$100K IUL challenge

Whenever we discuss any investment topic on this forum, we invariably start discussing all the miracle benefits of IUL. So, here is a challenge to everyone. If you can create an IUL with minimum eight percent annual return with no downside risk, this guy will give you $100K to invest. Surprise, surprise, none has taken him up on the challenge yet!

BTW, the guy (Alan Roth) is only person whose investment advice I listen to. Check out his profile. Pretty interesting.


I still don’t understand how IUL works. Maybe I should sit down and think about it a bit more…

First of all, did you guys send me a virus? I fought for 5 minutes in order to copy and paste. WTH?

OK, let’s analyze what he says. Just remember, you got to see what he does for a living, I said it last time in the topic Jil opened days ago, everybody has their own agenda and everybody pulls water to their own mill. Also, he said that in 2009, long time ago when most of IULs were crappy. Nowadays, the insurance companies keep adding bonuses or new incentives

like most of the other emails I received from insurance producers, this one didn’t use any abusive language and I’d be thrilled to earn eight percent annually, without any risk. So I accepted and agreed to fork over $100,000 for this challenge, if he could deliver. The challenger, Brett Anderson, has a website titled Last Chance Retirement.
Will I be forking over $100,000 to buy this product? I had some surprises on this one. Read on.

OK…Big mistake! You as a rep of any insurance company can’t guarantee a return of x% when it’s capped at a certain amount of return, unless the policy specifies certain amount. You can get a policy promising 4% and that’s what you are going to get no matter what the market performs. It is a contractual obligation from the insurance carrier.

Nobody, based on a fiduciary rule, can guarantee any returns unless as I said it’s contractual. I bet this guy Alan Roth can’t guarantee anything because he would be breaking the fiduciary rules. He can see historic returns of any bond, mutual fund and whatever to illustrate their future performance, but he can’t guarantee anything either, unless contractual. I am 100% sure about that.

When we run an illustration, it states it is based on the legal return rate the state dictates, which is about 7% in CA for the particular policy I illustrated days ago. The insured can get more up to the cap of 12.5% or less, that is based on the S&P 500 indexing returns. Last year the returns were 9%. Usually, we prorate the returns in the last 20 years to come up with a reasonable return.
Also, whoever offers you a life insurance policy without filling out a financial analysis is not doing a good job. We, in my office, can’t accept anybody bringing a check for $100K without knowing if he is going to have money to eat next day. It is totally irresponsible and of course you need to do your fiduciary duty of protecting people, not your pocket. That’s why I believe Alan Roth by talking too much made a mistake because he should know that in order to throw $100K into anything, a financial analysis needs to be done. At least he doesn’t mention it.

He says this:

The product - Indexed Universal Life (IUL) Policy
In the challenge, Mr. Anderson promised to bury me in analysis and, at the very least, he buried me in paper. The product features and timing of paying my $100,000 changed over the challenge. Initially, I would get 140% of the S&P 500 index return. Then it was changed to use an option giving me 100% of the index return but a higher cap. Ultimately, he ended up with an IUL from Minnesota Life. The product’s name is Eclipse Indexed Life. I’d hand over the $100,000 up front and would be credited 100% of the S&P 500 index return, with no downside risk in bad years.

He is talking about the crediting options and caps, which I ignore from that IUL. Minnesota life has a good credibility among the insurance carriers.
The agent is telling the truth here, no downside risk of the principal. That’s the goody of these policies. O% return on the downside, the cap when it’s up.

Another statement:
The first promise to go in the challenge was the claim that I could “take out the gains Tax Free for retirement income.” That went out the door because paying the full $100,000 up front disqualified it from IRS rules letting me borrow gains against the policy, as this is technically called a Modified Endowment Contract (MEC). I didn’t consider this a big deal, because I don’t really want to pay to borrow my own money anyway.

I got lost in translation here. It seems he doesn’t believe he can take the returns as loans over the premiums as income. He is wrong. He can put $100K, (providing he can show he earns that amount or more every year. You can get insured for up to 22-25 times your annual income.) then, loan about 75%-80% of the $100K in 10 days. He will have $100K earning up to the specified cap, if any. He does that for 5 years, say he pays $80K in premiums, he will have a good income in his retirement.

Also, in insurance terminology, there’s no “investment” per se.

Death benefit. We have an old agent, who got a policy for her husband and hers. 3 months later, he was diagnosed with stage 4 cancer. He got $373K from the living benefits, went to the doctor, took good care of himself, nowadays he is cancer free. His wife now is an agent in our office and she promotes the policy I showed here.

Good night. Nice article. Going to sleep. We may keep this topic for tomorrow, although I am going to be up and down from my office to running some errands.

Oh, if you see Sue Orman anywhere, the poor woman was destroyed one day arguing about life insurance. She was a total clueless woman talking about what she doesn’t know. Like me. :stuck_out_tongue_winking_eye:

If after removing all the mumbo jumbo of the policy, its return depends on stock market return, why not invest directly into stock market and avoid the commission?

It’s great to hear from you that no return is guaranteed and underlying return is that of stock market.

Death benefit is real but a simple term life insurance is much cheaper and straightforward.


Please do not tell Suze Orman as clueless woman.
She is one of the best financial specialists for common people.
I watched her TV shows, read her Costco financial connections…etc.

I did not counter so far as I do not want to interrupt into your marketing !

Why is she getting crowd? Why is she famous?
She is perfectly right on her statements, be it Roth or Insurance, no doubt.

The basic principle is you tell the truth, you will see followers.

Well, you guys woke me up, before I go to do my chores, some opinions.

I am not here to trash anybody. I just say what I hear and know. I also know the basics of investing your money, as Warren Buffet said, first rule, never lose money, second rule, see rule #1.

Life insurance is not an investment, I, or others for reasons of talking too much may have said something similar, but this is for those who worry about passing away leaving their dear ones without any economic protection. It is not for the gambler in you risking your money in the stock market.
Since I don’t know what you pay every time you invest in the stock market, I leave you at that, I just don’t think that is free to do so, you may have pay broker, agent fees somewhere. Let me know since I am a dumb in that area. I know that management fees are the ones keeping everybody earning a living.

It also brings you to think about the moment you get a stroke, get paralyzed, can’t perform 2 of the daily activities, like bathing, eating, you will need long term care, which can destroy a family if the affected is the bread winner. Most of permanent life insurances nowadays include living benefits, among them, long term care. I dare you to quote any long term care protection out there, it will cost you an eye. Go ahead, research on that cost, you will be asking for forgiveness to mom and pop for being negative about it. In the bay area, it will cost you between $7K to $10K a month to have somebody taking care of you. Think about that, that’s all.

Also, as I said before, this is not an investment where you go rich next day, no, this is a long term, conservative approach to retirement. So, go ahead, invest in the stock market, your money, your future, but again, you may hit payday, or get a 2008 scenario where the market lost 38% all the sudden, for what you will need 76% to recover. This is not for everybody.

As I said, whatever you see, whoever you read or listen to, everybody has a bag of dead bodies behind or a story s/he hasn’t told and their agendas are to bring water to their mill.

She said and I quote: I own 5 homes, I don’t owe a penny on them. Is that the real advise from a financial advisor?

So far, if I am not wrong, everybody says never pay your mortgage, right? Any of you out there challenging that statement? Please respond. Thanks!

See you later!

Watch this video, at 3:08

Long-term care isn’t that big of deal. If you don’t have any money, then medicaid takes care of it. If you have money, then the government makes you pay what you can before medicaid pays the rest. My grandpa had social security and GM pension, so he paid a ton to live in assisted living. Honestly, it’s just another reason to shield assets, because they can only force you to sell certain types of assets to cover the cost of care.

In some regards, it’s better to blow all your money and enjoy it. Then the government will take care of you when you’re old at the expense of others. How many people are going to have good enough health at old age to spend all the money anyway?

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The first statement, many times I have told not to pay off low interest loan. The main reason is that if we invest same amount in some other investments, we stand to gain a lot.

Example: A person, aged between 20 and 40, has 1M cash. He buys a home for 1M, taking 800k fixed loan at 3.75% and putting 200k as down payment. If he is financially savvy, he can invest and get a 8% return, pay tax, still he is well off 2.5% gain. This is almost $20000 gain after tax. He also gets Mortgage Interest Tax deduction on 3.75% which is a bonus.

With this, he is assured at least $20000/year gain every year after tax.

If the same person has 35M net worth and income hourly rate is $1000/hr, still stand to gain $20000/year, but he/she may not prefer to focus on such small sum compared to net worth and income. That is Suze Orman ! For her level, it is not worth having a mortgage, but easy to keep it paid by cash.

When you become like her, you will understand that it is not worth keeping such mortgages !

A lot depends on where you are in your life/career. Early on, it makes no sense to pay down the debt. Keep money invested earning higher returns than you pay for debt. Once you near retirement or lowering your income, then it makes more sense to pay things off, deleverage, and relax.

Peak earning years are 40-55. Although, that’s probably not true in tech unless you make the jump to management.

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OK…Lunch time!

Have a look at this, there’s no way it’s going to be free. Period!

E. Resource Limitations (Property/Assets)

To qualify for Medi-Cal the recipient must demonstrate that s/he has limited resources available. Since January 1, 1989, the property limit for one person has been set at $2,000.

Medi-Cal classifies property as “exempt” and “non-exempt.” Exempt property is not counted in determining eligibility; non-exempt property is counted. If the applicant has more than $2,000 in non-exempt property, he/she will not be eligible, unless the property is spent down for adequate consideration before the end of the application month.

The following property is generally exempt and, therefore, not counted in determining eligibility:
•The Home: totally excluded, if it is the principal residence. Includes mobile home, houseboat, or an entire multi-unit dwelling as long as any portion serves as the principal residence of the applicant, and buildings surrounding, contiguous to, or appertaining to the residence. The property remains exempt if a person in a nursing home or the person’s representative expresses an intent to return home on the Medi-Cal Application and Statement of Facts, or if an “exempt” individual resides in the home, such as a spouse, a minor, blind or disabled child (of any age) or a sibling or son or daughter who has lived in the home continuously for at least one year before the applicant entered a nursing home. Note that when the home is exempt, it can be transferred without penalty and without affecting the Medi-Cal eligibility.
•Other Real Property: can be exempt if the net market value of the property ( assessed value or fair market value, whichever is less – minus any encumbrances such as mortgages, loans, etc.) is $6,000 or less and the beneficiary is “utilizing” the property, i.e., receiving yearly income of at least 6% of the net market value. Property used as a business can also be exempt if it meets the standards under the program, i.e., it is actually used as a business, reported to the IRS as such, etc. – see below for details on other real property and business property.
•Household Goods and Personal Effects: totally exempt.
•Jewelry: for a single person, wedding, engagement rings and heirlooms are totally exempt and other items of jewelry with a total net market value of $100 or less are exempt; for spouses, when one spouse is in a nursing home, there is no limit on exempt jewelry for determining institutionalized spouse’s eligibility.
•Cars/motor Vehicles: one vehicle used for transportation is totally exempt.
•Whole Life Insurance: policies with a total face value of $1,500 or less. If the total face value of the policy or policies exceeds $1,500, then the cash surrender value of the policies is counted toward the $2,000 cash reserve. If the cash surrender value exceeds the $2,000 cash reserve, the applicant will not be eligible unless, he/she reduces the value of the policy.
•Term Life Insurance: totally excluded.
•Burial Plots: totally excluded.
•Prepaid irrevocable burial plan of any amount and $1,500 in designated burial funds: There is no limit on the amount of the irrevocable burial fund, but the $1,500 in designated funds must be kept separate from all other accounts and designated as a burial account. Accumulated interest on burial funds is also exempt.
•IRAs and work-related pensions:
◦ In applicant’s/beneficiary’s name: The balance of the IRA or the pension is considered unavailable if applicant/beneficiary is receiving periodic payments of interest and principal.
◦ In spouse’s name: The balance of the IRA or Pension fund is totally exempt from consideration and is not included in the community spouse resource allowance (CSRA).
•Non work-related annuities: ◦ Annuities purchased prior to 8/11/93: Balance is considered unavailable if applicant/beneficiary is receiving periodic payments (of any amount) of interest and principal.
â—¦ Annuities purchased between 8/11/93 and 3/1/96: Annuities purchased between 8/11/93 (the date the federal law changed) and 3/1/96 (the date California law changed) that cannot be restructured to meet the new requirements will continue to be treated under the old rules (see above). Written verification from the company or agent who issued or sold the annuity must be obtained stating that the annuity cannot be restructured.
◦ Annuities purchased on or after 3/1/96 by the applicant or the applicant’s spouse: the individual and/or spouse must take steps to receive periodic payments of interest and principal; payments must be scheduled to exhaust the balance of the annuity at or before the end of the annuitant’s life expectancy. Annuities structured to exceed the life expectancy will result in denial or termination of benefits due to transfer of non-exempt assets.
â—¦Note: Annuities purchased by the applicant/beneficiary on or after 9/1/04 will be subject to Medi-Cal recovery when the beneficiary dies.
â—¦Cash reserve: Applicant/beneficiary may retain up to $2,000 in liquid assets, e.g., savings, checking, excess cash surrender value of life insurance.

• Community Spouse Resource Allowance (CSRA): Community (at home) spouse may retain up to $120,900 in liquid assets, not including the home and other exempt assets, such as IRAs and retirement funds.
Any assets above the property reserve limit of $2,000 or $120,900, in the case of a community spouse, or any asset that is not exempt will be counted by Medi-Cal in determining eligibility.

What percent of people do you think would have to pay? The primary home, all personal property in it, vehicle, and all retirement accounts are exempt. How much net worth do you think most people have outside of those things? If they do, they will be smart enough to use LLC and/or trusts to make it exempt too.

The funny thing is your whole life policy isn’t exempt unless it’s face value is <$1,500. They can make you cash out the policy down to $1,500 remaining.

[quote=“Jil, post:8, topic:2418, full:true”]

Suze is a very smart woman, for her cause. She follows the ideology of pure investment, no commissions to be paid, that’s why she suggest term insurance, well known in our industry as the cash cow of the industry. Why? Because in order to cash in, you have to die, and most people run out of time, they stop paying, their policies expire before dying and if they get sick, good luck, they are in for a surprise of their life.

She started as anybody, loyal to her ideas, to the protection of her followers. Then, she saw a path of wealth on using her name for the sake of making money.
If you didn’t watch the video, there she is, advising on never buy a new car. The following script, she is advertising Cadillacs and telling her followers “that’s smart money”. Then, “you can afford a vehicle like mine, help me out buying one or something like that”. Why? Because she is now getting paid to advertise that monster of a car. She abandoned her own principles, the fiduciary duty to take care of her people.

She, again, in the video above, she is promoting a debit card because it will generate a FICO score. Why? Because she is getting a cut. Then, they show another video moment when she is telling the audience “debit cards don’t generate FICO score”. That’s a WTF? moment.

I can go and on berating her, but I am just trying to show you that she is, generalizing -just another life insurance agent/car/home insurance/realtor/home seller/landlord in disguise trying to make a buck and living out of unsuspected clients. She is in it for the money, that’s all.

I have been appointed to a few insurance companies, and I walk away at the first sign of mischief, dishonesty and lying. So far, up to now, my group is the most honest I’ve been with, very knowledgeable, and up front, if you don’t qualify, you don’t qualify. Financial analysis are done in order to protect our clients.

Oh, how do you buy stocks? Do you pay to get into a stock brokerage, a portal? How much do you pay every time you buy or sell? Capital gains?

@buyinghouse It’s pretty hilarious when you insult people that work selling products for a commission when you’re doing the same. Let me guess. Their products are evil, and your products are good. At the back end of all those products is a company making a profit. That’s why they are selling the product.

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One thing I am guilty of, so many times, is my lack of English to write anything. But I can read, and I read it pretty well, how about you Marcus?

“I can go and on berating her, but I am just trying to show you that she is, generalizing -just another life insurance agent/car/home insurance/realtor/home seller/landlord in disguise trying to make a buck and living out of unsuspected clients. She is in it for the money, that’s all.”

Some times, I think you deserve to be called dumb.

So now you admit that you personally try to make a buck off of unsuspecting clients?


You use Robinhood? Can you do options there? I’m paying <$3/stock trade and $1/option contract.

What brokerage do you use?

Interactive brokers. I mostly use the iPad and iPhone apps. I rarely use their web-based stuff except for my annual statement.

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I use Robinhood and Merrill edge. Merrill edge gives me 30 free trades/month when we maintain minimum 25k investment amount. I do not even trade more than 20 per month.

Robinhood does not have options.

Options,Merrill edge, I rarely do, but they charge $7.95 (or 8.95) for option.

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