Ask Terry Questions LIRP at Life Insurance Seminar

LIRP at Life Insurance Seminar

By Terry Savage on March 24, 2019 | Insurance & Annuities

Attended a financial seminar and wondering if the LIRP they are advising us to invest in would be a good idea. Almost seem too good to be true but would love your take on this retirement option. Thank you!

Terry Says

Well, you attended a seminar that is guaranteed to make the salesperson rich –at your expense!  Did you think there was a free lunch??  I assume you’re referring to a “life insurance retirement program” where you stuff an insurance policy with the maximum amount of cash allowed by law, where it can grow tax-deferred inside the policy, and be borrowed out tax-free while you live (which impacts the eventual death benefit, of course). And no RMDs.

Sounds great.  BUT — and there are LOTS OF BUTS in this deal.

Typically the charges and fees for the investment portion of these policies take a lot of money out of your account (that’s how they pay the salesman) and the investment options are not only expensive, but limit your gains in various ways that are guaranteed to make the insurance company money!

Have you stashed every possible dollar in your 40l(k) plan (where you get a match instead of fees?  Have you opened an IRA if you qualify — even if non-deductible or a Roth?  You can do that at Fidelity or Vanguard and pay practically nothing in fees.

I have no problem with cash value life insurance.  But if you are buying it from someone who is selling it at a seminar, I can guarantee that you are not getting a good deal!!



a personal
finance question