What Would You Suggest - High Income Earner

[djs]

Don't get me wrong, I'm not arguing against life insurance, I'm just wondering why whole life (or IUL) is a good option in this case?

Have a $4-5M term policy in force, I'm good with that, I understand that. Is it reasonable to split it? Maybe.

I don't view life insurance as an investment vehicle, just as a protection tool. I know some try to position as an investment, or at least part of an investment portfolio, I just feel from a pure investment play, there are better options.

Now, if you tell me she needs some perm stuff for estate planning, I might buy that, but she needs an estate plan in place to position the insurance.

Dan

 

[moonlightandmargaritas]

Don't get me wrong, I'm not arguing against life insurance, I'm just wondering why whole life (or IUL) is a good option in this case?

It's actually a perfect choice in this case. In LI, there's a "need" sale (you'll sell a lot of term) and a "greed sale". For a doc pulling down 460K/year, with dependents (needs the insurance), permanent LI is a superior "rich person's" product.

I don't view life insurance as an investment vehicle, just as a protection tool. I know some try to position as an investment, or at least part of an investment portfolio, I just feel from a pure investment play, there are better options.

While she should certainly max out any qualified plans available (OP says she has) what other "investment" is going to offer the combination of:

1) Death benefit leverage
2) Self completing (waiver of premium)
3) Tax-deferred cash value growth
4) Tax-free cash access (loan)
5) Creditor proof accumulation

A good quality whole life contract was made for a situation like this, despite whatever Dave Ramsey says.

 

[jacobtn]

It's actually a perfect choice in this case. In LI, there's a "need" sale (you'll sell a lot of term) and a "greed sale". For a doc pulling down 460K/year, with dependents (needs the insurance), permanent LI is a superior "rich person's" product.
While she should certainly max out any qualified plans available (OP says she has) what other "investment" is going to offer the combination of:

1) Death benefit leverage
2) Self completing (waiver of premium)
3) Tax-deferred cash value growth
4) Tax-free cash access (loan)
5) Creditor proof accumulation

A good quality whole life contract was made for a situation like this, despite whatever Dave Ramsey says.

I agree, i think an overfunded IUL would be perfect.

 

[djs]

With the exception of death benefit leverage, you pretty much described an annuity.

There are some additional benefits the annuity would offer, not the least of which is not having the life insurance premium coming out of the 'investment'.

Use term for the life insurance death benefit.

I still don't see why whole life (or IUL) is a good benefit here.

I have no idea what the clients goals are, which is a major factor in all of this. There is also no 'ONE' answer. It needs to be a bit of a layered/diversified strategy.

Dan

 

[moonlightandmargaritas]

With the exception of death benefit leverage, you pretty much described an annuity.

Annuities offer waiver of premium? Do they have a wash loan provision if you need to get ahold of some cash in an emergency?

 

[Norwayguy]

With the exception of death benefit leverage, you pretty much described an annuity.

There are some additional benefits the annuity would offer, not the least of which is not having the life insurance premium coming out of the 'investment'.

Use term for the life insurance death benefit.

I still don't see why whole life (or IUL) is a good benefit here.

I have no idea what the clients goals are, which is a major factor in all of this. There is also no 'ONE' answer. It needs to be a bit of a layered/diversified strategy.

Dan

Pull out the illustration software solve for minimum death benefit under option b increasing death benefit for the dollar outlay your looking at and then look at a supplemental illustration of the policies cost. Yes there is front loading of cost in the policy but look out 10-20 years down the road and your cost for insurance probably runs in the 2% of accumulation value. Yes thats a cost but with waiver of stipulated premium and loan features blow away the annuity especially if you ever need access prior to 59 1/2.