about to start distributions.
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Day 5 of 15. IUL Reality Check.
2008. The S&P 500 dropped 37% in a single year.
Picture a 65 year old drawing retirement income that year. Every dollar pulled comes out of a balance that just got cut by more than a third.
The loss and the withdrawal stack.
The account never recovers because there's less left to grow back. That's sequence of returns risk and it's brutal in the first years of retirement.
Now run that same year through a properly structured IUL.
Index falls 37%. Your indexed crediting is 0%.
The 0% floor means the cash value didn't take the hit.
Charges still apply but the market loss never touched you. You draw your income off a balance that's intact.
One feature. One year.
It's the difference between money that lasts to 90 and money that runs dry at 81.
The early retirement crash is the one your distribution math can't survive and the floor is what takes it off the table.
Tomorrow Day 6: how a participating policy loan lets you spend that cash value while it keeps crediting interest as if you never touched it.
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@iuladvocate @mbontrager5 You pointed specifically to returns in this thread.
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@mbontrager5 Your reality check has nothing to do with the quoted post. It’s about taxes, and you are posting about returns.
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@iuladvocate A lot of these are hard to find performance on, but here’s how the Allianz index has done the last four years.
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Claim 1: the 12 percent cap caps your upside. Real answer: modern IUL designs use uncapped indexed strategies. Transamerica's Balanced Uncapped index, Pacific Life's Pacific Index Performance LT, Allianz's Bloomberg Dynamic Balance, Nationwide's JP Morgan Mozaic II. Volatility-controlled. Par rates above 100 percent. Zero cap on the upside.
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Personal Finance Club's 'Is IUL a Scam?' is the single most-shared IUL critique online. Practitioners have been sent this link for years. Here is the actual practitioner answer, claim by claim. Ten beats.
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@mbontrager5 The uncapped indexes are risk controlled proprietary indices that will never perform like true index funds.
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@joshwaxman__ @mbontrager5 do you have too much locked up liquidity?
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If you're earning $500K+ and your financial strategy doesn't include these four things, you're leaving serious money on the table every single year.
Which one is missing from yours? Drop the number in the comments. Or comment "BANK" for the full framework.
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#raindelayquestions this is just an ask. If you answer a question you need to “like” it so I can show my friends I got props from JBen
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