Last week I took my daughter to the mall. While walking in, she saw someone she knew from school and he was smoking. My daughter said, "Dad, that's gross!". I then replied, "That will probably cost him over a million dollars, too!". Today I wanted to run an Indexed Universal Life (IUL) Illustration just to see what this seemingly small amount of money each day would really cost a person in lost potential income gains.
The boy we saw was 16 years of age. If you use a cost per pack of cigarettes of $7.50 and assume a pack-a-day habit, you will spend $2,737.50 in one year or $228.12 per month on your habit. If you were to invest $228.12 per month into an IUL from age 16 to age 65, you would be able to draw $183,766 per year, TAX-FREE, from age 65 to age 100! All of this without your money being at risk, like a 401K or IRA and then having to pay the IRS tax on your money. This investment also provides your loved ones with a TAX-FREE death benefit!
The assumptions used in this Illustration, are as follows:
- 20 Year Backcast of the S&P 500 with an average rate of return of 8.10%.
- Top 5 of the 7 Indexing Strategies used to provide diversification.
- Increasing Death Benefit Option used to Age 65 and Level from 65 to 100.
- Minimum Death benefit selected to increase cash accumulation.
- Premiums stop at age 65, as account will be fully funded.
- Withdrawls taken from age 65 to 100.
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| Illustration |
Michael Pfeil
Family First Life
mpfeil@FamilyFirstLifeMD.com
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