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Harry Nguyen
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I'm not concerned about the MEC within 7 years cause I don't even max it out every year, maybe like half of it. It's just after that, is my concern.
4 Years of Whole Life Insurance
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Harry Nguyen
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Yeah true, but I could only fund what I could afford right now. I just do what I can. Say, someone that's older than me have more money, do they have a advantage over me since I started at a early age?
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Harry Nguyen
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I feel like its similar to credit, if you start early its better for you than later in life. I started my credit when I was 20, if I knew about this back then I would have start. But I started at 26. They say the best time to start is now. I know there are people in their 30's and 40's that they don't even have life insurance. The average people know about term, maybe a few know whole life but don't know about overfunding - infinite banking.
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This is really why so many of the "life insurance instead of 401k or Roth or X investment" don't come remotely close to illustrated best case scenario comparing the 2 alternatives.
Human nature is what it is & also life events happen like job loss/divorce/disability & consumption decisions happen that impact the premiums being paid & over funding being continued. If modified in the mid term or early years, the life plan will have much more severe consequences than backing off pure savings plans that don't go through insurance. I think I see 9 out of 10 original plans like this compared to the ones that stick with it all the way through to the tax free loans & withdrawals to supplement retirement.
IMHO, the goal for these type of policies (max funded cash value) is to design it so that the client can comfortably max fund it. If its designed to accept alot more premium than the client can fund, they underperform as a default. Doesn't matter WL or IUL... design and funding is the key. Of course, the longer you have it the better it will do as time to compound is huge, but that is only really relevant if it is designed and funded properly.
I see a lot of policies designed terribly, and in the best interest of the agent who sold it - rather than the client. Doesn't mean it will fail, but the odds are much higher and it certainly won't deliver the performance it could have, if designed properly.
If you can fund as you have been, at least do that. When you can do more, do it.
Well, that's a huge mistake.
But a lot of those people think it's expensive. Everyone working needs term. It's crazy inexpensive and satisfies a very important need.
Overfunded WL/IUL still needs a term component to make up the difference in death benefit (since you're compressing your death benefit by overfunding),
Most of these people should also have disability insurance, but they don't buy that either.
