Bought my first house with my cash value...

[Robert Barney]

The excess in year one, from a 1035, simply means you transferred money in from another product. In essence, that was a lump sum premium payment and now explains why after $6000 in 2 years, you could borrow $10,000.

In total, after 2 years, you have paid $58,457 in premiums, and have a total Cash value of $51,220 (with Dividend Cash Values). I imagine the company would be happy to lend you as much as $51,220, minus about 5% ($2,561), which would be the loan interest at then end of one year.

But to summarize, you paid in $58,457 in two years, and have $51,220. The difference has given you about $750,000 of insurance for 2 years. Most of that difference went in commissions to the agent. You also have foregone the interest on the money used for premiums

I tried to google "FPR Contract Premium" and had no luck finding out what the acronym FPR referred to. Is this by any chance a Northwestern Mutual product? I saw some reference to FPR Contract Premium re. an NWL policy, but the link did not resolve to a page I could access.

I also tried to google "APPUA Premium" and had no luck finding out what the acronym APPUA refers to.

Do you know what these acronyms are?

 

[DHK]

Bob - stick to term insurance.

 

[DHK]

You also have foregone the interest on the money used for premiums

So wrong - if the policy and loan is non-direct recognition. The original amount continues to grow uninterrupted, but annual loan interest could be deducted against the policy.

Don't you remember me posting this (multiple times)? And this time, I don't feel like posting the formula again. There's a search function for that.

I also tried to google "APPUA Premium" and had no luck finding out what the acronym APPUA refers to.

I'm sure it references a PUA rider. Many companies call them different things.
MassMutual calls it ALIR (Additional Life Insurance Rider).
Guardian calls it EPUA (Enhanced Paid Up Additions)
Assurity calls it VER (Value Enhancement Rider)

They do the same thing.

 

[DHK]

REI_Velocity,

Meet Robert Barney - the founder of Compulife software - a term insurance quoting software company. Bob says he own some permanent life insurance, but he only bought it for the death benefit.

Bob, despite his "years of experience" has little to no knowledge on planning with life insurance or the strategic use of cash values of life insurance policies.

Only recently, did I help him understand that the cash values of a life policy are not "kept by the insurance company" but are a component of the total net death benefit.

Net death benefit = cash values + net amount at risk - any outstanding loans.

And after referencing plenty of other materials he either finally "got it" or relented (I can't remember now).

In essence, he's not the kind of person you'd want to ask for advice on the strategic use of life insurance.

 

[goillini52]

REI_Velocity,

Meet Robert Barney - the founder of Compulife software - a term insurance quoting software company. Bob says he own some permanent life insurance, but he only bought it for the death benefit.

Bob, despite his "years of experience" has little to no knowledge on planning with life insurance or the strategic use of cash values of life insurance policies.

Only recently, did I help him understand that the cash values of a life policy are not "kept by the insurance company" but are a component of the total net death benefit.

Net death benefit = cash values + net amount at risk - any outstanding loans.

And after referencing plenty of other materials he either finally "got it" or relented (I can't remember now).


In essence, he's not the kind of person you'd want to ask for advice on the strategic use of life insurance.

Bob also doesn't like agents and begrudges them for getting paid(making a commission).

"But to summarize, you paid in $58,457 in two years, and have $51,220. The difference has given you about $750,000 of insurance for 2 years. Most of that difference went in commissions to the agent."

 

[DHK]

It's not like there's any charge of insurance or anything...

 

[BeeSelective]

Disneyland was started with a life insurance policy loan. Just ask Walt!

 

[REI_Velocity]

The excess in year one, from a 1035, simply means you transferred money in from another product. In essence, that was a lump sum premium payment and now explains why after $6000 in 2 years, you could borrow $10,000.

In total, after 2 years, you have paid $58,457 in premiums, and have a total Cash value of $51,220 (with Dividend Cash Values). I imagine the company would be happy to lend you as much as $51,220, minus about 5% ($2,561), which would be the loan interest at then end of one year.

But to summarize, you paid in $58,457 in two years, and have $51,220. The difference has given you about $750,000 of insurance for 2 years. Most of that difference went in commissions to the agent. You also have foregone the interest on the money used for premiums

I tried to google "FPR Contract Premium" and had no luck finding out what the acronym FPR referred to. Is this by any chance a Northwestern Mutual product? I saw some reference to FPR Contract Premium re. an NWL policy, but the link did not resolve to a page I could access.

I also tried to google "APPUA Premium" and had no luck finding out what the acronym APPUA refers to.

Do you know what these acronyms are?

This one is with Penn Mutual. As to the 6K, that is the premium, but I have over 18K in paid-up additions. So after year one, I had roughly 20,500 avail of the 25K (not including the 1035 money). My breakeven point is year 4... I paid 100K and have 100K+ in cash, plus the 1035 portion. This is totally cool as I'm capitalizing the policy... these are also the worst 3 years.

I'm only doing 25K a year for 5 years then I don't have to put anything else in. I can choose to put 6K of premium in or I can pay it with my CV. 30 years later, when a typical term would have been long exhausted, I'll have almost a million dollars of Cash Value, and 1.7MM in death benefit. Plus, I have my other policies.

I think it's a pretty good deal to stash my foundational cash in. Do you think it's a good deal?

 

[REI_Velocity]

REI_Velocity,

Meet Robert Barney - the founder of Compulife software - a term insurance quoting software company. Bob says he own some permanent life insurance, but he only bought it for the death benefit.

Bob, despite his "years of experience" has little to no knowledge on planning with life insurance or the strategic use of cash values of life insurance policies.

Only recently, did I help him understand that the cash values of a life policy are not "kept by the insurance company" but are a component of the total net death benefit.

Net death benefit = cash values + net amount at risk - any outstanding loans.

And after referencing plenty of other materials he either finally "got it" or relented (I can't remember now).

In essence, he's not the kind of person you'd want to ask for advice on the strategic use of life insurance.

Thanks for the heads up I'm just a lowly non-agent consumer of permanent life insurance.... I do put my money where my mouth is though... ha.

 

[REI_Velocity]

I also tried to google "APPUA Premium" and had no luck finding out what the acronym APPUA refers to.

APPUA, go to Page 11 below:

http://www.eckagency.com/Company Forms/Penn Mutual Life/Underwriting/Guaranteed Choice Whole Life agent guide 7-15.pdf