Life insurance is purchased for PENNIES on the dollar.
Cash in the bank is DOLLAR FOR DOLLAR.
To make these strategies work, you need to leverage a permanent death benefit.
Let's look at the alternative: In retirement, you cannot spend all your money because you need to leave it for your surviving spouse, use it in case of long-term illness and you need a constant income stream.
So, if you have $1 million dollars in cash, and you can reasonably get 7%, you can only spend the interest or $70,000/year.
If that 7% is constant, you can only spend $70,000 per year. It won't grow. (Yes, you can spend less, but I'm more of a proponent to enjoy your wealth while you're here and while you're healthy.)
Now, if you wanted to take a cruise around the world? You can't do it without tapping into your principal. You don't tap into your principal because you need these funds to go to your surviving spouse. Get it?
But if you have a permanent insurance benefit, you can use your other resources more efficiently.
Cash in the bank helps to offset market volatility - but you can't access the equity in your house unless it was your absolute last resort. In my scenario, it becomes a strategic option for income, NOT a last resort.
So, with life insurance, you can have up to 30% or more in retirement income and have it increase over your retirement years... or you can NOT have life insurance and be stuck at a level income.
Your choice. BTW, these are LEAP concepts.
DHK,Everything you've listed, i could do if i had the money in the bank instead of in your wl polciy.
Without having to spend all the money on your wl policy, (just buying a very cheap term in case my husband does young) we'd
Have 1.5 m in the bank instead of your 1m in the bank.
I'd be earning 100k per year in interest instaed of the 70k per year i'd make in your scenario.
I can take a cruise around the world, without tapping into my principel because i'm making 100k per year instead of 70k.
I dont' have to access my home equity because i've got an extra 500k in the bank.
With all that money going into your wl ins pol i don't have more retirmenet income, i'd have less.
I have 50% more retirement income without your wl policy.
It's very simple math.
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Originally Posted by Death Cab For Tootie
You know what? I know we've had our differences GFN. I've tried to be civil throughout this particular conversation. I've even tried to be helpful and explained how you can find out more information on LEAP and given you more info than I would normally. But there's no reason for childish taunts and accusations. For the record, I do show my clients their lost opportunity costs of utilizing WL vs. leaving money in savings. It goes to show EVERY SINGLE TIME that there are less LOC's in my strategy than what they currently do.
If you want to stay willfully ignorant, that's your choice. But if you want to contend that what I say is hocus-pocus and I'm lying, well, you better be able to back it up. Otherwise, prepare to be professionally bitch-slapped with this message board as witness.
Dc4t,i haven't made any sexist remarks.
Please don't refer to 'me' and 'bitch' in the same sentence.
Thank you.
Just do one thing. please explain this statement you made earlier:
"If I can spend the $1mm like it's $2mm or $3mm, I'll take that over $1.5mm without the permanent DB."
Exactly how can obne spend 1m like it's 2m or 3m?
Last edited by GonnaFlyNow : 09-08-2009 at 02:58 PM.
Reason: Posts merged
I will refrain from using the word 'bitch' in my dealings with you, provided you treat me with a modicum of respect. Again, we've had our differences in the past, and I've attempted to be civil, but you continue to drag the conversation down to a third grade level. Keep it civil, use complete words, and capitalize when appropriate.
Spending $1mm like it's $2mm or $3mm is a function of having a permanent death benefit, tax management, and the ability to keep a client's income up with inflation by providing them a raise every year. These are three topics that cannot be looked at individually, but rather, as topics that need to be coordinated at the same time. It is too complex to get into on a message board, but suffice it to say it can, and is done on a regular basis. I have invested a lot of my own time and money to study these techniques, and I do not feel it is right to give up this information for free. Now, if you would like, I would be willing to reduce my fee to show you how this would work. If this is of interest to you, let me know.
dhk,
If you start with a false premise all conclusions derived from that premise are false.
A life insurance death benefit is purchased for 'pennies on the dollar' in the first few years.
But when you add up all the premiums to pay for the expense ridden wl policy over one's lifetime and the opportunity cost of those dollars, wl is NOT leveraging anything.
Life insurance makes a lousy investment vehicle.
I can't believe that peopel still believe this stuff.
What century are we living in here?
Whole life never is and never was an investment vehicle.
Savings and investments are similar words. But similar words and the right words are the difference between lightning and the lightning bug.
The whole life death benefit continues to grow as you continue to put in premiums and dividends are credited. Increasing guarantees are great to have.
You keep attacking the product when you have no STRATEGY. That's amateur night in the arena.
Products don't matter. Strategy is EVERYTHING. Proper strategy will make "bad products" do great things.
"Everything you've listed, i could do if i had the money in the bank instead of in your wl polciy."
Including losing it in a lawsuit and having to declare it for FASFA.
"Without having to spend all the money on your wl policy, Have 1.5 m in the bank instead of your 1m in the bank."
Which would leave me open for loss if I were sued or uncle bucks wanted it.
"I'd be earning 100k per year in interest instaed of the 70k per year i'd make in your scenario."
And paying taxes on the money vs. taking dividends as a "return of overpaid premium" Or using your whole life as the cheapest longest running term policy ever created.
"I have 50% more retirement income without your wl policy."
Of which all would be taxable... and reachable by others.
"It's very simple math."
Absolutely. it is as it's not what you make, it's what you get to keep.
Before you get all A is better than B, you should really look at how the stuff works and how uncle bucks and the courts view it. If cash value policies are such Sh ite, why the need for MEC?
What tends to happen in our business is the first products you are introduced to become the measure against all others. Whole life sucks if you are taught "term first". Term doesn't make sense if you're taught whole life first.
That said, there are alot of ways to go about things. I own and use Whole life effectively for my needs. Are there days I regret it's purchase? yes Are there days I'm so god dammed pleased I have it? absolutely.
To each his/her own. Own what you want, sell what you want.
I use all the tools in my toolbox when working with the public. I don't just own a hammer.
"Everything you've listed, i could do if i had the money in the bank instead of in your wl polciy."
Including losing it in a lawsuit and having to declare it for FASFA.
"Without having to spend all the money on your wl policy, Have 1.5 m in the bank instead of your 1m in the bank."
Which would leave me open for loss if I were sued or uncle bucks wanted it.
"I'd be earning 100k per year in interest instaed of the 70k per year i'd make in your scenario."
And paying taxes on the money vs. taking dividends as a "return of overpaid premium" Or using your whole life as the cheapest longest running term policy ever created.
"I have 50% more retirement income without your wl policy."
Of which all would be taxable... and reachable by others.
"It's very simple math."
Absolutely. it is as it's not what you make, it's what you get to keep.
Before you get all A is better than B, you should really look at how the stuff works and how uncle bucks and the courts view it. If cash value policies are such Sh ite, why the need for MEC?
What tends to happen in our business is the first products you are introduced to become the measure against all others. Whole life sucks if you are taught "term first". Term doesn't make sense if you're taught whole life first.
That said, there are alot of ways to go about things. I own and use Whole life effectively for my needs. Are there days I regret it's purchase? yes Are there days I'm so god dammed pleased I have it? absolutely.
To each his/her own. Own what you want, sell what you want.
I use all the tools in my toolbox when working with the public. I don't just own a hammer.
Wow. you guys are really smart. taxes and litigation and college tuition assistance. i never would have thought of that.
Ok. let's see.
My income without the wl will be $100k. but now you guys have helped me to understand that i have to subtract taxes from that.
Assuming the highest income tax bracket (35%), that extra 30k of income is actually only worht about 20k after taxes. wow. that makes a big difference. i could have either 70k in income AND a wl policy or i could have 90k of after tax income, an extra 500k in savings and not have the wl policy. it still sounds like i'm better off having that extra 500k in the bank rather than in your wl polciy.
Oh, but wait. i forgot about the FASFA. with my husband's salary, i don't think we'd every qualify for fasfa anyway. and, lord knows that even if we ever did qualify by that time the gov't would probably get rid of the program anyway. but, do i really need the fasfa. i've got an extra 500k in savings anyway, plus i've got an extra 20k in income per year (after taxes). so a few grand per year from fasfa isn't really worth it. is fasfa going to pay me 20k per year for my kid to go to college? i don't think it'll pay that much. it certainly won't pay me an amount equal to the extra 500k i have in savings because i bought term and invested the difference.
Oh, no. but wait. i forgot. there's the threat of litigation. i could be sued and that 1.5m in the bank could be taken away from me. after all, that happens to at least 1 in 100,000 people. i'm not a risk taker, so i'd better protect myself against the thraet of litigation.
Couldn't i just buy an umbrella policy. that shouldn't cost too much. probably a grand a year at the most. but just to be on the safe side it would feel better if the money was in an investment vehicle that was protected from lawsuits and creditors. so, i'll just put it all in some deferred annuities instead of the bank. theyll give me the same protection from creditors and lawsuits.
Thanks for helping me think this through, guys. i really appreciate it.
Last edited by GonnaFlyNow : 09-08-2009 at 05:26 PM.
WL is for people who want a guaranteed death benefit for their heirs. Dollar for dollar it's the cheapest way to accomplish that goal. Everything else is just a topping. I personally have one financial goal in life and that is to leave as much money as possible for my 3 kids. So I'm building a portfolio to accomplish that goal. Call me crazy but I want my kids to have as much money as possible.
Yep. You've got it all figured out. Not a flaw in your plan. Not one. It works under all circumstances and cannot fail.
I obviously don't have financial planning mastered like you do. Then again, your mastery of the written English language escapes me as well. I'm guessing your personal hygene is beyond reproach and you are in peak physical condition.
That's a failure's strategy... but to each his own.
classic insurance-agent-speak. what's up is down.
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Originally Posted by Franz Kafka
WL is for people who want a guaranteed death benefit for their heirs. Dollar for dollar it's the cheapest way to accomplish that goal. Everything else is just a topping. I personally have one financial goal in life and that is to leave as much money as possible for my 3 kids. So I'm building a portfolio to accomplish that goal. Call me crazy but I want my kids to have as much money as possible.
franz, i agree with you.
Wl is great to transfer wealth and to pay estate taxes. it can't be beat there.
But this wealth accumulation stuff is pure b.s. (Lifetime Economic Acceleration...) what a joke.
But, frank, if you want to protect your assets for your heirs, plz tell me u have a top notch ltci policy. plz.
Last edited by GonnaFlyNow : 09-08-2009 at 06:17 PM.
Reason: Posts merged
I just teach my clients to begin with the end in mind.
Accumulation, distribution and preservation are part of ONE lifetime strategy and not the 3 different phases that we are usually taught.
When you think this way, you think differently about the decisions you should make and when you should make them.
there's no one product that will accumulate, distribute, and preserve efficiently. i understand you're trying to psoition wl as the one product that does all of those things, but it's not efficient. (obviously we disagree.)
Honest to g-d, i feel like i'm in a foreign country when i'm talking to you life ins guys. no. not a foreign country. i'm in a bizarro world. like that seinfeld episode.
Agreed. It earns good returns, preserves wealth, offers perm life, slices and dices. Can't imagine why something that great has NEVER caught on over oh....say 100 years? This is still something that must be sold and is almost never sought after.
Funny. I'd think common sense would dictate that any product in the market place that offers that much for people would really be sought after....kinda like term?
When was the last time a prospect said "Hey, you well WL, right!"
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It's NOT about one product. (See, we can agree on something.) It's about STRATEGY. It's about financial structure and flexibility for the client. Part of that is helping the client to build a moat around their financial castle.
WL just happens to be a very good product that has multiple uses and benefits. Think of it like adding SALT to your dinner. Without salt, your dinner may be bland. SALT adds some flavor. You don't pour out the shaker onto your dinner, but you do sprinkle some in and it makes a difference.
I'm sorry that whole life (when used properly and communicated well) is so effective. It helps create the "LEAP cult-following" that most people think of when they hear about LEAP. (Hence, your "Kool-aid" comment before.)
In the proper context and with good strategies, whole life fits and fits well. When it DOESN'T FIT, I don't recommend it. But I always offer convertible term so we have the option in the future.
Well, from your background, it looks like you'll learn a bit more about it in a few years when your daughters start looking to university. Then maybe the lightbulb will go off and I won't sound so silly to you. (Mine are 3rd med school and 4th year bio major and there's alot to learn.)
However, it's pretty clear you'll have to learn it on your own.
Agreed. It earns good returns, preserves wealth, offers perm life, slices and dices. Can't imagine why something that great has NEVER caught on over oh....say 100 years? This is still something that must be sold and is almost never sought after.
Funny. I'd think common sense would dictate that any product in the market place that offers that much for people would really be sought after....kinda like term?
When was the last time a prospect said "Hey, you well WL, right!"
i especially like the fact that any wl policy worth it's weight in paper slices AND dices.
I'm not spending good m oney on something that only slices.
Agreed. It earns good returns, preserves wealth, offers perm life, slices and dices. Can't imagine why something that great has NEVER caught on over oh....say 100 years? This is still something that must be sold and is almost never sought after.
Funny. I'd think common sense would dictate that any product in the market place that offers that much for people would really be sought after....kinda like term?
When was the last time a prospect said "Hey, you well WL, right!"
Last week. But hey, who am I to break up a perfectly good rant?
I'm curious, if a prospect ever asked you for WL, would you sell it to them?
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