Equity Management (missed fortune and IBC)

Discussion in 'Life Insurance Forum' started by James, Nov 2, 2006.

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Equity Management of Home within Ins. or Sec.?

  1. A terrible idea!

    90.6%
  2. A great idea!

    9.4%
  3. Don't know enough to comment

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  1. James
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    James Guru

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    So how do you feel about these ideas of placing and using equity of the home and other resources in financing within a UL, WL Vs using Securities as in Stocks, Bonds or MF's? Do you feel that the arbitage is a sound idea or that it shouldn't be done not withstanding any product may it be a Insurance Contract or Securities?
     
  2. James
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    James Guru

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    Isn't there a better word to use then Arbitrage? Okay, it is what most use for the theory that Missed Fortune and IBC people use to descripe the leverageing of equity of a Home or other Assets that do not necersarily recieve a Return of Investment such as Properties or Assets within a business. Or some even suggest ones savings for Retirement or Profits made in the market as in "Securing last years Profits from your Stock Investments".
     
  3. sman
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    sman Guru

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    I'm curious to know why you would recommend one over the other? I wouldn't recommend it for anyone. But just curious why you believe an insurance product would work better than securities?
     
  4. James
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    James Guru

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    Most that use Insurance Products for this theory site the security within the Insurance Contract as the overriding reasons. Yet I imagine Bonds and someother investments would be secure also.

    Yet, the question I have are you against the idea of seperating equity from the home/property or just the idea of using what most use a EIUL to do it with?
     
  5. indaville
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    indaville Super Genius

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    It is best to use insurance and stay away from securities with this strategy. The Missed Fortune guys seem to think this will work for everyone, my experience says that for about 1 in 3 this could be a good idea.
     
  6. sman
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    O.K., you've repeated yourself and not answered the question.
     
  7. johncm
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    Bonds do not work either. Although safe, do not create an arbitrage. EIUL has the best chance of this and still be safe. Securities have risk of loss of principal and people would be tempted to make emotional moves that ultimately do not work out in thir favor and thir are ongoing fees to boot.

    I like to concept, was it not obvious, and live by slow and steady. There are only a few, maybe 3 at most, companies that this works well with. Just any EIUL will not work. An remember, with this concept, you are selling minim DB with max cash value.
     
  8. James
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    James Guru

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    Why wouldn't Bonds work? We really aren't talking about a real arbitrage because as I noted that has the exchange of currency, ie the ultimate being George Soros. Yet I'm really trying to figure out why some don't like this idea in general, is it the idea of the Equity Management or the idea of using a Insurance Contract?

    I would also think there is more then three good UL's to use for this, I thinking you are being a bit picky or going by the book Andrew put out originally, yet more and more companies are coming out with attractive UL's.
     
  9. indaville
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    indaville Super Genius

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    I don't know what is going on with my posts?

    I like the LI over securities b/c of the safety. Using LI over bonds provides multiple benefits for the client.
     
  10. sman
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    sman Guru

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    You like the LI over securities because of safety? Let me ask you this, would you consider this philosophy to be a long term process? If so, what makes you think the returns on an EIUL will outperform the returns of a well allocated equity protfolio?

    What 17 years in this business has taught me is that even the best laid plans fall apart. Clients get tired of putting those dollars into a life insurance policy. They refinance their houses. They move to new houses. They buy new cars. They send their kids to college. Oh yeah, and let's not forget what has happened to the rates on those Option ARM loans over the last two years. Now the monthly savings they were to set aside for the EIUL has reduced. It's just a recipe for disaster.

    This type of program is not for the mass population. It MAY work for a select few. And I do mean a select few. Any agent who "convinces" a person to refinance their house and take that equity and put it into an EIUL along with the monthly savings is not, in my opinion, looking out for the best interest of the client. They are only looking at padding their wallets.
     
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