SECOND THOUGHTS on Whole Life Insurance 1 Year in - ADVICE???

[jboussea]

Are you security licensed?? Most 529 plans have an option that moves more into cash and bonds the closer they get to college. Even if you were doing it yourself common sense tells you to move into more a conservative allocation as college approaches.

I addressed that point earlier..if you do that you're losing the one advantage of the 529 ..and that the potential of higher return ..that really gives ypu a small window to be in stocks..you only have a total of 18 years.. the first few years your contribution are relatively small the last few years you have to take a more conservative position of cash and bonds... So you can't tell me you can confidently tell your client to expect a great return in that small of a window.. ita possible..but you can't depend on it.With WL. You're earning dividnds while the balance is at its highest

..and no I'm not securities licensed but I do have money in stocks and I like to understand the products I put my money in..

And i won't even go into the problem of having your money in bond funds in this environment

 

[Golfnut2112]

I addressed that point earlier..if you do that you're losing the one advantage of the 529 ..and that the potential of higher return ..that really gives ypu a small window to be in stocks..you only have a total of 18 years.. the first few years your contribution are relatively small the last few years you have to take a more conservative position of cash and bonds... So you can't tell me you can confidently tell your client to expect a great return in that small of a window.. ita possible..but you can't depend on it.With WL. You're earning dividnds while the balance is at its highest

..and no I'm not securities licensed but I do have money in stocks and I like to understand the products I put my money in..

And i won't even go into the problem of having your money in bond funds in this environment

What problem with bond funds? Check out some of their returns. Once again get security licensed and quit drinking the kool-aid. Like I said numerous times I sell all types of life insurance but I sell it when appropriate. To many people sell life insurance when a security product would be better but they can't sell the security because they are not licensed for what ever reason.

 

[jboussea]

What problem with bond funds? Check out some of their returns.

They are fine now.but i wouldn't bet ob them being fine once interest rates go up

What about the main point of my post?

 

[Golfnut2112]

They are fine now.but i wouldn't bet ob them being fine once interest rates go up

Then you go to bank loan funds. I did not mean any disrespect about the security license but I have been doing this 30 year and could not imagine not having one the income and business I would lose would be substantial. BTW I make conference every year with with a large life company so I do both.

 

[jboussea]

What problem with bond funds? Check out some of their returns. Once again get security licensed and quit drinking the kool-aid. Like I said numerous times I sell all types of life insurance but I sell it when appropriate. To many people sell life insurance when a security product would be better but they can't sell the security because they are not licensed for what ever reason.

I'm sure agents do that..but you're saying WL should never be used for college and I'm telling you why I woukd use it..and why someone else may find it useful... And more beneficial to a 529..

Its alot easier to explain the benefit s of 529 than it is a whole life... 529 is great in theory but when you start looking at real life scenarios..i think hindsight being 20 /20 a lot of ppl would rather go with wl..but by the time They realize it..it will be too late

 

[Golfnut2112]

I'm sure agents do that..but you're saying WL should never be used for college and I'm telling you why I woukd use it..and why someone else may find it useful... And more beneficial to a 529..

Its alot easier to explain the benefit s of 529 than it is a whole life... 529 is great in theory but when you start looking at real life scenarios..i think hindsight being 20 /20 a lot of ppl would rather go with wl..but by the time They realize it..it will be too late

I'm sure they will thrilled paying the interest year after year. Just remember if things go wrong you are going to have a very hard time explaining why you chose a WL policy to fund college, instead of other options.

 

[jboussea]

I'm sure they will thrilled paying the interest year after year. Just remember if things go wrong you are going to have a very hard time explaining why you chose a WL policy to fund college, instead of other options.

So is it about what's better for the client or what's easier to explain.. as far as the interest goes im with DHK on that if you design it so your dividends are higher than the interest paid..your net effect bis positive.. you might know more about this than i do but so far you haven't really explained how the dividends will not offset the interest..

 

[Golfnut2112]

So is it about what's better for the client or what's easier to explain.. as far as the interest goes im with DHK on that if you design it so your dividends are higher than the interest paid..your net effect bis positive.. you might know more about this than i do but so far you haven't really explained how the dividends will not offset the interest..

Your dividend in say 22 yrs WILL NEVER exceed the intrest due if you takeout $100,000 plus in loans. If you do not believe me run an illustration.

 

[Tahoe Ray]

Your dividend in say 22 yrs WILL NEVER exceed the intrest due if you takeout $100,000 plus in loans. If you do not believe me run an illustration.

I agree with you on most of this...529 plans are an excellent savings vehicle for college and I would rather see people making more money than these people before buying WL or IUL.

That being said, what happens if you take 100k out of your bond fund? It's gone.

In a properly structured WL plan, you're paying a few % points (net) and continue to earn "interest" on spent money.

That's not a bad arbitrage.

 

[Golfnut2112]

I agree with you on most of this...529 plans are an excellent savings vehicle for college and I would rather see people making more money than these people before buying WL or IUL.

That being said, what happens if you take 100k out of your bond fund? It's gone.

In a properly structured WL plan, you're paying a few % points (net) and continue to earn "interest" on spent money.

That's not a bad arbitrage.

I see what you are saying about the arbitrage but I feel if you fund a bond fund and a WL equally you probably have more money in the bonds or a conservative allocation.

I have been doing this 30 years and NEVER seen a life insurance policy perform like projected. In a whole life or UL it has been declining interest rates and with a few carriers an increase in their UL mortality cost. When I started VUL was all the rage at PRU, we all know how those policies worked out. I believe the problem with the VUL was projecting a level interest rate when in reality it fluctuates.

I do not recommend any cash value products for any type of savings needs, I sell it as protection and most people I have found prefer the WL. Most of the time I sell a blended policy with a healthy dose of PUA rider. I also show a RPU option at some future date. Ohio National makes it's nice showing the RPU amount yearly on their illustrations.