Airborne1 and those that do not care for W/L

[Guest]

Airborne1

Thanks for your efforts in reaching me.

 

[James]

James, if I may:

I know you are a big proponent of WL. May I ask you why?

1. Why do you like it so much. (And I do not mean that argumentatively, just to elicit a response). I can see that the benefits are: (1) permanent coverage, (2) level premiums, and (3) more affordable than term (in the later years). But as I see it, it takes decades to build up any decent cash value. An insured should be awful young when they start it (ofcourse, they probably could not really afford a decent DB) You seem to really like the CV aspect of it especially the LTC (riders ?). It really intrigues me why you seem to be so enthusiastic about the product - - to me it seems as if though it takes a lifetime to build up the CV, hence hardly noteworthy.

2. I know you have said WL is getting more flexible. How?

3. I am curious why it builds up cash value - - why was it designed like that. Do you have any idea. What is the historical origin/context? Let's face it, what product sets aside part of your payments in a savings account for you (okay, I suppose credit card rewards programs do to an extent and airline frequent flier miles, but what else). What I mean by curious why it builds up cash value, what were the designers of the product thinking/intending. What is the rationale to accumulate CV? Is my question clear? I wonder if originally, maybe 100 years ago, it started out as a savings program with a DB in case you did not reach your savings goal when you died.

4. Which came first, term or WL?

5. If I may ask your further indulgence, would you mind describing the top two or three ideal candidates or scenarios for WL.

I guess I really ask, because I see it kind of like a "vanilla" flavored product (I don't know if that makes sense. You walk into a Baskin Robbins and one is attracted by all the other ice cream with fancy names and colors but by golly, vanilla sells and it is fundamental to the industry).
Further, I am not that impressed with the buildup of CV. As I said earlier, one better start when one is awful young. But then an advantage is the predictable premium that one can just pay on auto-pilot; takes no work, no monitoring, no thought. No slight intended, those are good things. If one buys insurance, they want a sure thing (or at least should have it available) they do not need to take risks wondering if they will be able to afford the COI in 10 years or how much the minimum premium will be next year to keep the policy in force.


Anyway, since I see it as a plain Jane vanilla product and you are so enthusastic about it (and are the professional) I obviously do not appreciate all the subtleties, attributes, and benefits of it.

Thanks James.

Excellent questions, I doubt if I could answer with any real significance without taking some time to respond in earnest. I would start with this, W/L was around before Term and that the Insurance Contract was an investment in the Insurance Company more on a Social/Economic Scale than today. Back a hundred years ago the economy was base more on small business that was driven locally with little State or Federal regulation and the ability for an average citizen to invest was more limited than today, extremely so. The W/L contract predates US Steel and Standard which is the first Huge Corp. that we see in the US or in some ways the World and there was no good way for one to invest outside of the local market or place of birth. Now we fast forward over a hundred years and we have without a question the fastest growing social engineering changes that the human race has ever seen and we all are right smack in the middle of it, you are living in historical times.

So the question is does W/L still fit in? Since the changes we are talking about began with the birth of the Industrial Revolution and the Social Changes since the early 18th Century but in earnest I would argue that in America and we are for the most part generations ahead of other Nations in Social Changes that it has not been since after WWII that the major change of investments came to the Middle Class, well I would argue since the 60's or about 40 years. Man doesn't change that much in 40 years and most people have basically the same financial mentallity that our grandparents had. So I would suggest the W/L Contract, CD and/or Bonds today are still what most are comfortable with. Now is this a good thing? That is for more educated people than you'll find on this board but we all have opinions. For one I don't think today's financial market ideas pushed by many are "population friendly".

Lets take GM for instance, once a World Icon (in the fities and early sixties), thee World Icon as far as business went. It alone was the lone Corporations that Nations stood and took notice if they took a dump. Fast forward 40 years and we see the problems now with GM and their likely rocky road ahead as they dig out from a debacle that has been in the works since the 50's. Now I imagine every company is like that, I don't think Microsoft will be all that much ahead if we fast forward 40 years. Now some want to put the idea of "Retirement Funding" strictly on the back of Private Companies/Corporations? I for one am thinking this might be a bit much if we desire to stay a free social and free economic base society. Today I see a rather Facsist set of ideas coming from all political parties, why? Because large Business is becoming so entangle with our everyday needs now including retirement funding which is quite personal to many. Go back before WWII and most retirement circle around the family not Wall Street and our retirement agenda has change and for the most part is new if we consider the idea of Middle Class retirement.

 

[Guest]

James,

Thanks so very much for your response. You put alot of things into perspective. Some of the sites I hit on with Google, had introductions to life insurance describing how it has existed for thousands of years since at least the early Romans.

Apparently people would band together for mutual financial protection such as a guild, and contribute to a fund to pay death benefits. As the funds grew with time and if invested wisely, the survivors did pretty well.

So, now I can see a rationale for the existence of WL and your comment about how it was one of the few things you could invest in 100 years ago explains another phenomenon quite nicely: mutual companies.

So, you have early groups banding together for financial security (mutually owned companies), their investments grow (WL-CV), and it is one of the few things to invest in besides railroads and presto, the modern day insurance company is formed. Thanks so much.

I really enjoy your editorials, views, and opinions. I always learn something from you.

Thanks!

 

[James]

The first Annuity predates Rome, I believe it was the Babylon's that first started a Annuity system. The first true banking system was first witness with the Knights of the Templar, they had what was called "Chits" (?), and they could use them like checks at any House of Templar that were spread across all of Europe down into the Middle East. This freed them from having to carry large amounts of cash which were a part of the envy by the French Royality and the Church which lead to the deaths of most of the Knights not to mention their political power was growing at an alarming rate, well at least according to the Government and Church.

 

[Crabcake Johnny]

James, your knowledge of history is nothing less than stunning. Do you have a formal background in history or are you just a very avid book reader?

 

[sman]

Now some want to put the idea of "Retirement Funding" strictly on the back of Private Companies/Corporations? I for one am thinking this might be a bit much if we desire to stay a free social and free economic base society. Today I see a rather Facsist set of ideas coming from all political parties, why? Because large Business is becoming so entangle with our everyday needs now including retirement funding which is quite personal to many. Go back before WWII and most retirement circle around the family not Wall Street and our retirement agenda has change and for the most part is new if we consider the idea of Middle Class retirement.

James,

Are you saying you're against investing in the markets for retirement?

 

[Airborne1]

Airborne1

Thanks for your efforts in reaching me.

Check your forum inbox

 

[Airborne1]

History of Life Insurance

4. Which came first, term or WL?

Here's what I have

1st "sale" of Life Insurance

Presbyterian Minister Fund - 1759 (TERM)

1st "sale of Whole Life

Nautilus Company - 1860

Maybe James is referring to insurance not "sold"

 

[Zydo]

Airborne.....you are correct.

Nautilus is still in business today.....they are known as New York Life if memory serves me correctly.

 

[James]

COVENANT LIFE INSURANCE COMPANY was once known as the Presbyterian Minister Fund as far as I know. Yet, there are lawsuits out there making claims that the value of the years ago while it was the Presbyterian Minister Fund is owed to them via family ties. Plus I wouldn't call it exactly a term since the value of the DB was for life for the Ministers and according to todays lawsuits has CV asserted in the policies that were originally issued.

http://www.pcusa.org/pcnews/oldnews/1998/98408.htm

Once again not the first but the first of our Nation, established while we were Colonies and not exactly an Insurance Company as it was first est. specifically for Ministers of the Church not the general public. Yet it did have value (maybe not pure cash but assistance if needed) and I believe was for the life of the Minister if he retired as a minister of the Church which would not be what I call term, but in other ways of looking at it I suppose one could call it term if they are reading the language with rose color glasses.