The name is catchy—”Wealth Beyond Wall Street.” Most people want to find wealth beyond Wall Street in order to avoid risk while still achieving their financial goals. And nobody willingly turns down financial safety, so everybody is interested in becoming a safe money millionaire.But here’s what’s actually going on with the theory behind Wealth Beyond Wall Street, so you can decide for yourself if this financial theory is right for you and your financial goals. After all, it is your money, your life and your life insurance. You get to make the call about what you want to do, and you should be in control of your own finances.
As far as I can tell, these terms, originated with Brett Kitchen and Ethan Kap who have written two books named after the theories described in the books:
- Safe Money Millionaire
- Wealth Beyond Wall Street
The product being promoted in these books and theories is Indexed Universal Life, IUL for short. Indexed universal life or IUL products have risks associated with them that participating whole life insurance products simply don’t have. And let’s make something about indexed universal life clear real fast here:
IUL is BASED on Wall Street performances and IS NOT beyond Wall Street.
That statement means that using indexed universal life or IUL to accumulate wealth will require you to rely on Wall Street performances. This wealth theory relies on Wall Street, despite the name. That’s where the risks with IUL come in. If you have a policy based on Wall Street performances, poor performances can cause your policy value to go down. And if your cash value is going down, then you aren’t accumulating wealth beyond Wall Street. This is the major problem with indexed universal life products.
But in case that main reason doesn’t persuade you, here are some other reasons for NOT choosing IUL for your future needs:
- The owner of IUL policy(ies) CAN lose money in years when the index mirrored in the policy’s non-guaranteed returns go down, trades laterally or even when it goes up marginally. Again, there are IUL risks that can affect your path to a financial legacy.
- Recent news reports document how thousands of policy owners’ premiums have been increased because IUL premiums are not fixed level premiums for life like participating whole life insurance premiums are. So, during the time you hold the policy, your premiums could increase, and your life insurance could be costing you more for no difference in return. (You can pay extra for a guaranteed level premium but that defeats the purpose.)
- Regulators in all states have now had to mandate agents and insurance companies to STOP using such high rates of return on their projected values in IUL illustrations. This is because there is no certainty in future market performance, and indexed universal life insurance is based on market performance.Pathetically, even these mandated rates of return are well beyond actual and compounded annualized growth rates. And so they are still misleading at best.
- Every IUL policy we have ever reviewed here at Life Benefits shows the guaranteed cash values zeroing out prior to the life expectancy of the insured. That means the policy will lapse or the owner will have to continue to pay premiums even though cash values may remain at zero. This is because the cost of insurance in the renewable term insurance, the basis of all IUL policies, continues to increase over the lifetime of the insured. So the costs can continue to grow and result in little to no cash value accumulated in the policy. On the other hand, whole life insurance premiums remain fixed and allow for the accumulation of cash value.
- Of the IUL policies we have reviewed there are multiple risks (up to 25 in some IUL contracts) that the IUL policy owner assumes. These are risks the insurance company accepts when issuing a participating whole life insurance policy. Because the owner of the IUL shoulders these risks they can lose money, lose the policy, face needless taxation, limit cash value growth and limit their access to the cash values to manage outside the policy with the Perpetual Wealth Code™. (Read more about The Perpetual Wealth Code™ here) Worst case scenario: all of the above could happen. So despite the name of “safe money millionaire,” using IUL to accumulate wealth isn’t actually safe. There are multiple risks the policy owner assumes.
- All IUL contracts that have been reviewed by Life Benefits offer a guaranteed interest rate in an attempt to offset downtrends in the index mirrored in the non-guaranteed accumulated cash values. But insurance companies that sell IUL can choose to credit this interest at will. That means they may credit it to your policy annually, every 5 to 10 years or even wait until your policy is terminated or a death claim is filed. This deferral, at the insurance company’s discretion, can be costly to the IUL policy owner due to the loss of compounding. This is simply NOT a risk worth taking. The risk is also not worth it when there is a better option with participating whole life. With participating whole life, the compounding is guaranteed and dividends, which are paid annually, add to that compounding effect.
- Finally, the insurance companies control how much gain of the index mirrored is actually shared with the policy owner. In other words, your earnings are capped and the insurance company takes the large profits and pays them to their shareholders (if they are a stock held company) or with their participating whole life policy owners if they don’t have shareholders and/or are a mutual company.
So there are 7 good reasons not to allow an agent to sell you an IUL instead of a participating whole life insurance product. Why should you expose yourself to all the above and lose control over your money for 10 to 15 years while the surrender fees associated with IUL policies expire all while the agent earns 50-70% more in commissions by selling you an IUL policy? That’s not a way to accumulate wealth (beyond Wall Street), and it’s not a safe way to accumulate wealth and create a financial legacy to pass on. It’s your money, your life and your policy. Why allow somebody else to control it? Keep control and realize why the Perpetual Wealth Code™ utilizes participating whole life insurance to maximize the amount of money you get to keep. Here at Life Benefits, we can teach you how to use a safe whole life insurance policy to start earning cash value and creating your financial legacy. Know that having Guaranteed, Available, Manageable, Equity is the key to Winning Your Financial GAME. And never, ever give the control of your money away to somebody else again because you now know the good, the bad and the ugly about indexed universal life insurance. It’s your money, and you should be in charge. That’s how to truly accumulate wealth beyond Wall Street.
Have you had experience with an IUL insurance product gone bad? Or know someone who did? Please share in the comments below.