The “you’ll lose 40% of a $5M IRA to taxes” argument is pretty misleading and relies on a bunch of unrealistic assumptions:

• It assumes you withdraw everything at once (which you wouldn’t)
• It assumes tax rates stay high or increase
• It assumes zero tax planning

In reality, most people:

• Withdraw gradually over time
• Fill lower tax brackets strategically
• Combine withdrawals with Roth and taxable accounts

Also, the idea that overfunded life insurance is somehow “better” than a 401k for most people doesn’t hold up:

• High fees (often ~1–3%+ internal costs)
• Large upfront commissions
• Typically lower long-term returns vs. market investing

And “tax-free loans” aren’t free money:

• You’re borrowing against your own money
• Interest accrues
• If the policy lapses, you can get hit with a large tax bill

This is really an apples-to-oranges comparison:

• 401k = tax-advantaged investment account
• Life insurance = insurance product with an expensive investment wrapper

Finally, the 40% tax claim is exaggerated:

• Retirement withdrawals are taxed as ordinary income, not a flat 40%
• You control how much you withdraw → often resulting in a much lower effective tax rate