Basic Questions Regarding Whole Life

[Death Cab For Tootie]

Here we go again.

I thought we had a truce You'd stay out of the WL threads, and I'd stay out of the health insurance and mediocre metal threads.

 

[HealthGuy]

Death Cab: I apologize, I couldn't resist.....

 

[Death Cab For Tootie]

Death Cab: I apologize, I couldn't resist.....

I CANT BELIEVE YOU LIKE PANTERA THEY ARE SUCH CRAP YOU SHOULD BUY MAIDEN ALBUMS AND REINVEST THE DIFFERENCE!!!!!!!!!!!!!!!111

 

[HealthGuy]

Dude: You got me all wrong - Maiden is #1, seen them twice baby in concert...I just like my Dime pic. More "striking" thank Bruce Dickenson.

 

[scagnt83]

Newbie here.

I am contemplating purchasing a whole life policy and have met with agents from a few different companies (random friends and associates have apparently given my name out to their agents recently). Here is my situation because whole life was not on my radar screen a few weeks ago.

I am in my mid 30's. With the exception of my mortgage I have finally gotten rid of debt (student loans took awhile). I am now maxing out my 401k at work and am looking for a vehicle to accumulate money for retirement purposes. My savings is not where it should be nor is the 401k due to a late start. While I do have a family I am NOT looking at this for death benefit purposes. Thus, I was quite surprised when this product was suggested by a distant family member, an acquaintenance and not surprisingly the salesmen.

What is the minimum amount of death benefit you can set up? Are their negative ramifications of doing the bare minimum (to me, not the agent). At the same time, I am curious about starting with a certain level premium but may increase it ina few years. Does that trigger a new round of fees? In sum, what features should I be insisting be in the policy to maximize my goals (assuming I'm looking at the right product)?

Sorry for my ignorance.

Any and all help appreciated.

Since no one has really answered your question in an understandable manner yet I will give it a shot... lol

Whole Life is in a category called "Permanent Insurance". It includes Whole Life and Universal Life Insurance.

Permanent Insurance can be an excellent alternative asset to accumulate retirement savings with. Banks, Corporations, and Hedge Funds all utilize permanent insurance for their portfolios. Many people dont understand it, and like to knock it, but considering that most high net worth individuals own millions of it, and most financial institutions contribute millions per year into it... obviously there is something to it..

The tax advantages and distribution features are the best thing about it

They both feature a Cash Value and a Death Benefit that grow.

WL gives you company dividends to base policy growth from. So a WL policy for cash accumulation should only be bought from a well rated mutual company that pays a strong dividend.

UL bases policy growth off of current interest rates that are set by the company. They are influenced by market rates.
There are 3 different types of UL. Traditional, Indexed (bases growth off of a stock index to some extent), and Variable (bases growth off of chosen mutual funds).

WL is a bit more rigid and structured than UL. There is no real premium flexibility with it, but it can be designed to allow for increases in the future (however this will effect growth some in the early years).

UL has a more flexible premium. You can skip payments, increase, decrease, etc. much easier than you can with WL. Allowing for increased premium in the future will affect the early years of the UL too, but not as much as WL.

Increasing payments does not trigger any new fees or anything like that.

The cash value grows tax deferred, and can be accessed tax free. Generally it will grow from 4%-6%.. but this is completely tax free... so it would be comparable to a 7%-9% mutual fund that is being taxed.
You can access the money because you can withdraw up to the basis of what you have paid in and you can take loans for the rest. The loan does not have to be paid back (generally speaking) and can be structured to be self sustaining within the policy.

Taking distributions from the Cash Value will affect the Death Benefit. But remember the DB grows just like the CV, so it will always be greater than the CV.

You can also add waiver of premium riders to the policy and if you are disabled and cant work it will pay your premiums for you... what 401K will do that???

You need to find a knowledgeable independent agent to show you illustrations and options from multiple companies and on multiple products.

 

[Death Cab For Tootie]

Dude: You got me all wrong - Maiden is #1, seen them twice baby in concert...I just like my Dime pic. More "striking" thank Bruce Dickenson.

If by "striking" you mean "hideous", I agree.

Maiden is the ****. I'm rediscovering them and they hold up. A newer band I found - Red Fang. Enjoy.

Red Fang Prehistoric Dog Video | pampelmoose Dave Allen of Gang of Four's Music and Media Blog

 

[HealthGuy]

Dude, nobody comes close to Maiden. Except for this Red Fang, HILARIOUS and HIDEOUS.

 

[Death Cab For Tootie]

Yeah, love their sound. Reminds me of old school Soundgarden from "Louder Than Love".

 

[dadkins131]

Newbie here.

I am contemplating purchasing a whole life policy and have met with agents from a few different companies (random friends and associates have apparently given my name out to their agents recently). Here is my situation because whole life was not on my radar screen a few weeks ago.

I am in my mid 30's. With the exception of my mortgage I have finally gotten rid of debt (student loans took awhile). I am now maxing out my 401k at work and am looking for a vehicle to accumulate money for retirement purposes. My savings is not where it should be nor is the 401k due to a late start. While I do have a family I am NOT looking at this for death benefit purposes. Thus, I was quite surprised when this product was suggested by a distant family member, an acquaintenance and not surprisingly the salesmen.

What is the minimum amount of death benefit you can set up? Are their negative ramifications of doing the bare minimum (to me, not the agent). At the same time, I am curious about starting with a certain level premium but may increase it ina few years. Does that trigger a new round of fees? In sum, what features should I be insisting be in the policy to maximize my goals (assuming I'm looking at the right product)?

Sorry for my ignorance.

Any and all help appreciated.

If you are looking to build your retirement account, then I suggest you run as fast as you can from this forum before someone sells you the idea that a whole life policy will do a better job meeting your goals then say, ummm, a retirement investment account. The truth is, most insurance agents care more about their commission check then they do about your life goals. Read this:

Money101 Lesson 20: Life Insurance

PS: Family and friends are not always the best financial advisors....

 

[bluemarlin08]

IMO, stay away from WL for investment purposes. I don't know any high net worth clients that buy WL as an investment.