Doug Andrew Lays Out 3 Ways an Indexed Universal Life insurance policy can offer more than a Traditional 401(k)

    Doug Andrew knows a bit about creating financial abundance and long-term wealth. He founded 3 Dimensional Wealth and acts as its CEO. He believes in approaching finances from a holistic and long-term point of view and has worked in the field for over 50 years.

    Andrew is a New York Times and Wall Street Journal bestselling author on money matters and is also a respected radio, TV, and YouTube personality. For these reasons, we’re listening when he speaks up to say that he believes an Indexed Universal Life Insurance Policy (IUL) may be better than a traditional 401(k) retirement plan.

    Sure, most of us have been raised to believe that a 401(k) is the gold standard for retirement savings. It’s easy to understand, can be rolled over when you change jobs, and many employers match contributions up to a certain point. It’s also invested without taxes being withheld from it. What’s not to like, right?

    Well, according to Andrew, quite a bit.

    Why 401(k)s Aren’t Your Best Bet

    Over the last several years, employers have increasingly moved away from strictly defined benefit pensions and toward defined contributions — such as 401(k)s — in which the employer lets the worker define how much they want to, or can afford to, contribute from each of their paychecks.

    “Most employers also match — and cap — employee contributions up to a certain pay percentage. The problem here is, whether your 401(k) makes or loses money in the stock market, it ends up being your problem, not your employers,” shared Andrew.

    The finance CEO shared that recent findings from Dalbar, the country’s top financial services market research firm, known for performing trusted ratings and evaluations of financial and healthcare industry practices, shed new light on the subject.

    “Dalbar says the average person who has money invested in the market in IRAs and 401(k)s is only earning 3.49%,” he said. It’s a paltry amount when you consider that some savings accounts in the US pay 4% interest,” he said.

    When looked at in contrast with the  5% to 10% predictable return rates of IULs can provide, you may start to see what Andrew means.

    Below are the finance whiz’s top three aspects to mull over when deciding where to park your retirement savings.

    After-Tax Vs. Pre-Tax Contributions

    When considering IULs vs. 401(k)s, taxes are one of the first issues to consider.

    401(k)s are funded by pre-tax money, meaning your retirement savings go directly from your pay to your 401(k) without any tax removed. This is one of the first things usually mentioned by fans of 401(k)s.

    But, what people don’t consider is that you’ll be paying taxes on this money when you withdraw the funds upon retirement.

    “The thinking here is that you are just deferring taxes — often with the hope that you’ll be in a lower tax bracket when you retire,” said Andrew. “But really, you’re just procrastinating on these taxes, and most American retirees aren’t in a lower tax bracket at retirement, they may even be in a higher one.”

    With an IUL, you contribute post-tax money into a policy, and it can grow tax- and worry-free, offering less stress as the years go on and at retirement.

    Market Protection Vs. Market Risk

    Another benefit of IULs is that they give you all of the market’s upsides without the danger of any of its downsides.

    “When the market goes up, you gain, thanks to indexing. When the market goes down, you don’t lose, thanks to your 0% guaranteed floor,” Andrew explained of this investor-friendly option.

    He also noted that an IUL is not capped and lets you contribute bigger amounts with fewer annual limits. For example, in 2023, the annual 401(k) contribution limit will be capped at just $22,500 and only $30,000 for contributors over 50.

    Access Your Money Anytime Without Penalties

    Another thing that Andrew dislikes about 401(k)s is that there are strict financial penalties if you choose to remove your money early. On the other hand, an IUL lets you access your money at any time — and at any age — without penalties.

    If you have a family emergency, an unexpected illness, or other unforeseen circumstances, having an IUL over a 401(k) can be a true lifesaver.

    The final point Andrew made for an IUL over a 401(k) is the allowance of transferring money from your policy to heirs without income tax liability, thanks to the IUL’s death benefit.

    With these illuminating thinking points to consider, we’re sure you’ll make the right decision about your retirement savings and be glad that there are various options at your fingertips.

    About Doug Andrew

    Doug Andrew, Founder & CEO of 3 Dimensional Wealth, provides a holistic program that helps individuals and families create financial, foundational, and intellectual abundance. He has more than five decades of experience in the financial sector and is a New York Times and Wall Street Journal bestselling author. The radio and television personality also has a high-performing YouTube channel. For more information please visit

    Jeannie Contreras
    Jeannie Contreras
    Jeannie Contreras’s work as a corporate author specializing in business management, has earned her awards for outstanding projects, as well as being named as the best guide to international leadership of the past 10 years. She is a highly regarded consultant in the topic.

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