Financial Planner

[Barryg]

I was looking at $1M not taxable (Roth) vs. $1.3333M taxable (traditional) with a big ? as to what the tax rate would be at that time. I was just trying to add a pro or con as it would seem that neither would have a large advantage.
The way most people look at it is what if I took out (for example) $50k a year to supplement retirement income? What tax bracket will I be in (at age 65)?
However, I think it would be very relevant and wise not to be STUCK at not being able to access my own money if there is a lucrative investment. Ldaati the HaChacham Einav Brosho approach would be to be liquid and have easy access to my money if needed...

[yos9694]

AFAIK Custom WL is a NY life product, unless you're referring to something else... Why would a reg WL be difficult to use as retirement? I'm pretty certain that if someone wanted to, for example, put exactly $5000/year for 35 years, into a reg WL, they may come out with a random amount of face value in ins. plan, but how difficult could this possibly be??

I think he means that a Limited Pay WL product is easier to deal with for this purpose than a Lifetime Pay, regardless of the company of issue. If you have premiums due during your draw-down phase, it can be messy and/or hard to understand.

[yos9694]

>>>>>>>>>>>>>I find it interesting that you have not come to utilize either an annuity tradtional/immediate or an insurance policy to help anyone.

Fixed annuities have their place in the marketplace.
Variable annuities and insurance policies marketed as investments are a giant load of crap for the people who buy them (and super lucrative for the ones who sell them).

That may be true for clients of modest means or the slightly affluent, who are able to satisfy their tax advantaged savings goals with 401k, IRA, 529, etc. When you start to work with the extremely affluent or wealthier, maxing out the usual tax advantaged savings vehicles doesn't even come close to meeting their needs, and VA/LI becomes very logical.

[Dan]

That may be true for clients of modest means or the slightly affluent, who are able to satisfy their tax advantaged savings goals with 401k, IRA, 529, etc. When you start to work with the extremely affluent or wealthier, maxing out the usual tax advantaged savings vehicles doesn't even come close to meeting their needs, and VA/LI becomes very logical.

Logical for the broker, no doubt
I've heard the commissions paid are just insane.

[LAXtraveler]

That may be true for clients of modest means or the slightly affluent, who are able to satisfy their tax advantaged savings goals with 401k, IRA, 529, etc. When you start to work with the extremely affluent or wealthier, maxing out the usual tax advantaged savings vehicles doesn't even come close to meeting their needs, and VA/LI becomes very logical.

I think your sentiments are correct here.  LI can have its place among other tax/estate planning mechanisms if the person/family is in need of such an investment vehicle. I think you will find many estate planning attorneys who agree with this too.

[Super Speed]

I have money just sitting in my savings account doing nothing for me, any ideas how or where to invest it?

[yos9694]

Logical for the broker, no doubt
I've heard the commissions paid are just insane.

Commissions for VA are 3% of the deposit, same as any front loaded mutual fund. Not insane at all. While you may personally prefer no load funds, front load funds make sense to other people.

Commissions on life insurance could be up to the full first year premium, but thats between the insurance company and the broker. The insurance product still has to perform for the client and it does, as long as you have anything but a short horizon for investing.

Again, I wouldnt recommend either of these as investments unless the client already is fully funding other tax advantaged vehicles first.

[yos9694]

I think your sentiments are correct here.  LI can have its place among other tax/estate planning mechanisms if the person/family is in need of such an investment vehicle. I think you will find many estate planning attorneys who agree with this too.

Estate planning is a completely different topic and far more complex. We're discussing tax planning for retirement, which is focused on the cash value of the policy, not the death benefit.

[Dan]

Commissions on life insurance could be up to the full first year premium, but thats between the insurance company and the broker. The insurance product still has to perform for the client and it does, as long as you have anything but a short horizon for investing.

Let me take a wild guess, you sell/broker WL insurance?

[gpapadop]

If I had a Vanilla Reload card for every time I have seen or heard life insurance with investment in the same sentence

[yos9694]

Let me take a wild guess, you sell/broker WL insurance?

I don't.

[Barryg]

I think he means that a Limited Pay WL product is easier to deal with for this purpose than a Lifetime Pay, regardless of the company of issue. If you have premiums due during your draw-down phase, it can be messy and/or hard to understand.

Or he could just answer for himself...

[mordyl19]

>>>>>>>>>>>>>I find it interesting that you have not come to utilize either an annuity tradtional/immediate or an insurance policy to help anyone.

Fixed annuities have their place in the marketplace.
Variable annuities and insurance policies marketed as investments are a giant load of crap for the people who buy them (and super lucrative for the ones who sell them).

I did not say that Whole Life Insurance and Annuities are investments. I was questioning your statement when you said that they are "crap" products.

[mordyl19]

Logical for the broker, no doubt
I've heard the commissions paid are just insane.

Yes logical and lucky to have the chance to do something like that. Commisions on anything really are insane but you hear about the insurance side more often than basic trades.

[mordyl19]

With all of this fancy investment, tax planning, estate planning, and return talk using Insurance, has anyone just bought insurance to protect their family or to use the product for the actual use of the product? Or is that just a crazy idea?

[yos9694]

With all of this fancy investment, tax planning, estate planning, and return talk using Insurance, has anyone just bought insurance to protect their family or to use the product for the actual use of the product? Or is that just a crazy idea?

Term?

[mordyl19]

Term or Whole Life, but you bought it not for the "investment" or tax aspect but rather, you wanted life insurance for insurance.

[skyguy918]

Term or Whole Life, but you bought it not for the "investment" or tax aspect but rather, you wanted life insurance for insurance.

If your only goal is the insurance aspect, then you want term. There may be some UL products out there that are essentially term for life, but even that is not usually a good option for pure insurance needs because the need decreases after a certain age. By its very definition WL has an investment component to it.

[mordyl19]

If your only goal is the insurance aspect, then you want term. There may be some UL products out there that are essentially term for life, but even that is not usually a good option for pure insurance needs because the need decreases after a certain age. By its very definition WL has an investment component to it.

That is true by its very definition whole life has an investment aspect. One might say they want insurance but do not want to contribute to a rental. He might like to buy it.  I use the example with your house, You could rent your house (Term) or buy your house (WL). Within purchasing and not renting the house you build equity (investment aspect) but you live there and its not being flipped. (used for the insurance not the investment) 

[skyguy918]

That is true by its very definition whole life has an investment aspect. One might say they want insurance but do not want to contribute to a rental. He might like to buy it.  I use the example with your house, You could rent your house (Term) or buy your house (WL). Within purchasing and not renting the house you build equity (investment aspect) but you live there and its not being flipped. (used for the insurance not the investment)

Not a very good analogy, always hated it. Generally speaking, the investment/equity aspect is only worthwhile if you're truly in need of/taking advantage of the tax vehicle aspect.

Most people just need the insurance aspect, and 'renting' makes a lot more sense.