Looking For a Whole Life Policy

[LGilmore]

Rex?

Do you realize you're just trying to nit pic at this point to save face? Rather than do that, why don't you take a second to learn more so you can make more sales?

 

[BNTRS]

Rex isn't an agent.

 

[Bluefin646]

BNTRS,
Last i heard from other gents in the office, anyhhing over $150k per year, and finl aid is off the table. Plse correct me if i am mis-informed.
But even at 200 or 250k per, 10-15-20k wl policy is huge ticket. Not sure where folks live, or cost of living, but in ct, with a family, need every bit of it to live without debt.
Thx again gents, eye opening for sure!
Be good

 

[BNTRS]

BNTRS,
Last i heard from other gents in the office, anyhhing over $150k per year, and finl aid is off the table. Plse correct me if i am mis-informed.
But even at 200 or 250k per, 10-15-20k wl policy is huge ticket. Not sure where folks live, or cost of living, but in ct, with a family, need every bit of it to live without debt.
Thx again gents, eye opening for sure!
Be good

I'm not aware of a specific number where you are in or out, this would depend on the college or university in question.

Yes 10k etc. per year is a a lot of money for anyone. It's also a lot of money into a 529. The focus, again, is on the wrong item. 10k per year into WL policy or 529 plan, let's say they net out roughly the same amount, which plan works out better? If you understand how to use you WL policy, it wins by a huge amount. Now, let's contemplate the ability of this policy to handle most of your life insurance needs during the same period, be an emergency fund if need be, and will also significantly enrich your retirement. Note this important element the outlay is the same in either case. All the 529 accomplishes is paying the college bill, WL does that and a boat load of other things.

 

[stevew7]

I'm with Larry and think that we've been hooked, but what the heck....

Steve,
You read my thread. I'm an engineer and asked a TON of questions both on my thread and over e-mail. I used BNTRS as my agent for a 10-Pay blended policy from Guardian. He was absolutely great to work with and I would recommend him to anyone. I learned a lot about WL and I'm almost dangerous with what I know.

My problem is your beating the dead horse of IRR. Why do you care so much about the "early year" IRR? My early year "paper" wealth is really not a critical factor for me. What dividend rate will the SBLI policy have in Policy Year 32? Guaranteed? What will the Dow be in the year 2027? Who has the crystal ball?

Our situations are very similar, but you have to decide on a strategy. Chasing IRR is NOT a strategy; in fact, you'll drive yourself crazy and end up disappointed. Policy construction, PUA treatment, company financial strength and your own personal financial strategy are much more important.

Remember that wealth has three phases: Accumulation, Distribution and Preservation. How does your financial strategy impact each of those? Like BNTRS told me once about money for retirement, it's not about how much you have, it's about how much you can spend. Think about that.

Slick

Hi Slick,

I agree with many of your points and appreciated the thread you started. I wish there was more transparency with whole life policies - people like me would love to go to guardian/NYL/MetLife/MassMutal's website and find out information like the below:

1) historical net interest payments (including dividend scale, expenses, and mortality)
2) the cost of insurance embedded into the whole life policy
3) expenses reducing cash value build-up (including commissions, policy fees, underwriting fees, etc).

I'd prefer to have the above information, instead of using the IRR. But since this information isn't available, I'm forced to use the IRR, since the IRR is an "all-in" performance number. I agree it isn't a perfect metric. I also understand the point of view on this board that past performance can't predict future results. But chronic underperformance, in my mind, is more likely to mean underperformance in the future as well (would you buy a mutual fund that performed in the bottom 10% of its peer group?). I also think the customer might be underestimating the effect of compouding, which is inherent to whole life policies, so a lot of the benefit of a whole life policy would be had if you just put dollars into a savings account (compouding makes all numbers look great in year 30, and also helps hide the low CVs in the early years).

Maybe one company could have a lower premium, but regular higher than expected mortality, making the net annual interest payment lower than the published scale. There is no way for me to tell as a consumer, and unless I happen to find a very good agent (like several here who know the ins and outs of multiple insurance companies). But even I found a policy (SBLI WL 10pay) that seemed to quiet the crowd.

I think of it this way: a whole life insurance company invests mostly in bonds, but has three huge benefits: one, they guarantee no loss of CV from year over year, two, any CV growth is tax deferred, and three, I have a guarantee of a minimum payout if I die. There is one big
con: the CV typically starts off less than your initial premiums.

It is a matter of perspective - I can buy a 750K 30 year term policy for $600/year. The 750K 10-pay WL policy I posted from SBLI costs almost $16K/year. There's a gigantic difference there. With those kind of dollars, I have to understand the product, the cost structure, and what would prevent my dollars from growing. In my case, with one toddler and another baby on the way, I know that there are going to be unexpected expenses. Right now, I'm hoping not to touch the cash value until my kids are in college. But if something happens and I need access to the cash in the policy, it is reassuring to know that my CV won't be a fraction of my first year premium, before "breaking even" somewhere in years 5-7. The alternative, which I was going to do before I found SBLI's policy, was to pay the $600/year for the term policy and leave the $15.3K/year balance in conservative bond funds and bank accounts.

Anyway, I appreciate the knowledge sharing and expertise of everyone that contributed. I may end up deciding that, for example, since Guardian's 10 pay permits PUAs to continue to be added AFTER the expiration of the first 10 years, that it may be beneficial to have a Guardian 10 pay policy as well. Info like this you can't find out anywhere else, and I'm appreciative of the information this board provided.

Best,
Steve

 

[stevedav]

Nice to understand somebody got a new job in the crappy economy. But examines like the Hartford still charters persons who absolutely need information of both mechanical and directed basics--that's habitually been my experience

 

[WinoBlues]

Nice to understand somebody got a new job in the crappy economy. But examines like the Hartford still charters persons who absolutely need information of both mechanical and directed basics--that's habitually been my experience

I agree. However, it the force were to be then of course it could not be. However,if it did not, then the paradox would be nil. No?

 

[Larry Tew]

Nice to understand somebody got a new job in the crappy economy. But examines like the Hartford still charters persons who absolutely need information of both mechanical and directed basics--that's habitually been my experience

But if what you hoped for never happened, how do you like hoping for that? You can't make chicken soup out of chicken poop, but grilled cheese sammiches can like the people who eat them.

 

[rex]

I'm not aware of a specific number where you are in or out, this would depend on the college or university in question.

Yes 10k etc. per year is a a lot of money for anyone. It's also a lot of money into a 529. The focus, again, is on the wrong item. 10k per year into WL policy or 529 plan, let's say they net out roughly the same amount, which plan works out better? If you understand how to use you WL policy, it wins by a huge amount. Now, let's contemplate the ability of this policy to handle most of your life insurance needs during the same period, be an emergency fund if need be, and will also significantly enrich your retirement. Note this important element the outlay is the same in either case. All the 529 accomplishes is paying the college bill, WL does that and a boat load of other things.

sorry if i gave the impression that im an agent. im not sure how i did that but i am not. saying they net out roughly the same would imply the stock market repeated itself over the last decade. i dont have a problem if the client believes that. i personally dont believe that will happen but of course nobody knows. while the outlay would be the same, the amount available for college wouldnt be (unless we have another bad decade in the stock market). i have no problem with the idea of using money in retirement but i still think its a stretch that many people could both now qualify for financial aide (especially non loans) and have much in the way of cash value in order to pick up the rest of the tab at any major university. the bottom line becomes what is your goal. if your goal is a permanent death benefit then you might be able to use some money towards college. if your goal is to pay for college and are hoping to get financial aide then it seems fewer people would fit this mold correctly.

 

[LGilmore]

" i personally dont believe that will happen but of course nobody knows"

Then go with that, and good luck see ya later.


One last thought though, maybe try approaching things from what happens if I'm wrong? What does the least damage if things go south?

A lot of forecasting is done in a way that if every duck lines up in a row, you're up to your waist in money. Very little planning is done where things get f'd up so bad.

Again good luck and I have to wonder why you're here.