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Started By
Message
re: Whole Life Insurance Lapse Rate
Posted on 1/26/14 at 7:45 pm to Janky
Posted on 1/26/14 at 7:45 pm to Janky
quote:
So, what % of WL policies pay out?
higher % than term
ETA: didn't mean that to sound dickish. Honestly don't know what % of traditional WL policies end up being kept until maturity over the entire industry
This post was edited on 1/26/14 at 8:02 pm
1
Posted on 1/26/14 at 7:55 pm to GoCrazyAuburn
no one has provided a rebuttal to the 80%
i guess that is telling
i guess that is telling
Posted on 1/26/14 at 7:58 pm to Stingray
I'm not trying to. The argument you are trying to make with it doesn't work. 80% of people decide they don't want their policy/end up not being able to afford it. What does that have to do with your ability to pay for the policy or your ability to keep it until you die? This has nothing to do with the return on your cash value, so stop trying to link the lapse rate to your return.
Now answer my questions
i've been trying to work under the assumption that it was correct. Looks like you were just trying to make this a "gotcha" thread.
Now answer my questions
quote:
i guess that is telling
i've been trying to work under the assumption that it was correct. Looks like you were just trying to make this a "gotcha" thread.
This post was edited on 1/26/14 at 8:01 pm
Posted on 1/26/14 at 8:13 pm to GoCrazyAuburn
quote:
Now answer my questions
I started this thread, and no one has answered my original question. No evidence has been provided to refute my study in the link or my formula.
I will not answer your questions. You answer mine.
Posted on 1/26/14 at 8:34 pm to GoCrazyAuburn
The 2013 Money Board Stock Predictions reigning champ says that WL is a bad investment vehicle. It was said and it is done. Have a good night, world!
Posted on 1/26/14 at 8:41 pm to Lookin4Par
2013.... New year bro!
Posted on 1/26/14 at 8:41 pm to Stingray
Well, first and foremost, page 19 of your document pertains to all life insurance, not whole life. I've tried to get you to understand that the question you have is irrelevant to whether or not WL is a good product or not.
But, as i've said earlier, looking at your equation, yes it would eventually get to 80, though rough estimate, but would that be around year 45 or so? Happy?
And again, as you have refused to answer, how does that make WL bad? How do individual decisions make the product worse or better?
But, as i've said earlier, looking at your equation, yes it would eventually get to 80, though rough estimate, but would that be around year 45 or so? Happy?
And again, as you have refused to answer, how does that make WL bad? How do individual decisions make the product worse or better?
This post was edited on 1/26/14 at 8:53 pm
Posted on 1/26/14 at 8:42 pm to Lookin4Par
quote:
The 2013 Money Board Stock Predictions reigning champ says that WL is a bad investment vehicle. It was said and it is done. Have a good night, world!
And you have already made a more sensible post against WL than this entire thread
Posted on 1/26/14 at 8:45 pm to Stingray
quote:
I will not answer your questions. You answer mine.
Why are you so against having discussions? The past two pages I have been assuming your numbers are correct. Why won't you defend your own conclusions?
Posted on 1/26/14 at 9:24 pm to GoCrazyAuburn
That was my question. I think something like 3% of term policies pay out
Posted on 1/26/14 at 9:27 pm to Janky
That wouldn't surprise me. As far as the breakdown of death benefit paid by companies, it's usually around 90-95% are whole life and 10-5% are term policies. (this is for the major companies).
Posted on 1/26/14 at 9:32 pm to GoCrazyAuburn
quote:
And again, as you have refused to answer, how does that make WL bad? How do individual decisions make the product worse or better?
It's hard to explain. I tried a metaphor. One way to think about it is to consider myself the average consumer, and the average consumer (80% of them), takes the money out of the WL policy, gets taxed on a meager 3-4% return, and doesn't get the DB. To me, that is a bad investment.
Posted on 1/26/14 at 9:42 pm to Stingray
quote:
One way to think about it is to consider myself the average consumer, and the average consumer (80% of them), takes the money out of the WL policy
So, other people's bad decision impact your decisions/investment?
quote:
gets taxed on a meager 3-4% return
Where are you getting these return numbers? If you are going to argue its not a good investment based on industry avg returns or something (which I would believe the avg is probably 5% or so), I'll just leave. As I've said in every thread on the subject, 90% of whole life policies out there are complete jokes. There are only a few that are actually good and perform accordingly.
quote:
doesn't get the DB
Again, how does this decision effect yours?
You are trying to operate in a vacuum where all of these things are linked. The lapse ratio has absolutely no bearing on your ability to keep your policy. You can only look at a policy on an individual basis. The lapse ratio is a company ratio to help with their accounting.
This post was edited on 1/26/14 at 9:45 pm
Posted on 1/26/14 at 9:46 pm to GoCrazyAuburn
quote:
The lapse ratio has absolutely no bearing on your ability to keep your policy.
Does the lapse ratio have bearing on the population of people who buy WL?
Posted on 1/26/14 at 9:50 pm to Stingray
quote:
Does the lapse ratio have bearing on the population of people who buy WL?
No, the population who buys WL has a bearing on the lapse ratio. The lapse ratio does not alter the chance of future people's ability to keep their policy to maturity.
But, if it will make you feel better, foregoing your long term gains that are involved in a WL policy, would as I've already said, be a terrible financial decision. It would be about as bad of a decision as buying term and not investing the difference every year.
This post was edited on 1/26/14 at 9:54 pm
Posted on 1/26/14 at 9:54 pm to GoCrazyAuburn
quote:
No, the population who buys WL has a bearing on the lapse ratio. The lapse ratio does not alter the chance of future people's ability to keep their policy to maturity.
I understand this. A causes B, not the other way around. But the historical lapse ratio would be a good predictor of how many people would lapse in the future, if you sell the same policy, correct?
Posted on 1/26/14 at 9:58 pm to GoCrazyAuburn
quote:
But, if it will make you feel better, foregoing your long term gains that are involved in a WL policy, would as I've already said, be a terrible financial decision
If you believe the above to be true, and you believe about 80% of people who buy WL forego the long term gain (as you posted previously), then therefore, you believe that about 80% of people who buy WL have made a terrible financial decision.
Posted on 1/26/14 at 10:00 pm to Stingray
It's a starting point, but has no standing on an individual basis.
This all brings us back to the original question I've had. You've already shown and admitted that lapsing your policy early is a bad financial decision (i've agreed). Your entire point relies on the reason policies are lapsed is completely due to the structure/design of WL Insurance.
Now, how is holding your policy to maturity a bad "investment"?
This all brings us back to the original question I've had. You've already shown and admitted that lapsing your policy early is a bad financial decision (i've agreed). Your entire point relies on the reason policies are lapsed is completely due to the structure/design of WL Insurance.
Now, how is holding your policy to maturity a bad "investment"?
Posted on 1/26/14 at 10:03 pm to Stingray
quote:
If you believe the above to be true, and you believe about 80% of people who buy WL forego the long term gain (as you posted previously), then therefore, you believe that about 80% of people who buy WL have made a terrible financial decision.
The leaps you've made here. Oh boy.
lapsing the policy is a terrible decision (sometimes. Impossible to say 100% of the time because situations are different, which is my entire point). However, this has no bearing on the decision to buy a WL policy. Buying a WL policy can be a very good decision and can be a poor decision. The amount of the policies that end up being lapsed has, again, no bearing on this.
I'll rephrase what you just tried to say. 90% of term policies lapse before they can pay out. Therefore 90% of people who buy term insurance have made a terrible financial decision.
This post was edited on 1/26/14 at 10:05 pm
Posted on 1/26/14 at 10:09 pm to GoCrazyAuburn
quote:
Now, how is holding your policy to maturity a bad "investment"?
Never said the above was bad, maybe not great, but never said it was bad.
quote:
It's a starting point, but has no standing on an individual basis.
To me, this is like saying the quality of the pitcher has no bearing on whether a hitter gets a hit or not, getting a hit is entirely within the control of the hitter.
I believe that the high lapse ratio of WL is directly related to the aggressive salesmanship of agents who sell to people who are either too dumb to understand they should hold on to the policy forever, too dumb to realize what they are buying so they change their mind and drop it, or are too poor to afford it over their lifetime.
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