Life Insurance

[gbw]

I know of whole life policies earning 4-6% guaranteed return

I don't mean to be unkind but I don't believe it. I'm sure willing to be proven wrong. If there were any safe guaranteed 4-6% net return to the policy holder for more than the shortest of terms, on anything, they could not print the policies fast enough to to supply the demand.

Who, with a national reputation, has ever recommended non-term life insurance as a sound financial move? I'm serious, not asking facetiously.

 

[Western]

From what I gathered from a few calls today. On the whole life policy you can get some early benefits such as, some hospice care, or depending on the policy some nursing home care. Then get whats left if you pass on, or your estate/family gets it.

Besides a little time on the web searching, I have a couple more to check with y'all recommended.

Thanks again

 

[LBrown59]

Not necessarily any more. I know of whole life policies earning 4-6% guaranteed return while CDs earned 1% and the stock market was in the tank. Term life premiums can go up and they do. Then they peter out.

It don't matter what whole life earns if you never collect on it and you won't collect the cash value if you die.
Cash value is like opening a savings account at a bank knowing you will never get to withdraw any of it .

 

[Ron JD670]

Ron JD670 said

The UL an whole life allow you to accumulate cash for use later if you don't die early and provide death benefit if you pass on early. They can be great if you can afford the payments and wait for the cash accumulation.

RoN[/QUOTE]

How do I collect both the death benefit and the cash value ?

To LBrown59 (and others)

The short answer is if you die part of the death benefit (DB) is your cash value (CV) and the balance is life insurance (LI). So CV+LI=DB
I know some will think this is scam but please read on.

When a group of insured people are young the individual cost is lower because the statical risk of death is lower. More of the premium payment (after expenses) goes to cash value and less to death benefit ( or what is otherwise called life insurance). As we (or our group of insured) age the cost of insurance goes up at an actuarially adjusted rate. If the policy is designed properly, as the CV accumulates it will reduce the LI cost needed. If the insurance company performs better than the guaranteed rate the LI cost diminishes faster. Eventually the cash value may exceed the original LI. But you can also design with an option so the LI grows as you age and the CV grows. Some policies reach a point were they have enough CV build up the pay future payments out of dividends or growth.

Once the cash value CV grows to a point you might borrow it. Say you bought it to pay college education expenses for the kid(s) in 18 yrs. If you do not die you might barrow the cash value for better terms than a personal loan or line of credit on the house.

Some may remember the financial crises 2007, 2008, 2009 well for some the only thing providing a (guaranteed) return we're these life policies (and annuities).

These policies (whole life) were the original pension plans. If you design for age 65 the insurance company guarantees you'll have X dollars to pay a pension (or a DB to you survivor) as long as you pay the premium every year.

The DB is normally tax free. If you surrender a policy to take out the full CV benefit part will be return of your money part will be taxable gain - possibly. This is where a good advisor with tax training and a CPA comes in.

In my opinion whole life, UL, or variable policies should only be bought as part of overall financial plan.

OK that was a long answer to a short question.
Good luck RoN

 

[Ron JD670]

I don't mean to be unkind but I don't believe it. I'm sure willing to be proven wrong. If there were any safe guaranteed 4-6% net return to the policy holder for more than the shortest of terms, on anything, they could not print the policies fast enough to to supply the demand.

Who, with a national reputation, has ever recommended non-term life insurance as a sound financial move? I'm serious, not asking facetiously.

I've seen them even higher. It depends when they where issued. In higher interest rate periods the insurance companies can buy long term investments that pay higher returns. Also to compete they have to offer competitive rates. unfortunately the rates are at historical lows today so they're less competitive or attractive.
Best to all
RoN

 

[daugen]

I worked for a number of years in a pretty high end financial planning business where some of the men had been there for thirty, forty years. What they were most pleased about on all the investments they had made, over their entire lifetimes, were the whole life policies they had bought a long time ago. Like Ron said so well, the old policies, if held a long time, really do/did put out 4-5%. The best yields were often from the mutual companies, Mass Mutual, NY Life, Northwestern, etc who shared the profits of the company by providing significant dividend returns to the policy. So these old investors got the life insurance they needed and sort of a bond return if they wanted to take cash out.

I bought my life insurance a long time ago, maybe 15 years, and bought it as LP65, meaning it was paid up after age 65, the death benefit stayed inforce and the built up values within the policy were adequate to keep it inforce as long as I lived,no matter how long that was. LP65 is more expensive, you aren't paying premiums for the rest of your life like most life insurance, but most of us want to cut back on the fixed costs of life when we get older. It made sense for me, I didn't have kids in college and I could afford to put a little more in permanent insurance. Many people can't and can only load up on as much term coverage as they can afford for as long as they can afford it. You must meet your term insurance needs before you spent extra dollars on whole life.

It's just that most term runs out, and anyone with estate tax issues needs to find some solution or other assets to "burn" in paying the tax man. Current estate tax limits are now pretty high, so this is less of a concern to many, but many large landowners and generational farmers really need professional advice to keep the land in the family.

Ron did a great job of explaining this. Drew

 

[DeniseM]

Usually, amounts lesser than or equal to $150,000 don't require a medical examination. Group life insurance doesn't require it either. What type of life insurance you'll need will depend on your goals right now, and where you are when it comes to working towards them. If the amount you're looking for is quite large and you're worried that your age might cause a considerable hike in premiums, choose term life insurance online because that's as affordable (and even cheap) as it will get for you.


Denise Mancini