Even worse. Dave's original radio show host was Roy Matlock Jr......of A.L. Williams. Dave basically operated as the marketing department.
Dave Ramsey hates whole life insurance ...(does he know Anything about Insurance) ?
- Thread starter Mike Siegal
- Start date
tippingpoint
Super Genius
- 109
What is the argument against DR, who says whole life is bad because you lose your cash value, and therefore the money is better off in a jar? That seems to be his bottom line. I'm reading the article above explaining calculating net death benefits. Some whole life policies do not pay you the cash value and some do? I'm looking at a MOO living promise policy where face value does not change.
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- 11,502
DR is flat out wrong. All policies pay out the cash values as a component of the total death benefit. He is just taking a popular myth and repeating it over and over again as though it's fact.
Now, there are some non-participating whole life policies where the cash values may exceed the death benefit, but the higher amount will be paid to the beneficiaries.
Mutual of Omaha, more specifically United of Omaha, has non-participating policies.
Now, there are some non-participating whole life policies where the cash values may exceed the death benefit, but the higher amount will be paid to the beneficiaries.
Mutual of Omaha, more specifically United of Omaha, has non-participating policies.
tippingpoint
Super Genius
- 109
I think he's a communist towing the party line anyway. Just another bought and paid for media shit head. Def something to be familiar with though because a lot of people watch this guy. Has not one CEO of a big insurance company called in to straighten him out? None of this makes any sense.
In the illustration provided on the first page of this thread it states:
So, how does the insurance company pay out $1,000 of protection?
They pay the cash values ($200) + the net amount at risk ($800) to equal $1,000.
Is this $200 being deducted from the cash value of the policy??
In the illustration provided on the first page of this thread it states:
So, how does the insurance company pay out $1,000 of protection?
They pay the cash values ($200) + the net amount at risk ($800) to equal $1,000.
Is this $200 being deducted from the cash value of the policy??
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- 4,990
I can see where this is true for a level UL or increasing UL as your internal COI is based on net amount at risk.
But, are you saying a WL at death will pay both the original face amount & the cash value or are you implying the WL pricing knew the WL was required by law to build cash value to endow, so it therefore is only charging premiums based on net amount at risk?
If a $50k face amount WL has a $20k base cash value, only $50k is being paid out, correct?
Not saying WL is bad, i own alot, just wondering what you mean that all policies pay out the cash value as the total death benefit? Only cash value i have seen paid on a death benefit of WL is the refunded overpaid current year Premium, the interest from date of death until claim paid & if the dividend option was accumulate at cash
- 11,502
Net death benefit = Cash Values + Net Amount At Risk - any outstanding loans.
Apply it to every policy. It always works.
Apply it to every policy. It always works.
- 11,502
It makes perfect sense when looking at insurance company business interests. Keep the expenses and pay out the dividends to policyholders. Besides, it was insurance company chutzpah that created the need for TAMRA, TEFRA, and DEFRA laws back in the 80's. Companies learned their lesson.
Apply the formula.
Net Death Benefit ($1,000) = Cash Values ($200) plus Net Amount At Risk ($800) - any outstanding loans (no loans being illustrated).
The $200 cash values is part of the total $1,000 payout.
The confusion always occurs when we forget about the net amount at risk.
- 11,502
I'm not talking about the pricing of the policy or premium structure at all. I'm only talking about the net death benefit formula.
Correct. Net Death benefit ($50k) = cash values ($20k) plus net amount at risk ($30k) minus any outstanding loans (none stated).
All the confusion happens because net amount at risk is never shown on the illustration. (There are enough columns of numbers as it is.)
tippingpoint
Super Genius
- 109
In the Net Amount At Risk article it states "As an example of this concept in action, consider a whole life insurance policy issued for a face value of $100,000. At the time of issue, the entire $100,000 is at risk, but as the cash value accumulates, it functions as a reserve account, which reduces the net amount at risk for the insurance company."
How is it a reserve account for the company? If it's the policy owners money?
How is it a reserve account for the company? If it's the policy owners money?
- 11,502
It's NOT the policyowner's money. It is the reserve for the death benefit.
However, the policyowner can always borrow against the policy's cash values at any time by contractual right. And the policyowner can make certain non-forfeiture adjustments to the policy, such as a reduced paid up option to reduce the death benefit and owe no more premiums.
Does home equity belong to the homeowner? No. It's just a difference between the indebtedness of the home and the current market value.
Can the homeowner borrow against the equity? Yes (per bank qualification, etc.).
The homeowner can use the home equity as collateral to borrow money from the bank. That's why there are payments due - you owe the bank.
The policyowner can use the cash value of a policy as collateral to borrow money from the insurance company. That's why there is interest on the loans... you owe the insurance company.
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