Looking For a Whole Life Policy

[DHK]

Well, u just re-affirmed my original belief that WL, unless perfectly set-up by the client, demanding the most from the policy, is the ONLY way to get an efficient policy. By default, your goals are inverse to mine. You lQQking to max out "yield to Larry" which automatically lowers the client yield over "rest of life". Flawed industry that needs willing clients to believe that a dividend is a real "return" vs return of overpayment.
Unfortunate that my first post was screened out.
Why, under any circumstances, would u offer a more efficient policy that works smarter for a client, that also has a lower commission to Larry ? The answer is.........we have a winner, NEVER!

Your premise is flawed.

If you really believe that a dividend is a "return of overpayment", then you also believe that all whole life premiums are over-priced and therefore a "rip off".

You're allowed to believe that.

You're also allowed to be completely WRONG.

Do you know how hard insurance companies worked to have a dividend classified as a "return of overpayment"?

Why would insurance companies do that when it sounds so denegrading to their products? (Insurance companies aren't stupid.)

What is funny is how the public interprets the insurance company/IRS relationship. The insurance companies WANT to pay dividends and want to preserve the favorable tax status. So they went to the IRS and said that they were a "return of overpayment" so leave them alone.

Then the ignorant public says "See! I told you they were a ripoff!" without understanding the policy to begin with.

 

[Larry Tew]

...Flawed industry that needs willing clients to believe that a dividend is a real "return" vs return of overpayment...

Ahh... the old "return of overpayment" thing. Blue, you are a nincompoop (I mean that in a nice way). Or worse, you are a "Prime-america" agent whose daddy Art Williams coined that argument a few decades ago.

Not that it matters, but the next time you decide to pretend to be a custy, post it in the "Insurance Consumer's Forum" instead of the "Insurance Agent's Forum". But hey, it's still all good, and thanks for bringing some humor to the thread.

 

[Bluefin646]

I think I am the one who asked a question to "learn" and one of your industry savvy veterans insulted me, and the question.
Not sure what further insults gain, except me running further away from slimy salesman, aka 'agent'. Lol.
3rd grade? That was a funny one. In it to sell and collect. Any surprise that there have been three insults and zero suggestions?
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Potential customer, apparently on incorrect thread. That original example is infact me. Week of with kids, trying to get some answers, only got insults. Happily crawl back in my whole and not pay some slim-man a commission.
Only funny/sad event is that salesmen are commission greedy and could care less about anyone's future.
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dHK,
Thank for an intelligent answer. Full blown ripoff, no. There are some attracted features that made me do some dd and hence I am here. I don't know much hence my questions and example. I do see the chance for it working for me, just trying to turn over every stone, apparently Larry doesn't like that.
Since when was getting the most for your $$$ a bad thing?
Again, that example is in fact me, any and all wisdom is appreciated.
Again, on the wrong thread by mistake.

 

[BNTRS]

Whether you are sincerely a consumer looking for information, or a hawk of some sort, there's no need to yield on a moment to educate those who might come upon this later.

I'd ask what you are basing this bit about the product only being worthwhile if it is designed by you the consumer. I'd submit that I know a fair deal about insurance and most likely eclipse what you know by a considerable amount if you are just a consumer who has "researched" this topic. How on earth do you know what a "properly" designed policy looks like? Further more, what is properly designed? My guess would be it could mean a lot of different things

If I take your example, where you appear to value cash values over death benefit thought like the idea of being around, I'd say this fits into the shortened pay policy arena--you already mentioned Guardian by name.

The question of dividend recognition is always one for debate. I've spent time trying to make up my mind on which one is best, and I've decided it doesn't really matter. There are inherent benefits cash growth wise to direct recognition, with excess to money benefits to non-direct recognition. Both will do what makes WL a powerful wealth leveraging tool, which is pay dividends even on values that are baking up a loan.

Disability waiver is certainly a good idea if you can get it.

I'm not sure what the steady db is about.

To sum, if cash is of primarily importance, than nothing beats blended 10 pay (I've lost count of how many times I've stated this now). There's no getting around it.

 

[LGilmore]

blue?

Are you posting from a blackberry? Your sentences are pretty hard to follow.

What is it that you want to know?

 

[stevew7]

Not sure why several folks have thought I was an agent? I'm just a consumer that is about to enter into a very long term contract with an insurance company and I would like to understand what I'm getting myself into!

I'm very used to the mutual fund world and much prefer it - the costs and performance are black and white, and by law, have to be spelled out in the prospectus. You didn't know class A shares had a 5.75% load? Well guess what? It's in the prospectus. Want to know the closing NAV from two years ago? Freely available on multiple finance websites.

There's no equivalent of a prospectus for whole life policies that I could find. I googled and found some documents which had bolded lettering saying for agent use only, which had some useful information, but other than that, this forum has been my primary source of information.

Heck, I can't even find the historical NET annual interest rate paid - just the dividend scale, which is only a partial picture of the dollars paid every year. Is there a publication out there that publishes the "net" dividend - including the mortality savings, operating expenses, etc? That is, in year two, if I have $1000 of CV, and in year three, my CV goes up to $1050, that's a total of a 5% net interest rate. But the published dividend scale might have been 5.5%, with a mortality factor of -.25% and operating expenses of -.25%, thus making the net dividend 5.0%. I am looking for the 5.0% number, not the published 5.5% number. I know, I know, you all have told me multiple times now, get the right policy first, and the dividends have been about equal across all the carriers, but I'd like to prove it to myself.

My first call before I started researching this was to my local agent who I buy my home and auto policy from. Guess what? He produced a vanilla quote for a whole life policy, a second quote for a term policy, and when I started asking about how to stuff cash into the policy to maximize cash value (to generate a positive IRR as early as possible), I heard silence on the other end of the phone.

I greatly appreciate the knowledge I've gathered on this forum so that I can at least "pre-qualify" agents when I am ready to start shopping, and hopefully I can find a professional like those I've found here.

By the way, what's the etiquette in asking for agent references here? I see a "request a quote forum" with very little activity. Figure I might have better luck here than picking up the phone book and calling around.

 

[VolAgent]

Not sure why several folks have thought I was an agent? I'm just a consumer that is about to enter into a very long term contract with an insurance company and I would like to understand what I'm getting myself into!

I'm very used to the mutual fund world and much prefer it - the costs and performance are black and white, and by law, have to be spelled out in the prospectus. You didn't know class A shares had a 5.75% load? Well guess what? It's in the prospectus. Want to know the closing NAV from two years ago? Freely available on multiple finance websites.

There's no equivalent of a prospectus for whole life policies that I could find. I googled and found some documents which had bolded lettering saying for agent use only, which had some useful information, but other than that, this forum has been my primary source of information.

Heck, I can't even find the historical NET annual interest rate paid - just the dividend scale, which is only a partial picture of the dollars paid every year. Is there a publication out there that publishes the "net" dividend - including the mortality savings, operating expenses, etc? That is, in year two, if I have $1000 of CV, and in year three, my CV goes up to $1050, that's a total of a 5% net interest rate. But the published dividend scale might have been 5.5%, with a mortality factor of -.25% and operating expenses of -.25%, thus making the net dividend 5.0%. I am looking for the 5.0% number, not the published 5.5% number. I know, I know, you all have told me multiple times now, get the right policy first, and the dividends have been about equal across all the carriers, but I'd like to prove it to myself.

Right or wrong, life insurance is a bit of a black box product. You can only go so far before its hard to get much more information. Also, while the investment officers do have a defined investment policy with numerous legal requirements, I would say they are not as narrowly defined as a typical mutual fund.

And while the insurers do like sales based upon cash accumulation, retirement, etc. They also like the product sold on a protection basis. I'd say they use that protection aspect to keep some of the magic secret and protect it from their competition.

 

[LGilmore]

Steve, you'll probably find some of the information you're looking for with a stock company as they are publicly traded. Mutual companies are privately owned companies (whole life policy holders own the company) and they do release to policy holders. I will take a look tomorrow and see if I can find what you're looking for.

You also might want to consider some online agent education websites as I use one that doesn't charge you, unless you take the exam. You might find what you're looking for there as well.

As far as prospectus, there isn't one for insurance as they are not the same thing as mutual funds. I think if you google enough you'll come across something.

 

[Bluefin646]

Bntrs
Thx. U def have more expertise and knowledge than I. Have never heard of blended 10 pay, plse explain.
Cash growth vs money benefits, plse explain difference when comparing direct vs non direct recognition.
15-20-25-30-35 years into these things, how do I borrow against these policies? What is the fine print? Does it really work? What are the rules to access My CV? Or should I say to funds cash value.
Lgilmore, go back a few pages and read my original post. Everything I am looking for is right there. Maximize my insurance premiums to work the most for me and my policy.

 

[BNTRS]

Steve,

Just like registered investment companies (the legal name for what is colloquially call mutual funds), and as is true of almost any facet of life, there are a lot of moving parts. I can show you that a fund is either a winner or a loser simply by picking the start and end date of the investment time line. The same is true of this product (only there's more designing I can do to make it look great or terrible).

I'll call back to a common phrase I like a lot. If you aren't getting the right answers, you aren't asking the right questions

This presupposes the right answer is there, we've just ignored it by pursuing questions that had nothing to do with it.

You've framed a lot of your inquiry around the notion of rate of return. For that, there is a lot of different information and you'll likely agree seeking information to determine even simple questions regarding rate of return provides a dizzying array of information. This is also true of the investment world.

A few important points:

1. PUA's grow faster than base premium. They are immediately paid up and incur no additional expense loading. Because they are immediately paid up, they are a relatively inefficient way to buy death benefit, but the inverse is true regarding their efficiency for cash growth.

2. The shorter the required payment, the more rate of return you'll get on your premium.


So, first things first, the best way to get this to work the way you want this to work is to look at blended 10 pay policies. Historical rate of return isn't going to get you far, if the company in question doesn't have this product.


If rate of return is still a hook for you, I guess you could use the full disclosure dividend analysis to make up your mind. But, there might be some other points you come to understand as you go through this that are more important (I know, it's very hard to let go of believing rate of return is the key consideration, but trust me, there are more important things especially since no one knows what the rate of return will actually be).


It's not shocking that your P&C agent had no idea how to answer your question, or really any idea how to go about having a life insurance conversation with you as most don't. To be fair, you could drill me on home or auto insurance and I'd fail miserably to impress you, that's the point of expertise.


Blue,


Blended 10 pay WL policy with a term policy attached to it (increases db and allow for more PUA's without MEC-ing the contract).


Direct recognition allows the insurance company to adjust dividends on portions of the policy that support a policy loan (i.e. on which there is an outstanding loan) this adjustment can be up or down, depends on the company. The criticism is, unlike non-direct recognition where the dividend cannot be changed regardless of loan status, the insurance company can decrease the dividend rate for potions of the policy that back up a loan. The flip side to this is the company is more willing to offer a higher non-loaned dividend rate as an incentive not to borrow against the policy.


Non-direct recognition alternatively means that you might be able to access your money without losing some of your dividend rate and therefore do not need to worry about taking loans. The truth is both can be played with enough to erase any benefit over the other. It really doesn't matter, and both will work almost identically (yes there are some who will refute that, but no one who wants to pick that fight ever ponies up the evidence to change my opinion, and yes I fight with both the direct and non-direct advocates over this).


You can borrow at any time for any reason as long as you have cash value in the policy. The loan itself does come out of the policy, it comes directly from the insurance company. So the cash value in your policy remains and continues to grow (regardless of dividend recognition). There's no credit worthiness for this loan. If you don't repay it, the insurance company will simply take the money from your cash value. The fact that your money continues to grow pretty much wipes out the any cost of borrowing, if not eliminates it all together and still nets out more money for you (vs. other financing options, and whether you borrow money or take it out of whatever account you have it in, you finance everything you buy, be it by paying interest, or giving it up).