Whole Life Insurance

[ABC]

Beyond the permanent death benefit, WL is a great fit for those clients who want a non-qualified place to park long-term, conservatively-invested assets. When you combine tax-deferral, tax-free loans, liquidity, and creditor-protection, it smokes other low-risk investments out of the water.

So yes, a lot of people I come across buy WL. I also own a lot of it. How much do you own, ABC?

I personally have a $250,000 WL with $750,000 of term.
So in 20+ years my cash value will be equal to what I have layed out in premium for both policies.

Maybe at that point I will take a loan on the money and pick up a used corvette that does not have air conditioning.

I have been kicking around the idea of the May increasing the WL to $500,000 and reduce what I am putting in my 401k. I think the market is going to have another serious set back 3rd quarter this year.

 

[Death Cab For Tootie]

I personally have a $250,000 WL with $750,000 of term.
So in 20+ years my cash value will be equal to what I have layed out in premium for both policies.

Awesome! Free insurance! And a permanent DB that can be leveraged!

Maybe at that point I will take a loan on the money and pick up a used corvette that does not have air conditioning.

Bah, I'm sure you'll be able to get one with A/C. You'll need to re-do the interior though...

I have been kicking around the idea of the May increasing the WL to $500,000 and reduce what I am putting in my 401k. I think the market is going to have another serious set back 3rd quarter this year.

Not a bad idea, not that I'm promoting market timing. For those (myself included) who feel long-term, conservative, non-qualified money is prudent for an overall financial strategy, there's nothing better than WL. My clients tend to agree as well, so they buy WL too.

FWIW, I wasn't trying to bait you, ABC. After I re-read my original post, I may have come off as a bit confrontational. It wasn't my intention, but I'm glad to hear you own what you sell. I'm kind of suprised that, given your level of commitment to WL, more people are not jumping on board when you present it.

 

[Full Throttle]

If you compare a 401k with the fees and then compare the fees for the mutual funds 1.6%-2.9% Most 401k have performed under 4%.

No offense ABC, but if you're selling it as a 4% alternative compared to a pension plan, and that's all you're saying, it's not positioned correctly and I wouldn't buy it either.

Although the cash savings can have some effective ways of helping people, the main reason for the sale needs to be a death benefit sale. If they simply want the conservative savings element, there are other places to go in my opinion. If they want to pass money along tax efficiently and a conservative savings vehicle is important for a portion of their savings, then WL probably is a great fit. Of course, many other factors come into play as well.

 

[ABC]

FWIW, I wasn't trying to bait you, ABC. After I re-read my original post, I may have come off as a bit confrontational. It wasn't my intention, but I'm glad to hear you own what you sell. I'm kind of suprised that, given your level of commitment to WL, more people are not jumping on board when you present it.

I was just trying to make light of the subject. You make a valid point that most agents to buy what they sell.

No offense ABC, but if you're selling it as a 4% alternative compared to a pension plan, and that's all you're saying, it's not positioned correctly and I wouldn't buy it either.

Although the cash savings can have some effective ways of helping people, the main reason for the sale needs to be a death benefit sale. If they simply want the conservative savings element, there are other places to go in my opinion. If they want to pass money along tax efficiently and a conservative savings vehicle is important for a portion of their savings, then WL probably is a great fit. Of course, many other factors come into play as well.

My sales pitch is stale. I am selling the WL product as a forced savings account with a death benefit that is more secure than a 401k.

I am a group health guy so I have never really gone after life. I am surprised by how much life insurance most career people have. I was working with a young gun that with his personal and employer life plans had about $2 mill. He is 29 years old.

Everyone has Term and I don't blame them.

I really think WL has its place again. 4% on your money is not bad.

 

[bunkerjunker]

I believe that we can all agree that diversification one's financial portfolio is paramount to financial success. In reading this thread (and any other Term vs Perm thread for that matter) it seems that so many people are into what is "hot" for that day. In the 90's it was Securities. Then came 9-11. Then people began saying the only safe place to put money is Real Property. That has turned out well hasn't it? The fact of the matter is that we need to use a variety of financial instruments to become successful. Yes I say we, because I do for myself what I do for my clients. The secret has been right in front of our noses for decades, yet we seem to forget, Cash and Liquidity is KING. When the right opportunity comes along (Securities in the 90's, Real Estate in the early 2000's) those who have the available cash have come out light years ahead of those who buy and hold.

With that being said, Whole life insurance is nothing more that a secure, guaranteed parking garage for a person to hold cash. I have used my Whole Life policies over the years for a number of "opportunities" that have come along. The fact that I have a guaranteed death benefit on my policy is gravy. I'll say that the first few years paying for a policy was difficult, and I was much happier contributing to my investments, but now that I understand the proper use of Whole life, and have seen the benefits, I can't wait to make my next annual premium. Seeing those benefits, my new thoughts are buy WL and invest the Term premium!

 

[Full Throttle]

With that being said, Whole life insurance is nothing more that a secure, guaranteed parking garage for a person to hold cash. I have used my Whole Life policies over the years for a number of "opportunities" that have come along. The fact that I have a guaranteed death benefit on my policy is gravy.

Personal opinion, you have it backwards for most people. The most important element is the guaranteed death benefit, the secure cash savings is gravy. If I don't have a need (or desire) for the death benefit, why would I pay for it?

 

[BNTRS]

Personal opinion, you have it backwards for most people. The most important element is the guaranteed death benefit, the secure cash savings is gravy. If I don't have a need (or desire) for the death benefit, why would I pay for it?

You get premiums back with interest and a dividend. Creditor and liability protection. Planning for the future. But I see your point.

 

[Full Throttle]

You get premiums back with interest and a dividend. Creditor and liability protection. Planning for the future. But I see your point.

All true (creditor protection depends on your state), but I can accomplish all those with an annuity if I don't care about the death benefit. I'm not anti-WL, far from it, but if the death benefit doesn't matter, it probably isn't the best fit.

 

[Death Cab For Tootie]

All true (creditor protection depends on your state), but I can accomplish all those with an annuity if I don't care about the death benefit. I'm not anti-WL, far from it, but if the death benefit doesn't matter, it probably isn't the best fit.

"Mr./Mrs. Client, is there a chance in the future you'll care enough about someone or a charity that you'll want to leave a legacy? Do you want to lock in your ability to provide that legacy?"

Creditor-protecting assets by using an annuity can be a catch-22. A 1099 is more likely, thus causing a withdrawal to be attachable. A loan is a tax-free event and is not as 'traceable'.*

*I'm not an attorney but I did stay at a Holiday Inn Express last night. Consult an attorney regarding your state's rules.

 

[BNTRS]

All true (creditor protection depends on your state), but I can accomplish all those with an annuity if I don't care about the death benefit. I'm not anti-WL, far from it, but if the death benefit doesn't matter, it probably isn't the best fit.

I know, we are also ignoring liquidity.