Whole life cash value automatically adjusts in high interest rate environment?

[Allen Trent]

Unpopular opinion - Life insurance shouldn't be used as an investment product

I said what I said

In case I missed it, did someone say that. I assumed the OP was asking because he wants higher dividends so that the dividends buy more paid up death benefit each year to create more tax free death benefit for their family.............especially has the policy he bought 2 years ago is only worth about 75 cents on the dollar today inflation adjusted

 

[Al3x Lee]

In case I missed it, did someone say that. I assumed the OP was asking because he wants higher dividends so that the dividends buy more paid up death benefit each year to create more tax free death benefit for their family.............especially has the policy he bought 2 years ago is only worth about 75 cents on the dollar today inflation adjusted

No one said that directly, I just find the whole idea of dividends based on insurance company investment performance to be an odd thing. Most whole life policies I've looked at with that component never seem to be that lucrative.

Even accounting for tax, it seems rare that people get ahead on these policies unless they're a high net worth individual who can afford to dump piles of cash into it. You would almost be better taking your post tax income, dumping it into mutual funds on robinhood, and then taking the capital gains tax hit and giving it to your family. It seems like even in that scenario, you would often come out ahead of the dividends and money invested into a whole life product.

Disclaimer: I don't have a degree in finance and I'm probably dumber than 90% of the people on this forum, so this is just my personal opinion.

 

[Lloyds of Lubbock]

Dividends come from 3 places.
Interest over and above what is needed for guarantees.
Mortality improvements over and above guaranteed mortality.
Expenses (actual vs guaranteed) which can be a plus or minus on the dividend.
After all that is calculated it goes into a bucket and is allocated to policies based on their contribution to surplus.
The interest rate is only one component.
Your opinion is fine and many people will go down that route.
I just hope you buy some term insurance before you go down that path.

 

[Al3x Lee]

Dividends come from 3 places.
Interest over and above what is needed for guarantees.
Mortality improvements over and above guaranteed mortality.
Expenses (actual vs guaranteed) which can be a plus or minus on the dividend.
After all that is calculated it goes into a bucket and is allocated to policies based on their contribution to surplus.
The interest rate is only one component.
Your opinion is fine and many people will go down that route.
I just hope you buy some term insurance before you go down that path.

I'm not against life insurance, I primarily write P&C but I'm licensed in life and do sell policies to my clients that want me to. I carry term life myself, but I'm relatively young in my 30's

I just want someone to sell me on the idea of whole life, or really any life policy that has a cash component.

It seems like whenever I talk to an agent who sells these policies, they're not able to explain the value beyond 'trust me' and convoluted talk that I can't understand.

I'm all ears if you guys see value in these whole life products. An example to prove me wrong is what I need and I'll concede to being wrong about them.

 

[Tahoe Ray]

I'm not against life insurance, I primarily write P&C but I'm licensed in life and do sell policies to my clients that want me to. I carry term life myself, but I'm relatively young in my 30's

I just want someone to sell me on the idea of whole life, or really any life policy that has a cash component.

It seems like whenever I talk to an agent who sells these policies, they're not able to explain the value beyond 'trust me' and convoluted talk that I can't understand.

I'm all ears if you guys see value in these whole life products. An example to prove me wrong is what I need and I'll concede to being wrong about them.

If you want to have this discussion, call me. I am against permanent insurance in most cases but it does work for some.

 

[DHK]

 

[Tahoe Ray]

View attachment 8237

That's only true if your earnings suck.

 

[DHK]

That's only true if your earnings suck.

I can show people how earning 0% over the next 10 years is BETTER than earning 10%+ EACH YEAR for the next 10 years from a net retirement cash flow perspective.

 

[Tahoe Ray]

I can show people how earning 0% over the next 10 years is BETTER than earning 10%+ EACH YEAR for the next 10 years from a net retirement cash flow perspective.

Bet. I'll do a call with you if you can show me that.

 

[DHK]

I like you Ray. I can show it to you, but not today. Dealing with some vertigo/headache today. But I'll show it to you. We'll schedule a time.