Under what circumstances would you recommend a client purchase Whole Life over other forms of life insurance?
In every circumstance where the client can afford it.
The UL cheerleaders and the BTITD - LEAP guys and the FIA boosters will differ with me... and that is fine... but dollar for dollar, pound for pound, risk to reward, WL is (still) the "best," safest, and most flexible financial product out there for the vast majority of people (read the italics again... it means "not everyone.")
(G)UL is a close second (if not done at "target").
Term is a scam... but often all people can afford and is better than nothing.
NO... you don't put an entire portfolio or nest-egg into WL (or any insurance product) but perm insurance should be part of everyone's financial program.
I'm a bit over 60 and have been investing for longer than most of you guys have been on the planet... and I've seen a lot of markets over the years... up, down, and the 70s sideways mess... and even with inflation, people who took some WL 30 years ago and are now looking at retirement have a lot more options and are in a much better position than many who relied on their 401 or their equities broker to get them to where they wanted to be at this age.
You asked. I answered. Hit me with your best shot.
Under what circumstances would you recommend a client purchase Whole Life over other forms of life insurance?
Couple examples for consideration:
-When a client wishes to have permanent insurance to settle their estate, to leave to family or church, etc regardless of whether they die at age 60 or 100. The fact that there are many misinformed decisions to do this does not mean that it is not right for many with full disclosure, suitiability analysis and deference to the fact that they are the client not us.
-When the client wants a final expense plan which should be a whole life policy although some are not. Only side note there, is that I think that there are more instances where the client should go for a small amount of underwritten whole life rather than the simplified FE plans. Particularly if they want amounts closer to 50,000.
-Where the client wishes to build cash value, has full disclosure, extremely low risk tolerance, and decides to do or is essentially just seeking a kind of return of premium scenario down the road by cashing out. Again this requires discipline on the part of the agent to not put clients into this where other options may be better and more affordable but it also requires discipline to understand that once the client has been fully informed, they are the client, not you.
Complete agreement not expected here.
-Where the parents are the owners of the policy for their grown children as a gift. Often that is the kind of insurance that they have always had and trusted so that is what they want for their kids, assuming full disclosure and no funny business about hyper-inflated projected cash build up.
Often it is a good decision. Often it is just an okay decision but the one that they want or will accept versus going without. And often it is a bad decision. Have to listen to the client.
Winter
------------------------------------ Spending Our Way to Prosperity
In every circumstance where the client can afford it.
The UL cheerleaders and the BTITD - LEAP guys and the FIA boosters will differ with me... and that is fine... but dollar for dollar, pound for pound, risk to reward, WL is (still) the "best," safest, and most flexible financial product out there for the vast majority of people (read the italics again... it means "not everyone.")
(G)UL is a close second (if not done at "target").
Term is a scam... but often all people can afford and is better than nothing.
NO... you don't put an entire portfolio or nest-egg into WL (or any insurance product) but perm insurance should be part of everyone's financial program.
I'm a bit over 60 and have been investing for longer than most of you guys have been on the planet... and I've seen a lot of markets over the years... up, down, and the 70s sideways mess... and even with inflation, people who took some WL 30 years ago and are now looking at retirement have a lot more options and are in a much better position than many who relied on their 401 or their equities broker to get them to where they wanted to be at this age.
You asked. I answered. Hit me with your best shot.
The Jackass
"Term is a SCAM???!!!"
Al, I think you are baiting us. You can't believe that.
Whole-life is for permanent needs. Term is for temporary needs. It's as simple as that. Most people need a combination of both.
In every circumstance where the client can afford it.
But dollar for dollar, pound for pound, risk to reward, WL is (still) the "best," safest, and most flexible financial product out there for the vast majority of people (read the italics again... it means "not everyone.")
Term is a scam... but often all people can afford and is better than nothing.
But perm insurance should be part of everyone's financial program.
It's very interesting (albeit inconsistent) that someone who has positioned themselves as the "anti-Christ" of insurance companies has taken such a large gulp of their whole life kool-aid.
To make a statement such as "term is a scam" is not only ludicrous, it reveals a true naivete about the life insurance business.
Caveat emptor to potential clients...
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[COLOR=blue]Don't steal - the government hates competition.[/COLOR]
I'm a bit over 60 and have been investing for longer than most of you guys have been on the planet... and I've seen a lot of markets over the years... up, down, and the 70s sideways mess... and even with inflation, people who took some WL 30 years ago and are now looking at retirement have a lot more options and are in a much better position than many who relied on their 401 or their equities broker to get them to where they wanted to be at this age.
You asked. I answered. Hit me with your best shot.
The Jackass
Some of your comments make a case for the conservative investor being in annuities rather than mutual funds over the long haul. That is not necessarily an argument for whole life since you do not have to retreat into a whole life policy just to get safety of principle and a modest return, especially since much of your premium payment goes toward a jacked up cost of insurance underlying it all.
I do however agree with the point that a diligent, disciplined investor making regular contributions to even a so-so retirement plan of any sort (where the principle is not at risk) can do well over a thirty year period.
If one is looking for guaranteed death benefit, and that means comparing the guaranteed benefits in a WL, compared to a ULNL, one gets more bang for the buck with ULNL. I do a fair amount of estate planning and use to use WL for liquidity, but can't justify when comparing guarantees to guarantees.
Al, I think you are baiting us. You can't believe that.
Whole-life is for permanent needs. Term is for temporary needs. It's as simple as that. Most people need a combination of both.
Define "temporary needs?" So after 20 years and the term runs out, there is no "need" for any life coverage? How do you know? Have you had your term plan lapse? There won't be a mortgage or "living expenses" or education expenses, or need to save for retirement after the term lapses? And tell me, exactly what percent of term ever pays a benefit?
OK, your car and house insurance hardly ever pay a benefit but you have no choice when you insure them. With insuring your life you HAVE a choice.
I tell my clients to think like a banker. Never give out money to a financial product without the express intention of getting it back. (The corollary is to never borrow money on something that gets worth less... like a car.)
Unless you absolutely can't afford it, why buy term... a wasting asset, when for a few bucks more (at age 20, 30 or 40) you can buy a good UL or WL or even ROP which is going to give you some real value for your money... as opposed to just pissing it away.
Term insurance is sucking-candy. It looks good, has a nice wrapper, and it is cheap and you can get it anywhere. It dissolves in your mouth and it's gone.
A good UL or WL is the candy machine. It keeps making candy.
I tell my good-looking female clients: "Two choices. You give me a dollar and I'll give you a kiss... and leave. Or you can give me five dollars and I'll give you a kiss and I will come back tomorrow and give you six dollars. Pick one."
Maybe it is just coincidence but in all my 60 years I've never known anyone who regularly paid into a WL or "accum" UL who retired broke. But I know lots of people who put ALL their "faith" in the markets and who are going to work until the day they die.
I worry about you young kids out there... 25, 30.. who don't know what you don't know about investing, markets, returns, risk, reward, human nature, and all the bad s--t that can happen over a lifetime... and you... with damn little life experience are going out and advising people on how they should "invest" their money. Yeah, that makes a lot of sense to me!
Until you have had a spouse and a home and a job and have lost a job and had someone be very sick, and made money in the markets and lost money in the markets, and have been though a few recessions and have been to a funeral or two and know real fear as well as real happiness... you are not qualified to go out there and sell life insurance... because all you know is the textbook.... and life is NOT a textbook.
You want to listen to some 30 year old "kid" sell the fad-policy of the day (this week is it indexed life) be my guest. With few exceptions, I'll take the guy who has "been there" and who understands that term is basically a scam (like title insurance, IMO.) Each to their own... no wrong answer... do what you want.
This I am sure of. When I recommend perm over term, I'm doing the best thing for the client. That does not mean he always (can) buy it... but I never SELL term insurance. I allow the client to buy it after they have convinced me that they won't do what is in their best interest but instead do what their neighbor or friend or brother-in-law has done... which was BTITD. I've learned a long time ago "Don't fight the tape." (There is probably only 3 people in this venue who know where that saying came from... or who have ever seen "the tape"... and no it is not video tape!)
If one is looking for guaranteed death benefit, and that means comparing the guaranteed benefits in a WL, compared to a ULNL, one gets more bang for the buck with ULNL. I do a fair amount of estate planning and use to use WL for liquidity, but can't justify when comparing guarantees to guarantees.
I am not savvy enough to know what ULNL stands for. Are you talking about a GUL without significant cash value build-up versus a traditional whole life policy or?
Under what circumstances would you recommend a client purchase Whole Life over other forms of life insurance?
Transfer of Wealth...
HNW individuals who are apt to lose a good portion of their estate to taxation, WL works well to preserve the estate value. Estate planning, and that is about it...
The only other exception is folks who need final expense.
The other application is when a client prefers the idea of WL over Term... some folks just don't get the term idea, and view it more of renting versus owning. No sense in fighting with them, give them what they wish.
Sorry Winter, you are correct, universal life no lapse, goes by different acronyms. These policies, as you may know, are basically term policies to age 100
First of all, you should understand that ALL life insurance IS term. The only difference is the way the "extra" premium is invested, if in fact there is extra. Term in and by itself has no extra premium, it strictly buys life insurance. Whole Life charges more up front and builds cash value which is invested by the company who makes alot more on that investment than they give to the client! UL is a combination of the two, a hybrid.
UL was started when Art L. Williams began educating the consumer that they could get a better return on the "extra" if they would only have the discipline to invest it themselves. Unfortunatly, most people don't. This was the "Buy Term and Invest the Difference" concept. Works well if you work it. The insurance companies saw what he was doing and came up with the UL's as their answer to a better return. But they really only work if you have time to make it work. The whole idea behind the investment part of insurance is to give you time to accumalate money but cover you if you die early. If you have the accumulation, then you don't need the insurance do you? You're self insured at that point. As for "term", Mortgage insurance is an example of a need for term. When you are young, you have alot of bills and a future to cover. Therefore you need alot of insurance coverage. When you get older, presumably the kids are gone, the mortgage is paid, etc, etc, so you don't need the high protection anymore, or at least not as high.
Hopefully, maybe when you where young you took out a WL policy then and it seems like paying pennies comparitivly.
Term is a scam? Well, sounds like you've been scammed your "Whole Life" then!
Very accurate analysis TRK, I assume you must have some years in the business. Those of us that saw all this unfold since the early 80's had to make adjustments along the way.
First of all, life insurance isn't for me. I'm dead. It's for my wife and son. I have 30 year term that expires when I'm 68 - my wife will be 73 and my son will be 33. I'm trying to figure out why they would need life insurance then.
On a bad day I can destroy the returns of any perm life policy - and have been doing so.
Wouldn't a wise agent understand and place the appropriate policy in any situation? I sell permanent and I sell term. Why is there a problem for some of you to do this? WE are here to serve our clients with the products they want. It is our job to educate them honestly about those products so they can make a good decision.
Now what's a good decision for you, may not be for your client. If you can't understand that, well what's the point of the conversation?
Be honest about the products you sell. I have no problems with either or even vul. I have taken the time to learn about the products available.... and I don't mean "learning" by what a sales manager tells me. Most of you who've been around have learned a sales manager teaches you to sell what's best for the sales manager, so if you're basing your points on what the guy told you about a product when you came into the business who gets a cut of your action... well think about it. Were they really giving you honest advice or sales advice?
Every insurance product has a purpose for somebody. When I fix my car or build my house.. I want access to a full toolbox.... but to each their own.
Wouldn't a wise agent understand and place the appropriate policy in any situation? I sell permanent and I sell term. Why is there a problem for some of you to do this? WE are here to serve our clients with the products they want. It is our job to educate them honestly about those products so they can make a good decision.
Now what's a good decision for you, may not be for your client. If you can't understand that, well what's the point of the conversation?
Be honest about the products you sell. I have no problems with either or even vul. I have taken the time to learn about the products available.... and I don't mean "learning" by what a sales manager tells me. Most of you who've been around have learned a sales manager teaches you to sell what's best for the sales manager, so if you're basing your points on what the guy told you about a product when you came into the business who gets a cut of your action... well think about it. Were they really giving you honest advice or sales advice?
Every insurance product has a purpose for somebody. When I fix my car or build my house.. I want access to a full toolbox.... but to each their own.
Well said! Different products exist to provide for different situations.
Wouldn't a wise agent understand and place the appropriate policy in any situation? I sell permanent and I sell term. Why is there a problem for some of you to do this? WE are here to serve our clients with the products they want. It is our job to educate them honestly about those products so they can make a good decision.
Now what's a good decision for you, may not be for your client. If you can't understand that, well what's the point of the conversation?
Indeed, and, in my view, you are approaching the issue properly by framing it as a "term compared to a permanent policy" versus "term compared to whole life." One can be against the investment aspect of whole life but still seek a permanent policy.
As you noted, many arguments have merit but when you mix in what the client wants rather than what we want it can change, duh! If a man has a reasonably good retirement but wants to spend his investment funds during his retirement but still leave a sum to his children via a permanent insurance policy why is it my job to talk him out of that after we have had a full-bodied discussion and disclosure and that is what he wants. Not to mention the fact that that retirement plan and investments that were going to support the wife may or may not be there. Sometimes life does not go as planned.
If a gal wants a permanent policy to leave a sum to her church which has been a big part of her parents life, her life, and her childrens life why is that my job to talk her out of it if it is suitable for her goals and affordability? How is the term policy going to help her here?
Whole Life Insurance
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