Cashing Matured Whole Life Policy, on Grown Son

[Golfnut2112]

If he has no need for the insurance cash it out. Do not take a loan and pay loan interest every year on something he may not need. I agree with you talk to your investment guy!!

 

[AboutThatLife]

If he has no need for the insurance cash it out. Do not take a loan and pay loan interest every year on something he may not need. I agree with you talk to your investment guy!!

why ruin the investment?

 

[Golfnut2112]

why ruin the investment?

What investment it's life insurance the son does not need. The son has little or no savings I would cash out and open a Roth IRA for the son, assuming he qualifies for one.

 

[DHK]

According to what criteria have we decided that the son doesn't need the policy?

Generally, financial professionals will do a complete fact-find before making such a determination. Just because the OP says he "has his own insurance" does not mean he has enough, nor is he fully utilizing its capabilities.

Prescription without proper diagnosis is malpractice.

 

[pfg1]

I agree that we don't know enough of the other factors invovled to make a 100% accurate recommendation. However, cashing out an old WL policy (assuming its mutual -dividend paying to pua) usually doesn't make much sense. They are super efficient at that point.

 

[Golfnut2112]

According to what criteria have we decided that the son doesn't need the policy?

Generally, financial professionals will do a complete fact-find before making such a determination. Just because the OP says he "has his own insurance" does not mean he has enough, nor is he fully utilizing its capabilities.

Prescription without proper diagnosis is malpractice.

Since we are not their agent and know nothing about the policy and the mother stated he has his own insurance, the best we can do is give ideas. Just as you stated about loaning out the policy and paying unnecessary loan interest. Life insurance is not as complicated as you make it sound. I have never used a fact finder and never met a good agent that has including the late and great Ben Feldman who I met numerous times when I first started out. He told me to use a legal pad and keep it simple.

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I agree that we don't know enough of the other factors invovled to make a 100% accurate recommendation. However, cashing out an old WL policy (assuming its mutual -dividend paying to pua) usually doesn't make much sense. They are super efficient at that point.

I agree with you about that.

 

[AboutThatLife]

Since we are not their agent and know nothing about the policy and the mother stated he has his own insurance, the best we can do is give ideas. Just as you stated about loaning out the policy and paying unnecessary loan interest. Life insurance is not as complicated as you make it sound. I have never used a fact finder and never met a good agent that has including the late and great Ben Feldman who I met numerous times when I first started out. He told me to use a legal pad and keep it simple.

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I agree with you about that.

Really? I disagree, I think the fact finder offers a semblance of professionalism to the client. It also gives you a basis for dealing with more complex cases involving estate planning. I have never actually "used" the information I gathered from one, and I deal mostly with seniors who couldn't afford all the insurance they need to protect their estate anyway.

DHK seems to have more of a white collar clientele, whom it would be useful to have these types of documents with. These are people who file lawsuits, he's an agent that holds himself to a fiduciary standard. So it's good for him.

 

[DHK]

Since we are not their agent and know nothing about the policy and the mother stated he has his own insurance, the best we can do is give ideas. Just as you stated about loaning out the policy and paying unnecessary loan interest. Life insurance is not as complicated as you make it sound. I have never used a fact finder and never met a good agent that has including the late and great Ben Feldman who I met numerous times when I first started out. He told me to use a legal pad and keep it simple.

I think you missed my point. It wasn't about the form. It was about doing the fact-finding. Maybe I should've used the term 'discovery'.

For me, I use a fact-finding form AND a legal pad. The legal pad is to illustrate and communicate various concepts, while I use the fact-finding form as my agenda and data-gathering tool. In this, I think we're more alike than we might admit.

Just because the OP says "they have their own insurance" doesn't mean that they necessarily have enough. Ben Feldman and John Savage both advocated human economic life value and used life insurance for many different uses. They both primarily sold for the permanent death benefit, back before both of their deaths in 1993.

But one thing I've noticed about permanent life insurance: It is the ONLY tax-deferred to tax-free account that guarantees the compound interest curve. Of course, that definition only fits whole life, but IUL at least protects the capital balance - aside from policy costs. Investments (securities) do not have such a guarantee. It is also liquid, meaning that you can access the funds while the money continues to grow tax-deferred/tax-free. As long as the policy stays in force, those benefits are preserved.

If someone was going to "cash it in" - depending on whether it's an emergency or opportunity - borrowing money from the policy in a responsible manner, and paying the annual interest is a great way to have your liquidity and continue to guarantee the compound interest curve - assuming a competitive borrowing rate.


For ATL's assertion that I have more of a "white collar clientele", that's not exactly true. In my area, we have a lot of blue-collar, but well-earning homeowner families, and English may not be their first language. These guys are sincere, hard-working, and just want the facts. They need to feel that they have an expert that is putting their needs first, not just trying to make a sale. But they do want financial advantages to help fund retirement, maximize college aid, pay for college, eliminate costly interest payments to outside institutions, have it self-completing in the event of disability, and avoid market risks where possible and if it makes sense for them.

I do hold myself to a fiduciary standard to the point that I need to know as many advantages of my products and strategies as possible. (You'll notice that the DOL ruling focuses primarily on disclosures, product and contract language when it comes to FIAs.) I also put my recommendations in writing. I can back up any and all assertions in a court of law. I wrote a comparison matrix of 23 points comparing the superiority of a maximum-funded life insurance contract to MEC guidelines to qualified plans & IRAs, 529s, mutual funds, and a Roth IRA. I can back up what I tell people.

So, for me, it's not merely a "belief" in life insurance as so many people talk about in our industry, being a 'secret for success'. That you won't sell much of it until you deliver a death claim. And then the business is "in your blood".

That's not my standard. I KNOW life insurance - inside and out. That's my standard. Life insurance is not a cult (although some selling systems make it seem like it is). Life insurance is a tool, and tools can be used in many different ways. The question is... what is the best way for your prospect/client that's in front of you? The more you know about it, the better you can serve their needs & wants.

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BTW, one of my favorite tools that has helped me understand and "codify" my knowledge of life insurance wasn't any CLU textbook, but the Tools and Techniques of Life Insurance Planning.

This is a GREAT resource. You can either buy it directly, or get the online version with a VSA subscription for $23.95/month along with about 8 or so additional Tools & Techniques books.

Reference

 

[AboutThatLife]

I think you missed my point. It wasn't about the form. It was about doing the fact-finding. Maybe I should've used the term 'discovery'.

For me, I use a fact-finding form AND a legal pad. The legal pad is to illustrate and communicate various concepts, while I use the fact-finding form as my agenda and data-gathering tool. In this, I think we're more alike than we might admit.

Just because the OP says "they have their own insurance" doesn't mean that they necessarily have enough. Ben Feldman and John Savage both advocated human economic life value and used life insurance for many different uses. They both primarily sold for the permanent death benefit, back before both of their deaths in 1993.

But one thing I've noticed about permanent life insurance: It is the ONLY tax-deferred to tax-free account that guarantees the compound interest curve. Of course, that definition only fits whole life, but IUL at least protects the capital balance - aside from policy costs. Investments (securities) do not have such a guarantee. It is also liquid, meaning that you can access the funds while the money continues to grow tax-deferred/tax-free. As long as the policy stays in force, those benefits are preserved.

If someone was going to "cash it in" - depending on whether it's an emergency or opportunity - borrowing money from the policy in a responsible manner, and paying the annual interest is a great way to have your liquidity and continue to guarantee the compound interest curve - assuming a competitive borrowing rate.


For ATL's assertion that I have more of a "white collar clientele", that's not exactly true. In my area, we have a lot of blue-collar, but well-earning homeowner families, and English may not be their first language. These guys are sincere, hard-working, and just want the facts. They need to feel that they have an expert that is putting their needs first, not just trying to make a sale. But they do want financial advantages to help fund retirement, maximize college aid, pay for college, eliminate costly interest payments to outside institutions, have it self-completing in the event of disability, and avoid market risks where possible and if it makes sense for them.

I do hold myself to a fiduciary standard to the point that I need to know as many advantages of my products and strategies as possible. (You'll notice that the DOL ruling focuses primarily on disclosures, product and contract language when it comes to FIAs.) I also put my recommendations in writing. I can back up any and all assertions in a court of law. I wrote a comparison matrix of 23 points comparing the superiority of a maximum-funded life insurance contract to MEC guidelines to qualified plans & IRAs, 529s, mutual funds, and a Roth IRA. I can back up what I tell people.

So, for me, it's not merely a "belief" in life insurance as so many people talk about in our industry, being a 'secret for success'. That you won't sell much of it until you deliver a death claim. And then the business is "in your blood".

That's not my standard. I KNOW life insurance - inside and out. That's my standard. Life insurance is not a cult (although some selling systems make it seem like it is). Life insurance is a tool, and tools can be used in many different ways. The question is... what is the best way for your prospect/client that's in front of you? The more you know about it, the better you can serve their needs & wants.

This sounds like something I would do. I have a similar philosophy. I feel like we would understand each other.

 

[Golfnut2112]

I think you missed my point. It wasn't about the form. It was about doing the fact-finding. Maybe I should've used the term 'discovery'.

For me, I use a fact-finding form AND a legal pad. The legal pad is to illustrate and communicate various concepts, while I use the fact-finding form as my agenda and data-gathering tool. In this, I think we're more alike than we might admit.

Just because the OP says "they have their own insurance" doesn't mean that they necessarily have enough. Ben Feldman and John Savage both advocated human economic life value and used life insurance for many different uses. They both primarily sold for the permanent death benefit, back before both of their deaths in 1993.

But one thing I've noticed about permanent life insurance: It is the ONLY tax-deferred to tax-free account that guarantees the compound interest curve. Of course, that definition only fits whole life, but IUL at least protects the capital balance - aside from policy costs. Investments (securities) do not have such a guarantee. It is also liquid, meaning that you can access the funds while the money continues to grow tax-deferred/tax-free. As long as the policy stays in force, those benefits are preserved.

If someone was going to "cash it in" - depending on whether it's an emergency or opportunity - borrowing money from the policy in a responsible manner, and paying the annual interest is a great way to have your liquidity and continue to guarantee the compound interest curve - assuming a competitive borrowing rate.


For ATL's assertion that I have more of a "white collar clientele", that's not exactly true. In my area, we have a lot of blue-collar, but well-earning homeowner families, and English may not be their first language. These guys are sincere, hard-working, and just want the facts. They need to feel that they have an expert that is putting their needs first, not just trying to make a sale. But they do want financial advantages to help fund retirement, maximize college aid, pay for college, eliminate costly interest payments to outside institutions, have it self-completing in the event of disability, and avoid market risks where possible and if it makes sense for them.

I do hold myself to a fiduciary standard to the point that I need to know as many advantages of my products and strategies as possible. (You'll notice that the DOL ruling focuses primarily on disclosures, product and contract language when it comes to FIAs.) I also put my recommendations in writing. I can back up any and all assertions in a court of law. I wrote a comparison matrix of 23 points comparing the superiority of a maximum-funded life insurance contract to MEC guidelines to qualified plans & IRAs, 529s, mutual funds, and a Roth IRA. I can back up what I tell people.

So, for me, it's not merely a "belief" in life insurance as so many people talk about in our industry, being a 'secret for success'. That you won't sell much of it until you deliver a death claim. And then the business is "in your blood".

That's not my standard. I KNOW life insurance - inside and out. That's my standard. Life insurance is not a cult (although some selling systems make it seem like it is). Life insurance is a tool, and tools can be used in many different ways. The question is... what is the best way for your prospect/client that's in front of you? The more you know about it, the better you can serve their needs & wants.

----------

BTW, one of my favorite tools that has helped me understand and "codify" my knowledge of life insurance wasn't any CLU textbook, but the Tools and Techniques of Life Insurance Planning.

This is a GREAT resource. You can either buy it directly, or get the online version with a VSA subscription for $23.95/month along with about 8 or so additional Tools & Techniques books.

Reference

Can you explain why life insurance is better than a Roth especially if there is no need for life insurance? Also if you could explain why it is better to pay interest each year instead of getting something tax free and no charges. I am not opposed to life insurance I usually do around $125,000 a year in premium. I never understood the whole bank on yourself, and other sales pitches. I did win a trip in August to a home office to learn moneytrax.

I am not trying to be cynical but I could never believe in the concept. I have a short term Putnam bond fund with a checkbook that I use as a bank. Also I bought a $500,000 whole life policy when my first daughter was born in 1988 which I believe has an 8% loan rate so if I borrow $50,000 it would cost me $3,000 per year which is insane especially if I never paid back the principal. Even though I no longer qualify for a Roth IRA I do have a solo Roth 401k.

Once again if you or anyone could enlighten me it would be greatly appreciated