Young P&C Agent Looking for Most Appropriate Permanent Life Policy

[KenP]

Hello all,

A strategic partnership our agency made with a law firm brought up conversation about LTCI. As my curiosity took hold, it sent me on a path to learning more about permanent life policies for myself.

I have a finance background as well, so it's attractive to me to use this life policy as one of many other investments in a broad basket of different risk profiles. Despite my young age of 25, I'm more naturally drawn to steady and conservative investments, especially when it comes to those that I'll be making regular, passive contributions to. I also want to have a little extra to leave behind to friends and family (unmarried, no kids) and don't have notable assets to do so yet. I'd like to have the ability to scale this up in the future as the actual DB need rises (mortgages, family, etc.)

Finally, I know myself and the folly of youth has taught me that specifically having some of my investment portfolio be relatively illiquid (especially at first) is actually preferable to me. I do find value in a third party forcing me to keep my mitts off for a while.


My weekend of manic, obsessive research has guided me to a few points so far, but I very seriously appreciate any other insights you all can provide me

• Permanent life is quite a niche product that's truly inapporpriate for many of those it's sold to, but with some objective reflection, I do feel I fit the niche it works well for
• I need to keep the commissions as low as possible (making it a little hard to find an agent to work with on this haha!) as that is a SERIOUS expense when I've reviewed illustrations
• I want a carrier that will provide truly good ratings on the insurance portion or it quickly makes less sense, like your typical BTID mantra crowd would say
• To that end, I've found that the typical competitive whole life policies I'm being quoted for direct (from the likes of StateFarm and USAA) are actually only 3-5times more than their term equivalent with the most competitive carriers' quotes I've gotten on term. This is starkly less than the 8.5-12 times amounts that I see in typical examples. It appears my age and health may be playing the biggest role here
• Even further to that end, a conservative but consistent and guaranteed investment schedule like that offered in WL policies seems like it's more effective the earlier you start, so it's a double whammy of positives for me to start ASAP

The biggest questions that come to mind:
-What would be the best carrier(s) and policy type for my situation? Similarly, what do I need to do to keep commissions as low as possible?
-Can someone break down the way PUA through additional contributions works a little more? In my head, I want to be able to contribute more than the required premium when possible, much like paying down extra on a loan beyond the minimum payment. This increases the DB but also front-loads cash quicker, enhancing the investment portion. I somewhat understand it conceptually, but feel a little cloudy on the details
-This would also scale up the DB throughout my life as my natural need for higher DB would increase, correct?
-Not to mention, I'm continuing to benefit from my 25-year-old, healthy underwriting and rating factors even though I could be 42 as I'm increasing coverage through PUA?

Again, thanks in advance for taking the time to help me out here.

 

[STIBROKER]

-What would be the best carrier(s) and policy type for my situation?

Have you looked at GUL's.................

 

[Tahoe Ray]

Hello all,

A strategic partnership our agency made with a law firm brought up conversation about LTCI. As my curiosity took hold, it sent me on a path to learning more about permanent life policies for myself.

I have a finance background as well, so it's attractive to me to use this life policy as one of many other investments in a broad basket of different risk profiles. Despite my young age of 25, I'm more naturally drawn to steady and conservative investments, especially when it comes to those that I'll be making regular, passive contributions to. I also want to have a little extra to leave behind to friends and family (unmarried, no kids) and don't have notable assets to do so yet. I'd like to have the ability to scale this up in the future as the actual DB need rises (mortgages, family, etc.)

Finally, I know myself and the folly of youth has taught me that specifically having some of my investment portfolio be relatively illiquid (especially at first) is actually preferable to me. I do find value in a third party forcing me to keep my mitts off for a while.

My weekend of manic, obsessive research has guided me to a few points so far, but I very seriously appreciate any other insights you all can provide me

[*]Permanent life is quite a niche product that's truly inapporpriate for many of those it's sold to, but with some objective reflection, I do feel I fit the niche it works well for
[*]I need to keep the commissions as low as possible (making it a little hard to find an agent to work with on this haha!) as that is a SERIOUS expense when I've reviewed illustrations
[*]I want a carrier that will provide truly good ratings on the insurance portion or it quickly makes less sense, like your typical BTID mantra crowd would say
[*]To that end, I've found that the typical competitive whole life policies I'm being quoted for direct (from the likes of StateFarm and USAA) are actually only 3-5times more than their term equivalent with the most competitive carriers' quotes I've gotten on term. This is starkly less than the 8.5-12 times amounts that I see in typical examples. It appears my age and health may be playing the biggest role here
[*]Even further to that end, a conservative but consistent and guaranteed investment schedule like that offered in WL policies seems like it's more effective the earlier you start, so it's a double whammy of positives for me to start ASAP


The biggest questions that come to mind:
-What would be the best carrier(s) and policy type for my situation? Similarly, what do I need to do to keep commissions as low as possible?
-Can someone break down the way PUA through additional contributions works a little more? In my head, I want to be able to contribute more than the required premium when possible, much like paying down extra on a loan beyond the minimum payment. This increases the DB but also front-loads cash quicker, enhancing the investment portion. I somewhat understand it conceptually, but feel a little cloudy on the details
-This would also scale up the DB throughout my life as my natural need for higher DB would increase, correct?
-Not to mention, I'm continuing to benefit from my 25-year-old, healthy underwriting and rating factors even though I could be 42 as I'm increasing coverage through PUA?

Again, thanks in advance for taking the time to help me out here.

Three points....

1) Commissions don't affect your premium. An agent can't "lower" commissions. The rate is the rate.

2) You should talk to an independent agent here who knows dividend paying whole life, since it can become fairly complex. I would recommend PFG1 and Scagnt83 for this.

3) Do you have disability insurance as this is probably your most important life protection (just yourself) at this time.

 

[KenP]

Have you looked at GUL's.................

I have, but I do want to have the cash value/ investment portion

----------

Three points....

1) Commissions don't affect your premium. An agent can't "lower" commissions. The rate is the rate.

2) You should talk to an independent agent here who knows dividend paying whole life, since it can become fairly complex. I would recommend PFG1 and Scagnt83 for this.

3) Do you have disability insurance as this is probably your most important life protection (just yourself) at this time.

2 - Okay, I appreciate the recommendation. I'll reach out to them because I couldn't agree more: this is an inherently complex product, and I don't plan to just grab a policy "off the shelf"

3 - I don't, and from the analysis I've seen, it would make sense to acquire this as its own policy instead of just having a premium waiver for disability since, naturally, the benefits paid from the disability will go toward life in general, not just an insurance payment

As for your first point, I had to look closer. There was a paper written by a fee-only advisor that talked about lowering commissions. I was just pulling that mentally when I typed the OP. I referenced it and here's what I saw:

At one time, inflexible premium structures on whole life insurance policies gave the consumer no choice. This is no longer the case. Today, the agent and policy applicant have considerable discretion in structuring a policy and premium so as to reduce the standard commission by 80% or more.

This is done by designing a policy with a maximum amount of term insurance and a minimum amount of permanent insurance and then having most of the annual premium payments take the form of “additional premiums” or “dump-ins” on which the commission may run about 3 percent, or a mere 5 percent of the standard first-year agent’s commission

Realizing this, it's basically just saying to get the lowest possible DB,then pay up. The commission structure on those additional contributions is naturally lower and you reduce your total commission bill, effectively. And if you truly need more DB (which is usually the case, but may not be for me), just pick up some term to cover the difference.

This aligns very very well with my intent as it stood anyway. Does this approach make sense to you with your greater knowledge?

 

[Tahoe Ray]

I have, but I do want to have the cash value/ investment portion

----------

2 - Okay, I appreciate the recommendation. I'll reach out to them because I couldn't agree more: this is an inherently complex product, and I don't plan to just grab a policy "off the shelf"

3 - I don't, and from the analysis I've seen, it would make sense to acquire this as its own policy instead of just having a premium waiver for disability since, naturally, the benefits paid from the disability will go toward life in general, not just an insurance payment

As for your first point, I had to look closer. There was a paper written by a fee-only advisor that talked about lowering commissions. I was just pulling that mentally when I typed the OP. I referenced it and here's what I saw:

Realizing this, it's basically just saying to get the lowest possible DB,then pay up. The commission structure on those additional contributions is naturally lower and you reduce your total commission bill, effectively. And if you truly need more DB (which is usually the case, but may not be for me), just pick up some term to cover the difference.

This aligns very very well with my intent as it stood anyway. Does this approach make sense to you with your greater knowledge?

On point one, that is correct. If you're over funding IUL or WL (w/ PUA) the agent gets paid less.

Any agent worth his or her salt will design a policy this way if your objective is to maximize cash accumulation. Read the previous posts of the agents that I recommended and you'll see that they advocate this.

As for your disability insurance, use this tool:

http://highincomeprotection.com/disability-insurance-need/

Disclosure: this is my website

You'll find a lot of helpful info here. I would ignore any PMs you get unless they also post on the thread.

 

[KenP]

On point one, that is correct. If you're over funding IUL or WL (w/ PUA) the agent gets paid less.

Any agent worth his or her salt will design a policy this way if your objective is to maximize cash accumulation. Read the previous posts of the agents that I recommended and you'll see that they advocate this.

As for your disability insurance, use this tool:

Disclosure: this is my website

You'll find a lot of helpful info here. I would ignore any PMs you get unless they also post on the thread.

I appreciate the resource and the disclosure on it being yours. I'm reviewing it now and will attack this along with my whole life. 25, healthy, and a sedentary desk job I imagine are good UW/rating factors for disability insurance so it should be a very reasonable cost for a very useful product.

Thanks again

 

[Tahoe Ray]

I appreciate the resource and the disclosure on it being yours. I'm reviewing it now and will attack this along with my whole life. 25, healthy, and a sedentary desk job I imagine are good UW/rating factors for disability insurance so it should be a very reasonable cost for a very useful product.

Thanks again

Not a problem. Good luck with your search.

 

[Josh]

Despite my young age of 25, I'm more naturally drawn to steady and conservative investments

Why? Interest rates are still incredibly low and the impact of being "risky" at 25 is almost a non-issue if you're looking 40 years plus down the road. Yes investments can go up and down, but realistically the most risky thing you can do is be overly conservative.

 

[dc328]

good luck with your search!

 

[jboussea]

Why? Interest rates are still incredibly low and the impact of being "risky" at 25 is almost a non-issue if you're looking 40 years plus down the road. Yes investments can go up and down, but realistically the most risky thing you can do is be overly conservative.

The word "conservative" could have different meanings.. .he might just be conservative for his age.. .