There is a large sign alongside monotonous Highway 20 in Iowa on both the westbound and eastbound lanes that isn’t the typical DOT version. The sign, however, is not self-explanatory. It only states MANSON in big white letters with Next Exit and an arrow underneath amid an orange and black explosive background. Every time I drive by it, I’ve wondered why it is there.
With all the research tools we now have available at our fingertips and for my own edification, I discovered its significance this week. It is the location of an impact crater buried under more than 100 feet of sediment that once measured 22 miles wide, and 2,800 feet deep caused by an asteroid travelling at 45,000 mph when it imploded on that location on Earth that is now Manson, Iowa. The resulting astronomical explosion was equivalent to 1.1 million megatons of TNT causing a massive fireball.
It’s no longer a visual crater like the one in Arizona which I have been to (predated digital photography). If the sign said, “Home to the Largest Impact Crater,” people would be sorely disappointed to find the impact crater filled with dirt and a small, rural town residing on the surface. It would be highly misleading.
The same is true and analogous to Cash Value Life Insurance (CVL). Term life insurance is straightforward. Cash value life insurance, specifically, Indexed Universal Life (IUL) insurance is not. It’s a complex financial product with shifting components. The sales tactics often used to sell CVL insurance (whole, universal and variable) can be highly misleading.
While the unscrupulous sellers claim it is an investment vehicle, it is in fact an insurance product. However, it can have a place within a well-funded and balanced portfolio.
The only time this type of life insurance policy should be considered is from an agent with a Chartered Life Underwriter (CLU) designation to help navigate the buying and management processes. Agents with this designation have a thorough understanding of the industry and life insurance underwriting procedures. Buying from a so-called agent on TikTok, YouTube or Instagram to maximize your wealth for a tax-free retirement will likely be a scam.
Additionally, these criteria should be met (from Andy Panko).
• Relatively high income
• Traditional investable accounts are already fully funded
• You have a fairly high degree of sophistication and understanding of IULs and want an additional place to put money for diversification
• Have access to potential other benefits, such as the “living benefits” of chronic illness riders, and having a source of liquidity to tap via loans if or when that becomes necessary.
Any form of permanent life insurance, specifically IULs, can be a keen compliment to a broader portfolio of traditional assets but shouldn’t be treated as the core of your savings or investments. Every so often we re-review the literature, policy and progress because it’s complicated and unlike any typical asset. This was one of those weekends.
As with any place where you put your money, always research first to find trustworthy sources that clearly explains the possible risks and returns before you invest.
Indexed Universal Life Insurance (IUL): How It Works – NerdWallet
Types of Life Insurance Plans and How to Decide Which One Is Right for You
Featured Image – screenshot from Street View on Google Maps