LI that Pays DB Plus Cash Value

[rousemark]

I do remember that chart and after looking at it again it has made me realize whole life is a TERRIBLE insurance plan your younger people.

1. You start out paying 3 or 4 times the cost of term.

2. As the years go by the net risk amount of risk to the insurance company is going down but your still paying a higher premium.

3. If you die you only get the death benefit ,whereas with a 30 term and a Roth both the death benefit and the IRA tax free.

4. The money is not yours in a whole life you need to borrow it whereas a Roth it's yours and no need to pay intrest.

5. The 3 or 4 percent a whole life may make over a 30 period is overstated because once you withdraw that money you will be paying interest on it every year. OUCH!! A Roth is tax free and intrest free.

6. If you still need insurance after 30 buy a little policy because really that's all you would have if you started out with whole life because of the net amount of risk.

As I stated before I'm not a termite and sell a lot of permanent life insurance but mainly for wealth transfer.

The money is yours in the CV. You do not borrow the money out of the CV. If you did it would have the same effect on the contract was a cash withdrawal from an UL. You borrow the company's money while yours remains in the contract and continues to build but does stand as collateral for the loan.

It is the same as if you take a second mortgage on you're house. The equity (money) in the house is still yours.

As for interest, there is interest on most loans but many insurance companies have 0 Wash loans. If you could take a loan against the value of your Roth, the assets in the Roth would still be yours and still be subject to grow but the lender would charge interest. If, instead of the loan, you withdrew the assets, then those assists would no longer contribute to the growth.

 

[Golfnut2112]

The money is yours in the CV. You do not borrow the money out of the CV. If you did it would have the same effect on the contract was a cash withdrawal from an UL. You borrow the company's money while yours remains in the contract and continues to build but does stand as collateral for the loan.

It is the same as if you take a second mortgage on you're house. The equity (money) in the house is still yours.

As for interest, there is interest on most loans but many companies have 0 Wash loans. If you could take a loan against the value of your Roth, the assets in the Roth would still be yours and still be subject to grow but the lender would charge interest. If, instead of the loan, you withdrew the assets, then those assists would no longer contribute to the growth.

That makes sense. I have a daughter getting married this year and I have a $250,000 WL with Pru I bought when she was born. There is more than enough money in the policy to pay for the wedding but I believe the interest rate is 8% and that would cost me between $2500 to $3,000 a year depending on the final cost. Which means in 12-15 years I'm paying for it again in interest cost.

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Yes, I'm arguing semantics, because life insurance is a contract and contracts are defined by various terms, and each term has a specific definition.

If the insurance company paid out the "face amount", then the insurance company "keeps the cash value". Of course, the "face amount" is just the beginning of the calculations of a life insurance policy illustration.

The death benefit column is called... total death benefit, NOT "face amount".

The death benefit and face amounts are two different numbers used in different context.

Therefore, the death benefit is defined as:
Net death benefit = cash values + amount at risk - any outstanding loans.


If you can find me an illustration that shows a column for 'face amount'... then you will be correct because then the insurance company will be paying out the 'face amount' regardless of cash values... that they would (supposedly) keep.

It really is semantics I was at a dance competition last night and was using the terms interchangeably. The bottom line is if the annual report shows a death benefit of $100,000 and cash of $40,000 the bene gets only the $100,000.
As long as the company pays what is says it will then I'm happy. Just for your info NONE of that stuff you posted with the American college is in the contract.

 

[DHK]

Just because it's not explicitly stated in the contract... doesn't mean it doesn't exist or apply.

I do remember that chart and after looking at it again it has made me realize whole life is a TERRIBLE insurance plan your younger people.

1. You start out paying 3 or 4 times the cost of term.

Just like buying a home compared to renting an apartment - at least in normal real estate markets. And of course, the initial payments are all interest and don't contribute to your equity at all. At least the advantage is that it's tax-deductible interest in the beginning.

2. As the years go by the net risk amount of risk to the insurance company is going down but your still paying the same premium.

Just like a 30-year mortgage. You start out with great tax-deductible interest payments, and over time, your deduction is less and less (if you don't refinance the loan).

3. If you die you only get the death benefit ,whereas with a 30 term and a Roth both the death benefit and the IRA are paid out tax free.

Okay... but if you became disabled... you wouldn't have the benefit of a disability waiver of premium to make your IRA contributions as you would for a whole life contract.

4. The money is not yours in a whole life you need to borrow it whereas a Roth it's yours and no need to pay intrest.

Your policy receives the interest payments. I just did this one yesterday based on a direct-recognition contract:
https://david82496.wixsite.com/davi...ance-Loans-Am-I-Paying-To-Borrow-My-Own-Money

5. The 3 or 4 percent a whole life may make over a 30 period is overstated because once you withdraw that money you will be paying interest on it every year. OUCH!! A Roth is tax free and intrest free.

Withdrawals and loans are two different things. Withdrawals permanently reduce your cash values and earning power, while loans collateralize the cash values so they can still earn interest and dividends - depending on direct vs non-direct recognition.

6. If you still need insurance after 30 buy a little policy because really that's all you would have if you started out with whole life because of the net amount of risk.

The larger policies are easier to be underwritten for and far more affordable when you are younger. Should insurability be affected later, you may not qualify for much more than an FE policy.

As I stated before I'm not a termite and sell a lot of permanent life insurance but mainly for wealth transfer.

Why not "begin with the end in mind" and plan for wealth transfer from the beginning?

 

[LGilmore]

To golfnut?

What is your dividend election for the pru policy? Why didn't you surrender dividends rather than loan, if a loan bothers you that much?

Also in your previous post you use a Roth for comparison, are the levels of risk the same for your life insurance and the roth? You're comparing apples and oranges in your statement.

While I hate getting into these type of threads, as I don't care what you buy. I've owned WL for almost 30 years and am very happy with it. The price was dirt cheap when I bought it compared to now. Was term cheaper? yes it was, so is rent. ownership costs. I have been uninsurable for some time now.

I can't imagine how screwed I would be if I had bought term as a young man. Instead I own stuff I don't have to worry about losing it's value. I have other products of course as there is no one single solution for planning. But I have to say locking in premium costs as a young man was so much smarter than waiting to pay a but load of money for either term or buying permanent as a late middle aged man, with lots of meds on the menu.

Sorry I just disagree with your last couple posts, but you are entitled to make any choices you like. I don't have to agree or follow them and yes, likewise you don't have to follow mine.

 

[Golfnut2112]

To golfnut?

What is your dividend election for the pru policy? Why didn't you surrender dividends rather than loan, if a loan bothers you that much?

Also in your previous post you use a Roth for comparison, are the levels of risk the same for your life insurance and the roth? You're comparing apples and oranges in your statement.

While I hate getting into these type of threads, as I don't care what you buy. I've owned WL for almost 30 years and am very happy with it. The price was dirt cheap when I bought it compared to now. Was term cheaper? yes it was, so is rent. ownership costs. I have been uninsurable for some time now.

I can't imagine how screwed I would be if I had bought term as a young man. Instead I own stuff I don't have to worry about losing it's value. I have other products of course as there is no one single solution for planning. But I have to say locking in premium costs as a young man was so much smarter than waiting to pay a but load of money for either term or buying permanent as a late middle aged man, with lots of meds on the menu.

Sorry I just disagree with your last couple posts, but you are entitled to make any choices you like. I don't have to agree or follow them and yes, likewise you don't have to follow mine.

I have to say I am not against WL besides the one I bought in 1988 I bought another one when I was with NYL in 1993 when by second daughter was born. Both policies started out at $250,000 and are worth a lot more now. I still pay the premiums on both policies since I no longer qualify for the Roth however I do not think I will ever loan either one out because of the interest charge unless its a last resort. I am however a lot happier with my American funds and and other accounts even though I know its not the same risk tolerance. I just feel with the 30 term now available along with the Roth that may be a better solution for the average income young family.

My Dividend option is PUA. Becoming uninsurable is one thing I did not factor in which is HUGE!! First off let me say I probably only have 30 clients under the age of 40 out of my 700+clients. That is just not my market and I can honestly say if I set someone up with a 30 term and a Roth and they don't contribute to it I will bring it up in the annual meeting but I will not hound them about it.

The biggest thing that I do like about my polices is I can spent the other money and still know my kids will have something (maybe a college fund for their kids once they have them). Unless I'm having a good time then its all gone and they are on their own. lol

 

[LGilmore]

Did you like your American funds in 2008?

What a lot of financial gurus and agents fall into is the trap of designing a plan or plans that only work one way. If your predictions for the future never change.

When we look around nothing we see is an absolute.

Try looking at your planning as if things go south or do not turn out the way you hoped.

I like my whole life because it is simple basic and safe. For it to fail, the nation would have to fail.
My WL allows me to take more risk on elsewhere (and better possible returns) than I would not be wise to do with term. If I totally screw the pooch with my other financial choices and there are days or years, where I could say that is true, the WL is my safety net.
It was never designed to be an end all investment choice. It was designed to work as insurance and provide a safe low to no risk place to stash money.

There is great comfort knowing (especially after 2008) that my cash values can't go backwards. Everything else I did went backwards then.

 

[Golfnut2112]

Did you like your American funds in 2008?

What a lot of financial gurus and agents fall into is the trap of designing a plan or plans that only work one way. If your predictions for the future never change.

When we look around nothing we see is an absolute.

Try looking at your planning as if things go south or do not turn out the way you hoped.

I like my whole life because it is simple basic and safe. For it to fail, the nation would have to fail.
My WL allows me to take more risk on elsewhere (and better possible returns) than I would not be wise to do with term. If I totally screw the pooch with my other financial choices and there are days or years, where I could say that is true, the WL is my safety net.
It was never designed to be an end all investment choice. It was designed to work as insurance and provide a safe low to no risk place to stash money.

There is great comfort knowing (especially after 2008) that my cash values can't go backwards. Everything else I did went backwards then.

I did not have a bad 2008 and either did my clients. I have never been a buy and hold advisor and since around 2000 I have certainly have not been. Most of my clients now are allocated 90% fixed income 10% equity. I remember 2008 very well because it was probably my best year for referrals. As most guys were telling their clients don't worry it will come back I was moving mine into cash.

 

[jboussea]

I do remember that chart and after looking at it again it has made me realize whole life is a TERRIBLE insurance plan your younger people.

1. You start out paying 3 or 4 times the cost of term.

2. As the years go by the net risk amount of risk to the insurance company is going down but your still paying the same premium.

3. If you die you only get the death benefit ,whereas with a 30 term and a Roth both the death benefit and the IRA are paid out tax free.

4. The money is not yours in a whole life you need to borrow it whereas a Roth it's yours and no need to pay intrest.

5. The 3 or 4 percent a whole life may make over a 30 period is overstated because once you withdraw that money you will be paying interest on it every year. OUCH!! A Roth is tax free and intrest free.

6. If you still need insurance after 30 buy a little policy because really that's all you would have if you started out with whole life because of the net amount of risk.

As I stated before I'm not a termite and sell a lot of permanent life insurance but mainly for wealth transfer.

UGH.. i really hate Absolutes.. This is terrible .. this is the best etc...

I'm 33 .. and I can tell you

WHole life or UL is not terrible
Term Life is not terrible
and the Stock Market is not terrible

Here's my ideal scenario for my own personal retirement ...
t
I would get a permanet policy .. could be WL but I prefer IUL ... ideally I'd like to have both in the future . .
I have a permanent policy and with a conservative projection .. that would get me my predictable income during retirement.. mainly the income I would need to cover my expenses..

In order to do that I would have to get the Death benefit as low as possible .. which means I will need to purchase term to maximize the DB ... THe permanent policy will have an increasing death benefit so by the time the term runs out I will have enough DB in my permanent policy ... Once I have maximize the savings into my permanet policy I will add more money into stocks and I can be as aggressive as I want to be since my expenses are covered. When the market dips I have no worries since I don't need to pull from those funds.. I will have the permanent policy to pull from.

Better yet .. if there's another market crash.. I have the flexibility to borrow out of my policy and take some of that money and buy LOW

if interest rates go way up I have the flexibility of moving the funds to the fixed interest account .. I can put some money in CD's if the rates ever become favorable.. but I have a lot of flexibility ...


So no for a young person like me I don't see how any of these vehicles are terrible including whole life.. You jsust have to learn the attributes of them all and use them to your advantage.

 

[Golfnut2112]

UGH.. i really hate Absolutes.. This is terrible .. this is the best etc...

I'm 33 .. and I can tell you

WHole life or UL is not terrible
Term Life is not terrible
and the Stock Market is not terrible

Here's my ideal scenario for my own personal retirement ...
t
I would get a permanet policy .. could be WL but I prefer IUL ... ideally I'd like to have both in the future . .
I have a permanent policy and with a conservative projection .. that would get me my predictable income during retirement.. mainly the income I would need to cover my expenses..

In order to do that I would have to get the Death benefit as low as possible .. which means I will need to purchase term to maximize the DB ... THe permanent policy will have an increasing death benefit so by the time the term runs out I will have enough DB in my permanent policy ... Once I have maximize the savings into my permanet policy I will add more money into stocks and I can be as aggressive as I want to be since my expenses are covered. When the market dips I have no worries since I don't need to pull from those funds.. I will have the permanent policy to pull from.

Better yet .. if there's another market crash.. I have the flexibility to borrow out of my policy and take some of that money and buy LOW

if interest rates go way up I have the flexibility of moving the funds to the fixed interest account .. I can put some money in CD's if the rates ever become favorable.. but I have a lot of flexibility ...


So no for a young person like me I don't see how any of these vehicles are terrible including whole life.. You jsust have to learn the attributes of them all and use them to your advantage.

That actually makes a lot of sense.