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Excellent advice, STI. Give the client what they want to buy, not what you want to sell them!
This is not the way true advisors think.
This is the way salespeople think.
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Excellent advice, STI. Give the client what they want to buy, not what you want to sell them!
This is not the way true advisors think.
This is the way salespeople think.
Death benefit that will last the life of the child?
What kind of income does $50,000 in db replace?
that we could take over for a premium of 45.53 a month???
Great, let's analyze this...
If you're concerned about burial expenses/grieving fund, you can purchase a kiddie rider on your own policy for what - $5.00 a month?
That leaves you $50/month to invest. At college time (16 years) at 8% average annual return, you have $19,489.53.
What's the cash value?
And what happens when the anticipated "average" return is an actual negative return the year the child needs to pay tuition? Should the kid withdraw less for tuition the next year to make up for the short fall in the ROR? Would the college be on board with reducing the tuition to accommodate the kids market issues?
Even if you lost half, you'd still have more than what the cash value would be. Should you make a move to less volatility as the time draws near to use the money? Of course you should.
Not only is funding a child's college though a market/equity position dangerous because of the almost guaranteed ACTUAL declines in the market (and thereby decline in the cash flow for tuition). But if you look at a compounding chart for a growth investment - you will be withdrawing the money right before the account would experience some of the largest increases it can participate in (doubling of money ie.. Rule of 72). That makes a whole lot of sense!
If you went to the bank and applied for a loan, secured by the account, don't you think you'd get it?
IMHO, parWL will be far more advantageous for the child for reasons that have been listed. In addition, I believe it is superior to use to fund a child's college. This is because, in part, if you use a company that has Non-direct Recognition of loans, the CV will continue to grow as if you had never took the money out for college. MF's do that? - Protected from creditors? - Carry a Net Death Benefit? - Tax free? etc....
Although not an education funding expert, I believe these 529 tuition plans ARE in fact creditor protected. What difference does it make if it's taxable or not? You can pay the tax (at the childs lower rate) and still come out net ahead of the cash value!
Here's a question for you; If you do not find WL worth it to have on a child to protect their insurability because of the statistical improbability of the child facing that problem. Do you/will you not sell term insurance because of it's statistical improbability of the insured ever using/realizing the benefit? (less the 1% of all term policies will ever pay a death benefit)? Just seeing if you are consistent in your premises.
Agent
Wow, finally some non "emotional" viewpoints.No, not at all. Buy a kiddie rider - and invest the difference. Aren't kiddie riders convertible when the child reaches a certain age?
Life insurance is a great product - as life insurance. As an accumulation vehicle, due to the inherent charges - not so good versus other things you can do.
.....you might be missing sales for being one sided....just a thought....
Actually Scott, I started in the biz with life insurance...working a debit with Pru. Have also worked for Guardian, and also did a stint as a life insurance wholesaler.
Even though it's not my main focus, I still write a fair amount of life apps, mainly high face amounts of term insurance - cuz I'm dealing almost exclusively with business owners.
If I had a choice, I'd rather be delivering a $300,000 check from a term policy - than a $75,000 check from a whole life policy.