Guardian or Penn Whole life

[DHK]

People always tout that your money will be working in 2 places at the same time with cash value permanent life insurance. I don't see any positive spread here. At best, it's a wash, unless you borrow at 6% and are able to get 10% somewhere. I am not aware of any safe bets where I can get 10% or you have to be content that your premiums compounded without paying any interest all these years? That's the only advantage? This only makes sense if you have already maxed out your 401k,right?

I wouldn't try doing this without trying to time the economy. No, not the stock market... the economy.

Just wait until after a market crash (and you have all your money available to borrow against) and wait for some Government Official to say that "We're going to 'stimulate' the economy." That's when you invest... watch it grow... and pay the loan back.

 

[Lloyds of Lubbock]

Could you borrow from a whole life policy at invest at a higher rate creating an arbitrage?
That is a lot of risk.
There are many reasons to access your cash values that have nothing to do with investing that money.
The fact that you have diffent options is a positive.
I collateralized a policy for a real estate down payment.
No credit check, nothing on my credit report and I had the money in 3 days.

 

[Purdue]

you have to be content that your premiums compounded without paying any TAXES (sorry said interest by mistake) all these years?

 

[pfg1]

People always tout that your money will be working in 2 places at the same time with cash value permanent life insurance. I don't see any positive spread here. At best, it's a wash, unless you borrow at 6% and are able to get 10% somewhere. I am not aware of any safe bets where I can get 10% or you have to be content that your premiums compounded without paying any TAXES (sorry said interest by mistake) all these years? That's the only advantage? This only makes sense if you have already maxed out your 401k,right?

What you mentioned is not necessarily about spread. Yes, you could get a spread. Its about having your money growing and compounding, AND being able to use it at the same time. Most people have to remove their money from a position of growth in order to use it. Having liquidity use and control of your money through this vehicle is a good thing. Positive arbitrage is a bonus and tax free growth and use is great. If someone has a 401k it should definitely be utilized at least to the match, imo.

 

[scagnt83]

- Underwriting criteria (standard gets lowest treatment; heavily rated and preferred rated policies get higher dividends)

This is not correct. They do not get higher or lower dividends. They get the same Dividend rate. One just carriers a higher expense load than the other rating.

Same Dividend, different expenses.

 

[scagnt83]

See, this is again opposite of what the other agent said that no dipping from the CV. If the expenses are taken out and then the dividend is declared, why is it not fully credited. Nobody seems to know and when I press, I get attacked, called an agent etc. It's your livelihood and I understand that but I am also investing my hard earned money and I deserve to know this. I also understand that you don't need to tell me for free. I am willing to pay a consulting fee to anyone who can help me understand this point. Please message me, if interested. Thanks

You have to understand that not all agents are experts in these products. Even the ones who pitch it on a regular basis.

There can also be differences of opinions when it comes to suitability and which carrier/product/design is best for a particular situation.

From a percentage basis, you get the Dividend rate as a percentage, minus expenses. Obviously the amount of CV you have will dictate the exact dollar figure.

 

[scagnt83]

It's not the dividend but insurance expenses.

Here is what my agent say's:
"We've found that Penn's illustrations illustrate the minimum insurance expense and then charge higher rates, pulling down the IRR. "

"We have historical policies from Mass Mutual and Guardian displaying the illustrated and actual returns. We have worked with smaller companies in obtaining this information for years but they've always refused to provide and offer a higher payout instead. "

"This is something we check, and ask companies for, before offering to consumers. The end result is that the 4 Major Mutual companies have displayed proof whereas smaller companies have not. "

"The actual Net Values on Penn and other smaller companies will likely produce returns closer to the guaranteed values"

I guess it's on what the agent is selling. Agents who sell only Penn will say good things about Penn. Some only sell major 4 and they have the above to say about the smaller companies. So confusing...

This is total bullsh*t. Find a new agent.

WL does not have changing expenses once in-force. One of the main features of WL is that expenses are guaranteed and level. They cannot and willnot increase per the contract.

This agent is confusing IUL and WL in those comments. IUL/UL has "current" expenses, and "maximum" or "guaranteed" expenses. And yes, most illustrations use the current expenses for IUL.

But WL expenses are Guaranteed and do not change.

----

The Underwriting in relation to your health will matter a hell of a lot more than what carrier you go with. Penn, Mass, Guardian, NYL, NWM, they all have solid WL policies with 100s of years of consistent dividend history. And none of them has "higher" dividends on a long term historical basis, they are all within the same general range generally speaking over a 30-40 year period.

Personally, Penn/Mass/Guardian are my go to WL carriers. UW is the very first thing I look at when recommending which a client should go with. And usually I can knock out at least 1 of the 3 based on UW.

If you have not evaluated UW, then you are wasting your time with all of this analysis of Dividends and expenses. (the older you are, the more important this is)

 

[Allen Trent]

This is total bullsh*t. Find a new agent.

WL does not have changing expenses once in-force. One of the main features of WL is that expenses are guaranteed and level. They cannot and willnot increase per the contract.

This agent is confusing IUL and WL in those comments. IUL/UL has "current" expenses, and "maximum" or "guaranteed" expenses. And yes, most illustrations use the current expenses for IUL.

But WL expenses are Guaranteed and do not change.

while I agree almost entirely with your statement, I do believe Dividends are impacted by the actual carrier mortality experience & expenses being currently incurred at the time, not just the worst case guaranteed mortality & expenses built into their guaranteed policy assumptions. So, you are correct that WL doesn't have changing expenses within a specific clients policy, but the overall carrier expenses & mortality experience will impact the policy performance due to the impact to the Dividend able to be credited. This is basically what has caused most, if not all, WL carriers to pay lower dividends today compared to what was originally illustrated. A lot of the impact is from investment returns for the carrier, but some carriers are indeed having much higher expenses than originally priced into the policy design & in some rare cases worse mortality experience.

 

[scagnt83]

while I agree almost entirely with your statement, I do believe Dividends are impacted by the actual carrier mortality experience & expenses being currently incurred at the time, not just the worst case guaranteed mortality & expenses built into their guaranteed policy assumptions. So, you are correct that WL doesn't have changing expenses within a specific clients policy, but the overall carrier expenses & mortality experience will impact the policy performance due to the impact to the Dividend able to be credited. This is basically what has caused most, if not all, WL carriers to pay lower dividends today compared to what was originally illustrated. A lot of the impact is from investment returns for the carrier, but some carriers are indeed having much higher expenses than originally priced into the policy design & in some rare cases worse mortality experience.

That is very different than the comment I was replying to. But I do get your point, and you are correct.

Carrier Declared Dividends are dependent on the performance of the company, and the expenses the company incurs. That varies, and what is currently being incurred is what they use to calculate declared dividends (at least I think thats true for most carriers).

But within the legally binding Life Insurance Contract the client receives; Policy Expenses are Guaranteed and Level for a WL policy.

 

[Allen Trent]

That is very different than the comment I was replying to. But I do get your point.

Carrier Declared Dividends are dependent on the performance of the company, and the expenses the company incurs. And obviously that varies.

But within the legally binding Life Insurance Contract the client receives; Policy Expenses are Guaranteed and Level for a WL policy.

True. whoever the agent is involved in this case is definitely spinning the situation to disparage the others or the insured is mixing information from 1 product discussion like a UL/IUL into the WL part of the discussion