Insurance has long been fraught with scandals and dastardly deeds; from purposeful fires (that are all to common lately…) to murder for insurance schemes. Finally I have come across something juicy enough to post about in the insurance category on Stoked Wallet.
They say there is nothing new under the sun, but maybe there is something as insidious as insurance fraud hiding in-between the lines on Tik Tok. Recently several accounts have been touting an insurance product dubbed an IUL (Indexed Universal Life Insurance) as a secret to financial wealth in retirement. You may be thinking how can a life insurance product provide you wealth in retirement if you are dead? The answer they are providing is not that you are the beneficiary of your spouse’s policy, but instead you took out a loan against the policy at a young age to become Grant Cardone with free money.
Yes Robert Kiyosaki meant pay yourself first by leveraging your IUL and is not just parroting the advice from The Richest Man in Babylon. I don’t know about you, but if my insurance salesman (aka certified financial advisor) doesn’t have diamond studs I don’t trust them.
“NO RISK” he furiously underlines with his marker something no one associated with FINRA would ever do. I don’t mean to pick on Ryan, but he is emblematic of the many people not qualified to offer financial advice of this caliber. While the idea seems enticing what about the risk of the IUL not earning 10-12% (outrageous) or someone leaving the life insurance policy having borrowed $20,000 from it at 2% interest (a lowball estimate of the actual rate even for 2021)?
Some finance experts are starting to take notes of various bad actors not providing proper risk disclosures to potential clients about the variety of risks involved with leverage. I on the other hand am not saying you need to be a data scientist quant with SQL tables of indexed policy performance and world event probability models plugged into a MarkovChain to offer any sort of financial advice, however there should be a risk disclosure and life insurance should not be listed as a vehicle above ROTH/401K for retirement unless you have some serious documentation to back up that claim.
What you can’t make a Markov Model for 100 year policy starting at age 44 with a $20,000 loan in a rising rate environment with several global conflicts and the petrodollar in decline with a power vacuum on the next world reserve currency? What are you stupid? Anyways I offer one piece of advice to the gurus. Get better sales tactics or financial enforcement, who is always reactive not proactive, will find you.