Whole Life... Why Not to Love It?

[DHK]

First, I know my job. Credit card debt is the first that must be addressed and contained before doing long-term savings.

Your disapproval of permanent life insurance has no bearing on how I do my job. One day, you should do a comparison between IRC Section 7702 and 408.

Ignorance on your part does not constitute an obligation to comply with your perceptions on my part.

 

[Mr_Ed]

First, I know my job. Credit card debt is the first that must be addressed and contained before doing long-term savings.

Your disapproval of permanent life insurance has no bearing on how I do my job. One day, you should do a comparison between IRC Section 7702 and 408.

Ignorance on your part does not constitute an obligation to comply with your perceptions on my part.

well, larry thinks that it's OK to recommend someone buy WL when they still have high interest credit card debt.

 

[BNTRS]

All right, I'm going to try and speak in your vernacular to make understanding a tad easier, so here goes...



The dividend rate is the rate at is the yield on the reserve. For whole life policies, you and I will never know precisely what the exact reserve is, but SNFL requires that is be no less than the policies cash surrender value.

So, when a company declares a dividend for the year, the dividend rate is quoted to help you understand what you are getting in total between guaranteed interest and dividends. The yield is based off the cash surrender value.



If you are buying life insurance specifically for cash accumulation purposes, it's all a game of maximizing cash by making as much of your planned premium paid-up additions because paid up additions will create immediate cash in the policy, which will then earn dividends and guaranteed interest.

This is all standard insurance regulation stuff that you should know if you want to profess to be an insurance professional.

The dividend rate does not tell us what you'll earn each year, just like the 12.21% average return for P&G over the last 30 years doesn't mean we got 12.21% year over year on P&G stock.



And if this still isn't working, take a gander at page two of this little gem, calculate the IRR on that policy and then try to tell me whole life yields are bad:

Bogleheads • View topic - Term Life vs Whole Life Math


Numbers are attached. I was going to upload the excel file, but the forum won't let me, so you'll have to settle for a screen shot instead.

And please, for the sake of not setting the women's movement back another 10 years, please stop acting like a little kid. Your local ABWA chapter must be so proud... <---hey I actually meant to use that one!

 

[Mr_Ed]

All right, I'm going to try and speak in your vernacular to make understanding a tad easier, so here goes...


The dividend rate is the rate at is the yield on the reserve. For whole life policies, you and I will never know precisely what the exact reserve is, but SNFL requires that is be no less than the policies cash surrender value.

So, when a company declares a dividend for the year, the dividend rate is quoted to help you understand what you are getting in total between guaranteed interest and dividends. The yield is based off the cash surrender value.



If you are buying life insurance specifically for cash accumulation purposes, it's all a game of maximizing cash by making as much of your planned premium paid-up additions because paid up additions will create immediate cash in the policy, which will then earn dividends and guaranteed interest.

This is all standard insurance regulation stuff that you should know if you want to profess to be an insurance professional.

The dividend rate does not tell us what you'll earn each year, just like the 12.21% average return for P&G over the last 30 years doesn't mean we got 12.21% year over year on P&G stock.



And if this still isn't working, take a gander at page two of this little gem, calculate the IRR on that policy and then try to tell me whole life yields are bad:

Bogleheads &bull; View topic - Term Life vs Whole Life Math


Numbers are attached. I was going to upload the excel file, but the forum won't let me, so you'll have to settle for a screen shot instead.

And please, for the sake of not setting the women's movement back another 10 years, please stop acting like a little kid. Your local ABWA chapter must be so proud... <---hey I actually meant to use that one!

finally, real numbers... i can't wait.

but it's beddie bye time.

 

[BNTRS]

I think I've just learned something reading this thread. I've always wondered how people sold this stuff and now I think I know. You confuse the heck out people with all the terms, formulas and acronyms.
After 30 minutes of this I would just say ok ok where do I sign?

Hmm, maybe. Or perhaps it has something to so with client sophistication.

Our average client earns well into the six figures and is generally very well read on the topic of personal finance and investing.

In addition, 99% of our new business is initiated by the client when they contact us. The only outward prospecting we do is for referrals, and I'd bet all the self help coaches in the world would use us as the model for how NOT to try and prospect referrals--the truth is we just can't spend time trying to chase people who aren't interested. So no one is getting a call from us out of the blue and agreeing to listen to any sort of presentation. We have neither the time nor the interest in that model.

Now, we don't intentionally try to push lower income earners or less finance knowledgeable people away. If they contacted us we certainly would be happy to help them. They just don't tend to contact us.

 

[houcoogster]

Hmm, maybe. Or perhaps it has something to so with client sophistication.

Our average client earns well into the six figures and is generally very well read on the topic of personal finance and investing.

In addition, 99% of our new business is initiated by the client when they contact us. The only outward prospecting we do is for referrals, and I'd bet all the self help coaches in the world would use us as the model for how NOT to try and prospect referrals--the truth is we just can't spend time trying to chase people who aren't interested. So no one is getting a call from us out of the blue and agreeing to listen to any sort of presentation. We have neither the time nor the interest in that model.

Now, we don't intentionally try to push lower income earners or less finance knowledgeable people away. If they contacted us we certainly would be happy to help them. They just don't tend to contact us.

I am really impressed with you and the others too. To be able to help people like this without spending insane amounts of money on leads is just freakin awesome. You guys are the real deal! Fantastic! Super cool!

 

[DHK]

well, larry thinks that it's OK to recommend someone buy WL when they still have high interest credit card debt.

But don't you think it's okay to put someone in securities for their 401(k) and IRA while they have high interest credit card debt? One is promises, protection and guarantees. The other is "blue sky".

Promise me that you aren't locking clients money away and putting clients capital at risk while they have high interest credit card debt?

I trust Larry to do an excellent job and implement the right strategies for all of his clients.

 

[Larry Tew]

well, larry thinks that it's OK to recommend someone buy WL when they still have high interest credit card debt.

I most certainly did NOT say that. You didn't take the time to read my post because you were too busy thinking about your next post. I discussed the element of human behavior and what a client will ACTUALLY do versus what the math says they SHOULD do, as well as the need for access to capital for the next unexpected event

You've asked for facts and then refused to acknowledge facts. Debating with you is a waste of time because somewhere along the way you think that because you passed a securities exam that it magically made you special. You're unteachable because you already know it all. The problem is that a lot of what you know just ain't so.

And it's like DHK said, unless you turn away a client at the door until they have NO revolving or installment debt, you're a hypocrite.

None of us know it all. Please learn something today.

 

[jfnyl]

[

The 25 year old could put $458.33 per month into a Roth IRA.
He could buy a large 30 year term life policy with the extra $41 per month.

That's $14,760 in opportunity cost he just lost if he didn't die before age 55, and I didn't even calculate TVM. He could have secured permanent coverage that grows and pays dividends - if he's with a mutual insurer-- instead he decided to rent coverage for 30 years. Now he's 30 years older and has to shop for term insurance again, and that's money he's lost the opportunity to invest.

 

[Larry Tew]

[

That's $14,760 in opportunity cost he just lost if he didn't die before age 55, and I didn't even calculate TVM. He could have secured permanent coverage that grows and pays dividends - if he's with a mutual insurer-- instead he decided to rent coverage for 30 years. Now he's 30 years older and has to shop for term insurance again, and that's money he's lost the opportunity to invest.

Here's the math. The $492 annual premium for 30 years at 5% is $34,322. But opportunity cost keeps going after the premium bleeding stops, so the total cost for this policy to his age 85 isn't $14, 760, it's $148,339.

The question isn't "should he have the insurance", the question is "is there a better way to pay for it". In other words, can he have the insurance and avoid as much lost opportunity cost as possible.