An attorney friend of mine reached out asking me about using universal life insurance with a cash-value component as a retirement savings vehicle. He said a friend of his was being pitched this and his antennae went up that he should ask some questions.
I responded with some typical inquiries – general age, whether he is covered by a retirement plan through work, and a variety of other questions to ascertain whether this could even be viewed as an appropriate possibility. While I certainly couldn’t provide specific advice since I don’t know enough specifics, it didn’t appear to be a good use of funds for this attorney especially with a price-tag of $100,000 per year for five years. That is not a typo.
It was being sold as superior to stock market returns with a death benefit plus, of course, virtually no risk. In other words, the epitome of having the cake and eating it too. Are your antennae up? They should be.
His friend was so psyched about this idea that he was trying to pitch this idea to my attorney friend that he should do something similar.
My response to that comment was as follows, “Ironically, any product that people are that excited about is almost always a sign it’s a bad idea because all the truly good ideas are boring.”
If something sounds so good that you want to commit significant dollars immediately, let that be your sign to ask additional questions before proceeding. At least one question worth asking is, “How much is the commission on this if I move forward?” Once the stumbling over words ensues, you’ll understand why this was such a no brainer. I mean a no brainer for the “advisor”, not for you.
The age-old advice of “If it sounds too good to be true, it probably is.” got to be a tired and worn out saying because it almost always holds true.
- Advice Doesn’t Have to Be Complicated to Be Effective from Ben Carlson
- Lessons in Fear and Wealth from the Coronavirus from Peter Adeney
- Retirement is Liberating – and Hard Work from Kim Blanton
- Why are Stock Market Crashes Permanently Impermanent? from Tony Isola
- It’s Time to Change the Retirement Planning Conversation from Carolyn McClanahan
- Think About What You Have, Not What You Lack from Trent Hamm
From the Archives:
Just a heads up that I will probably step back for a couple of weeks on the blog as I am finishing up the first draft of my book as well as working on another exciting project that I’ll be sure to tell you about soon. All of that is, of course, in addition to my typical client meeting schedule. My apologies for less writing, I’ll be excited to return to business as usual next month, but I will keep the Retirement Digest going.
Thanks for reading!
This post is not advice. Please see additional disclaimers.
Join the Retirement Field Guide Newsletter
Subscribe below to get our "Preparing for Retirement: Seven Essentials for Successful Investing in Retirement" whitepaper!
I am a Financial Advisor in Pittsburgh and a CERTIFIED FINANCIAL PLANNER™ professional with Shorebridge Wealth Management. I enjoy helping clients and readers find sensible answers to retirement’s big questions. If I can answer any questions for you, feel free to Contact Me or if you think you might be a fit for our practice, see Who We Serve.