Mark Kohler breaks down where your IUL premium goes: on a $10,000 payment, roughly $2,000 covers the year's term cost, with the rest eaten by agent commissions and fees. It takes five to seven years before the cash value becomes meaningful and accessible.
When you invest in that IUL, so I put my $10,000 in a year, there's this point where the cash value has to first pay for the commission and the administrative cost of the agent selling that policy. So when you put in $10,000, and if you wake up next year and go, I want my $10,000 back. Well, I don't get my $10,000 because I paid for a year's worth of term, $2,000. Okay, I want my $8,000. I want the money that's in my cash. It's not there. What do you mean it's not there? Well, it's growing, but we got to pay for the cost of the commissions and this and this. It takes on average, from what I understand, 5 to 7 years before that cash value really gets some legs under it.
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