SECOND THOUGHTS on Whole Life Insurance 1 Year in - ADVICE???

I believe the capital gains tax applies to other financial investments too. No different if you bought stock and then sold it.

I can't think of ANY insurance product where capital gain taxes apply. Only ordinary income tax rates.

What Golfnut2112 is referring to is 'phantom income'. This is when a life insurance policy is cancelled or lapsed while it has an outstanding loan(s). ALL of the outstanding loans are then added into the policy owner's taxable income for that year. (That can be a hefty amount!)

http://www.investmentnews.com/artic...-could-lurk-in-failed-life-insurance-policies

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To avoid the tax while having outstanding loans... is to simply keep the policy in force (sometimes easier said than done). You only get into trouble when you cancel the policy while there are loans against it.
 
Dave Ramsey has made lots of people millionaires.... most are not the listeners to his program. Mattress companies, mutual fund companies, mortgage companies, home security companies etc. Just not many of his listeners.

A Financial Advisor would lose their license if they gave the same market "advice" that Dave gives.

Is WL a good investment? Terminology aside, it depends on the person and their goals.

People in year 1-10 usually are not super thrilled with WL. People in years 20+ usually love their WL policy more than any other safe investment they have.

Returns aside; people in the age 55-65 range are buying tons of Guaranteed Universal Life, because they are finding they STILL need insurance after their 30-year term or 40 years of 20-year term have run out. And those premiums are really great for agents bank accounts... not so much for the clients... your talking average premiums in the $8k-$15k range... in today's dollars.


That being said, WL gives a terrible return if not designed correctly. And I prefer IUL over WL because it allows a more efficient design and much better values in the early years. (via lower internal expenses using GPT instead of CVAT testing)
 
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Best thing I ever did was take out a large whole life policy on myself and my wife. You will feel differently about the policies one you reach a point where dividends are more than the premiums. THat is if you are with a company with a good participating whole life policy.
 
Interest and/or income taxes--if negative themselves, do not make life insurance a negative.



I believe that statement would be true for money obtained temporarily from almost any source.



I believe the capital gains tax applies to other financial investments too. No different if you bought stock and then sold it.


It's not the income tax it's the interest that needs to been paid every year on the loans. A 529 is tax free for qualified education expenses.
 
If you don't do a RPU (reduced paid up) to avoid making more premium payments, then you'll accelerate the possibility of having the policy lapse and having the outstanding loan be subject to phantom income.

The $50k loan vs $40k loan is really just adjusted for cash flow of the policy illustration. If you make the $10k premium and still take out a $50k loan, it still nets out to be a net $40k.
 
Since the policy receives the interest payments being paid back to the policy, that's not much of a negative.

https://david82496.wixsite.com/davi...ance-Loans-Am-I-Paying-To-Borrow-My-Own-Money

That example you are showing is very misleading, first off the illustration is a MEC and you did not show an illustration with no policy loans which is needed. The loan payments people make on a whole life policy is paid to the company and NEVER gets back into the policy, you must be thinking of a 401k or 403b. What you are seeing on your illustration is not people keeping the interest they pay but the effect of the unpaid interest being added back into the loan. If you run a illustration showing no policy loans and compare it to the one showing loan repayments you will see the payments made for interest is not being applied to the policy.
 
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Nope. Not a MEC.

Here are the screens for generating the basic illustration - WITHOUT a loan. (Btw, I once had spotted an error in their illustration system where I could tell it would've been a MEC and they issued a software patch for that month. I think it was December of last year and it showed 100% cash values in the first year - which is impossible without it being a MEC.)

The VER rider is the PUA rider with Assurity... and the maximum amount of time you can contribute to that rider is up to age 75. I always illustrate their policies with a RPU for age 65 or other retirement age.
 

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Before everybody beats their chest and bruises themselves can the OP come back and actually tell us what product they actually bought and from whom?

I am seeing criticisms with no product to criticize.... How bout we find out what the person purchased and what company it is?
 
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