Why sell permanent Insurance?

[Guest]

Here is a link to a discussion forum on Missed Fortune:

http://www.mightybargainhunter.com/2005/07/31/missed-fortune-101-horrible-advice/

Airborne1

You have stated:

1. The idea is to pay for the insurance policy in 5 to 7 years. Is there no risk of becoming an MEC?

2. COI can be reduced in later years, but people don't get why. How?

3. There are only a few companies whose policies work for this. Which are they? Why?

Thanks

 

[Airborne1]

Salespro22


1. Developer in Virginia Beach was almost finished with developing a residential area, and residents had already moved in. During the last few houses under construction, it was discovered the soil/water was contaminated by military activity nearbydecades ago. How would you like to have put down a large downpayment or put all the equity from your previous home in this development ? Your P&C coverage is worthless.

>>>>>Do you have a link to this article. Specifics about the developer would be useful as well. An environmental study should have been completed prior to building.

I wish I did, but it actually made the local news all the way up to Metro DC. I do recall seeing it in the Wash. Times or Wash. Post, but I honestly can't remember if mentioned homeowner's losing their equity.

The best way to get an article on this is to go to a good library - some have incredible databases that you vrtually access every major newspaper's archived material.

 

[Airborne1]

marcircus

Here is a link to a discussion forum on Missed Fortune:

http://www.mightybargainhunter.com/2005/07/31/missed-fortune-101-horrible-advice/

Airborne1

You have stated:

1. The idea is to pay for the insurance policy in 5 to 7 years. Is there no risk of becoming an MEC?

2. COI can be reduced in later years, but people don't get why. How?

3. There are only a few companies whose policies work for this. Which are they? Why?



1. Max funded right below MEC - obviously you could not use this strategy with a policy on your child.

2. I'm only willing to share this with you personally, and only if you promise not repost what I share with you. Set up a dummy email account and I'll tell you there. I'm no longer in the habit of bashing my head against the wall with folks who think W/L is even a decent product, much less a great one.

3. Companies which give you access to the excess premium with NO surrender charges after year 1. That is the premium above the target level. Depending on the age of the insured this could amount to 90% of what you put in. This is not a loan - it's a partial surrender, therefore you incur no cost of a loan if you need access to the money in the early years.

B. There has to be an age to 100 DB guarantee in order to access the cash tax free down the road. The goal is NOT to have a pile of cah at age 100, but to prevent the life insurance company from eliminating the death benefit, which creates a taxable life insurance contract, and reduces their reserving requirements.

C. Zero-cost loans after a decade or so, and low cost loans in early years

D. No hidden costs such as "outrageous per unit fess"


I would strongly encourage to stop listening to mental midgets like Mighty Bargain Hunter, Scott Burns, Suze Orman's, and most financial planners

If you look at MBH's profile, he has absolutely no background in finance, but more importantly no background in insurance.

Why would anyone listen to someone like that regarding insurance, mortgages, or personal finance ?

[/b]

 

[Airborne1]

James

What "projections" are you referring to that Doug Andrews misuses ?

 

[Guest]

Airborne1


Thanks for you answers.

 

[James]

James

What "projections" are you referring to that Doug Andrews misuses ?

Missed Fortune, paperback, Page 111, illustration 9.11 in which he uses 7% as the growth of the investment, obviously the EIUL and the illustration shows a mortgage loan of 7%. Outside of that he commonly uses 7-9% interest to show the growth of the EIUL through out the book. Using these kinds of illustrations is a sure way of pulling out your E&O Insurance in the out years (which from my understanding Doug is doing on multiple lawsuits). While I support these ideas, it is best to use real numbers and that would be 5% at most! Yet though I can still get loans well under 6% or if I use my money its 4% or less via a insurance contract or using cash as the grarantor as what some refer to as a wash loan.

I do believe strongly that Andrew has become a poria within the industry and try the best I can not to use him or his books to discuss these ideas. Plus I do not today or tomorrow going to support his 8 grand plus seminars at his home or wherever he gives them! Maybe his marketing ideas are worth it but I don't think his ideas of "Missed Fortune" is worth it, others may disagree that simply doesn't matter to me personally.

Once again this isn't rocket science, I can on my own (on a yellow legal pad (don't need leap)) easily show how taking out a 30 yr loan and paying the difference of a 15 yr loan (in a safe investment account) that one could easily pay off the house quicker with the 30 yr loan! Even if you earn 2% points less on the investment side as you do on the loan side. This is basically what I use for more normal people and promoting the use of safe investment such as a Annuity or Life Contract. Yet I wouldn't do it if I had to show anything greater than 5% to make it work. Yet when it comes to Realstate investors or House Flippers, the guarantee or protection is all that is needed to show to make it a winning idea.

 

[J.R.]

Once again this isn't rocket science, I can on my own (on a yellow legal pad (don't need leap)) easily show how taking out a 30 yr loan and paying the difference of a 15 yr loan (in a safe investment account) that one could easily pay off the house quicker with the 30 yr loan! Even if you earn 2% points less on the investment side as you do on the loan side. This is basically what I use for more normal people and promoting the use of safe investment such as a Annuity or Life Contract. Yet I wouldn't do it if I had to show anything greater than 5% to make it work. Yet when it comes to Realstate investors or House Flippers, the guarantee or protection is all that is needed to show to make it a winning idea.


>>>>> I am interested in seeing the calculations you show an family who is interested in a 30 yr. vs. a 15 year loan and using the excess to pay off the loan earlier using 5% as an investment return cap.

 

[James]

>>>>> I am interested in seeing the calculations you show an family who is interested in a 30 yr. vs. a 15 year loan and using the excess to pay off the loan earlier using 5% as an investment return cap.

I would of assume you could of ran the numbers? I guess not.

Okay for those that don't have what it takes:

7% loan on a 30 year mortgage equals yearly payment of $7,983.60, a 15 year mortgage of 7% is $10,785.96 base on a hundred grand. Difference is $2,798.36, after 15 years of the 30 year mortgage is right at $68,021.68. Now go invest the difference of $2,798.36 at 5% and after 15 years you have $69,221.41, you have $1,193.50 more in the savings account paying 2% less then you are paying. If you achieve a equal amount of interest or 7% of the savings you would have $82,963.22 or about 14 grand more than what is due to payoff the house. Plus I'm not using the saving on taxes, since on a 30 year mortgage you pay more in interest in the 15 years meaning you get more in tax deduction. If you count those savings and reinvest that money the amount climbs!

 

[J.R.]

I would of assume you could of ran the numbers? I guess not.

>>>>Perhaps the psychic network could use your services

Okay for those that don't have what it takes:

>>>>HaHa, next!!!!

7% loan on a 30 year mortgage equals yearly payment of $7,983.60, a 15 year mortgage of 7% is $10,785.96 base on a hundred grand.

>>>If a 30 yr. loan and 15 yr. loan had the same interest rates you are correct. I imagine a great follow-up would be to tell your potential client that normally that is not the case and the 15 yr. loan will have a lower rate.

Difference is $2,798.36, after 15 years of the 30 year mortgage is right at $68,021.68.

>>>>Actual loan balance would be $73,785.13 (amortization @ 30 yrs, 7%)

Now go invest the difference of $2,798.36 at 5% and after 15 years you have $69,221.41, you have $1,193.50 more in the savings account paying 2% less then you are paying.

>>>Number are close enough to be accurate. I agree with the theory of using leverage to finance properties and increase your income, but not exclusively through an annuity. What do you recommend to people who do not like annuities and want a "guaranteed" 5% return or higher? In another words, commission aside, what are the alternatives?

-J.R.

 

[James]

I would of assume you could of ran the numbers? I guess not.

>>>>Perhaps the psychic network could use your services

Okay for those that don't have what it takes:

>>>>HaHa, next!!!!

7% loan on a 30 year mortgage equals yearly payment of $7,983.60, a 15 year mortgage of 7% is $10,785.96 base on a hundred grand.

>>>If a 30 yr. loan and 15 yr. loan had the same interest rates you are correct. I imagine a great follow-up would be to tell your potential client that normally that is not the case and the 15 yr. loan will have a lower rate.

Difference is $2,798.36, after 15 years of the 30 year mortgage is right at $68,021.68.

>>>>Actual loan balance would be $73,785.13 (amortization @ 30 yrs, 7%)

Now go invest the difference of $2,798.36 at 5% and after 15 years you have $69,221.41, you have $1,193.50 more in the savings account paying 2% less then you are paying.

>>>Number are close enough to be accurate. I agree with the theory of using leverage to finance properties and increase your income, but not exclusively through an annuity. What do you recommend to people who do not like annuities and want a "guaranteed" 5% return or higher? In another words, commission aside, what are the alternatives?

-J.R.

First off if you have paid in for a full 15 years you are effectively in the 16th year, that may explain the difference in numbers.

Outside of that, the investment? I sell Insurance, that is what I do but it really doesn't matter. The investment depends upon the individual and their make-up, so if its Insurance, Bonds, Securities that would depend upon the individual.

I like Realstate, as an investment that can be manipulated and either a W/L, UL and or Annuity for the safe harbor of the profits. Of course if one wants Bonds that is fine, they are easily brought. I can offer CD's and make a low commission thru several online banks.