What is a Family Private Fund
The private funding concept is very similar to the private banking concept, but is some ways it is better. Rater than using a whole life insurance you use indexed universal life insurance.
How indexed universal life is differ from whole life.
- IULs have lower cost or premiums
- The MEC limits are higher with IULs so you can overfund you policy at a higher limit
- There is way more flexibility with IULs than whole life
- The death benefit can be increased at greater levels
The private funding concept, like the private reserve banking concept uses the two elements of cash value and the ability to borrow against that cash value. Unlike, whole life insurance, indexed universal life insurance can be a little complicated. There are more features to a IUL which a not easily understood.
- Caps rates on participation: Insurance companies sometimes set a maximum participation rate that is less than 100%.
- Only good for larger face amounts: Smaller face values don’t offer much advantage over regular over whole life policies.
- Based on an equity index: If the index goes down, no interest is credited to the cash value. The goal of most IUL policies is to not outperform the index, but to profit from upward movements in the index.
- Annual renewable term: With many index universal life policies the premium is based on an annual renewable term which if not paid properly can result in the policy lapsing.
Although not for everyone, a family private can be a very good tool for both creating and maintaining wealth.
