90 • MARTIN H. RUBY
Truthful Scale: * Here’s one of my favorite myths about IUL, because it’s so easy to dispel. There’s a common refrain: life insurance is too expensive to use as a savings tool. What this means is that life insurance con- tains fees. So do 401(k)s. ¹⁵ And IRAs . ¹⁶ And Roth IRAs. So when people tell me, “IUL is too expensive,” I always ask them, “Compared to what?” Let’s look at the fees you could pay in each kind of account.
401(k)
IRA
IUL
Administrative Fees – fees that pay the company adminis- tering your account Management Fees – fees that pay for the management of as- sets in certain kinds of funds
Advisor Fees – fees to the person man- aging your funds for managing your account Managed Account Fees – fees that pay for the creation of a portfolio within your account Fund Fees – fees for the mutual funds or other funds held in your account
Mortality Fees – fees that support your life insurance death benefit Expense Fees – fees that support the expenses of es- tablishing, under- writing and managing your ac- count
Fund Fees – fees for the mutual funds or other funds held in your account
¹⁵ U.S. Department of Labor. “A Look at 401(k) Plan Fees.” https://www.dol.gov/sites/dolgov/files/ebsa/about-ebsa/our-activities/resource- center/publications/a-look-at-401k-plan-fees.pdf. ¹⁶Robert Powell. MarketWatch. Aug. 10, 2010. “No free lunches, no fee-free IRAs.” http://www.marketwatch.com/story/no-free-lunches-no-fee-free-iras-2013-08-10.
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