Author Topic: Financial Planner  (Read 6795 times)

Offline mordyl19

  • Dansdeals Gold Elite
  • ***
  • Join Date: May 2013
  • Posts: 195
  • Total likes: 0
  • DansDeals.com Hat Tips 0
  • Gender: Male
    • View Profile
    • Work Website
  • Location: Miami Beach
  • Programs: SPG Gold, Hyatt Gold,
Re: Financial Planner
« Reply #60 on: August 14, 2013, 04:20:41 PM »
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.
why does renting make more sense? The equity can be used for beneficial things other than being truly in need.
I am not 100% sure about this. But I am going to click it anyway.

Online skyguy918

  • Dansdeals Presidential Platinum Elite
  • ********
  • Join Date: Mar 2011
  • Posts: 3136
  • Total likes: 304
  • DansDeals.com Hat Tips 1
  • Gender: Male
    • View Profile
  • Location: Queens, NY
Re: Financial Planner
« Reply #61 on: August 14, 2013, 07:05:24 PM »
why does renting make more sense? The equity can be used for beneficial things other than being truly in need.

Because on the whole it's not as efficient (and ultimately as lucrative) as other investments, the exception being when you're fully funded in all your other tax-advantaged options. Additionally, term is the only market where competition has really brought prices down and reduced profit margins.

If they were to do away with the tax advantages, most likely the only market that would survive is term.

Offline mordyl19

  • Dansdeals Gold Elite
  • ***
  • Join Date: May 2013
  • Posts: 195
  • Total likes: 0
  • DansDeals.com Hat Tips 0
  • Gender: Male
    • View Profile
    • Work Website
  • Location: Miami Beach
  • Programs: SPG Gold, Hyatt Gold,
Re: Financial Planner
« Reply #62 on: August 15, 2013, 11:55:33 AM »
Because on the whole it's not as efficient (and ultimately as lucrative) as other investments, the exception being when you're fully funded in all your other tax-advantaged options. Additionally, term is the only market where competition has really brought prices down and reduced profit margins.

If they were to do away with the tax advantages, most likely the only market that would survive is term.
So there is no one or very few people who want it as the insurance for more than say 20-30 years? and would you not care which company sold you the insurance if it was term?
I am not 100% sure about this. But I am going to click it anyway.

Online yos9694

  • Dansdeals Platinum Elite + Lifetime Gold Elite
  • ******
  • Join Date: Aug 2012
  • Posts: 946
  • Total likes: 112
  • DansDeals.com Hat Tips 6
  • Gender: Male
    • View Profile
  • Location: Not Brooklyn
Re: Financial Planner
« Reply #63 on: August 15, 2013, 12:26:06 PM »
If they were to do away with the tax advantages, most likely the only market that would survive is term.

+1. Or at the very least, the other life insurance products would need to be redesigned to survive.

And to correct a misconception, Whole Life is not by definition an investment as some has suggested. It is by definition a pre-funding of your annual insurance costs- because you pay a level premium in every year but your insurance costs increase every year. That pre-funding belongs to the policy owner by law, so you end up with a de-facto investment.

Online yos9694

  • Dansdeals Platinum Elite + Lifetime Gold Elite
  • ******
  • Join Date: Aug 2012
  • Posts: 946
  • Total likes: 112
  • DansDeals.com Hat Tips 6
  • Gender: Male
    • View Profile
  • Location: Not Brooklyn
Re: Financial Planner
« Reply #64 on: August 15, 2013, 12:34:17 PM »
So there is no one or very few people who want it as the insurance for more than say 20-30 years? and would you not care which company sold you the insurance if it was term?

It depends on what you consider an "insurance need". The most obvious example is income replacement for a family - if the breadwinner dies then the family needs to get money to make up for the loss of income or they end up taking charity. That is a temporary need because families go through stages and chances are that in 20+ years the dependents will be grown up enough to fend for themselves and the income replacement need is gone. Term fits this need, whole life would be a waste of money.

Why would you not care about the company that sold you the insurance if it was term? 20 years is a long time and you want to be as certain as possible that the company you bought from will be around to pay if you need them to.

Online skyguy918

  • Dansdeals Presidential Platinum Elite
  • ********
  • Join Date: Mar 2011
  • Posts: 3136
  • Total likes: 304
  • DansDeals.com Hat Tips 1
  • Gender: Male
    • View Profile
  • Location: Queens, NY
Re: Financial Planner
« Reply #65 on: August 15, 2013, 12:38:02 PM »
So there is no one or very few people who want it as the insurance for more than say 20-30 years? and would you not care which company sold you the insurance if it was term?

Well, first of all, you have to think about what your insurance need is. If you're married with kids and a house, you want to make sure that those that survive you can afford to keep the house, pay for education, weddings, etc in the event that you and your stream of future income are gone. But once you're 60-70, your kids may all be out of school and married, your house may be paid off, and there's not much left to insure for. Not to mention the fact that at that point your passing may not mean the cessation of an income stream because it may come from sources that don't cease (at least not entirely) with your passing. There are of course other considerations, like using insurance as an estate vehicle, but for the most part you don't need life insurance once you're older and retired.

Even if you did want lifetime (ie permanent) insurance at a fixed premium, there are Universal Life products that are designed to fill this need relatively cheaply. As far as buying term, this is a tough question. You can definitely save some money going with just any company. The chief concern would be the financial strength of the company, which will play a role in whether they'll be around to pay the claim down the road. Some people will tell you this is a minute risk, especially with the guarantee associations backing, others will say it's a real factor that you have to account for. Another concern is the issue of convertibility.  Almost everyone will agree that which company you choose matters more for permanent insurance. If you're buying term thinking, worst case if I get sick (which would cause your premiums to skyrocket at the end of the term and possibly prevent you from getting a new policy) I can always convert to permanent, you might want to buy term with a company that you'd feel comfortable owning permanent insurance with.

Online skyguy918

  • Dansdeals Presidential Platinum Elite
  • ********
  • Join Date: Mar 2011
  • Posts: 3136
  • Total likes: 304
  • DansDeals.com Hat Tips 1
  • Gender: Male
    • View Profile
  • Location: Queens, NY
Re: Financial Planner
« Reply #66 on: August 15, 2013, 12:39:11 PM »
It depends on what you consider an "insurance need". The most obvious example is income replacement for a family - if the breadwinner dies then the family needs to get money to make up for the loss of income or they end up taking charity. That is a temporary need because families go through stages and chances are that in 20+ years the dependents will be grown up enough to fend for themselves and the income replacement need is gone. Term fits this need, whole life would be a waste of money.

Why would you not care about the company that sold you the insurance if it was term? 20 years is a long time and you want to be as certain as possible that the company you bought from will be around to pay if you need them to.

The warning popped up when I was replying to mordyl, but I was to lazy to go back and edit out the parts of my post you already mentioned.

Online yos9694

  • Dansdeals Platinum Elite + Lifetime Gold Elite
  • ******
  • Join Date: Aug 2012
  • Posts: 946
  • Total likes: 112
  • DansDeals.com Hat Tips 6
  • Gender: Male
    • View Profile
  • Location: Not Brooklyn
Re: Financial Planner
« Reply #67 on: August 15, 2013, 02:44:06 PM »
Some people will tell you this is a minute risk, especially with the guaranty associations backing, others will say it's a real factor that you have to account for.

IFYP