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Multi Index Universal Life Insurance
Old 01-22-2017, 12:14 PM   #1
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Multi Index Universal Life Insurance

First post here, please be gentle!

I have a financial adviser that I pay to handle my retirement financials and I think we have done some great things for my future but now I'm searching for more options to retire early.

She brought up a Riversource multi index universal life insurance package. In general the thing is too complex for me to comprehend but I'm researching it and finding a lot of negativity. I like some of the long term care benefits it has and of course the ability to use it as an additional vehicle for retirement. What are your thoughts?

I have around $200/mo that I feel I should be doing something with to further my early retirement. Ideas welcome!


My situation
-I'm single and 42, earning around 70k/y in a low cost of living area.
-Mortgage is being overpayed currently, roughly on track to pay it off by 63.
-I have a substantial IRA from previous employment 401k that is basically just sitting and growing, no contributions.
-I have a separate Roth IRA that I am contributing the maximum to.
-I have medium term savings investments that I am contributing to that is being managed and has a decent amount of funds in it to take care of projects like new roof for the house, new vehicle etc.
-I keep a good amount of money in checking to take care of unexpected things, I could live for six months off of checking if I had to.
-I have health, vision, dental etc through work.
-Disability insurances through multiple places adding up to something like 90% current income.
-I started a new 401k from my employer but for overhead reasons (small company) they decided they can't do that any more and are ending it. I was putting in 5%. This is the recent change that has me searching for new options.
-Before the 401k caved in I was on track to retire around 63 with over 80% income.
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Old 01-22-2017, 12:17 PM   #2
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Originally Posted by Maxburn View Post
She brought up a Riversource multi index universal life insurance package. In general the thing is too complex for me to comprehend but I'm researching it and finding a lot of negativity. I like some of the long term care benefits it has and of course the ability to use it as an additional vehicle for retirement. What are your thoughts?
Your negativity is well-placed. Anything "too complex to comprehend" should be avoided.
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Old 01-22-2017, 12:35 PM   #3
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You will probably find that your financial advisor has not been looking our for your best interests. Trying to sell you this dog is a good tip off. The good news is that you have plenty of easy options. Stick around.
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Old 01-22-2017, 12:41 PM   #4
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Right, I agree. I'm looking for options though.

As I have moved and am dealing with this financial adviser long distance I might be better off finding a new financial adviser. How do I go about finding someone that I can trust?
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Old 01-22-2017, 12:44 PM   #5
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How do I go about finding someone that I can trust?
Look in the mirror. Read a few books, set up a "couch potato portfolio" with 3 - 5 index funds, and you're done.
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Old 01-22-2017, 12:45 PM   #6
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Right, I agree. I'm looking for options though.

As I have moved and am dealing with this financial adviser long distance I might be better off finding a new financial adviser. How do I go about finding someone that I can trust?
Many, if not most of us just use low cost index funds from Vanguard and Fidelity. Vanguard will even assign you a financial advisor for 0.3%, though I don't think it is worthwhile on an ongoing basis. You can also find a fee only advisor that will help put you on autopilot and not sell you anything. The good news is that it is not hard and there are plenty of people that will help you here, or at the Bogleheads Forum.
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Old 01-22-2017, 12:45 PM   #7
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Right, I agree. I'm looking for options though.

As I have moved and am dealing with this financial adviser long distance I might be better off finding a new financial adviser. How do I go about finding someone that I can trust?
Simple...Vanguard.
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Old 01-22-2017, 01:14 PM   #8
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Welcome Maxburn.

Your first post mentioned a few things that will probably trigger strong responses from the members here... 1) a financial advisor that would suggest this kind of "investment" and 2) a compex, expensive, fee-laden investment like the one proposed. Please take the responses as negative to the FA and the universal life policy, not as negative to you.

I agree completely with ReWahoo that any investment that is too complicated to understand is one to avoid. Especially when there are plenty of non-complex investments that perform well.

You're in a good position of being able to break from your FA because of the geographic change... Take that opportunity.

As Walt34 mentioned - you can do this yourself. Read "Millionaire Teacher", google "Couch Potato Portfolio" or "Lazy Portfolio"... You invest in a few index funds and rebalance once a year. Easy peasy. But if you want to use a service that does it for you (for a fee) Vanguard and Schwab both have low cost portfolio management. So does Betterment (robo-advising). You won't get a person to stroke your ego and hold your hand - but you'll get quality, low fee, low expense ratio investments.
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Old 01-22-2017, 01:15 PM   #9
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Earlier thread about this here.

Another opinion.
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Old 01-22-2017, 01:16 PM   #10
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You'll get the same advice from 99% of folks here.

Don't combine investing and insurance.

Ditch the FA (the indexed life insurance recommendation proves she is no good) and DIY with someone like Vanguard.
Insurance products do allow for taxed deferred growth (maybe that's the idea), but why commit yourself to such an expensive way to save when the 401k might start again. Keep the ROTH contributions going and whatever you'd have saved to the 401k use to pay down the mortgage or save to a regular investment account.

As a single 42 year old you don't need life insurance and if you worry about long term care then buy a long term care policy or defer SS.

edit:
I see Riversource is affiliated with Ameriprise....so another reason to run away.
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Old 01-22-2017, 01:55 PM   #11
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if you are single why do you need LI?
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Old 01-22-2017, 02:03 PM   #12
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if you are single why do you need LI?
It could be for the tax deferred gains because of not having access to a 401k, still that's a poor reason given the expense and contract required.
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Old 01-22-2017, 02:40 PM   #13
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It could be for the tax deferred gains because of not having access to a 401k, still that's a poor reason given the expense and contract required.
This plus there is a cheap rider for long term care if/when I am unable to live on my own. My grandmother is in a home and running out of money, I don't want that to happen to me.
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Old 01-22-2017, 02:42 PM   #14
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Earlier thread about this here.

Another opinion.
Thank you! Already found those via google, that's how I got here out of the blue, good reads.
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Old 01-22-2017, 03:05 PM   #15
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Welcome Maxburn.

Your first post mentioned a few things that will probably trigger strong responses from the members here... 1) a financial advisor that would suggest this kind of "investment" and 2) a compex, expensive, fee-laden investment like the one proposed. Please take the responses as negative to the FA and the universal life policy, not as negative to you.

I agree completely with ReWahoo that any investment that is too complicated to understand is one to avoid. Especially when there are plenty of non-complex investments that perform well.

You're in a good position of being able to break from your FA because of the geographic change... Take that opportunity.

As Walt34 mentioned - you can do this yourself. Read "Millionaire Teacher", google "Couch Potato Portfolio" or "Lazy Portfolio"... You invest in a few index funds and rebalance once a year. Easy peasy. But if you want to use a service that does it for you (for a fee) Vanguard and Schwab both have low cost portfolio management. So does Betterment (robo-advising). You won't get a person to stroke your ego and hold your hand - but you'll get quality, low fee, low expense ratio investments.
Thank you. She started me out pretty well I thought and I'm the one asking for other solutions to enhance retirement. Still I would like to work with someone local to look my entire situation over, including reviewing tax impacts, on a little more personal level and I'm not adverse to paying for it. I will look those articles up and take some time.

Quote:
Originally Posted by nun View Post
You'll get the same advice from 99% of folks here.

Don't combine investing and insurance.

Ditch the FA (the indexed life insurance recommendation proves she is no good) and DIY with someone like Vanguard.
Insurance products do allow for taxed deferred growth (maybe that's the idea), but why commit yourself to such an expensive way to save when the 401k might start again. Keep the ROTH contributions going and whatever you'd have saved to the 401k use to pay down the mortgage or save to a regular investment account.

As a single 42 year old you don't need life insurance and if you worry about long term care then buy a long term care policy or defer SS.

edit:
I see Riversource is affiliated with Ameriprise....so another reason to run away.
The 401k is guaranteed to not start again at the company I am with now. I'm happy here for a variety of other reasons though so I don't see this changing soon. Good call on the mortgage though, that's easy enough. And you all have something against Ameriprise here too?
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Old 01-22-2017, 03:14 PM   #16
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..........And you all have something against Ameriprise here too?
Oh, yea. Use the Google search function to search the site for Ameriprise.
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Old 01-22-2017, 03:31 PM   #17
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The 401k is guaranteed to not start again at the company I am with now. I'm happy here for a variety of other reasons though so I don't see this changing soon. Good call on the mortgage though, that's easy enough. And you all have something against Ameriprise here too?
Yes, Ameriprise have a bad reputation here because of a number of court cases and the fees they charge.

I would not lock yourself into any whole life or universal life type of product even if you don't have access to a 401k. The tax deferred gains are outweighed by the expense and the contract. If you are worried about long term care then buy long term insurance.

This board will be almost unanimously against the indexed life insurance product you are considering because keeping fees to a minimum and control over funds take priority.
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Old 01-22-2017, 03:33 PM   #18
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Oh, yea. Use the Google search function to search the site for Ameriprise.
Yes, doing that and seeing all the comments. Thing is I thought she had excellent advice up to now in identifying gaps in insurance and making sure the whole package fit with the goals I specified, making sure there is a plan. I can see where my asking what else I can do lead to the MIULI. When I first went to her I was just shoving money in an ING savings account and forgetting it so I don't look back on my time there as bad. Saving the money has never been my problem, figuring out how to maximize it has.

I'm pretty good on forums and reading though, guess I'll be spending time here.
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Old 01-22-2017, 03:37 PM   #19
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I'd add that there is nothing wrong with investing for retirement in an after tax account, especially after you have maxxed out your Roth. You can invest in a tax managed fund if you don't want it to throw off earnings, or even invest in a non-dividend paying stock like Berkshire. At this point I wish more of my stash was after tax as I'll be paying 25% taxes on it as I pull it out.
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Old 01-22-2017, 03:43 PM   #20
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Yes, doing that and seeing all the comments. Thing is I thought she had excellent advice up to now in identifying gaps in insurance and making sure the whole package fit with the goals I specified, making sure there is a plan. I can see where my asking what else I can do lead to the MIULI. When I first went to her I was just shoving money in an ING savings account and forgetting it so I don't look back on my time there as bad. Saving the money has never been my problem, figuring out how to maximize it has.

I'm pretty good on forums and reading though, guess I'll be spending time here.
It is important to understand exactly what you are paying to be with an advisor. Not only is there the wrap fee that they charge you on the value of the whole portfolio, but they can also profit from steering you into funds with high fees. These fees can really add up, especially as they compound over time. A safe withdrawal rate when retired is around 4%. If you are paying someone 1% or more, they are eating up 1/4 of your retirement income.
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