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bigblake
Member since Jun 2011
512 posts
| Cash Value Life Insurance Policies (Posted on 10/9/12 at 2:31 pm)
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This post was edited on 4/6 at 1:53 pm
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Janky 
LSU Fan
Team Primo
Member since Jun 2011
2501 posts
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| re: Cash Value Life Insurance Policies (Posted on 10/9/12 at 3:43 pm to bigblake)
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Lonestar
LSU Fan
Member since Nov 2006
644 posts
| re: Cash Value Life Insurance Policies (Posted on 10/9/12 at 4:16 pm to Janky)
As part of an overall strategy they are very good. The people who hate on them, do not understand them at all.
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Tiger4Ever 
UTEP Fan
Member since Aug 2003
34927 posts
| re: Cash Value Life Insurance Policies (Posted on 10/9/12 at 4:27 pm to bigblake)
:inb4theyaregreatsendmeanemailorcallmeandletstalkaboutit:
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ocelot4ark 
Arkansas Fan
New York, NY
Member since Oct 2009
6989 posts
| re: Cash Value Life Insurance Policies (Posted on 10/9/12 at 5:06 pm to bigblake)
I think the expense ratios are pretty bad and most people would be better off with a term policy for much cheaper and investing the difference.
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TheHiddenFlask 
Clemson Fan
The Welsh red light district
Member since Jul 2008
16382 posts
| re: Cash Value Life Insurance Policies (Posted on 10/9/12 at 5:13 pm to Lonestar)
quote:
As part of an overall strategy they are very good.
Agreed.
quote:
The people who hate on them, do not understand them at all.
False.
The people who hate on them do so because the people who are slinging them are generally unethical commission seekers. GoCrazyAuburn is very knowledgeable about the matter and is generally a good source on the issue (I believe he sells them).
Whole life is not for most people and is pimped as a great retirement scheme, which is terrible. It has its benefits, but should mostly be used for estate planning purposes.
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756
LSU Fan
Member since Sep 2004
8591 posts
| re: Cash Value Life Insurance Policies (Posted on 10/9/12 at 6:42 pm to bigblake)
your policy should have no cash value because you should have term- only insurance sales folks say different- insurance is not a good investment vehicle
just ask your financial adviser or stock broker
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cbtullis
LSU Fan
Baton Rouge
Member since Apr 2004
2751 posts
| re: Cash Value Life Insurance Policies (Posted on 10/9/12 at 7:43 pm to 756)
Yes, ask your financial advisor or stock broker. They will tell to buy term and invest the difference. Because they don't sell these polices and would like your money to invest.
Each situation is different. I have similarities sometimes when I meet with clients, but everyone has different goals and needs.
That's first to remember. Therefore there isn't a right or wrong answer.
The amount of life insurance is always the most important thing. Not the type that it is.
I can assure you a spouse has never asked what kind it is. They ask how much and is it enough to take care of the family.
Next, when is life insurance most important?
Some will say when you are younger, kids are in school, you have a mortgage, etc
The correct answer is "when you die"
And unfortunately we don't know when that's gonna be. We can take an educated guess based on mortality rates, but we just don't know. Having said that you don't know what your situation will be.
On to the "salesman" pitch that for commissions.
There are a lot of bad whole life an universal policies out there.
A lot of people promising certain returns and level payments.
That's where a lot of misinformation comes from.
If you do by a permanent policy, you want to look at Northwestern Mutual, Ny life, mass mutual, guardian.
They have consistently produced what they said.
This is a fact most don't know for instance.
From 1990-2010 the stock market returned 10.2 %. Northwestern Mutual dividend was 8.1%.
Which do you think is riskier? Plus the average person will not invest the difference. They will spend it.
Speaking of bad information. The commission percentage is not higher on cash value policies, the premiums are higher. So yes the "salesman" makes more.
Lastly, you should only be looking at a cash value for a few different reasons. Death benefit first for final expenses. Also, part of an estate planning need as hidden flask said. It's a lot cheaper to pay premiums to the company and let the company pay the esate tax after death. Of course no one knows what that will be when they die.
The only time it should be used as an "investment" is if you are already over the income for a Roth IRA and can not use one or if you have already maxed out a Roth for you or you and your spouse and are looking to put extra money away with favorable tax policies. Other than that you should always buy term.
Sorry for the long answer, but I get sick of seeing these threads.
There are a lot of people in the insurance industry looking to make money. Find someone who has been in the business with one of the top 3 companies for 3 years or longer.
If they are still there it's because they do the right things for their clients.
Hope this helps
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bigblake
Member since Jun 2011
512 posts
| re: Cash Value Life Insurance Policies (Posted on 10/10/12 at 6:09 am to cbtullis)
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This post was edited on 4/6 at 1:53 pm
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TheHiddenFlask
Clemson Fan
The Welsh red light district
Member since Jul 2008
16382 posts
| re: Cash Value Life Insurance Policies (Posted on 10/10/12 at 6:36 am to bigblake)
Sounds like it may be the right thing or you, but I really don't know. You Should hunt down GoCrazyAuburn and link him to this thread. I respect the guy a lot and he is very knowledgeable and honest.
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BigErn
LSU Fan
Member since Mar 2007
1164 posts
Online
| re: Cash Value Life Insurance Policies (Posted on 10/10/12 at 7:34 am to bigblake)
quote:
I can withdraw from my policy without paying any taxes as long as the amount is less than what I have paid-in in premiums (right?)
No, you can take out beyond your basis tax free as long as it is designed correctly.
A good policy will work like a roth with an added death benefit. After tax premiums, tax deferred growth, tax free withdrawals(beyond basis), residual death benefit.
This post was edited on 10/10 at 7:48 am
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GoCrazyAuburn 
Auburn Fan
Member since Feb 2010
9066 posts
| re: Cash Value Life Insurance Policies (Posted on 10/10/12 at 8:28 am to bigblake)
Flask, thanks for the kind words 
Bigblake, I'm going to be out of pocket all day today, so it will be hard for me to respond, but whn I am done for the day, I will try and answer as many questions you have as I can.
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TheWiz
LSU Fan
NOLA
Member since Aug 2007
6528 posts
| re: Cash Value Life Insurance Policies (Posted on 10/10/12 at 8:36 am to GoCrazyAuburn)
quote:
GoCrazyAuburn
You don't happen to race bikes do you?
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cbtullis
LSU Fan
Baton Rouge
Member since Apr 2004
2751 posts
| re: Cash Value Life Insurance Policies (Posted on 10/10/12 at 8:41 am to GoCrazyAuburn)
quote:
No, you can take out beyond your basis tax free as long as it is designed correctly. A good policy will work like a roth with an added death benefit. After tax premiums, tax deferred growth, tax free withdrawals(beyond basis), residual death benefit.
This is correct
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GoCrazyAuburn
Auburn Fan
Member since Feb 2010
9066 posts
| re: Cash Value Life Insurance Policies (Posted on 10/10/12 at 8:49 am to TheWiz)
I do not. Why?
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TheWiz
LSU Fan
NOLA
Member since Aug 2007
6528 posts
| re: Cash Value Life Insurance Policies (Posted on 10/10/12 at 9:13 am to GoCrazyAuburn)
I race bikes with a guy that is a big Aubbie fan and also deals with financials.
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Lonestar
LSU Fan
Member since Nov 2006
644 posts
| re: Cash Value Life Insurance Policies (Posted on 10/10/12 at 11:13 am to TheWiz)
Yes, whole life insurance will not end up being for everybody. As said before the most important issues are the amount, time frame, and its within budget.
The "buy term and invest the difference" works for some, but in a changing economy like now, this one size fits all approach does not work (despite what dave ramsey says- market gains of 12%+  )
It does not take into account insurability, taxes, income, creditor/lawsuit protection, etc...
If people think they can just retire on a 401k, ira, and savings, then they live in fantasy world. I have my plans through NY Life and they actually showed a mathmatical and financial breakdown (done and supported by Ibbotson and Morningstar) of all my options and whole life was the best for my overall portfolio. Just my 2 cents
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TheHiddenFlask
Clemson Fan
The Welsh red light district
Member since Jul 2008
16382 posts
| re: Cash Value Life Insurance Policies (Posted on 10/10/12 at 11:25 am to Lonestar)
quote:
If people think they can just retire on a 401k, ira, and savings, then they live in fantasy world.
Yes, unicorn fart investments are also very key to a good retirement.
WTF are you talking about? If someone is contributing 14% to their 401k and getting a match of 5%, then maxing an IRA, then saving some cash on top, I think they are going to do REALLY well later in life.
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Lonestar
LSU Fan
Member since Nov 2006
644 posts
| re: Cash Value Life Insurance Policies (Posted on 10/10/12 at 11:47 am to TheHiddenFlask)
You are not taking into account:
Taxes - likely to go up, seriously affecting ur 401k and IRA take home $
Inflation
future expenses
guarantees
Market instability
medical care
etc....
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Janky
LSU Fan
Team Primo
Member since Jun 2011
2501 posts
Online
| re: Cash Value Life Insurance Policies (Posted on 10/10/12 at 11:59 am to Lonestar)
quote:
You are not taking into account:
Taxes - likely to go up, seriously affecting ur 401k and IRA take home $
Inflation
future expenses
guarantees
Market instability
medical care
etc....
With the exception of taxes, how do things not have an impact on insurance?
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