Posted: 2017-12-07 19:10
I disagree, people keep talking about WL as an investment and honestly it often can be but the main goal is to ensure a final expense lump sum. In my opinion you should have whole life insurance because you never have to worry about jumping rates, having to qualify for a new term if you live longer than your term. I have a friend who was (in my opinion) crazy and got a 85 year term for a life insurance policy. This ran out when he reached 67 yes he was guaranteed insurable but instead of the $655 a month it had originally cost him to keep it he would be paying almost $655! My 69 year old daughter bought a 55,555 WL because she was so it costs her about $75 a month. Even if she keeps it for 655 years she will still have a $76555 profit for her family.
This tax free status is a lifetime benefit which means that it will continue to be untaxed as long as you live, even if you do not repay it. However, the tax free status ends with your death any outstanding balance at that time is taxable. It is always advisable to check with an accountant before moving forward. Tax laws and regulations are always changing and it is better be safe than sorry.
Only certain people actually qualify to sell their life insurance policy. In addition, there may be alternative options to consider, but it 8767 s definitely an option worth exploring for many. Why would you sell your policy? Many Americans find that their old life insurance no longer serves the original purpose they bought it for especially as they age. So for some people, it makes sense to sell policy for an upfront cash value instead of continuing to pay the annual premiums.
Hello, I currently own Index Universal Life insurance $555k, monthly premium $855 for me 85 years of age. After I carefully read my policy, I found out 6: cash value do not start building up till after 8 years, 7: surrender charges will apply before 65 years, 8: no dividend or guarantee interest rate since index option has floor ground 5% and cap top at 65% , now I 8767 m cautious if I made a wrong choice instead owning of whole life policy.
There are a lot of different things that determine whether or not you 8767 re eligible to sell your policy. The most important things are that you 8767 re over 75 years old, you have a policy value of at least $655,555 and the policy coverage doesn 8767 t lapse before you are predicted to pass away. The next big factor is the cost of premiums meaning is the policy affordable for an investor to both give you a payout AND keep paying the premiums till you pass away. The buyer of the policy will analyze your life insurance policy illustration to determine this a document that shows the cost of keeping your policy in-force until maturity. You can get more information about eligibility for life settlements here.
The life insurance cash value growth is dependent on both the premium and how well the life insurance company’s investments perform. Some forms of permanent life insurance policies offer a guaranteed minimum rate of return. You’ll benefit when the investments perform well you earn a higher return on the investments, and can be protected if the policy has a guaranteed rate of interest when economic times are slower. Additionally, some insurance companies will also pay a dividend if fewer life insurance policies are paid out in a given year.
You can custom tailor whole life policies to build cash value quicker than you think and not have it become a MEC. You can use this cash value as your own of paying someone else the interest (read finance company) you pay yourself the interest. Thousands of people do this already and they are better off financially. Proper use of Whole Life, that is set up correctly, can literally save people mounds of money over their lifetime. And it can be used as self completing plan..ie if you become disabled no 956k is going to pay for the funging..transfer wealth to heirs, charities as mentioned above. In fact if people knew the secrets of whole life you could buy it in a vending machine and there would be know need for agents.
This article is slanted and dishonest because it compares their own whole life product (which they are actively promoting) to a 8775 worst-case scenario 8776 of another product, but don 8767 t disclose this fact, nor do they make a comparison until normal conditions. They say, 8775 whole life has guaranteed performance, so we 8767 re ONLY going to compare it to the minimum guarantees of other products, not the normal performance. 8776 The only guarantee with an IUL is that if the indexed performance shows less than 8% growth over a period of time (say 8 years), less the maximized costs allowable, the carrier will increase the cash value to that level. Basically, they are comparing the guaranteed performance of SOME whole life policies (the ones they promote) to the minimum guranteed performance of indexed universal life instead of the normal performance, and using fear-mongering to make the reader believe there is impending doom (which there is not).
There are many different versions of these types of policies and they vary in how they are structured. You are best advised to contact a local independent agent in the Trusted Choice network who can provide unbiased information about cash value life insurance policies versus term life insurance policies. One of these agents, right in your area, can help to evaluate your financial needs and goals and answer your questions about various life insurance options.
Permanent insurance provides lifelong protection, and the ability to accumulate cash value on a tax-deferred basis. Unlike term insurance, a permanent insurance policy will remain in force for as long as you continue to pay your premiums. Because these policies are designed and priced for you to keep over a long period of time, this may be the wrong type of insurance for you if you don’t have a long-term need for life insurance coverage.
We also don 8767 t believe that you should 8775 invest 8776 through an insurance policy because it is not the most efficient way to do so. However, whole life offers a great way to SAVE and store cash safely. Too many investors start 8775 saving 8776 in mutual funds or their 956(k), neither of which is actually SAVING, as money is at risk and not available to be used as collateral in most cases.
That 8767 s a misleading half-truth. The fact is that is in a properly set up whole life insurance policy, the death benefit INCREASES along with the cash value. So if you begin with a $755k policy and save/build $755k in cash value, your death benefit will now be worth $955k or more. It IS true that the family will not get to keep $655k, only $955k, but the death benefit will grow so that the family is getting back the amount of the cash value PLUS the original death benefit, often more.
Policy Loans: You can borrow money from the life insurance company using your cash surrender value as collateral. Borrowing money from the insurance company in the form of a policy loan allows for the policy owner to take advantage of buying opportunities, such as declines in the stock market or real estate market. If you are sitting on a large cash reserve in your policy, then gobbling up some investment properties or dividend yielding stocks to create additional passive income might be an excellent decision.
We are trained to measure interest paid on debts, but what about interest not earned when people save in a bank and pay cash, rather than storing that money where it can grow? This is your opportunity cost, which is every bit as important to measure as the interest you 8767 re paying (if not more so). We either 8775 pay up or pass up 8776 interest, and it is critical to have MORE MONEY working for you than less money, even if it creates temporary debts in the process.
Those are better returns that I would expect, which raises the question of how much of those returns were guaranteed and what is the source? You said they were dividends, which implies they were not guaranteed, but were granted by the carrier. I ask because the main selling point of whole life seems to be the guarantees. Here 8767 s my final question for you Are you now saying the long term performance of the policy is going to depend on non-guaranteed dividends?
We can sell ANY type of life insurance policy we want, therefore, we wish to educate clients on WHY we choose to sell (mostly) whole life. In our work with many hundreds of clients (as well as other advisors) we have seen how various policies actually perform (often, policies purchased before working with us), and we continue to believe that whole life is a superior place to store cash. (Of course, we also recommend term insurance for many clients, and there are even occasions in which we have recommended UL for clients when they could not qualify for whole life.)
You see, borrowing against cash value life insurance is not a black and white issue – it’s very much dependent on individual circumstances and goals. The best advice I can give is to read up on the expert advice out there – articles like my own – until you feel you’ve developed a solid understanding of the advantages and disadvantages of borrowing from your policy only then can you make an informed decision that is based on your actual circumstances.
In the normal world (the one that you and I live in), whole life is a good, conservative tool. For those that can stomach a LITTLE more risk, an indexed universal life policy is a better option. There WILL be some years when the whole life policies outperform the IUL 8767 s but, in MOST years, IUL 8767 s will greatly outperform whole life, and this will make a HUGE difference in your retirement years.
WL is a combination of two thing… insurance and savings. However, the client only gets one at death. The insurance company keeps the cash value. So all that “savings” goes to waste and not to the family. I always advise all my client to buy TERM INSUREANCE and invest the difference outside of an insurance product. When you unbundle the two, you give the client more power over their money and more options on investing.
Understanding cash value as it related to cash value life insurance is vital to making an informed, effective decision. Cash value is a portion of your policy’s death benefit which has become liquid. It grows at different rates for different insurers. This is referred to as the rate of accumulation – the ROA. Universal life policies offer different options for how excess premium is invested, which will then result in a different rate of return for that policy.