I can say this (don't know your particular situation) but a lot of these type strategies are pushed by folks who are only licensed to sell life insurance. So, they have to get creative and invent other needs/usages for life insurance...such as an investment vehicle. Definitely get a second opinion. Generally, for me professionally, not a big fan when utilized as an investment vehicle. These work good for folks who have estate tax issues and don't want the estate paying the tax. Take care.
Whole Life Insurance as Retirement Planning Investment
- Thread starter LoneRanger
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Originally Posted by LoneRanger
Originally Posted by Wolf359
You don't actually say why you need life insurance. If you have enough savings such that your death won't be an undue hardship, then you don't need life insurance. Then you're just buying something that you don't really need that's disguised as an investment product, but it's really a poor investment product as you can see.
I don't need life insurance. My survivors should be able to bury me and settle the estate several times over with the liquid and hard assets currently owned.
I've had the same conversations with people who tried to sell me life insurance. They came up with all sorts of reason but I countered them all and I don't have any life insurance. Stock market investments have done really well of late, but maybe not the last few days. I also set up a margin account recently at Fidelity. Didn't cost anything to set it up and you can borrow up to 50% of what you have, only took a day to get approved. I think interest rate was about 8.35% if it was under 100k. So yeah, you can borrow against what you own too if you wanted to or needed to.
Usually they show me some great investments that they've made and the returns and I just say I can do the same thing without buying life insurance and I don't need the life insurance component so my return would be even higher without it. That pretty much in a nutshell is how those conversations end.
Originally Posted by Wolf359
You don't actually say why you need life insurance. If you have enough savings such that your death won't be an undue hardship, then you don't need life insurance. Then you're just buying something that you don't really need that's disguised as an investment product, but it's really a poor investment product as you can see.
I don't need life insurance. My survivors should be able to bury me and settle the estate several times over with the liquid and hard assets currently owned.
I've had the same conversations with people who tried to sell me life insurance. They came up with all sorts of reason but I countered them all and I don't have any life insurance. Stock market investments have done really well of late, but maybe not the last few days. I also set up a margin account recently at Fidelity. Didn't cost anything to set it up and you can borrow up to 50% of what you have, only took a day to get approved. I think interest rate was about 8.35% if it was under 100k. So yeah, you can borrow against what you own too if you wanted to or needed to.
Usually they show me some great investments that they've made and the returns and I just say I can do the same thing without buying life insurance and I don't need the life insurance component so my return would be even higher without it. That pretty much in a nutshell is how those conversations end.
A mix of dividend stocks is better.
I agree with Wolf359, look for other areas to invest.
Are the bull markets over soon ???
I agree with Wolf359, look for other areas to invest.
Are the bull markets over soon ???
Originally Posted by LoneRanger
I've always heard, read, and been told that if you need Life Insurance and want to build some cash value instead of "renting" term life insurance, then whole life may be an option to look at. And I've heard, read, and been told that if a financial planner, investment adviser, or etc tries to steer you into a whole life policy by promoting to you it's eventual cash value and the ability to borrow against it, etc., that you should walk away.
Well, I have a person whom I'm in a 501c3 fraternal organization with, a brotherhood if you will, who is an insurance agent who also offers retirement planning services through a CPA he knows. I went to an initial meet and greet get acquainted appointment at the CPA's business office. My acquaintance from the fraternal organization was also there. They pitched the LEAP program. Turns out LEAP appears to push whole life policies. I knew this going in but wanted to hear what they had to offer. I told them I'd done some initial research on LEAP and it seems that all roads lead to whole life in the LEAP model. They stated the original LEAP model, yes, it did, but what they offer is a more widely optioned version of LEAP. They want data. A lot of it. Tax returns, existing insurance policies for life, property, auto, health, personal or professional liability policies, etc. They want copies of certificates of deposit, loan obligations mortgage, auto, any credit cards. They advise they need the whole enchilada of personal financial data on wife and I in order to tailor the best fit of growing and "protecting" assets. They talked about "velocity of money" and how important it is to keep money in motion.
They displayed a particular whole life policy where you simply make one BIG lump sum payment and no premiums thereafter and it grows cash value at a defined rate, but the annual returns were dismal, looked like about 2%. But you can borrow against it and take some out and use it and replace it, etc etc, got to keep the money moving, the whole velocity of money concept or whatever.
To say I am leery at this point is accurate, but with one of the persons presenting this being a "brother" in the fraternal 501c3 we're in, has the potential to rub me the wrong way if all this is is a ploy to sell me whole life.
You have to make your own decision based on what's best for you and your family. FWIW along with our IRA's, my wife and I have whole life policies (both paid up) that are paying a guaranteed 4.5% interest. In our case this has worked out well and gives us a substantial sum of money we can pull out of the policies if needed, and still have the policies pay a death benefit. Yes I know you can make argument of how much we have paid in premiums over the years. However the policies have always paid interest based upon current interest rates and the guaranteed minimum 4.5% has been nice during these last several years of low interest rates
I've always heard, read, and been told that if you need Life Insurance and want to build some cash value instead of "renting" term life insurance, then whole life may be an option to look at. And I've heard, read, and been told that if a financial planner, investment adviser, or etc tries to steer you into a whole life policy by promoting to you it's eventual cash value and the ability to borrow against it, etc., that you should walk away.
Well, I have a person whom I'm in a 501c3 fraternal organization with, a brotherhood if you will, who is an insurance agent who also offers retirement planning services through a CPA he knows. I went to an initial meet and greet get acquainted appointment at the CPA's business office. My acquaintance from the fraternal organization was also there. They pitched the LEAP program. Turns out LEAP appears to push whole life policies. I knew this going in but wanted to hear what they had to offer. I told them I'd done some initial research on LEAP and it seems that all roads lead to whole life in the LEAP model. They stated the original LEAP model, yes, it did, but what they offer is a more widely optioned version of LEAP. They want data. A lot of it. Tax returns, existing insurance policies for life, property, auto, health, personal or professional liability policies, etc. They want copies of certificates of deposit, loan obligations mortgage, auto, any credit cards. They advise they need the whole enchilada of personal financial data on wife and I in order to tailor the best fit of growing and "protecting" assets. They talked about "velocity of money" and how important it is to keep money in motion.
They displayed a particular whole life policy where you simply make one BIG lump sum payment and no premiums thereafter and it grows cash value at a defined rate, but the annual returns were dismal, looked like about 2%. But you can borrow against it and take some out and use it and replace it, etc etc, got to keep the money moving, the whole velocity of money concept or whatever.
To say I am leery at this point is accurate, but with one of the persons presenting this being a "brother" in the fraternal 501c3 we're in, has the potential to rub me the wrong way if all this is is a ploy to sell me whole life.
You have to make your own decision based on what's best for you and your family. FWIW along with our IRA's, my wife and I have whole life policies (both paid up) that are paying a guaranteed 4.5% interest. In our case this has worked out well and gives us a substantial sum of money we can pull out of the policies if needed, and still have the policies pay a death benefit. Yes I know you can make argument of how much we have paid in premiums over the years. However the policies have always paid interest based upon current interest rates and the guaranteed minimum 4.5% has been nice during these last several years of low interest rates
I was given a copy of "The Wealthy Barber" decades ago and it served me well
That LEAP plan means the sales person or advisor leaps for joy when he lands a fish that buys whole life insurance. Are you old enough to recall when insurance companies hawked "universal life insurance" as an investment? What a joke. Your inclination to run away is correct! Buy term insurance if you need life insurance.
As a BITOGer, I agree with most of what ArrestMeRedZ said.
As a Brother and PM, kindly swerve and MISS your Brother in the parking lot! ...
Financially, you appear to be set in terms of your current financial position.
If you want to invest that money, determine your financial goals and risk tolerance, then seek the advice of a fee based only Certified Financial Planner.
As a Brother and PM, kindly swerve and MISS your Brother in the parking lot! ...
Financially, you appear to be set in terms of your current financial position.
If you want to invest that money, determine your financial goals and risk tolerance, then seek the advice of a fee based only Certified Financial Planner.
Originally Posted by LoneRanger
Originally Posted by Wolf359
You don't actually say why you need life insurance. If you have enough savings such that your death won't be an undue hardship, then you don't need life insurance. Then you're just buying something that you don't really need that's disguised as an investment product, but it's really a poor investment product as you can see.
I don't need life insurance. My survivors should be able to bury me and settle the estate several times over with the liquid and hard assets currently owned.
There is your answer then.
Originally Posted by Wolf359
You don't actually say why you need life insurance. If you have enough savings such that your death won't be an undue hardship, then you don't need life insurance. Then you're just buying something that you don't really need that's disguised as an investment product, but it's really a poor investment product as you can see.
I don't need life insurance. My survivors should be able to bury me and settle the estate several times over with the liquid and hard assets currently owned.
There is your answer then.
More than any person on here I am familiar with life insurance, all types, and also the LEAP system, and I have several designations and licenses. I run a hedge fund, up 86% last year and still try to buy as much whole life insurance as they will issue me. It grows without paying taxes on the cash, you can take money out without paying taxes on it, your cash grows, your dearth benefit grows but you need to fund it correctly. You want to buy as little life insurance as allowed while pushing the MEC limit without encroaching on it. There's also less than 10 companies I would buy life insurance from.
Originally Posted by JLawrence08648
More than any person on here I am familiar with life insurance, all types, and also the LEAP system, and I have several designations and licenses. I run a hedge fund, up 86% last year and still try to buy as much whole life insurance as they will issue me. It grows without paying taxes on the cash, you can take money out without paying taxes on it, your cash grows, your dearth benefit grows but you need to fund it correctly. You want to buy as little life insurance as allowed while pushing the MEC limit without encroaching on it. There's also less than 10 companies I would buy life insurance from.
Lone Ranger:
"Oh Lord, My God!
More than any person on here I am familiar with life insurance, all types, and also the LEAP system, and I have several designations and licenses. I run a hedge fund, up 86% last year and still try to buy as much whole life insurance as they will issue me. It grows without paying taxes on the cash, you can take money out without paying taxes on it, your cash grows, your dearth benefit grows but you need to fund it correctly. You want to buy as little life insurance as allowed while pushing the MEC limit without encroaching on it. There's also less than 10 companies I would buy life insurance from.
Lone Ranger:
"Oh Lord, My God!
Let us not rush to judgement. As a hedge fund manager, JLawrence may be in a different financial situation than most of us by two orders of magnitude. From what I've seen, whole life makes no sense for those of us with a net worth of seven figures or less. If you are in the bracket of eight figures or more it may have some validity as a tax and/or estate planning strategy. Of course with those assets, you had better be one, or be using the services of a Certified Financial Planner that you trust.
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Originally Posted by LoneRanger
The whole life thing they showed me was a single premium policy.
This sounds a lot like a plan that was sold in Canada some years ago. The idea being that the expected annual increase would pay all the future premiums. It's not necessarily a bad idea, but what if the actual increase is less than what is required to pay the premiums?
I don't recall the details but let's just say it didn't end well. You may be able to find a discussion on the web.
The whole life thing they showed me was a single premium policy.
This sounds a lot like a plan that was sold in Canada some years ago. The idea being that the expected annual increase would pay all the future premiums. It's not necessarily a bad idea, but what if the actual increase is less than what is required to pay the premiums?
I don't recall the details but let's just say it didn't end well. You may be able to find a discussion on the web.
Originally Posted by Or
Originally Posted by nickaluch
Insurance and investments are two totally different things. Don't walk ,run away there giving you bad advise.
There's some very bad advice in this thread so far, like this.
Genuine "whole life" insurance is a fantastic investment vehicle, capable of impressive returns through tax advantages. It can also have substantial flexibility for anticipated expenses, like a child's education, for example.
The scenario you described is a bit over the top; I bought a policy from Northwestern Mutual decades ago and it's not so invasive like that. That is just a ruse to get your whole data so they can target more pitches at you. I would suggest reading real articles about what and how "whole life" insurance works (basically, it's a limit-free IRA funded by post tax dollars for retirement funds). Then talk to pros like at Northwestern Mutual, MassMutual, Prudential, etc.
I stand by statement as do most here on this thread.
Originally Posted by nickaluch
Insurance and investments are two totally different things. Don't walk ,run away there giving you bad advise.
There's some very bad advice in this thread so far, like this.
Genuine "whole life" insurance is a fantastic investment vehicle, capable of impressive returns through tax advantages. It can also have substantial flexibility for anticipated expenses, like a child's education, for example.
The scenario you described is a bit over the top; I bought a policy from Northwestern Mutual decades ago and it's not so invasive like that. That is just a ruse to get your whole data so they can target more pitches at you. I would suggest reading real articles about what and how "whole life" insurance works (basically, it's a limit-free IRA funded by post tax dollars for retirement funds). Then talk to pros like at Northwestern Mutual, MassMutual, Prudential, etc.
I stand by statement as do most here on this thread.
Originally Posted by ecotourist
I agree with the previous posters. I too think that Whole Life Insurance is a poor investment. If you need life insurance (and people who have financial obligations do) I'd suggest you buy "die to win" (Term) Life Insurance.
I've had term life insurance for almost 50 years. It's getting really expensive at my age and I'm about to walk away from my policy. Am I sorry I "wasted" all that money and have ended up with nothing? Nope. I paid low premiums for a meaningful amount of insurance when I was young and invested my money and now have my own pot of money. And because of that, I don't need Life Insurance anymore.
And be sure you buy a meaningful amount of life insurance. What would your family need to re-establish themselves in the event of your death? It's not $20,000 or $50,000.
Insurance companies aren't in business to do anyone a favour. Their best product is insurance. Buy their insurance, and invest the rest.
Great advice ðŸ‘
I agree with the previous posters. I too think that Whole Life Insurance is a poor investment. If you need life insurance (and people who have financial obligations do) I'd suggest you buy "die to win" (Term) Life Insurance.
I've had term life insurance for almost 50 years. It's getting really expensive at my age and I'm about to walk away from my policy. Am I sorry I "wasted" all that money and have ended up with nothing? Nope. I paid low premiums for a meaningful amount of insurance when I was young and invested my money and now have my own pot of money. And because of that, I don't need Life Insurance anymore.
And be sure you buy a meaningful amount of life insurance. What would your family need to re-establish themselves in the event of your death? It's not $20,000 or $50,000.
Insurance companies aren't in business to do anyone a favour. Their best product is insurance. Buy their insurance, and invest the rest.
Great advice ðŸ‘
A single premium whole life policy smells a lot like an annuity. If a person can't invest for returns that are better than those of an annuity, he should quit.
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I got burned on an annuity when I was younger, in my first marriage when we were wanting to set up college savings for our son. We were late to the college savings game, he was twelve. I was actively flying, and had been spending money on the hobby instead of putting it into a college fund, and was feeling a sense of both urgency and guilt. A fellow pilot whom I flew with from time to time, who was in the local detachment of the civil air patrol, his wife was a broker with a brokerage with a well recognized name and reputation. One day at a get together of friends and etc at their place, we sat in her office room in the house and she showed me some choices. She recommended a Pacific Life variable annuity as a solid choice for a last minute college savings plan. I was young dumb and full of... well... you know. I'd rather have been talking airplanes and private pilot flying stories than boooooooring financial stuff. I trusted her. Invested 25k into that specific investment. Chose, under her guidance, the mutual funds to comprise the content of the variable annuity. It tanked bad the first year, and long story short it was just a bad vehicle for a short term last minute college funding attempt with about 6 yrs to go until he graduated high school. Later on, other brokers I was acquainted with told me it wasn't the best choice for that objective but, coincidentally, it was the most profitable item for a broker to sell, among various choices. It strained the friendship, but didn't matter because professional obligations had them moving out of the area to the east coast and we lost touch anyhow.
4-10% dividend stocks are your friend.
Invest after the next recession that is approaching...
Invest after the next recession that is approaching...
Life Insurance, as a topic, is a lot like cars, as a topic.
It's simply too complex of a subject to say, "whole life is good" or "whole life is bad", because that's like saying, "sedans are good" or "sedans are bad" without understanding the needs of the buyer, the company offering the product, or the particular terms of the product.
Unfortunately, the terms of the product, the company, and the needs of the OP were absent, so there is no way to fairly, accurately, answer his question.
It's simply too complex of a subject to say, "whole life is good" or "whole life is bad", because that's like saying, "sedans are good" or "sedans are bad" without understanding the needs of the buyer, the company offering the product, or the particular terms of the product.
Unfortunately, the terms of the product, the company, and the needs of the OP were absent, so there is no way to fairly, accurately, answer his question.
The investment portion of Whole Life is a conservative investment. Also investment returns very from company to company and different types of policies, variable, interest sensitive, conglomerate, mutual, stock companies. It is unfair to compare a conservative investment to buy term and invest the difference in the stock market. If you want to be fair, compare buy term and invest the difference in CDs, AAA, AA, or US Gov't bonds subtracting the cost of the insurance from the investment, then subtract the taxes from the investment. Over the long term the returns on the stock market will always beat the returns of CDs.
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