How To Buy A Life Policy

[James]

Thank you James.

Just an old saying.

 

[Guest]

OK, maybe the word "shopping" to a group in sales was the wrong choice of word. I meant how does one buy insurance.

BACKGROUND

In the world of personal finance, there is a ton of information on mutual funds, stocks, bonds, IRA's. A long time ago, I emmersed myself in the study of stocks, bonds, mutual funds, asset allocation, IRA's, etc.

I really have become quite competent and well versed and could go toe to toe with any financial advisor on mutual fund selection, asset allocation, and diversification.

INTEREST IN INSURANCE

My interest in insurance came about when I was looking for something I could use as a vehicle to save money for my children. It started out as a 10 pay WL policy. Well now it is paid.

Since I cannot get them an IRA, I came to the conclusion that a VUL would be nice for them.

Since finding this board, I have come to the realization that LI is an integral part of one's financial picture (I guess the word investment can't be used to represent insurance). Nevertheless, I would argue with anyone that LI is integral to their financial well-being. Further, the uses and versatility of the product make it a financial Swiss Army knife

MY HOPES

I desire to become conversant in the attributes, uses, and flexibility of permanent insurance so I can set them up with a nice policy when they are older (many companies will not underwrite UL's for pre-teens). So, I figure by the time they are 16 or 17, I should know enough to know a good policy from a less desirable policy. Additionally, just as I intend to teach them about mutual funds and investing, so do I intend to teach them about insurance.

Don't get the idea I am made of money. I am talking modest amounts. Perhaps just starting them out with $100,000 policies for less than $400 a year. So obviously, the agent is not going to be predisposed to spending a whole lot of time with me answering endless questions.

I do, however, want to start them out because:

1. At such a young age the COI is dirt cheap.
2. At such a young age they will have many years of compunding on the earnings.

MY QUESTION

My intent is to be as efficient as possible with the agent. Perhaps telling him I want the following attributes:

1. Insured to age 120.
2. Minimum guaranteed earnings of X%
3. Full participation with the tracking index
4. Loans for which the interest is paid to myself
5. Minimum surrrender fees.

Now, he might say he can only get me 3 out of 4 above. Then I might want to ask him which is his best WL policy and how that compares to his best UL.

MY PURPOSE

- Do as much research so I can ask intelligent pointed questions.
- Not waste his time.

No, I do not want to analyze this to death (someone mentioned paralysis by analysis).

Lastly, if I go to this independent, might there not be companies out there that only sell through captives (Thrivent?) which might be better but which I would never know about.

CONCLUSION

I am very cognizant of an agent's time. (And believe me, talking to multiple agents would not be my idea of fun. I would feel bad having to tell someone no thanks).

I want to go in, have him know that I know what I am talking about so he can save time on the preliminary explanations and get to the heart of the matter. If I only get two hours with him, I want it spent talking about substance, not introductory basic material.


Lastly, personal finance, reading about it and discussing it is really a hobby with me. I enjoy it find and find it quite pleasant.

Thanks.

 

[Bob_The_Insurance_Guy]

Wow! I wish I could have been there, when you proposed to your wife. How romantic THAT must have been.

All kidding aside. It sounds like you know what you want, financially. However, Life Insurance is an emotional product, as well.

If I were your agent, and you had done that much homework, I would welcome that. That being said, once I presented my top two contenders to you, if you gave me the old, "Let me talk it over with my wife", or "I'll have to think about it," then I'd know that you gathered just enough informtion to SOUND well informed, and that you are going to analyze this to death.

As your life changes, so does the life insurance product you need. It's okay for someone to own more than one life insurance policy throughout their life. I can appreciate what you are doing, and your reason for doing it.

Good luck to you. I have to admit, I am just as confused with your last post, as I was with your first post.

 

[James]

I would imagine if you want to teach your children you look towards teaching them capital investments and real investing. May that be a Lemonade Stand or Cutting Grass for the neighbors. Of course you can elevate this as they age, say selling some form of product for profit. This would of course involve the initial investment and then planning out a strategy to get the end results.

My kid is nine and has a good time doing things such as a Lemonade Stand. Night before I made him and his friend sit down and calculate what the cost would be, figure a good stand presentation and then scheldule their day. Turns out they made about 70 bucks the first day, they were simply walking on a cloud at the end of the day! Of course I match a portion of their profits so they could spend some of the bootie! This was the first leg on there plan trip to the Grand Canyon, I'm forcing them to save their own spending money.

 

[Guest]

Wow! I wish I could have been there, when you proposed to your wife. How romantic THAT must have been.

Out of respect to Melmunch3, and to maintain the decorum of the board, I will not respond to you except via private e-mail.

Pease feel free to e-mail me at marcircus . com (no spaces - do not wish to create a link) if you wish to make further personal comments. I am going to delete this address in about 24 hours so as to avoid my e-mail becomming clogged with spam.

 

[Guest]

I would imagine if you want to teach your children you look towards teaching them capital investments and real investing. May that be a Lemonade Stand or Cutting Grass for the neighbors. Of course you can elevate this as they age, say selling some form of product for profit. This would of course involve the initial investment and then planning out a strategy to get the end results.

My kid is nine and has a good time doing things such as a Lemonade Stand. Night before I made him and his friend sit down and calculate what the cost would be, figure a good stand presentation and then scheldule their day. Turns out they made about 70 bucks the first day, they were simply walking on a cloud at the end of the day! Of course I match a portion of their profits so they could spend some of the bootie! This was the first leg on there plan trip to the Grand Canyon, I'm forcing them to save their own spending money.

Dang James, I would hire you if you could teach me how to make $70.00 on a lemonade stand!

James, what I mean about teaching: I do not think anyone would disagree that a parent should educate their children about saving, investing, IRA's, 401(k)'s. The popular press is full of stock and mutual fund information. I contend that LI is just as vital an element to one's financial well being as stocks, bonds, mutual funds, and IRA's. Accordingly, they should know about it. Further, they should be aware that when buying LI, youth is on their side.

In fact, if a child grew up to only make say $10.00 an hour. I feel so strongly about permanent LI that I think it might even be bettr than an IRA because of the flexibility and DB. This ofcourse implies the person could only contribute say around $400 or $500 a year (which at $10.00/hr I think he might even be over-extending themselves.)

 

[James]

I would imagine if you want to teach your children you look towards teaching them capital investments and real investing. May that be a Lemonade Stand or Cutting Grass for the neighbors. Of course you can elevate this as they age, say selling some form of product for profit. This would of course involve the initial investment and then planning out a strategy to get the end results.

My kid is nine and has a good time doing things such as a Lemonade Stand. Night before I made him and his friend sit down and calculate what the cost would be, figure a good stand presentation and then scheldule their day. Turns out they made about 70 bucks the first day, they were simply walking on a cloud at the end of the day! Of course I match a portion of their profits so they could spend some of the bootie! This was the first leg on there plan trip to the Grand Canyon, I'm forcing them to save their own spending money.

Dang James, I would hire you if you could teach me how to make $70.00 on a lemonade stand!

James, what I mean about teaching: I do not think anyone would disagree that a parent should educate their children about saving, investing, IRA's, 401(k)'s. The popular press is full of stock and mutual fund information. I contend that LI is just as vital an element to one's financial well being as stocks, bonds, mutual funds, and IRA's. Accordingly, they should know about it. Further, they should be aware that when buying LI, youth is on their side.

In fact, if a child grew up to only make say $10.00 an hour. I feel so strongly about permanent LI that I think it might even be bettr than an IRA because of the flexibility and DB. This ofcourse implies the person could only contribute say around $400 or $500 a year (which at $10.00/hr I think he might even be over-extending themselves.)

LOL, you ought to see me with a fruit stand! Can't wait, told my son that he could do that this summer, it should be fun! I really dislike this house I am currently residing in but it has a great street for such things.

 

[James]

I would imagine if you want to teach your children you look towards teaching them capital investments and real investing. May that be a Lemonade Stand or Cutting Grass for the neighbors. Of course you can elevate this as they age, say selling some form of product for profit. This would of course involve the initial investment and then planning out a strategy to get the end results.

My kid is nine and has a good time doing things such as a Lemonade Stand. Night before I made him and his friend sit down and calculate what the cost would be, figure a good stand presentation and then scheldule their day. Turns out they made about 70 bucks the first day, they were simply walking on a cloud at the end of the day! Of course I match a portion of their profits so they could spend some of the bootie! This was the first leg on there plan trip to the Grand Canyon, I'm forcing them to save their own spending money.

Dang James, I would hire you if you could teach me how to make $70.00 on a lemonade stand!

James, what I mean about teaching: I do not think anyone would disagree that a parent should educate their children about saving, investing, IRA's, 401(k)'s. The popular press is full of stock and mutual fund information. I contend that LI is just as vital an element to one's financial well being as stocks, bonds, mutual funds, and IRA's. Accordingly, they should know about it. Further, they should be aware that when buying LI, youth is on their side.

In fact, if a child grew up to only make say $10.00 an hour. I feel so strongly about permanent LI that I think it might even be bettr than an IRA because of the flexibility and DB. This ofcourse implies the person could only contribute say around $400 or $500 a year (which at $10.00/hr I think he might even be over-extending themselves.)

What is really good about WL or a good UL within ones portfolio is that it frees up your risk ability within your portfolio. In other words it is the ultimate hedge fund (such as equity management) that an individual can employ on their own. Most people in the market should understand the Hedge Fund and understand what is behind that, yet on the other hand they want to talk about the risk of the "Equity Management" usage of a WL or UL Life Contract? Amazing!

Yet though, all of this is mute for the most part if we don't teach our children how to create Capital via Entrepreneurship. Hell guy, I meet people that can't balance a check book but can make money, so as long as they have the ability that most don't, everything else is a piece of cake.

 

[Steve]

A good read for anyone wanting to build a business is a series of books called E-Myth by Michael Gerber (if I recall his name correctly.)

He talks about the meaning of the entrepreneurial spirit, what it takes and doesn't, common problems/pitfalls, success habits/traits, etc.

 

[Guest]

Wow! I wish I could have been there, when you proposed to your wife. How romantic THAT must have been.

Hi Bob, I wish I could have been with your wife on her wedding night - if you get my drift.