Life insurance Rule or Regulation Question

[AboutThatLife]

But yes, I do agree with your premise. Lots of people look at life insurance as a way to generate big commissions, so they try to justify putting more premium into life insurance than may be appropriate.

What determines if it is appropriate or not? Client wants tax efficiency, fixed credited interest, no market risk, and to protect their assets.

 

[DHK]

In my opinion, many advisors / planners look at financial planning like "net worth" planning: "Let's get as many dollars to show up on your "net worth" statement and since life insurance has a low return, it sucks for building up your net worth."

(I have yet to see an "estimated taxes due" column near a qualified plan entry on a net worth statement or even an IRA/401(k) account statement. Nor a risk tolerance threshold that incorporates a 50% loss in a financial plan.)

I look at cash flow, liquidity, use, and control of one's finances. Life insurance is pretty awesome for that - as long as there is sufficient bank savings and cash flow during the early years to keep funding it.

https://davidkinderfinancial.wixsit...s-Your-Financial-Planning-Pyramid-UPSIDE-DOWN

 

[Golfnut2112]

In my opinion, many advisors / planners look at financial planning like "net worth" planning: "Let's get as many dollars to show up on your "net worth" statement and since life insurance has a low return, it sucks for building up your net worth."

(I have yet to see an "estimated taxes due" column near a qualified plan entry on a net worth statement or even an IRA/401(k) account statement. Nor a risk tolerance threshold that incorporates a 50% loss in a financial plan.)

I look at cash flow, liquidity, use, and control of one's finances. Life insurance is pretty awesome for that - as long as there is sufficient bank savings and cash flow during the early years to keep funding it.

https://davidkinderfinancial.wixsit...s-Your-Financial-Planning-Pyramid-UPSIDE-DOWN[/QUOTE

A lot or qualified plans today have the Roth option so there would be no taxes due on that portion.

 

[VolAgent]

What determines if it is appropriate or not? Client wants tax efficiency, fixed credited interest, no market risk, and to protect their assets.

Having all the facts, would a prudent person make the same decision. Pretty nebulous, right? That is kind of the core of the problem here. There are plenty of agents who are truly trying to help families with life insurance. There are plenty more who are simply looking for the big commission check. At the surface, they are hard to tell apart as they both talk the same talk. You have to get deeper into it to sort them out.