Scroll down for a discussion on Why sell permanent Insurance? within the Life Insurance Forum.
Here is a link to a discussion forum on Missed Fortune:
http://www.mightybargainhunter.com/2...rrible-advice/
Airborne1
You have stated:
1. The idea is to pay for the insurance ...
1. Developer in Virginia Beach was almost finished with developing a residential area, and residents had already moved in. During the last few houses under construction, it was discovered the soil/water was contaminated by military activity nearbydecades ago. How would you like to have put down a large downpayment or put all the equity from your previous home in this development ? Your P&C coverage is worthless.
>>>>>Do you have a link to this article. Specifics about the developer would be useful as well. An environmental study should have been completed prior to building.
I wish I did, but it actually made the local news all the way up to Metro DC. I do recall seeing it in the Wash. Times or Wash. Post, but I honestly can't remember if mentioned homeowner's losing their equity.
The best way to get an article on this is to go to a good library - some have incredible databases that you vrtually access every major newspaper's archived material.
1. The idea is to pay for the insurance policy in 5 to 7 years. Is there no risk of becoming an MEC?
2. COI can be reduced in later years, but people don't get why. How?
3. There are only a few companies whose policies work for this. Which are they? Why?
1. Max funded right below MEC - obviously you could not use this strategy with a policy on your child.
2. I'm only willing to share this with you personally, and only if you promise not repost what I share with you. Set up a dummy email account and I'll tell you there. I'm no longer in the habit of bashing my head against the wall with folks who think W/L is even a decent product, much less a great one.
3. Companies which give you access to the excess premium with NO surrender charges after year 1. That is the premium above the target level. Depending on the age of the insured this could amount to 90% of what you put in. This is not a loan - it's a partial surrender, therefore you incur no cost of a loan if you need access to the money in the early years.
B. There has to be an age to 100 DB guarantee in order to access the cash tax free down the road. The goal is NOT to have a pile of cah at age 100, but to prevent the life insurance company from eliminating the death benefit, which creates a taxable life insurance contract, and reduces their reserving requirements.
C. Zero-cost loans after a decade or so, and low cost loans in early years
D. No hidden costs such as "outrageous per unit fess"
I would strongly encourage to stop listening to mental midgets like Mighty Bargain Hunter, Scott Burns, Suze Orman's, and most financial planners
If you look at MBH's profile, he has absolutely no background in finance, but more importantly no background in insurance.
Why would anyone listen to someone like that regarding insurance, mortgages, or personal finance ?
What "projections" are you referring to that Doug Andrews misuses ?
Missed Fortune, paperback, Page 111, illustration 9.11 in which he uses 7% as the growth of the investment, obviously the EIUL and the illustration shows a mortgage loan of 7%. Outside of that he commonly uses 7-9% interest to show the growth of the EIUL through out the book. Using these kinds of illustrations is a sure way of pulling out your E&O Insurance in the out years (which from my understanding Doug is doing on multiple lawsuits). While I support these ideas, it is best to use real numbers and that would be 5% at most! Yet though I can still get loans well under 6% or if I use my money its 4% or less via a insurance contract or using cash as the grarantor as what some refer to as a wash loan.
I do believe strongly that Andrew has become a poria within the industry and try the best I can not to use him or his books to discuss these ideas. Plus I do not today or tomorrow going to support his 8 grand plus seminars at his home or wherever he gives them! Maybe his marketing ideas are worth it but I don't think his ideas of "Missed Fortune" is worth it, others may disagree that simply doesn't matter to me personally.
Once again this isn't rocket science, I can on my own (on a yellow legal pad (don't need leap)) easily show how taking out a 30 yr loan and paying the difference of a 15 yr loan (in a safe investment account) that one could easily pay off the house quicker with the 30 yr loan! Even if you earn 2% points less on the investment side as you do on the loan side. This is basically what I use for more normal people and promoting the use of safe investment such as a Annuity or Life Contract. Yet I wouldn't do it if I had to show anything greater than 5% to make it work. Yet when it comes to Realstate investors or House Flippers, the guarantee or protection is all that is needed to show to make it a winning idea.
Once again this isn't rocket science, I can on my own (on a yellow legal pad (don't need leap)) easily show how taking out a 30 yr loan and paying the difference of a 15 yr loan (in a safe investment account) that one could easily pay off the house quicker with the 30 yr loan! Even if you earn 2% points less on the investment side as you do on the loan side. This is basically what I use for more normal people and promoting the use of safe investment such as a Annuity or Life Contract. Yet I wouldn't do it if I had to show anything greater than 5% to make it work. Yet when it comes to Realstate investors or House Flippers, the guarantee or protection is all that is needed to show to make it a winning idea.
>>>>> I am interested in seeing the calculations you show an family who is interested in a 30 yr. vs. a 15 year loan and using the excess to pay off the loan earlier using 5% as an investment return cap.
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"Tell me and I will forget. Show me and I will remember. Involve me and I will understand." Confucius
>>>>> I am interested in seeing the calculations you show an family who is interested in a 30 yr. vs. a 15 year loan and using the excess to pay off the loan earlier using 5% as an investment return cap.
I would of assume you could of ran the numbers? I guess not.
Okay for those that don't have what it takes:
7% loan on a 30 year mortgage equals yearly payment of $7,983.60, a 15 year mortgage of 7% is $10,785.96 base on a hundred grand. Difference is $2,798.36, after 15 years of the 30 year mortgage is right at $68,021.68. Now go invest the difference of $2,798.36 at 5% and after 15 years you have $69,221.41, you have $1,193.50 more in the savings account paying 2% less then you are paying. If you achieve a equal amount of interest or 7% of the savings you would have $82,963.22 or about 14 grand more than what is due to payoff the house. Plus I'm not using the saving on taxes, since on a 30 year mortgage you pay more in interest in the 15 years meaning you get more in tax deduction. If you count those savings and reinvest that money the amount climbs!
I would of assume you could of ran the numbers? I guess not.
>>>>Perhaps the psychic network could use your services
Okay for those that don't have what it takes:
>>>>HaHa, next!!!!
7% loan on a 30 year mortgage equals yearly payment of $7,983.60, a 15 year mortgage of 7% is $10,785.96 base on a hundred grand.
>>>If a 30 yr. loan and 15 yr. loan had the same interest rates you are correct. I imagine a great follow-up would be to tell your potential client that normally that is not the case and the 15 yr. loan will have a lower rate.
Difference is $2,798.36, after 15 years of the 30 year mortgage is right at $68,021.68.
>>>>Actual loan balance would be $73,785.13 (amortization @ 30 yrs, 7%)
Now go invest the difference of $2,798.36 at 5% and after 15 years you have $69,221.41, you have $1,193.50 more in the savings account paying 2% less then you are paying.
>>>Number are close enough to be accurate. I agree with the theory of using leverage to finance properties and increase your income, but not exclusively through an annuity. What do you recommend to people who do not like annuities and want a "guaranteed" 5% return or higher? In another words, commission aside, what are the alternatives?
I would of assume you could of ran the numbers? I guess not.
>>>>Perhaps the psychic network could use your services
Okay for those that don't have what it takes:
>>>>HaHa, next!!!!
7% loan on a 30 year mortgage equals yearly payment of $7,983.60, a 15 year mortgage of 7% is $10,785.96 base on a hundred grand.
>>>If a 30 yr. loan and 15 yr. loan had the same interest rates you are correct. I imagine a great follow-up would be to tell your potential client that normally that is not the case and the 15 yr. loan will have a lower rate.
Difference is $2,798.36, after 15 years of the 30 year mortgage is right at $68,021.68.
>>>>Actual loan balance would be $73,785.13 (amortization @ 30 yrs, 7%)
Now go invest the difference of $2,798.36 at 5% and after 15 years you have $69,221.41, you have $1,193.50 more in the savings account paying 2% less then you are paying.
>>>Number are close enough to be accurate. I agree with the theory of using leverage to finance properties and increase your income, but not exclusively through an annuity. What do you recommend to people who do not like annuities and want a "guaranteed" 5% return or higher? In another words, commission aside, what are the alternatives?
-J.R.
First off if you have paid in for a full 15 years you are effectively in the 16th year, that may explain the difference in numbers.
Outside of that, the investment? I sell Insurance, that is what I do but it really doesn't matter. The investment depends upon the individual and their make-up, so if its Insurance, Bonds, Securities that would depend upon the individual.
I like Realstate, as an investment that can be manipulated and either a W/L, UL and or Annuity for the safe harbor of the profits. Of course if one wants Bonds that is fine, they are easily brought. I can offer CD's and make a low commission thru several online banks.
Missed Fortune, paperback, Page 111, illustration 9.11 in which he uses 7% as the growth of the investment, obviously the EIUL and the illustration shows a mortgage loan of 7%. Outside of that he commonly uses 7-9% interest to show the growth of the EIUL through out the book. Using these kinds of illustrations is a sure way of pulling out your E&O Insurance in the out years (which from my understanding Doug is doing on multiple lawsuits). While I support these ideas, it is best to use real numbers and that would be 5% at most!
Not true at all. I get annual statements on ALL of my EIUL customers, and the returns have exactly matched the S&P 500 for the last 3 years (up to the cap). I guarantee you it's better than 5%.
Every carrier that markets the EIUL bases their "illustrated rate" on a lookback period of around 20 - 50 yrs. which is approved by the state DOI in every state. You will not find one EIUL that uses a small lookback period of 4 or 5 yrs when the market was only going up...for obvious reasons the state DOI would not allow it.. The "illustrated rate" merely reflects the average number of the lookback period. The stock market could do better or worse, and that is clearly explained.
Since you have absolutely no down years in an EIUL, IMHO you have a better change of coming closer to the actual average.
So long as you don't say the illustrated rate is the guaranteed rate, you would never lose a claim. Same philosophy applies to disclosing "illustrated rates" in a regular UL or VUL. So long as you don't confuse what's illustrated with what's guaranteed, you'll never lose.
Read my lips
You have a contractual guarantee to participate in the gains of the S&P 500 up to the cap,
A contractual guarantee is far superior than what the board of directors declare every year in a W/L or regular UL, which is BEHIND CLOSED DOORS.
I would of assume you could of ran the numbers? I guess not.
>>>>Perhaps the psychic network could use your services
Okay for those that don't have what it takes:
>>>>HaHa, next!!!!
7% loan on a 30 year mortgage equals yearly payment of $7,983.60, a 15 year mortgage of 7% is $10,785.96 base on a hundred grand.
>>>If a 30 yr. loan and 15 yr. loan had the same interest rates you are correct. I imagine a great follow-up would be to tell your potential client that normally that is not the case and the 15 yr. loan will have a lower rate.
Difference is $2,798.36, after 15 years of the 30 year mortgage is right at $68,021.68.
>>>>Actual loan balance would be $73,785.13 (amortization @ 30 yrs, 7%)
Now go invest the difference of $2,798.36 at 5% and after 15 years you have $69,221.41, you have $1,193.50 more in the savings account paying 2% less then you are paying.
>>>Number are close enough to be accurate. I agree with the theory of using leverage to finance properties and increase your income, but not exclusively through an annuity. What do you recommend to people who do not like annuities and want a "guaranteed" 5% return or higher? In another words, commission aside, what are the alternatives?
-J.R.
First off if you have paid in for a full 15 years you are effectively in the 16th year, that may explain the difference in numbers.
Outside of that, the investment? I sell Insurance, that is what I do but it really doesn't matter. The investment depends upon the individual and their make-up, so if its Insurance, Bonds, Securities that would depend upon the individual.
I like Realstate, as an investment that can be manipulated and either a W/L, UL and or Annuity for the safe harbor of the profits. Of course if one wants Bonds that is fine, they are easily brought. I can offer CD's and make a low commission thru several online banks.
Missed Fortune, paperback, Page 111, illustration 9.11 in which he uses 7% as the growth of the investment, obviously the EIUL and the illustration shows a mortgage loan of 7%. Outside of that he commonly uses 7-9% interest to show the growth of the EIUL through out the book. Using these kinds of illustrations is a sure way of pulling out your E&O Insurance in the out years (which from my understanding Doug is doing on multiple lawsuits). While I support these ideas, it is best to use real numbers and that would be 5% at most!
Not true at all. I get annual statements on ALL of my EIUL customers, and the returns have exactly matched the S&P 500 for the last 3 years (up to the cap). I guarantee you it's better than 5%.
Every carrier that markets the EIUL bases their "illustrated rate" on a lookback period of around 20 - 50 yrs. which is approved by the state DOI in every state. You will not find one EIUL that uses a small lookback period of 4 or 5 yrs when the market was only going up...for obvious reasons the state DOI would not allow it.. The "illustrated rate" merely reflects the average number of the lookback period. The stock market could do better or worse, and that is clearly explained.
Since you have absolutely no down years in an EIUL, IMHO you have a better change of coming closer to the actual average.
So long as you don't say the illustrated rate is the guaranteed rate, you would never lose a claim. Same philosophy applies to disclosing "illustrated rates" in a regular UL or VUL. So long as you don't confuse what's illustrated with what's guaranteed, you'll never lose.
Read my lips
You have a contractual guarantee to participate in the gains of the S&P 500 up to the cap,
A contractual guarantee is far superior than what the board of directors declare every year in a W/L or regular UL, which is BEHIND CLOSED DOORS.
Now we can go into a lot here and I don't disagree but the historical average of any index isn't a indication of what is instore!
I simply don't know what to make of this and how it pertains?
[quote]2. I'm only willing to share this with you personally, and only if you promise not repost what I share with you. Set up a dummy email account and I'll tell you there. I'm no longer in the habit of bashing my head against the wall with folks who think W/L is even a decent product, much less a great one.
Hi,
I want to let you know that I provided my e-mail account which is
Camp sibert al @ yahoo . com
All of that without space.
I have not received anything- - no big deal. But, if you did send something which I did not receive, I did not want you to think that I was being rude in not replying with a thanks.
Now we can go into a lot here and I don't disagree but the historical average of any index isn't a indication of what is instore!
I simply don't know what to make of this and how it pertains?
Well, no one could disagree with statement #1
It's harder to sell on pessimism, since most folks think they'll end up okay somehow.
Looking at the abyssal savings rate in this country, I can't imagine how.
When I first got trained on perm insurance, the old guy training me said, "you have the largest segment of the population starting retirement in 2008, where are they going to be pulling money from ?"
You already know the answer, I hope. That's not selling pessemism, that's reality.
A couple of years later, I read the same thing in Robert Kiyosaki's book, "The Coming Stock Market Crash". You might say he has an agenda to steer folks towards real estate, but who knows.
A couple of years later, I read the same thing in Robert Kiyosaki's book, "The Coming Stock Market Crash". You might say he has an agenda to steer folks towards real estate, but who knows.
The wisdom behind his books are the MLM giant Quixstar/Amway and attributed to mass advertising and irrational thinking. Kiyosaki does touch upon a few sad truths (i.e., lack of financing education children receive), but is advice pertaining to real estate are way off (education doesn't pay and all you need are advisors). BS!
This may be of interest to those of you who would like to read an honest analysis of Kiyosaki and other Guru's
Obviously if you think insurance is rip off and all agents are scum then the story would seem to ring true. Outside of that I don't see any significance outside of more media bashing insurance and on the other hand sing the praises of the MF.
I didn't see anything in that article citing health insurance. Just life agents pushing high fee/high commission life insurance vehicles. And I love life insurance. Have plenty of it - 1.5 mill in 30 year term.
John, I love your posts here and I like your insight on investing, but your starting to get caught up with the "one-size fits all" cancer that lingers on this board sometimes. That article has some pretty good points for consumers buying life insurance, but basically gets a little carried away with the WL bashing. I mean, I am not negative on investing and I don't believe most people should be buying WL instead of investing. You should keep your insurance and investing separate and shouldn't view your insurance and part of your investment portfolio. Part of your assets, yes, but not part of your investment portfolio.
And the vast majority should be in term life, because most people don't have the luxury to afford everything in WL and there is the "opportunity cost" of buying all your coverage in WL (outside of select professionals such as doctors, lawyers, etc. and high net worth individuals).
The worst problem with term insurance is that so few policies ever pay out and the insured individual can look in the mirror and say "thank God", but the buy term only mentality assumes your need for life insurance will completely go away, and maybe it will, but it assumes some perfect assumptions.
For starters, suppose you die during a down market and your survivors have to liquidate investment vehicles to live on when their worth less than half of what they were a short time ago. It happens...and now such people have really learned the meaning of the term "opportunity costs", forced to cash in investments that would have likely recovered their value in a relatively short period of time. I don't think there is anything wrong with proposing the idea of having a small WL policy that will provide living expenses for a short period of time so your family won't HAVE to touch your investment portfolio if they don't need to. And if you're a risk taker and don't want to lose a small amount of money you could be putting into the market, so be it, but there is nothing wrong with recommending the idea for some people.
Another thing to consider, when buying any life insurance is what your family expenses will be, such as eduational expenses, for example. Most people plan their children's educational expenses in their life insurance, as well as general child-rearing expenses. Well, you could end up like my best friend's uncle George in a neighboring town. After college, George's daugther ended up marrying an abusive husband with a household so bad that George's granddaughter ended up living with him to have a stable homelife. Well, the granddaughter ends up in and out of jail a couple of times throughout high school, got addicted to heroin and has been bouncing around rehab programs ever since, and who was left to raise her daughter (she got knocked up at 17 too)? You guessed it...George. George is now in his 70s and raising his greatgrandchild. I think it is safe to say George would like to have some assets to provide a good life for her and perhaps break this family cycle (the rest of the family is not Jerry Springer trash or anything--something just went wrong there). Now, did George do a good job of investing? I don't know. If he's like a large number of the population, probably not, but he might have. If not, he could have several hundred thousand dollars of benefits to leave her if he bought a modest WL policy years ago. The whole point is that the "I'm 30 years old, so I don't need ANY life insurance except 30 year term" mentality only works if life doesn't throw you any bad cards and you indeed have no more need for life insurance.
There is nothing wrong with a little added WL for added security, if it makes sense to the buyer.
Oh yeah, two other beefs. First, I didn't like the remark about agents pushing high commission products. I get paid the same for term and UL, and only slightly higher commission percentage for WL. And term is probably the easiest sell out there when you find somebody that believe in life insurance because of so many "expert" articles in recent years claiming anything else should never be purchased. Second, use the internet for your insurance. You can't begin to compare some of the intangibles and company differences on the internet. There is no substitute for a good agent. Remember when you had Assurant deny a claim for a customer and you wrote to the company and got the claim paid? I know a manager in my company that as an agent, wrote and got a 500K DB check paid for a customer by lobbying for his client under some suspect circumstances. Basically, it was within the contestability clause time frame and he verified (knowing family personally) that his client was not aware of the extent of his health problems, by writing a detailed explanation of everything. Try getting the guy from the toll-free customer service number to lobby like that. Folks, there is more to insurance than the bottom line price.
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