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Message
re: Why dont more people see the value in Life Insurance?
Posted on 2/8/17 at 4:07 pm to Keeble9145
Posted on 2/8/17 at 4:07 pm to Keeble9145
Right. Plus if I die before then, they get the life policy plus whatever cash value was built up. So it isn't all for nothing. Big pay day for them
This post was edited on 2/8/17 at 4:10 pm
1
Posted on 2/8/17 at 4:09 pm to Keeble9145
quote:
Except with Whole life because it makes you money and protects you.
If I wanted to invest in something to protect my family in the event that something happen to me, I would buy a 20 term policy and put the rest of the whole life premium in the market or in some other investment avenue. You are not making near the returns on a whole life policy that you can in the market, real estate, etc..
He is right. Insurance should not be viewed as a growth investment strategy. Even whole life is a protection and happens to pay a little interest.
Posted on 2/8/17 at 4:11 pm to Keeble9145
quote:
My boss writes off around 20k a year on life insurance and will be able to cash it out tax free (what he has invested)and only taxed on gains when he retires.
I assume you are talking about BOLI. There are some significant tax issues upon the transfer of BOLI to the retiree. Not as simple as you think.
As far as why whole life isn't respected? It's because with the exception of 4-5 companies, the vast majority of it is crap. It's overpriced, the guarantees are pathetic, and it never performs anywhere near the illustration (can't tell me how many times I've sat in on a presentation where the illustration rate was north of 10 percent.) It's full of dishonest salesmen who have little to no training before they are told to call their friends and family and sell it.
Not every used car is bad and not every used car salesman is a scumbag... but stereotypes exist for a reason.
Not to mention... the initial hurdle of the commission charge is hard for most people to overcome. Sure, 10-20 years out, you can build up some nice cash value. But few people have that kind of horizon.
Posted on 2/8/17 at 4:12 pm to Golfer
quote:
It's not an investment.
It is definitely an investment. It's often over sold, though. And not necessary for everyone. But insurance in general if used properly is a phenomenal investment tool--especially if you have kids or dependents to take care of after you die.
This post was edited on 2/8/17 at 4:13 pm
Posted on 2/8/17 at 4:14 pm to TheOcean
quote:
But insurance in general if used properly is a phenomenal investment tool--especially if you have kids or dependents to take care of after you die.
I have a term policy in place to protect my family's financial well-being in the event I die. That is not an investment in them, its protection. Exactly what insurance is for.
Posted on 2/8/17 at 4:15 pm to TheOcean
quote:
It is definitely an investment
It is an investment. But IMO, there are several other avenues that make more sense. Especially if you are younger and can afford it. Then the pitch will be, you can lock in low rates while your young, but there are tremendously more/better options for financial growth.
Posted on 2/8/17 at 4:15 pm to stevengtiger
So what happens when you out live that 20 year term? Is your investment in the market going to make more growth than 625% of what you put in? Because that's essentially what im getting by investing 80k and receiving 500k (initial death payout) plus growth in return.
Posted on 2/8/17 at 4:17 pm to Keeble9145
quote:
So what happens when you out live that 20 year term?
You've built up your investments and paid down your debts making your net worth enough to pass on to your family.
Posted on 2/8/17 at 4:19 pm to Golfer
quote:
You've built up your investments and paid down your debts making your net worth enough to pass on to your family.
Then what about estate taxes? You realize if your estate is worth over 4.5-5 mil (it fluctuates)that in order for your loved ones to inherit what you've left behind they will have to pay the taxes on it.
Posted on 2/8/17 at 4:20 pm to Keeble9145
quote:
So what happens when you out live that 20 year term?
The money that I invest in what I choose to, will outperform anything that I whole life insurance policy will do. My term policy will take care of me if something happens to me when I am young. If I outlive the term policy, the goal should be to financially stable enough to take care of everything that you, your spouse and kids would need. That term limit may be different for different people. My term will carry me till I'm 52 and by then, I should have enough supplemental income from investments, that I won't worry about having an additional insurance.
I have no need for a whole life policy. Most people that work & invest, really shouldn't either.
Posted on 2/8/17 at 4:21 pm to Keeble9145
I'm married. So double that estate tax implication. And there are a multitude of options to avoid estate taxes.
Posted on 2/8/17 at 4:22 pm to Keeble9145
quote:
Then what about estate taxes?
You're stretching here. If you're worried about estate taxes, then hopefully you are leaving behind enough cash that it wouldn't matter that much.
Frankly, if I have saved up $4M by the time I die, I would look back and never think twice about buying a $500K whole life policy.
Posted on 2/8/17 at 4:23 pm to Golfer
quote:
You've built up your investments and paid down your debts making your net worth enough to pass on to your family.
It's definitely an investment, but it's pointless to argue
Will all of your net worth be liquid when you die? What if your family needs money immediately after you die? Unless you're an OT baller, many parents won't be able to create a large enough net worth to make sure their dependents can survive for X number of years.
Posted on 2/8/17 at 4:25 pm to stevengtiger
quote:
You're stretching here. If you're worried about estate taxes, then hopefully you are leaving behind enough cash that it wouldn't matter that much. Frankly, if I have saved up $4M by the time I die, I would look back and never think twice about buying a $500K whole life policy.
Your estate is not just cash buddy, its everything that you own. Property, cash, homes, camps, etc. Everything under your name. There is a reason why all rich people own massive life policies on themselves but I guess they are all idiots lol
Posted on 2/8/17 at 4:26 pm to TheOcean
quote:
Will all of your net worth be liquid when you die? What if your family needs money immediately after you die?
That is perfect circumstance for a term policy. Give yourself a cheap way to protect yourself and family until you feel like you would be able to offer this.
Posted on 2/8/17 at 4:28 pm to stevengtiger
quote:
That is perfect circumstance for a term policy. Give yourself a cheap way to protect yourself and family until you feel like you would be able to offer this.
And about 90% of term policies are out lived, then what?
Posted on 2/8/17 at 4:29 pm to Keeble9145
quote:
Your estate is not just cash buddy, its everything that you own.
I understand this.
quote:
There is a reason why all rich people own massive life policies on themselves but I guess they are all idiots lol
Not all rich people own massive life policies.
Posted on 2/8/17 at 4:29 pm to stevengtiger
quote:
That is perfect circumstance for a term policy. Give yourself a cheap way to protect yourself and family until you feel like you would be able to offer this.
Exactly. And I've got this until I'm 65. For more than 2x OP's value and 1/6th the cost.
Posted on 2/8/17 at 4:32 pm to Keeble9145
quote:
And about 90% of term policies are out lived, then what?
Then use your own freaking money to cover expenses man. Why do some people not carry full coverage when their car is paid off. They would rather save money and pay for repairs as needed or save for a new car. We have given you reasons for not seeing high value in life insurance. Your investment strategy may be different from others.
I personally don't see this HUGE advantage that you are trying to sell. I have invested money in several avenues throughout my working life to create financial stability for my family. It's just not something I have been or would ever be interested in.
Posted on 2/8/17 at 4:32 pm to Golfer
quote:
Exactly. And I've got this until I'm 65. For more than 2x OP's value and 1/6th the cost.
So you're paying how much and for how many years?
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