Speaking ill of Life Insurance

[SportsNut]

"Barring liquidity concerns shouldn't one get the insurance earlier?"

The problem with most purchases of life insurance at an earlier age is that the policies aren't usually set up correctly with a life ins trust, etc., to perform adequate estate planning. 99 out of 100 purchases of (my statistic, not scientific) life policies at the early age are geared toward replacement of loss of breadwinner income, debt reduction, education funds, etc. and not truly intended for estate planning purposes.

The exception would be those young whippers who have already tapped into the family wealth, (multiple 7 figures worth) or the even more rare case of the Yahoo gazillionaires... but those are freakish occurances, and will never be properly or adequately discussed on a msg board thread; IMO.

Most true estate planning is taking place at age 55 and well beyond, and geared for the eventual death tax avoidance. Usually at that point of a wealthy persons life they have excess liquidity, and whether it sits in acct/fund A, B, C, et al is irrelevant in the overall, considering acct X being some form of c/v life insurance that will yield exceptional mileage toward pre-paying the consequences of the death/estate taxes with compressed dollars. This is a pretty easy decision when one understands the consequences of not acting upon estate planning advice.

 

[djs]

The exception would be those young whippers who have already tapped into the family wealth, (multiple 7 figures worth) or the even more rare case of the Yahoo gazillionaires... but those are freakish occurances, and will never be properly or adequately discussed on a msg board thread; IMO.

Why freakish? Yahoo is right down the street from me.
I know a lot of people who where millionaires at 30, moving back in with parents by 35. Forgot to sell their stock options in between.....

Dan

 

[bobson]

Look, I grew up and was weaned in this biz starting in life insurance. I was personally trained by Jack and Garry Kinder.... but I'll dare you to find me a single known-name financial planner that would echo your comment about WHOLE LIFE being a "great part" of a financial plan? C'mon.... do you REALLY believe that nonsense when you've got all the credible mouthpieces in the FP industry saying the EXACT opposite?

(CAVEAT: I am a huge believer in PERMANENT insurance... AFTER your net worth exceeds $1M and you've maxed out all the tax advantaged plans you can... and even then it's iffy).

I certainly will defend your right to "sell" anything you'd like... but we all know that WL is a tough, tough sell... unless you've gone off the deep end and are selling Castiglione's LEAP program....(never mind, we won't go there).

Yes, and look at our country's savings rate. We actually spend more money than we make. If 100% of people that qualified for life insurance bought at least some whole life insurance I'm certain our country would be a lot better off.

I'm a huge believer in reality. I don't listen to talking heads that drum up the beauty of mutual funds as the key to growing wealth. I know the people behind Fidelity, Frankling Templton, etc love those preachers. Does anyone know why there are more mutual funds than individual stocks? Because if you own the mutual fund (not a shareholder owner but the actual owner of the fund) you make bank. It doesn't matter what happens to the mutual fund itself. Those fees continue to chip away whether investors add money, take money out, lose money, or make money.

Why do you think mutual fund companies pushed for IRA's, 401k's, etc? Ongoing continuing contributions are a beautiful thing to the mutual fund companies.

I'm on a rampage lately. All this garbage that gets spewed about whole life insurance makes me ill. If a great life insurance agent can get someone to put money away inside a whole life policy that they were pissing away on latte's and McDonald's I say thank you very much.

Most people don't have 6 months worth of cash in the bank. Most people don't have disability insurance. Most people don't have enough liability insurance. And most people don't have enough life insurance. But the mutual funds try and get their money in the form of automatic contributions to 401ks and IRAs.

Company match? Who cares if you don't have enough money to be laid up from work for 6 months or more?

 

[bluemarlin08]

How is WL a better choice than tax advantaged retirement plans? How can a product that invests in conservative debt instruments, has fees that are hidden, high mortality costs, be a better tool? In addition, many of the WL policies never make it to age 65, they get cancelled borrowed against or just lapse.

 

[bobson]

How is WL a better choice than tax advantaged retirement plans? How can a product that invests in conservative debt instruments, has fees that are hidden, high mortality costs, be a better tool? In addition, many of the WL policies never make it to age 65, they get cancelled borrowed against or just lapse.

Now we are getting somewhere! Whole life insurance (from a mutual insurance company or mutual holding company) is a great place to put money in for a number of reasons:

1. You get a bill each year. Let's face it, a lot of people have trouble putting money in savings because something comes up. You are forced to pay yourself first with life insurance.

2. Tax free is lots better than tax-deferred. You can take money out of your whole life insurance policy tax free. And someday someone will get a whole bunch of money income tax free.

3. Each year you know exactly how much value your whole life insurance policy has. You never have to hope, pray or guess what the value you will be. It shows up in writing like clock work. And itmay be more than you expect!

4. Policyholders share in the surplus via policy dividends. You aren't making some Oracle of New York rich by paying charges and fees for the privelage of holding your money.

5. Uncle Sam won't raid your cash value like he plans on when you start taking money out of your 401k and IRA. If you think your tax rate is going down when you retire you are kookie. Social Security, Medicare, and Medicaid will need a giant crutch someday. Tax rates will have to go up, and up, and up.

6. Premium continuation for disability via waiver of premium. I guarentee your boss won't keep contributing to your retirement plan if you can't work. The insurance company will.

A few quick points I guess.

 

[bluemarlin08]

1. You get a bill each year. Let's face it, a lot of people have trouble putting money in savings because something comes up. You are forced to pay yourself first with life insurance.

And what makes one think they will be compelled to put money into a WL policy?

2. Tax free is lots better than tax-deferred. You can take money out of your whole life insurance policy tax free. And someday someone will get a whole bunch of money income tax free.


But the return on your money is lousy, debt instruments less expenses.


3. Each year you know exactly how much value your whole life insurance policy has. You never have to hope, pray or guess what the value you will be. It shows up in writing like clock work. And itmay be more than you expect!

It may be, it might not be. Are you suggesting other investments don't give you annual values?


4. Policyholders share in the surplus via policy dividends. You aren't making some Oracle of New York rich by paying charges and fees for the privelage of holding your money.

Dividends on WL is a return of overcharge on premiums, that is why they aren't taxed.

5. Uncle Sam won't raid your cash value like he plans on when you start taking money out of your 401k and IRA. If you think your tax rate is going down when you retire you are kookie. Social Security, Medicare, and Medicaid will need a giant crutch someday. Tax rates will have to go up, and up, and up.

For a WL policy to come close to alternate investment returns, clients will pay tax on withdrawals over basis.

6. Premium continuation for disability via waiver of premium. I guarentee your boss won't keep contributing to your retirement plan if you can't work. The insurance company will.

Point on.

A few quick points I guess.[/quote]

How long have you been using LEAP?

Looked at it many times over the past 25 years, wanted it to work but could never get complete answers to my questions.

 

[NewHealthStrategies]

How long have you been using LEAP?

Looked at it many times over the past 25 years, wanted it to work but could never get complete answers to my questions.

I was one of the original Bob C. LEAP students and several of the guys that went through the advanced training are still making a killing using it today... so I have no problem, per sey, with LEAP.

I became a managed care guru in the early 90's and went the HMO/PPO route and abandoned life for the most part, although that was my start in this business, under the wings of Jack & Garry Kinder and the likes.

I still challenge you to find a recognized CERTIFIED Financial Planner that would argue your position... which in my mind, adds to much weight and an ever growing issue with LEAP or any other sales-method that tries to pound the square-peg of permanent life insurance for the every-day Joe into the proverbial round-hole.

Good luck with your endeavor though and check out LEAP's finer points, as it truly is a rather revoluntionary way of presenting permanent plans... and I recently heard that they have incorporated "term" into the mix, but I'm not sure how...!!!!

 

[djs]

2. Tax free is lots better than tax-deferred. You can take money out of your whole life insurance policy tax free. And someday someone will get a whole bunch of money income tax free.


But the return on your money is lousy, debt instruments less expenses.

How can you get money out of a whole life policy tax free? This is a loaded question, because your statement is extremely misleading.

You can take out what you contributed, because you have already paid tax. It's not tax free.

You can take a loan out, without taxes, unless you don't pay it back, then it's taxed when it's no longer a loan.

You can do a withdrawal of the gains, but then, that is taxed.

So tell me, how do I get money out tax-free?

Dan

 

[Insurance Phoenix]

I want to start a thread dealing with CFPs and financial advisers who speak ill of life insurance. Who has experienced this and how did you deal with it?

I'll get the ball rolling
I've used:

-Financial advisers cannot sell life insurance (in most cases) and therefore had a fiscal incentive not to recommend it.

-Financial advisers tend to focus on rate of return and fees while ignoring risk and taxes.

Anyone else have helpful sales tips when dealing with the haters

The CFP's and Financial Advisors I know all believe in life insurance and use it in their business every week. The friends I refer to all work at MetLife so maybe that's the difference. Perhaps you are referring to people who work for traditional investment firms, such as Merrill Lynch or somewhere similar.

 

[slushhhpuppie]

Yes, and look at our country's savings rate. We actually spend more money than we make. If 100% of people that qualified for life insurance bought at least some whole life insurance I'm certain our country would be a lot better off.

I'm a huge believer in reality. I don't listen to talking heads that drum up the beauty of mutual funds as the key to growing wealth. I know the people behind Fidelity, Frankling Templton, etc love those preachers. Does anyone know why there are more mutual funds than individual stocks? Because if you own the mutual fund (not a shareholder owner but the actual owner of the fund) you make bank. It doesn't matter what happens to the mutual fund itself. Those fees continue to chip away whether investors add money, take money out, lose money, or make money.

Why do you think mutual fund companies pushed for IRA's, 401k's, etc? Ongoing continuing contributions are a beautiful thing to the mutual fund companies.

I'm on a rampage lately. All this garbage that gets spewed about whole life insurance makes me ill. If a great life insurance agent can get someone to put money away inside a whole life policy that they were pissing away on latte's and McDonald's I say thank you very much.

Most people don't have 6 months worth of cash in the bank. Most people don't have disability insurance. Most people don't have enough liability insurance. And most people don't have enough life insurance. But the mutual funds try and get their money in the form of automatic contributions to 401ks and IRAs.

Company match? Who cares if you don't have enough money to be laid up from work for 6 months or more?

The last free lunch in America is an employer match on a 401(k) and if you aren't smart enough to recognize that, there's no helping you.

Grr... those evil mutual funds are taking all of my premium dollars, everyone should be buying WL instead!!! LOL

Do yourself a favor and don't walk around espousing this kind of ignorance, or most people will see you as the typical insurance agent and dismiss you just as quickly.