Using Whole Life (Permanent) Insurance to Supplement Retirement

[Robert Barney]

I don't think a need for permanent insurance necessarily stops at retirement.

That's why I have some permanent insurance, to pay a death benefit WHEN I die.

But how could I possibly keep paying the premiums if I was not adequately prepared for retirement?

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Actually, that is exactly how life insurance companies pay commissions, based on Death Benefit.

News to me.

35 years in the business and I learned something brand new; or did I?

 

[Tahoe Ray]

News to me.

35 years in the business and I learned something brand new; or did I?

You did. Overfund a UL and see what you get paid. The target comp is based on the DB...not the premium paid.

 

[jboussea]

That's why I have some permanent insurance, to pay a death benefit WHEN I die.

But how could I possibly keep paying the premiums if I was not adequately prepared for retirement?

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News to me.

35 years in the business and I learned something brand new; or did I?

Ok.. so you can do both... BINGO... It's always best if you don't put all your eggs in one basket.. that's true for life insurance..and that's true for the markets as well..

hence the title of the thread "to supplement retirement"

what happens ifyou had very good cash value in 08 ..and you had investments in the market... you had plans to take a certain number out of your nest egg... then the market crash... wouldn't it be nice to have something else that doesn't move with the market to withdraw from .. while you allow the market to rebound.. it took 4 years or so to get back to even... Imagine your stress level when you retire and no longer work . .when you have to pull money from something that's in the tank... even while it's rebounding .. you're worried about what could happen next...

And Remember .. it's not like your real estate property was doing great... it was not easy to get back into the workforce.. Your whole life insurance is one of the few things that doesn't move with the market.

 

[Robert Barney]

I am always wary of folks who focus on cash values. They mean nothing when you die.

They are really cash SURRENDER values, what you get if you give up, quit, capitulate, lose, etc. I buy/sold permanent insurance for the permanent death benefit, cash values be darned.

It's like that flight to LA, planning to jump out over Phoenix because that's what you really want. You're completely focused on the parachute, and you should have simply taken the flight to Phonenix and you wouldn't need the parachute.

 

[Tahoe Ray]

I am always wary of folks who focus on cash values. They mean nothing when you die.

They are really cash SURRENDER values, what you get if you give up, quit, capitulate, lose, etc. I buy/sold permanent insurance for the permanent death benefit, cash values be darned.

It's like that flight to LA, planning to jump out over Phoenix because that's what you really want. You're completely focused on the parachute, and you should have simply taken the flight to Phonenix and you wouldn't need the parachute.

Your cash values normally increase your death benefit (in a CV focused policy)...you get to your intended destination but got upgraded to first class.

 

[DHK]

I am always wary of folks who focus on cash values. They mean nothing when you die.

They are really cash SURRENDER values, what you get if you give up, quit, capitulate, lose, etc. I buy/sold permanent insurance for the permanent death benefit, cash values be darned.

It's like that flight to LA, planning to jump out over Phoenix because that's what you really want. You're completely focused on the parachute, and you should have simply taken the flight to Phonenix and you wouldn't need the parachute.

Robert... we've been over this. I thought you learned this by now?

Death benefit = cash values + net amount at risk - any outstanding loans.

If you want to keep thinking that it's only "face amount"... you're still wrong. The initial face amount is the beginning of the calculations of how the policy is projected to work. However, you will notice that every illustration talks about annual death benefits, not 'face amount'.

In fact, here's a screen print of the far right column of an illustration. It says TOTAL DEATH BENEFIT... not 'face' amount.

 

[DHK]

News to me.

35 years in the business and I learned something brand new; or did I?

Death benefit is one aspect. The other aspect is the strength of the guarantees of the death benefit.

Whole life has a higher premium than a 5-year term on the same death benefit.

UL or IUL has a lower INITIAL premium than Whole Life for the same death benefit.

It's not just the death benefit amount, but the length of the guarantees on that death benefit calculate the premiums, and then the insurance company pays a commission on that based on your commission schedule.

 

[LostDollar]

I am always wary of folks who focus on cash values. They mean nothing when you die.

They are really cash SURRENDER values, what you get if you give up, quit, capitulate, lose, etc. I buy/sold permanent insurance for the permanent death benefit, cash values be darned.

It's like that flight to LA, planning to jump out over Phoenix because that's what you really want. You're completely focused on the parachute, and you should have simply taken the flight to Phonenix and you wouldn't need the parachute.

Robert,

I don't know enough about life insurance to quantify this any better, but I am very uneasy about the things you are saying. They leave me feeling you are dangerous to your clients.

They are really cash SURRENDER values, what you get if you give up, quit, capitulate, lose, etc.

I know enough to know that is not a correct statement. I hold a policy that has a cash value which exceeds its face value. Your statements imply that: were I to die before I could cash out the policy, my wife would receive only its face. Not true.

The other thing is that either in acquiring your own wealth and years, or in spite of your own wealth and years; please realize that
YOU CANNOT SCRIPT YOUR CLIENTS LIVES. Be very careful that your OPINIONS do not damage their POSSIBILITIES.

 

[pfg1]

The BTID crowd always touts PLI as bad. Too expensive, you don't need insurance after you retire, CV is lost, etc.

I have clients that WANT to have as much death benefit as they can buy, in force when they die. The CV is a great tool to use along the way for whatever they need... and the benefits and leverage PLI provides is outstanding for the money spent. Especially if you are purchasing properly designed policies, and the earlier in life you can do that the better they will get.

There is certainly a place for term, perm, and investments. No one solution fits everyones needs. And yes, a properly designed policy will pay MUCH less commission than the anti-perm folks say it will when they try to scare people away from it. Sure, you can design them to pay the max comp if you want... and some people do. In that case, they are probably not looking out for the clients best interest.

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Robert,

I don't know enough about life insurance to quantify this any better, but I am very uneasy about the things you are saying. They leave me feeling you are dangerous to your clients.



I know enough to know that is not a correct statement. I hold a policy that has a cash value which exceeds its face value. Your statements imply that: were I to die before I could cash out the policy, my wife would receive only its face. Not true.

The other thing is that either in acquiring your own wealth and years, or in spite of your own wealth and years; please realize that
YOU CANNOT SCRIPT YOUR CLIENTS LIVES. Be very careful that your OPINIONS do not damage their POSSIBILITIES.

LD, many in the BTID / anti-perm crowd do just that. Your advice about opinions is a good point. Many people (in all areas of life) have missed out on various things that could have benefited them and their families by listening to opinions, rather than vetting out the facts.

 

[scagnt83]

News to me.

35 years in the business and I learned something brand new; or did I?

You did. Im not going to argue over the value of WL with you. But what I stated about comp is a cold hard fact.

Take Mass Mutual for example since its a common policy sold (but all participating WLs work like this):

55% commission on Base Premium
4% commission on Excess Premium (amount over Base)

Base Premium is based 100% on the Death Benefit. It is the minimum amount required to keep the policy in-force.

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Bob,
The issue is that if a customer comes to an agent and says "I have $10,000 to put in a WL policy". One of two things can happen:

1. That agent could put them into a policy with a Base Premium of $10k, and make $5,500. That policy will grow at a marginal increase.

2. The agent could put them into a policy with a base Premium of $3,000, and let the rest of the Premium go into the excess (PUAs). That policy will grow at a strong conservative rate. As a consumer, its obvious this is the option you would likely want.
But the agent only makes $1,900 with this better performing option.

#2 is how an honest and competent agent sells Cash Value WL. Unfortunately not all agents design WL this way, or know how to design it this way.

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No matter what your thoughts are on the value of WL. The Commissions are based on the "Base Premium", which is dictated by Death Benefit.

For UL, Commission is based on "Target Premium", which just like WL Base Premium, is based on the Death Benefit.