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re: The debate about universal life insurance
Posted on 8/10/20 at 3:49 pm to yatesdog38
Posted on 8/10/20 at 3:49 pm to yatesdog38
quote:
long term capital gains tax will still beat any insurance policy.
Umm... if the policy never terminates, or even if it does terminate and the CSV never exceeds premium... tax rate is zero...
Long term capital gains rate is more than zero unless you are poor...
0
Posted on 8/10/20 at 5:04 pm to LSUFanHouston
I’m 38.....I did a cash account calculator with 15k contributions per ....8% growth 15% capital gains for 10 years then allowing it to grow to 62 and I do come out with more cash but the combined death benefit seems to beat it, and it covers any underlying health issues.
At 61 I have almost 1 million in balance. Interest is about 77k per year. With 11k in taxes
At 61 I have almost 1 million in balance. Interest is about 77k per year. With 11k in taxes
Posted on 8/10/20 at 5:51 pm to PropofoLSU
quote:
I’m 38.....I did a cash account calculator with 15k contributions per ....8% growth 15% capital gains for 10 years then allowing it to grow to 62 and I do come out with more cash but the combined death benefit seems to beat it, and it covers any underlying health issues.
At 61 I have almost 1 million in balance. Interest is about 77k per year. With 11k in taxes
The UL is a good option if you need life insurance and want the tax deferred growth.
One of the problems with UL are the maintenance fees on the policy.
A second problem is accessibility fees. You get charged fees to access the funds.
A third problem (probably not for you since you are looking so far into the future) are surrender charges for early withdrawals from the cash account (usually within the first 15 years)
Posted on 8/10/20 at 7:49 pm to Hopeful Doc
There's a lot of merit to the idea of adding cash value life insurance in a portfolio to increase total yield and reduce beta
Businesswire article from 10 years ago, and with bond yields even lower now, it may make more sense.
LINK
Businesswire article from 10 years ago, and with bond yields even lower now, it may make more sense.
LINK
Posted on 8/10/20 at 7:50 pm to meansonny
Depends on the type of universal life policy, And if the individual plans to surrender part of the policy, or merely borrow against it. That could affect the tax treatment of the withdrawal on assets, however...
Posted on 8/10/20 at 7:52 pm to meansonny
quote:
accomplish my goals better with a Roth
Absolutely, but there are people who are maxing out Roth's and other retirement vehicles, and looking for other places to stash assets. these are typically people with a lot of money, and the ability to access that cash value tax free is relatively more attractive high net worth individuals
Posted on 8/10/20 at 8:28 pm to jrobic4
quote:
and the ability to access that cash value tax free is relatively more attractive high net worth individuals
I opened my cash value UL for this purpose.
I still think market returns (even with taxes) are better than current growth from UL. Isnt the current scenario looking 30 years into the future? Why avoid the most aggressive growth option? I know that taxes suck. But I'd rather maximize my growth and deal with the taxes than put a hard cap on my return with a 30 year timetable.
Posted on 8/10/20 at 10:12 pm to meansonny
It’s fixed index funds. Never can lose meaning a loss is 0% for the year but Caps at 12% on a big year. It guarantees about 6% on average. I’ll have more details Wednesday. I’ve printed out the cash calculators to compare. Thanks for the advice guys.
This post was edited on 8/10/20 at 10:14 pm
Posted on 8/10/20 at 10:21 pm to meansonny
quote:
But I'd rather maximize my growth and deal with the taxes than put a hard cap on my return with a 30 year timetable
It is a psychological factor, and there is no set amount, but there seems to be a level of net worth that once you reach it you become more interested in preserving your wealth than future returns. But I agree, investing in the market long term rather than insurance would usually be the best way to build wealth.
This post was edited on 8/10/20 at 10:25 pm
Posted on 8/10/20 at 10:22 pm to meansonny
There are ways to leverage the whole life policy and other investment options that involve setting up a trust. GRATs and some other lending strategies to leverage trust assets. It is out of my league of knowledge, but I was reading something a couple months ago. I'll see if I can find the article.
Posted on 8/10/20 at 10:31 pm to PropofoLSU
UL is made up of annual renewable term plus the cash component. The cost of insurance is rising every year. If you are not over funding the policy that policy 9/10 will implode because the cost of insurance and fees will eat away at the cash in the form of an automatic premium loan to pay the difference of the cost of insurance and the premium compounding to more and more losses.
Posted on 8/11/20 at 10:25 am to yatesdog38
quote:
There are ways to leverage the whole life policy and other investment options that involve setting up a trust. GRATs and some other lending strategies to leverage trust assets. It is out of my league of knowledge, but I was reading something a couple months ago. I'll see if I can find the article.
I LOVE the DIY-ness of so many on this board. It's really neat to see.
GRATs funded by overfunded whole life, etc, are some really, really advanced technical things that to me, fall under the "do not try this at home" mantra. They can work, work really well, in some very specific situations, but professional advice and guidance is almost always needed. You can make mistakes easily and blow up a lot of stuff if not careful.
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