Written By — David Shafer
I pride myself for educating folks about the world of finance and the ins and outs of EIULs before they commit to the strategies I suggest. Sometimes this leads to losing a sale to less honest folks, but I need to sleep well at night. Interestingly, this also leads to very smart individuals calling me up and having discussions with me that lead to new and better ideas. This happened recently.
I received a call from an individual who was interested in an EIUL. He was in his middle 50s and had some wealth he wanted to move into a place that would produce tax-free income down the road. He suggested that we look at his son as the insured [30 years old]. Intrigued, I ran the numbers on both him and his son. I thought the IRS corridor rules would even out the excess insurance costs on him [since he was older] causing the overall expenses to be about the same. I was wrong, the expenses were less for the policy on his son. And here is the kicker, in addition to expenses running .5% lower; there was a strong secondary benefit.
After, the father had taken out 17 years of income, the policy would continue on the son. So that meant that if the son gave the policy a 5-10 year pause, he could start taking out income himself in his early 70s! Talk about a win-win situation. The parents could take out income for their retirement lifetime, and then the son could do the same. Why hadn’t I figured that out before???? Thanks to my new client; we have a whole new way of strategizing the use of EIULs.
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