LIRPs? Anyone?

[IRstuff]

Has anyone looked at life insurance retirement plans (LIRPs)?

Trying to figure out if they're worth the effort. Need a decent spreadsheet side-by-side comparison against a 401K, including sequence risk, so some sort of spreadsheet analysis would be most interesting and useful

I know they offer some tangible benefits
> tax free distribution through "loans" from the death benefit
> no contribution limits
> guaranteed return
> buried fees

TTFN (ta ta for now)
I can do absolutely anything. I'm an expert!

https://www.youtube.com/watch?v=BKorP55Aqvg

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[Latexman]

I’ve never looked at that. I’d recommend asking here.

Good Luck,
Latexman

 

[IRstuff]

Thanks, I hadn't thought to look there, but none of the bloggers in the FIRE community seem to have covered that topic, which is curious in itself. I've been emailing with one of them, and they're never even looked at that. Clearly, there's a bit of hucksterism in that arena, since there's this constant drumbeat of "Oh no, higher taxes in the future" mantra, and clearly, from the responses, regard for insurance salespeople seem to be possibly even lower than for lawyers.

The higher taxes bit also comes from "The Power of Zero" book mentioned in a bunch of posts therein, but while zero taxation is ostensibly a good goal, it's not obvious that it comes for free and that there's no downside.

TTFN (ta ta for now)
I can do absolutely anything. I'm an expert!

https://www.youtube.com/watch?v=BKorP55Aqvg

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[btrueblood]

"guaranteed return" -- hmmm. I've seen that before, and had our guaranteed return disappear...Sun Life of Canada whole life policy. Class action suit bought us back a few pennies on the dollars invested. Meh.

 

[pmover]

IR,
wish ya good lick w/ your search. insurance companies are always in a no lose situation. no matter what happens, they will have their $. very similar to casino's.

you probably saw this site already:

https://www.policygenius.com/life-insurance/life-insurance-retirement-plans/

 

[Latexman]

Did you see:
Questions to ask about LIRP? Or just a scam?

Good Luck,
Latexman

 

[IRstuff]

Thanks, I did see that, but it seemed like most of the reactions were to the stereotype, i.e. insurance sales ~ used car sales.

I keep hoping to see a mathematical analysis, not unlike the sequence risk analyses that lots of these guys have done.

There was one interesting comment about rich being able to take advantage of LIRPS, but not the poor. As engineers, we're kind of in the middle, so if we can sock away money on top of our maxed out 401K contributions, it might be worthwhile.
One thing that did occur to me was how the rich did actually manage to defer compensation and why that was actually a good deal for them, and the LIRP fits that bill quite well when you consider a company simply buying LIRPS for their CEOs, which has immediate as well as future tax advantages.

TTFN (ta ta for now)
I can do absolutely anything. I'm an expert!

https://www.youtube.com/watch?v=BKorP55Aqvg

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[Latexman]

Okay. I’ll add an opinion. I’ve been on ER.org for over 8 years. Like here, when certain people give advise, one learns over time who to believe and who not to
believe. At ER.org, I put great faith in what pb4uski says. IIRC, he was an accountant in the insurance industry, but I’d have to look around to verify that. Anyway, to the question, Is there any scenario where LIRPs make sense?, he said, “No. Run.”

But I understand the desire to see data. A common phrase on ER.org is “numbers is hard”.

Good Luck,
Latexman

 

[IRstuff]

Thanks for the clarification. I've almost always been in stocks until now; and the question that might be a better fit is whether a LIRP is better than bonds.

The primary issue now is the sequence of returns risk, particularly in this year of a down market with more than a hint of coming, or already present, recession. Presumably, a LIRP might do better overall than bonds, and a LIRP can have tax-free withdrawals.

TTFN (ta ta for now)
I can do absolutely anything. I'm an expert!

https://www.youtube.com/watch?v=BKorP55Aqvg

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[Latexman]

As you are investigating, a question I have is, are LIRPs as liquid as bonds? If the ever-changing market changes to the advantage of bonds (inflation, interesr rates?), can one get out of LIRPs to get into bonds? I get the feeling LIRPs are a fairly long term ontract, but idk for sure.

Good Luck,
Latexman

 

[IRstuff]

They are liquid in the sense that you can relatively easily "borrow" from them, but they are based on a conventional indexed universal life insurance policy.

TTFN (ta ta for now)
I can do absolutely anything. I'm an expert!

https://www.youtube.com/watch?v=BKorP55Aqvg

faq731-376 forum1529 Entire Forum list

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[Latexman]

Folks,

pmover messaged me:
“you mentioned er.org. when i type that “er.org” in address bar, i get a lawyer site. so, im perplexed and requesting clarification. thanks!”

Sorry, that was my shorthand for:

https://www.early-retirement.org/forums/

Good Luck,
Latexman