In Dave Ramsey’s most recent video on Indexed Universal Life Insurance, he calls it a big pile of…In this video, I’m going to …

Dave Ramsey, the well-known financial expert and radio host, has made his opinion on indexed universal life insurance (IUL) very clear – he thinks it’s crap. But is this assessment accurate, or is there more to the story? In this article, I will discuss Ramsey’s criticisms of IUL and provide my response to his claims.

First, let’s examine why Dave Ramsey believes IUL is a bad investment choice. Ramsey argues that IUL is a complicated and expensive product that is often sold to consumers who don’t fully understand it. He also states that the commissions paid to insurance agents for selling IUL policies are excessively high, leading to a conflict of interest for the agents.

While these criticisms may be true in some cases, it’s important to recognize that not all IUL products are the same. Like any financial product, there are good and bad options available, and it’s essential for consumers to do their own research and due diligence before purchasing any insurance policy.

One of the primary benefits of IUL is its ability to provide a death benefit to beneficiaries while also offering the potential for cash value accumulation over time. This cash value can be accessed tax-free through policy loans or withdrawals, providing policyholders with a source of liquidity in retirement or emergencies.

Ramsey argues that the growth potential of IUL is limited compared to other investment options, such as mutual funds or individual stocks. While it’s true that IUL has a cap on the amount of interest credited to the cash value, it also offers downside protection through a guaranteed minimum interest rate. This feature can be particularly attractive to conservative investors who are looking for a way to participate in market gains without the risk of market losses.

Additionally, Ramsey criticizes the fees associated with IUL policies, claiming that they can eat away at the potential returns over time. While it’s true that IUL policies do have higher fees compared to term life insurance, it’s essential to consider the benefits and protections offered by these policies. For example, IUL policies provide a death benefit that is paid out tax-free to beneficiaries, providing financial security and peace of mind to loved ones.

In response to Ramsey’s criticisms, I would argue that IUL can be a valuable tool for individuals who are looking for a way to supplement their retirement income or protect their loved ones financially. When structured correctly and purchased from a reputable insurance carrier, IUL can offer a unique combination of protection and growth potential that is difficult to find in other financial products.

In conclusion, while Dave Ramsey may have valid concerns about indexed universal life insurance, it’s essential to consider the full picture before dismissing this product entirely. IUL can be a valuable tool for individuals who are looking for a way to provide for their loved ones and build wealth over time. As with any financial decision, it’s crucial to do your own research, consult with a financial advisor, and carefully consider your own individual goals and risk tolerance before making a decision about purchasing an IUL policy.