FREE Kindle Book: Busting the Life Insurance Lies

[DHK]

Get it while it's free. I don't know when the price will reset.

https://www.amazon.com/Busting-Life...3&sr=8-1&keywords=busting+life+insurance+lies

And yes, knowing the author (Kim D.H. Butler) it will be well worth reading on this subject.

 

[Deadlily]

Thank you for sharing, DHK.

 

[Sherota1]

Thanks a million. Flipped thru this one. Looks like a gem.

 

[mplsmm]

When I saw the headline, I rolled my eyes, another newbie popping on to push some crappy rag, but then I saw it was DHK and I downloaded right away. Thanks DHK! If you say it's good, I will read it front to back. You have recommended some great reads in here!

 

[DHK]

I read through it yesterday. It is very good, although I think there's a couple of inaccuracies here and there, but the concepts she explains are very good.

 

[tanwarrakesh]

No one likes to think about buying life insurance because the thought of its ultimate usage brings forth images of one's own mortality. And, if you are young and healthy, it is hard to imagine dying and leaving your family members alone to fend for themselves.

 

[TampaHound]

downloaded and hopefully I'll be able to read it over the holiday's

 

[mplsmm]

I read through it yesterday. It is very good, although I think there's a couple of inaccuracies here and there, but the concepts she explains are very good.

I am a little less than halfway through, what inaccuracies do you see? I am a newbie so it all looks pretty good to me! I appreciate your input.

 

[DHK]

I actually sent Kim an email about it (she hasn't responded). I like explanations that can be proven mathematically, not just in an explanation.

So, here's what I sent:

I’m reading through your book today, and I’m really liking it! However, I do notice a few things that I wanted to bring up to you:

Lie #2 - Life insurance loans – when loan interest (arrears and current interest) is repaid back to the policy, it restores the earnings back to the policy – regardless of direct or non-direct recognition.
- $100,000 @ 5% = $5,000
- $50,000 loan @ 5% interest = $2,500 loan interest cost (I’m ignoring 1st year interest in arrears in this example as that’s the initial loan charge).
- If you don’t pay the interest out of pocket, $5,000 - $2,500 = $2,500 net earnings.
- If you pay the loan interest back to the policy, it restores the earnings: $5,000 - $2,500 + $2,500 = $5,000.
o I’ve done this illustration with a “direct recognition” company and found that if the interest only was paid each year, that the interest + a slight gain was credited to the policy.

Plus, while you don’t “have” to pay the annual interest, it’s a lower payment than financing something requiring principal + interest payments. If you financed that $50,000 with a 0% loan for 5 years, that’s $10,000 per year, instead of the $2500 per year + 1st year interest in arrears. It’s not just about the interest rate, but about the total cash flow. Yes, they should pay the $10,000+ to their policy each year, so they can collateralize against it again, but knowing the minimum options are helpful as well – just to keep the policy afloat and healthy.
- In addition, the loan itself is not reported to credit bureaus, helping credit scores and “hiding debt” legally. This can help preserve credit scores in the event of a lengthy period of unemployment.

Lie – Insurance companies keep your cash value:
- At any given point, the formula is this: net death benefit = ‘net amount at risk’ + cash values – any outstanding loans. The cash values are a component of the net death benefit paid out. The problem is most people talk about “face amount”, but “face amount” is simply the beginning of the benefits calculation for the illustration, not the end or final result.

Lie #35 – I think your math is incorrect in this section. When you calculated the interest, I think you added annual interest and forgot to divide by 12 for the monthly amounts that would be added on a ‘per diem’ basis.

 

[jdeasy]

Is one of those lies that the cash value will be added to the death benefit?