Insurance Agent Forum

[James]

So how do you feel about these ideas of placing and using equity of the home and other resources in financing within a UL, WL Vs using Securities as in Stocks, Bonds or MF's? Do you feel that the arbitage is a sound idea or that it shouldn't be done not withstanding any product may it be a Insurance Contract or Securities?

[James]

Main Entry: 1ar·bi·trage
Pronunciation: 'är-b&-"träzh
Function: noun
Etymology: French, from Middle French, arbitration, from Old French, from arbitrer to render judgment, from Latin arbitrari, from arbitr-, arbiter
1 : the nearly simultaneous purchase and sale of securities or foreign exchange in different markets in order to profit from price discrepancies
2 : the purchase of the stock of a takeover target especially with a view to selling it profitably to the raider

Isn't there a better word to use then Arbitrage? Okay, it is what most use for the theory that Missed Fortune and IBC people use to descripe the leverageing of equity of a Home or other Assets that do not necersarily recieve a Return of Investment such as Properties or Assets within a business. Or some even suggest ones savings for Retirement or Profits made in the market as in "Securing last years Profits from your Stock Investments".

[sman]

Originally Posted by indaville

It is best to use insurance and stay away from securities with this strategy. The Missed Fortune guys seem to think this will work for everyone, my experience says that for about 1 in 3 this could be a good idea.

I'm curious to know why you would recommend one over the other? I wouldn't recommend it for anyone. But just curious why you believe an insurance product would work better than securities?

[James]

Originally Posted by sman

I'm curious to know why you would recommend one over the other? I wouldn't recommend it for anyone. But just curious why you believe an insurance product would work better than securities?

Most that use Insurance Products for this theory site the security within the Insurance Contract as the overriding reasons. Yet I imagine Bonds and someother investments would be secure also.

Yet, the question I have are you against the idea of seperating equity from the home/property or just the idea of using what most use a EIUL to do it with?

[indaville]

It is best to use insurance and stay away from securities with this strategy. The Missed Fortune guys seem to think this will work for everyone, my experience says that for about 1 in 3 this could be a good idea.

[sman]

Originally Posted by indaville

It is best to use insurance and stay away from securities with this strategy. The Missed Fortune guys seem to think this will work for everyone, my experience says that for about 1 in 3 this could be a good idea.

O.K., you've repeated yourself and not answered the question.

[johncm]

Originally Posted by James

Most that use Insurance Products for this theory site the security within the Insurance Contract as the overriding reasons. Yet I imagine Bonds and someother investments would be secure also.

Yet, the question I have are you against the idea of seperating equity from the home/property or just the idea of using what most use a EIUL to do it with?

Bonds do not work either. Although safe, do not create an arbitrage. EIUL has the best chance of this and still be safe. Securities have risk of loss of principal and people would be tempted to make emotional moves that ultimately do not work out in thir favor and thir are ongoing fees to boot.

I like to concept, was it not obvious, and live by slow and steady. There are only a few, maybe 3 at most, companies that this works well with. Just any EIUL will not work. An remember, with this concept, you are selling minim DB with max cash value.

[James]

Originally Posted by johncm

Bonds do not work either. Although safe, do not create an arbitrage. EIUL has the best chance of this and still be safe. Securities have risk of loss of principal and people would be tempted to make emotional moves that ultimately do not work out in thir favor and thir are ongoing fees to boot.

I like to concept, was it not obvious, and live by slow and steady. There are only a few, maybe 3 at most, companies that this works well with. Just any EIUL will not work. An remember, with this concept, you are selling minim DB with max cash value.

Why wouldn't Bonds work? We really aren't talking about a real arbitrage because as I noted that has the exchange of currency, ie the ultimate being George Soros. Yet I'm really trying to figure out why some don't like this idea in general, is it the idea of the Equity Management or the idea of using a Insurance Contract?

I would also think there is more then three good UL's to use for this, I thinking you are being a bit picky or going by the book Andrew put out originally, yet more and more companies are coming out with attractive UL's.

[indaville]

Originally Posted by sman

O.K., you've repeated yourself and not answered the question.

I don't know what is going on with my posts?

I like the LI over securities b/c of the safety. Using LI over bonds provides multiple benefits for the client.

[sman]

Originally Posted by indaville

I don't know what is going on with my posts?

I like the LI over securities b/c of the safety. Using LI over bonds provides multiple benefits for the client.

You like the LI over securities because of safety? Let me ask you this, would you consider this philosophy to be a long term process? If so, what makes you think the returns on an EIUL will outperform the returns of a well allocated equity protfolio?

What 17 years in this business has taught me is that even the best laid plans fall apart. Clients get tired of putting those dollars into a life insurance policy. They refinance their houses. They move to new houses. They buy new cars. They send their kids to college. Oh yeah, and let's not forget what has happened to the rates on those Option ARM loans over the last two years. Now the monthly savings they were to set aside for the EIUL has reduced. It's just a recipe for disaster.

This type of program is not for the mass population. It MAY work for a select few. And I do mean a select few. Any agent who "convinces" a person to refinance their house and take that equity and put it into an EIUL along with the monthly savings is not, in my opinion, looking out for the best interest of the client. They are only looking at padding their wallets.

[indaville]

Originally Posted by sman

You like the LI over securities because of safety? Let me ask you this, would you consider this philosophy to be a long term process? If so, what makes you think the returns on an EIUL will outperform the returns of a well allocated equity protfolio?

What 17 years in this business has taught me is that even the best laid plans fall apart. Clients get tired of putting those dollars into a life insurance policy. They refinance their houses. They move to new houses. They buy new cars. They send their kids to college. Oh yeah, and let's not forget what has happened to the rates on those Option ARM loans over the last two years. Now the monthly savings they were to set aside for the EIUL has reduced. It's just a recipe for disaster.

This type of program is not for the mass population. It MAY work for a select few. And I do mean a select few. Any agent who "convinces" a person to refinance their house and take that equity and put it into an EIUL along with the monthly savings is not, in my opinion, looking out for the best interest of the client. They are only looking at padding their wallets.

I don't use EIUL, I use an over-funded WL. I agree the strategy is not for everyone, but when it does work it can be a huge benefit for the client.

[johncm]

Originally Posted by sman

You like the LI over securities because of safety? Let me ask you this, would you consider this philosophy to be a long term process? If so, what makes you think the returns on an EIUL will outperform the returns of a well allocated equity protfolio?

What 17 years in this business has taught me is that even the best laid plans fall apart. Clients get tired of putting those dollars into a life insurance policy. They refinance their houses. They move to new houses. They buy new cars. They send their kids to college. Oh yeah, and let's not forget what has happened to the rates on those Option ARM loans over the last two years. Now the monthly savings they were to set aside for the EIUL has reduced. It's just a recipe for disaster.

This type of program is not for the mass population. It MAY work for a select few. And I do mean a select few. Any agent who "convinces" a person to refinance their house and take that equity and put it into an EIUL along with the monthly savings is not, in my opinion, looking out for the best interest of the client. They are only looking at padding their wallets.

This is not for the mass population. It works if you can get around this. If you get tired of putting money into anything, it will fall apart. SOME people jsut do not want the risk of securities and WANT safety. What's wrong with that. With 17 years, you've got me beet by a bunch. But, I still wonder if you are not just set in your own way and can not see any different. Not saying it's bad, but until you do a little more than just read the book, why bash it.

It is only a few companies that this works with and no it's not because of what's in the book. I don't think he mentions any names in the book. It is only a few only because when yuo do a side by side only a few come out on top with the rest not even close behind.

WL is good but I still believe that EIUL will still beat WL hands down. I know I am going to take a beating on this, but that is how I see it. WL was yesterday EIUL is today. Lets face, things improve in time. Ealy UL gave people a bad taste and we have learned.

On bonds, Safe yes, but do little in the arbitrage arena

[indaville]

Originally Posted by johncm

WL was yesterday EIUL is today.

The thing with WL is it always survives. UL was going to replace it, then variable, now EIUL. If you are using LI for cash accumulation I have not seen a UL or EIUL that looks good when you start taking cash out.

[johncm]

Originally Posted by indaville

The thing with WL is it always survives. UL was going to replace it, then variable, now EIUL. If you are using LI for cash accumulation I have not seen a UL or EIUL that looks good when you start taking cash out.

Have you actually taken a look at a EIUL designed to take cash out at some point.
Take a look at F&G, Indy Life and LSW. These 3 are way ahead of the other EIUL products. And although WL looks good. These look alot better. With much better chance of higher gains than WL could get.

[sman]

Originally Posted by johncm

This is not for the mass population.

Is there an echo in here?

It works if you can get around this.

This is the exception and not the norm and based on faulty assumptions if you ask me.

If you get tired of putting money into anything, it will fall apart.

Yes, but at least with equities you still have access to those monies you've saved. With the EIUL, you've suffered from a drag due to the load fees and COI. In addition, you've got lengthy surrender charges.

SOME people jsut do not want the risk of securities and WANT safety. What's wrong with that.

There is absolutely nothing wrong with that. However, those are generally the people who would rather have a home paid for and not mortgaged to the hilt in "HOPES" that what the agent showed them will work.

But, I still wonder if you are not just set in your own way and can not see any different.

Nope. I have to study everything that comes out on the market. You either study it and use it or study it and refute it. You use it if it's a good deal for the client. You refute it if you believe it will do more harm than good. After studying it, I choose the latter.

Not saying it's bad, but until you do a little more than just read the book, why bash it.

It's faulty for you to assume I've done little more than read a book.

It is only a few companies that this works with and no it's not because of what's in the book. I don't think he mentions any names in the book. It is only a few only because when yuo do a side by side only a few come out on top with the rest not even close behind.

Ah yes, it works when the numbers used in the illustration are obtained. When there is no increase in COI. When there is no reduction in premium due to the Option ARM loan having rising interest rates. It amazes me how agents will accept the "historic" returns when offering this product, and turn around and bash equities (most that do this aren't even licensed to sell equities) and use the "past results don't guarantee future returns" argument. How is it that you think and index product can outperform the index itself when it doesn't even include the dividends of that index? And don't give me the whole "it doesn't participate in the downturns of the market".

I know that the two most used carriers for this approach are F&G and Indianapolis Life. With F&G's MasterChoice, you've got a 7.5% load up to target (then 5% of excess) plus $10 a month. And with either of Indianapolis Life's plans you have a 5% premium charge plus $5 or $6 per month or 3% plus $5 per month depending on which product you choose.

So right off the bat, you've got to mak