re: Anyone using a whole life insurance policy for income?

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This is to no one in particular but I find it interesting how emotional people get with the topic of cash value life insurances. I view it all as just math, which is anything but emotional.

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Do you read texts from your wife as angry texts?

I like math.
Paying 7 years into a policy to break even is a pretty simple arithmetic.

If that's your thing, you are right. Go for it.

That type of consumerism should he applauded.

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Can you show the fees associated with WL policy?

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Not really. Most of the expenses are not "above the table" for the consumer to see.
There are agent commissions, underwriting expenses, and cost of life insurance/maintenance fees.

That is why you generally pay premium for 7 years before your value equals the paid premiums. Sales/service do not have a really good answer as to why it takes that long.
But essentially... that is how expensive these are.

You are in a negative asset scenario for 7 years.
From a pragmatic perspective, that is a lot of opportunity lost elsewhere.

I correlate these types of policies to a marriage.
If you forecast out 30 years, these are very attractive.
Like a good spouse, she can take great care of you when you are in greater need.
But a divorce from the policy (like a divorce from marriage) can be one of the most expensive mistakes.

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I've taken out a loan against my whole life policy when I could get a better rate than the bank for down payments on rental houses. I guess you can consider that for income. Don't have to deal with credit check, paperwork like a bank loan and can pay it back however I want.

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First, holy shite.
Secondly, I hope you’re at least paying the interest each year. If not, you won’t have that policy for very long and then those cheaper loans become very, very expensive loans.

Also, meansonny is correct in this thread. I hate saying that, too .

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I hope you’re at least paying the interest each year. If not, you won’t have that policy for very long and then those cheaper loans become very, very expensive loans.

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That depends on what type of policy and the type of company. If it's a WL with a mutual company the dividends could cover the interest if it is a small loan and the cash value will to continue to grow. Some companies do not reduce the cash value after a loan so you would continue to earn interest on the premium contributions, interest, and dividends that were were paid before the loan. But, you are absolutely correct at least pay the interest or your policy could go kaput.

It's also a good idea to get an updated illustration yearly especially if you take out a loan.

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meansonny

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He brings up good points but they are not germane to the topic of the thread. He keeps bringing up fees and cost associated with WL and comparing them with fees and cost associated with investing in the market. He should make another thread so he can show us how smart he is.

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much cheaper and easier to borrow from yourself than a bank

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If you’re borrowing from an investment or savings, then yes. If you’re borrowing from a whole life policy’s cash value, you’re paying wayyyyy more for life insurance only to have the ability to get a loan at an interest rate a percentage or two (or three) lower than that of a traditional loan from a bank. If you need life insurance, buy term. If you need to grow money or create income with your money, invest. Never combine the two unless you want the insurance company to make way more than you. Only a fool with his money does that.

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So you're saying there is no benefit to whole life? Just invest my money elsewhere?

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If the reason you bought the whole life is so you could one day access the cash value, then yes you should dump it unless you’re uninsurable now.

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Cashing out can lead to tax consequences.

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Thank you for assisting me with my point.

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TD and means are ride or die with the market guys and they beleive what is best for them is best for everyone.

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Aren't 6 month treasuries paying 5.3% right now?

There are lots of ways to accomplish financial goals that don't strip away opportunities today (or for the first 7 years).

If the downside risk is so great on a financial vehicle, I get miffed at sunshine pumpers.

If your duration timeline is 30 years, maybe life insurance is the appropriate vehicle.
But if your duration timeline is 30 years, are you really afraid of market risk through that window?
Is there such a thing as too conservative (lost opportunity cost over 30 years)?

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Aren't 6 month treasuries paying 5.3% right now?

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Yes. I notice you did not bring up 30 year treasuries which are currently at 3.84%. That would be a better comparison.

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If your duration timeline is 30 years, maybe life insurance is the appropriate vehicle.

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Permanent Life insurance should never be a short term option and the primary focus would not be for your main source of income in retirement.

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But if your duration timeline is 30 years, are you really afraid of market risk through that window?

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The simple answer is no and you shouldn't be afraid of market risk over a 30 year duration.

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Is there such a thing as too conservative (lost opportunity cost over 30 years)?

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Yes. Absolutely! I don't think, I could be wrong, that anyone is advocating putting all of ones money into Permanent Life insurance so that the cash value would be their main source of income in retirement.

I love how the OP asked the question and has disappeared.

Means, we agree on more than we disagree on