Anyone have investments in a SDLI?

[cjchaps]

Yesterday the wife and I went to an initial consultation with a financial advisor who works for American Express, and it went pretty well. If we are to hire the advisor, she will just make suggestions for us(she has no control over any of our money), and she is fee and not commission based. She will make a specific plan for us, and we tell her what we want or do not want to do or feel comfortable with.

Once thing that she did mention is that we would have access to something called a Specially Designed Life Insurance(SDLI) investment. She was saying that it?s very similar to a Roth IRA in that it is taxed at the beginning, so when you take it out it is not-taxed, so all your earnings on it are tax-free. Their SDLI can be used in conjunction with about 50 mutual funds from a variety of sources(Fidelity, etc?). We asked her more about the name because it sounds confusing because you usually don?t think about a life insurance policy as an investment, but from what she was saying is that the majority of the investment is a mutual fund, with a small part as a the policy. I don?t have any specifics on the exact percentages of what makes it up, but that would all be disclosed if we decide to hire her. As I mentioned before, this is just an option they have, and we would not be required to invest in it if we don?t want to.

Has anyone ever heard of an SDLI investment before?

C/N: At a consultation with a financial advisor we would have the option of investing in a Specially Designed Life Insurance(SDLI) investment, does anyone have experience with those?

 

[dirtboy]

You're not from California, but here it is very close to against the law to sell life insurance as an investment. It is against nearly every company's policy that I've see to recommend life insurance as an investment; i.e. the company can terminate your appointment (with the company) if you are selling as such. Only high net worth people buy it as an investment, but it is often sold as one due to the higher up front commissions, when compared to typical investments.

There's nothing special about what they are recommending. You could buy a Variable Universal Life Insurance policy that is probably the same thing. As far as taking money out tax free, that is a lie. The only way to do that is to borrow against your policy at a low rate (usually 0%) and never repay the loan. Of course you the life insurance premium is always being deducted from your policy, which is why it should not be sold as an investment.

100% of your money is in a life insurance policy. Rather than invest your money in what the company wants, you are allowed to select from a variety of what appear to you as mutual funds, but it is against the law to call them that; they are properly termed: seperate accounts.

 

[DaveSimmons]

I would run away, and make an appointment with someone at Schwab. Or do your own reading (vanguard.com and fool.com are two good places to start).

Life insurance is not a good investment (except as insurance) compared to Roth IRAs at a brokerage. Vanguard offers brokerage services as well as some of the industry's best mutual funds, and there are many other good brokerages.

If you want to invest more than $8K a year ($4K x 2) or are earning too much to be able to use Roth IRAs, I would still prefer an unsheltered brokerage account with good mutual funds like VFINX to a convoluted life insurance scheme with mediocre "fund-like" investments.

 

[cjchaps]

Thanks for the advice... I have done some other research and have decided to not go with them!