Author Topic: LIFE INSURANCE  (Read 140503 times)

Online ExGingi

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Re: LIFE INSURANCE
« Reply #1000 on: April 03, 2024, 10:26:48 AM »
run your own numbers. an agent will promise you xyz returns.  take out a calculator and prove them wrong. usually the math just doesn't add up.  and once they start with "its the best forced savings" then you know they got nothing on your numbers

Life Insurance is NOT AN INVESTMENT!

Whole life insurance is a special and unique asset class. The IRR of WL (and PUAs which are different) should not be compared to any other investment.

The way to evaluate the value proposition of Whole Life is by evaluating the lost opportunity cost of premiums paid for insurance, and the benefits of lifetime and at death liquidity.
I've been waiting over 5 years with bated breath for someone to say that!
-- Dan

Offline aygart

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Re: LIFE INSURANCE
« Reply #1001 on: April 03, 2024, 10:29:55 AM »
Life Insurance is NOT AN INVESTMENT!

Whole life insurance is a special and unique asset class. The IRR of WL (and PUAs which are different) should not be compared to any other investment.

The way to evaluate the value proposition of Whole Life is by evaluating the lost opportunity cost of premiums paid for insurance, and the benefits of lifetime and at death liquidity.

Which is why an investment advisor is the wrong person to discuss it with and the below is a legitimate question.

Do you go to financial advisors for medical advice?

Feelings don't care about your facts

Offline Mordyk

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Re: LIFE INSURANCE
« Reply #1002 on: April 03, 2024, 10:45:02 AM »
Life Insurance is NOT AN INVESTMENT!

Whole life insurance is a special and unique asset class. The IRR of WL (and PUAs which are different) should not be compared to any other investment.

The way to evaluate the value proposition of Whole Life is by evaluating the lost opportunity cost of premiums paid for insurance, and the benefits of lifetime and at death liquidity.
I agree. Although like 85% of life insurance agents didnt get that memo.
#TYH

Offline avadah

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Re: LIFE INSURANCE
« Reply #1003 on: April 03, 2024, 02:48:09 PM »
Based on your questions, it sounds like wealth accumulation is an objective here. Have you already maxed out contributions to tax qualified accounts? With a good plan, the IRA, 401k, and HSA are much more efficient at building wealth than an insurance product (subject to their annual contribution limits). This conversation shouldn't begin until those have been maxed out.
Its part of the objective. I saw those terms earlier in the thread and didn't know what they mean.

run your own numbers. an agent will promise you xyz returns.  take out a calculator and prove them wrong. usually the math just doesn't add up.  and once they start with "its the best forced savings" then you know they got nothing on your numbers
What do you mean?

Offline farmbochur

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Re: LIFE INSURANCE
« Reply #1004 on: April 03, 2024, 02:59:57 PM »


Its part of the objective.
Ok, so first max out those tax qualified accounts. What's the other part of the objective?
Risk is opportunity

Online ExGingi

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Re: LIFE INSURANCE
« Reply #1005 on: April 03, 2024, 07:00:56 PM »
Classic strawman argument.

Do you actually expect me to refute it point by point?  Do Doctors or dentists take the time and effort to refute medical advice given by non-medical professionals who render free medical advice?

You might think you are Mr. knowitall, but to borrow a term from a totally different area: תכלית הידיעה שלא נדע. Or in other words, when discussing something, a person who isn't properly trained, tested, and subject to regulatory supervision might have partial knowledge or understanding, which could be worse than no knowledge. A truly knowledgeable person knows what he knows, and where to defer to someone with more specialized knowledge.
I've been waiting over 5 years with bated breath for someone to say that!
-- Dan

Online ExGingi

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Re: LIFE INSURANCE
« Reply #1006 on: April 03, 2024, 07:03:19 PM »
I agree. Although like 85% of life insurance agents didnt get that memo.

You are making a baseless statement. How many agents have you personally spoken to about Whole Life?
I've been waiting over 5 years with bated breath for someone to say that!
-- Dan

Offline Alexsei

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Re: LIFE INSURANCE
« Reply #1007 on: April 04, 2024, 12:58:34 PM »
Based on your questions, it sounds like wealth accumulation is an objective here. Have you already maxed out contributions to tax qualified accounts? With a good plan, the IRA, 401k, and HSA are much more efficient at building wealth than an insurance product (subject to their annual contribution limits). This conversation shouldn't begin until those have been maxed out.
As an expat taking advantage of the FEIE I cannot contribute to an IRA is WL my next best option?
Party over country.

Online ExGingi

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Re: LIFE INSURANCE
« Reply #1008 on: April 04, 2024, 01:38:33 PM »
As an expat taking advantage of the FEIE I cannot contribute to an IRA is WL my next best option?

Permanent life insurance cash value has similar (but different in several aspects) tax treatment to a ROTH IRA. There is also no IRS reporting unless it becomes a MEC. So a maximum funded permanent plan could be a good wealth building vehicle. WL is great for fixed guaranteed values with upside from dividends, VUL or IUL could provide market exposure or market linked exposure (IUL isn't invested in the market, but returns are tied to market performance).
I've been waiting over 5 years with bated breath for someone to say that!
-- Dan

Offline aygart

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Re: LIFE INSURANCE
« Reply #1009 on: April 04, 2024, 01:41:08 PM »
As an expat taking advantage of the FEIE I cannot contribute to an IRA is WL my next best option?
Life Insurance is NOT AN INVESTMENT!

Feelings don't care about your facts

Offline Alexsei

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Re: LIFE INSURANCE
« Reply #1010 on: April 04, 2024, 02:10:24 PM »
Party over country.

Offline Alexsei

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Re: LIFE INSURANCE
« Reply #1011 on: April 04, 2024, 02:12:02 PM »
@ExGingi what are your thoughts on this? (not my age, not my shoe size..)
« Last Edit: April 04, 2024, 02:15:35 PM by Alexsei »
Party over country.

Offline aygart

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Re: LIFE INSURANCE
« Reply #1012 on: April 04, 2024, 02:17:36 PM »
Feelings don't care about your facts

Online ExGingi

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Re: LIFE INSURANCE
« Reply #1013 on: April 04, 2024, 08:07:54 PM »
@ExGingi what are your thoughts on this? (not my age, not my shoe size..)


Why do my thoughts matter? I think you should be asking @Mordyk @farmbochur and anybody else who refuses to acknowledge the attractiveness of Whole Life for their thoughts.

I'm assuming it's a non-MEC. I have designed similar policies. The drawback of this design is the lower cap on premiums/PUA paid in, especially in later years.
I've been waiting over 5 years with bated breath for someone to say that!
-- Dan

Offline Alexsei

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Re: LIFE INSURANCE
« Reply #1014 on: April 04, 2024, 09:16:11 PM »
Why do my thoughts matter? I think you should be asking @Mordyk @farmbochur and anybody else who refuses to acknowledge the attractiveness of Whole Life for their thoughts.

I'm assuming it's a non-MEC. I have designed similar policies. The drawback of this design is the lower cap on premiums/PUA paid in, especially in later years.
Thanks, I understand this is a new product from MassMutual, is it much better than other products?
To your comment, can you elaborate a bit more? Do you mean lower cap on potential to buy more insurance in the future?

 @farmbochur @Mordyk as I don't have access to IRA, what alternative do I have besides WL for a tax free financial security vehicle?
Party over country.

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Re: LIFE INSURANCE
« Reply #1015 on: April 04, 2024, 09:29:41 PM »
Thanks, I understand this is a new product from MassMutual, is it much better than other products?
To your comment, can you elaborate a bit more? Do you mean lower cap on potential to buy more insurance in the future?

 @farmbochur @Mordyk as I don't have access to IRA, what alternative do I have besides WL for a tax free financial security vehicle?

8 pay is a relatively new product, but a similar design can be achieved with other products. The point of this design is a tiny WL base policy, with lots of PUAs and a term rider to avoid becoming a MEC. I created similar designs for some of my kids using a 10-pay base policy. Once that was paid up I got them another more traditional policy where more benefits can be secured, despite lower early cash value accumulation.
I've been waiting over 5 years with bated breath for someone to say that!
-- Dan

Offline farmbochur

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Re: LIFE INSURANCE
« Reply #1016 on: April 04, 2024, 09:51:43 PM »
Thanks, I understand this is a new product from MassMutual, is it much better than other products?
To your comment, can you elaborate a bit more? Do you mean lower cap on potential to buy more insurance in the future?

 @farmbochur @Mordyk as I don't have access to IRA, what alternative do I have besides WL for a tax free financial security vehicle?
Several of options depending on the circumstances (and WL is certainly among them). Non-qualified accounts are effectively tax free if the investments avoid kicking off ST gains and your income is within the 0% LT cap gain range.
Risk is opportunity

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Re: LIFE INSURANCE
« Reply #1017 on: April 04, 2024, 09:57:48 PM »
Several of options depending on the circumstances (and WL is certainly among them). Non-qualified accounts are effectively tax free if the investments avoid kicking off ST gains and your income is within the 0% LT cap gain range.

A classical case of letting the tax tail wag the dog. Make sure your income is low enough so you don't owe taxes.

You say several options but failed to mention even one (other than paying lip service to acknowledge the benefit of WL in a situation where a ROTH IRA isn't available) with similar tax treatment and liquidity.
I've been waiting over 5 years with bated breath for someone to say that!
-- Dan

Offline Alexsei

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Re: LIFE INSURANCE
« Reply #1018 on: April 04, 2024, 10:39:43 PM »
Several of options depending on the circumstances (and WL is certainly among them). Non-qualified accounts are effectively tax free if the investments avoid kicking off ST gains and your income is within the 0% LT cap gain range.
I should hope I'll be in the 0% bracket when time comes to cash out? Or should I make sure to lose my job just for that one year? I get your point about "potential" to avoid taxes, but when I save up hard earned money I want to avoid as much as "what ifs" as possible.
But many people could probably rely on this if their job positions and earnings are steady and slowly trailing inflation as the 0% limit also increases accordingly.
Party over country.

Online ExGingi

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Re: LIFE INSURANCE
« Reply #1019 on: April 04, 2024, 10:51:41 PM »
I should hope I'll be in the 0% bracket when time comes to cash out? Or should I make sure to lose my job just for that one year? I get your point about "potential" to avoid taxes, but when I save up hard earned money I want to avoid as much as "what ifs" as possible.
But many people could probably rely on this if their job positions and earnings are steady and slowly trailing inflation as the 0% limit also increases accordingly.

So I guess for some people planning for poverty is a financial plan (it is definitely a Medicaid planning technique used for long-term-care purposes).
I've been waiting over 5 years with bated breath for someone to say that!
-- Dan