The MPI Account: Is This Our Golden Ticket (Or Just A Sketchy Indexed Universal Life Insurance Policy)?

MPI stands for Maximum Premium Indexing, which is a financial strategy that “could generate lots of money for you”. But more specifically, it’s a combination approach that provides life insurance and acts as a retirement planning vehicle at the same time.

MPI basically takes the features of an indexed universal life insurance contract and attempts to bolster them, and also create new benefits from them.

Actually, the very idea of combining life insurance and investing is something many financial “experts” say you shouldn’t do. But conventional wisdom isn’t always good wisdom.

MPI accounts can (theoretically): provide you with a relatively safe way to achieve consistent returns protected from market downturns, deliver ample tax-free retirement income, and then finally pass on a nice tax-free inheritance to your heirs…(theoretically).

An MPI secure compound interest account grows in line with the S&P500 index. However, the MPI account (via the terms of the IUL) has a floor of 0%, which means that even if the S&P500 crashes -30% in one year, you won’t lose anything!

The growth of your cash account grows in line with the S&P. It’s limited on the downside to 0%, but is capped on the upside at 10%. This means that if the S&P500 returns 8%, your account value will go up by 8%. If the S&P goes up 20% you only get…10%.

Historically, the S&P500 has returned around 10% per year for its investors (with reinvested dividends). But when factoring in the 0% floor and 10% cap, MPI has averaged about 7% over the last 25 years.

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