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Whole Life Insurance, etc
Posted on 4/4/24 at 3:27 pm
Posted on 4/4/24 at 3:27 pm
I think I’m about to fire my financial advisor. He’s an attorney & was doing full time financial advising but now it appears he’s practicing again and he hasn’t reached out this year for an annual review.
I have money going into two investment accounts- conservative (~5% per yr) and aggressive. He did advise what holdings I should have for 401k but does not get a fee there. He also put me in whole life insurance as an investment vehicle. It’s $450/month. I have about $20k in cash value now. I also have term life insurance through my firm.
Any analysis? Should I cash out , get more term and invest the cash value in a mutual fund? I have about $400k in the investment accounts and don’t really pay attention to the fees. Stupid, I know.
I have money going into two investment accounts- conservative (~5% per yr) and aggressive. He did advise what holdings I should have for 401k but does not get a fee there. He also put me in whole life insurance as an investment vehicle. It’s $450/month. I have about $20k in cash value now. I also have term life insurance through my firm.
Any analysis? Should I cash out , get more term and invest the cash value in a mutual fund? I have about $400k in the investment accounts and don’t really pay attention to the fees. Stupid, I know.
10
Posted on 4/4/24 at 3:32 pm to Hou_Lawyer
Call JG Wentworth 877 CASH NOW.
Posted on 4/4/24 at 3:32 pm to Hou_Lawyer
quote:
He also put me in whole life insurance as an investment vehicle.
This hurts my heart.
Does your business pay the premium or something?
I don't like anything about life insurance as an investment.
But if you can get a tax write off on your premium (which happens to invest) I could maybe see enough benefits to offset the poopy fees/expenses.
Posted on 4/4/24 at 5:01 pm to meansonny
quote:
This hurts my heart. Does your business pay the premium or something? I don't like anything about life insurance as an investment. But if you can get a tax write off on your premium (which happens to invest) I could maybe see enough benefits to offset the poopy fees/expenses.
No- I pay all out of pocket
Posted on 4/4/24 at 5:13 pm to Hou_Lawyer
If you are self employed, check with your tax preparer to see if business payments (business checking account or debit/credit card) can be tax deductible.
It is essentially a key man policy if you are self employed.
It is essentially a key man policy if you are self employed.
Posted on 4/4/24 at 5:27 pm to Hou_Lawyer
quote:
He also put me in whole life insurance as an investment vehicle.
Is that really what he called it? An investment?
Just curious, would you mind mentioning what Life Insurance company he placed you with?
This post was edited on 4/4/24 at 5:36 pm
Posted on 4/4/24 at 5:32 pm to La Place Mike
quote:
Is that really what he called it? An investment?
Yep
Posted on 4/4/24 at 5:42 pm to Hou_Lawyer
quote:
Yep
Wow!
What was his reasoning for you to "invest" in the Whole Life policy?
Posted on 4/4/24 at 5:58 pm to La Place Mike
quote:
What was his reasoning for you to "invest" in the Whole Life policy?
From what I recall years ago, the ins co has always paid a dividend (whatever the % is), you can borrow $ in the cash value amount if needed. “Another bucket” for diversifying portfolio
Posted on 4/4/24 at 11:52 pm to Hou_Lawyer
quote:
He also put me in whole life insurance as an investment vehicle. It’s $450/month
He’s retarded and I double dare anyone to convince me he’s not.
Fire him now.
Posted on 4/5/24 at 7:10 am to Hou_Lawyer
Purchased whole life about 25 years ago. The cash value was about $55,000 the dude kept saying we were making a killer return on our money. It raised a red flag when he said killer. I figured out we were returning about 1.5% or so.
I cashed it out and invested the cash.
When we purchased it the $100k was gonna help the surviving spouse - 25 years later it wasn’t the smartest thing we’ve ever done
I cashed it out and invested the cash.
When we purchased it the $100k was gonna help the surviving spouse - 25 years later it wasn’t the smartest thing we’ve ever done
Posted on 4/5/24 at 10:46 pm to Hou_Lawyer
quote:
He also put me in whole life insurance as an investment vehicle
Posted on 4/6/24 at 6:53 am to Hou_Lawyer
You got bamboozled, my friend
Posted on 4/8/24 at 5:33 am to Hou_Lawyer
I have some clients that treat their whole life police as part of their conservative strategy but it’s such a small piece for them. $450/month with term already in place seems a stretch.
Posted on 4/15/24 at 4:07 pm to JL
If you max out deferred plans, and make too much to Roth, it can be good.
Posted on 4/15/24 at 7:25 pm to Hou_Lawyer
Get all of your money away from him and do it yourself
Posted on 4/16/24 at 5:01 pm to JL
quote:
Have any of you guys read this white paper? The argument of using whole life as a volatility buffer vs. the "buy term and invest the difference" strategy is compelling. What are your thoughts on this?
I didn't have to click the link to know where it lead to. It's an interesting paper and the strategy would work for a lot of retirees. The problem is that it will fall on deaf ears or in this case blind eyes because it goes against the grain.
Posted on 4/16/24 at 8:21 pm to La Place Mike
quote:
The problem is that it will fall on deaf ears or in this case blind eyes because it goes against the grain.
I’ve read the paper. I disagree with some of the premises but in all it brings up some good points. The effective tax rate in retirement is absurd and 30% equities for someone on this plan is almost assuredly too conservative, but it still has relevant things to consider.
The main takeaway is that equities generally kick arse. Using life insurance/annuities to replace bonds over the last decade or so has been a wise decision.
I’d appreciate an update white paper with current rates. Not sure intuitively how it would change things, but I think it’s interesting nonetheless. The paper was written near the non-Covid bottom for rates.
Posted on 4/17/24 at 9:25 pm to Hou_Lawyer
quote:
It’s $450/month. I have about $20k in cash value now.
For fun.
1) Since inception, if you went 70% in something like a S&P500 or Total Market and 30% in bonds over the same time, what would that cash value be?
2) pick any time period (inception til now) over the last 100 years at random and run the same calculation.
3) what’s the payout upon death?
4) if you aren’t planning on knocking on the door of an estate tax problem as part of using this as an investment, you may want to question the motivations of the person selling you an underperforming investment with a smaller payout than a conservative stock/bond mix.
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