Suze Orman

[stormtracker]

Dave, and Suze and Dr. Lara, etc... give simplistic answers to complex problems. In their world, one size fits all.

 

[GonnaFlyNow]

1. you can spend down your 401k sooner and enjoy greater retirement income
2. you can take out a reverse mortgage and have tax-free income knowing that you have enough life insurance to repay the reverse mortgage
3. you can sell low-basis stock to a charitable remainder trust to enjoy the income from the stock and avoid the capital gains treatment (and have the life insurance replace the value back to your estate).
4. you can take single-life payouts on your pension versus joint-life because your life insurance can replace the value of your pension
5. even if all those values are used up sooner, you still have access to growing cash values to take for income via loans
6. During economic recessions and extreme portfolio volatility, you have other resources you can tap into for your retirement so you can leave your investments alone and ride it out.

DHk
i'm just curious. which of those six things could not be acoomplished by having the cash in the bank (instead of in your expenses ridden wl policy?)

 

[Death Cab For Tootie]

most of what suze and dave say is correct.
you don't get it because you see your products through the eyes of a salesperson. they c the big picture. you dont'

Ask someone who's been withdrawing 10% off their account that DR has said should return 12% how it's going.

Ask them why Suze Orman doesn't recommend whole life insurance to her callers yet owns a ton of it. Better yet, ask her why she insists on her callers invest in the stock market while she has roughly 1% of her wealth there.

Ask a DR fan if they knew he was on the verge of bankruptcy AGAIN due to bad real estate deals. Does getting financial advice from a TWICE FAILED real estate mogul concern them at all?

I could go on and on, but I've got a life to live and there's not enough hours left to point out where SO and DR have been wrong.

 

[DHK]

DHk
i'm just curious. which of those six things could not be acoomplished by having the cash in the bank (instead of in your expenses ridden wl policy?)

Almost none.

Why?

Life insurance is purchased for PENNIES on the dollar.

Cash in the bank is DOLLAR FOR DOLLAR.

To make these strategies work, you need to leverage a permanent death benefit.

Let's look at the alternative: In retirement, you cannot spend all your money because you need to leave it for your surviving spouse, use it in case of long-term illness and you need a constant income stream.

So, if you have $1 million dollars in cash, and you can reasonably get 7%, you can only spend the interest or $70,000/year.

If that 7% is constant, you can only spend $70,000 per year. It won't grow. (Yes, you can spend less, but I'm more of a proponent to enjoy your wealth while you're here and while you're healthy.)

Now, if you wanted to take a cruise around the world? You can't do it without tapping into your principal. You don't tap into your principal because you need these funds to go to your surviving spouse. Get it?

But if you have a permanent insurance benefit, you can use your other resources more efficiently.

Cash in the bank helps to offset market volatility - but you can't access the equity in your house unless it was your absolute last resort. In my scenario, it becomes a strategic option for income, NOT a last resort.

So, with life insurance, you can have up to 30% or more in retirement income and have it increase over your retirement years... or you can NOT have life insurance and be stuck at a level income.

Your choice. BTW, these are LEAP concepts.

 

[GonnaFlyNow]

dhk,
how's that kool aid tasting.
you need to crunch those numbers again.


what's better $1.5 million in the bank without whole life ins. or 1.0 million in the bank with your wl insurance.

what the h*ll is a LEAP.

i think it takes big leap of faiith to believe the scenarios you're coming up with here.



never mind.
i googled leap.

A friend of mind is now a LEAP agent. LEAP stands for "Lifetime Economic Acceleration Process" (http://www.leapsystems.com). He tried to explain how it works, but it is still pretty unclear to me. The basic idea (I believe) is to use whole life insurance to 1) protect yourself; 2) save for the future; and 3) increase your cash flow (by paying as little as possible on your mortgage or borrowing equity from your home and from the cash life value of the insurance).

I'm sure this would work for some people (everything works for some people), but what concerns me is the almost "religious" faith he seems to have in this system. I'm also concerned that he may not understand that this system is not appropriate for many people. It encourages people to stop contributing to other forms of retirement savings, 401(k)s, IRA's, etc. so they can divert the $$ into the premiums for the expensive whole life insurance.

 

[Death Cab For Tootie]

dhk,
how's that kool aid tasting.
you need to crunch those numbers again.


what's better $1.5 million in the bank without whole life ins. or 1.0 million in the bank with your wl insurance.

what the h*ll is a LEAP.

i think it takes big leap of faiith to believe the scenarios you're coming up with here.

If I can spend the $1mm like it's $2mm or $3mm, I'll take that over $1.5mm without the permanent DB.

LEAP = Lifetime Economic Accleration Process. You may not like it because it goes against some of SO's and DR's teachings, but it will be good education for yourself when you go out and fight the good fight.

 

[GonnaFlyNow]

Almost none.


Life insurance is purchased for PENNIES on the dollar.

Cash in the bank is DOLLAR FOR DOLLAR.

dhk,
if you start with a false premise all conclusions derived from that premise are false.

a life insurance death benefit is purchased for 'pennies on the dollar' in the first few years.

but when you add up all the premiums to pay for the expense ridden wl policy over one's lifetime and the opportunity cost of those dollars, wl is NOT leveraging anything.

life insurance makes a lousy investment vehicle.
i can't believe that peopel still believe this stuff.

what century are we living in here?

 

[Death Cab For Tootie]

dhk,
if you start with a false premise all conclusions derived from that premise are false.

a life insurance death benefit is purchased for 'pennies on the dollar' in the first few years.

but when you add up all the premiums to pay for the expense ridden wl policy over one's lifetime and the opportunity cost of those dollars, wl is NOT leveraging anything.

life insurance makes a lousy investment vehicle.
i can't believe that peopel still believe this stuff.

what century are we living in here?

This is why one uses the dollars that normally would go to their savings account to purchase WL. The opportunity costs over a lifetime of money sitting in a CD or savings are far greater than the same dollars purchasing WL insurance. Plus you get additional benefits like a permanent death benefit, creditor protection, and tax benefits (among others).

And for the record, any life insurance product is purchased for pennies on the dollar. Over time, however, this leverage is reduced to the point where, at age 121, there is no leverage. At that point, the guaranteed column equals the death benefit.

While we're on the topic, what is the lost opportunity cost of paying for a 30 year term policy that doesn't pay out (either due to living past the term or stopping payment during the term)? It becomes all lost opportunity cost! At least with WL, there are non-forfeiture options if you decide to stop paying on the policy.

 

[GonnaFlyNow]

dc4t,

too bad they don't show the opportunity cost besides the guaranteed column. that would be quite an eye opener to agent and consumer alike.





- - - - - - - - - - - - - - - - - -

If I can spend the $1mm like it's $2mm or $3mm, I'll take that over $1.5mm without the permanent DB.

it's amazing how life insurance will enable the $1m i have in my savings account to be spent like it's $2m or $3m.

that's simply marvelous.

you probably believe in the "social security trust fund" too.

at anytime when that $1m magically spends like $2m, do i haev to say 'abra cadabra' or 'hokkus pokus'?

here's a list of magic words that might help your clients spend that $1m like it's $2m.

Magicians Famous Magic Words | Magic Tricks .Com

 

[Death Cab For Tootie]

You know what? I know we've had our differences GFN. I've tried to be civil throughout this particular conversation. I've even tried to be helpful and explained how you can find out more information on LEAP and given you more info than I would normally. But there's no reason for childish taunts and accusations. For the record, I do show my clients their lost opportunity costs of utilizing WL vs. leaving money in savings. It goes to show EVERY SINGLE TIME that there are less LOC's in my strategy than what they currently do.

If you want to stay willfully ignorant, that's your choice. But if you want to contend that what I say is hocus-pocus and I'm lying, well, you better be able to back it up. Otherwise, prepare to be professionally bitch-slapped with this message board as witness.