Be Wary of Whole Life threads

Non-investing personal finance issues including insurance, credit, real estate, taxes, employment and legal issues such as trusts and wills
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LadyGeek
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Re: Be Wary of Whole Life threads

Post by LadyGeek » Wed Jan 18, 2012 9:35 pm

Anon1234 wrote:Very impressive that you are knocking them down at that rate. Thanks for the effort.
How do you ID spammers with 0 posts? Maybe they don't count once deleted?

You're welcome. Sorry, we don't disclose how spammers are ID'd. Then, they would know, too. :wink:
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Re: Be Wary of Whole Life threads

Post by Mel Lindauer » Thu Jan 19, 2012 1:18 am

LadyGeek wrote:
Anon1234 wrote:Very impressive that you are knocking them down at that rate. Thanks for the effort.
How do you ID spammers with 0 posts? Maybe they don't count once deleted?

You're welcome. Sorry, we don't disclose how spammers are ID'd. Then, they would know, too. :wink:


Good answer, LadyGeek.

And if we told you, Anon1234, we'd have to kill you! :D
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Re: Be Wary of Whole Life threads

Post by Mudpuppy » Thu Jan 19, 2012 4:48 am

If spammers here are as... simplistic... as I've seen on other websites, then they can be pretty easy to spot.

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Post by cycleProf » Thu Jan 19, 2012 3:57 pm

Steelersfan wrote:Good heads up and I hope we posters continue to alert the Mods about these types of PM's.

The only thing better than the quality of the posters on this site are the quality of the moderators.

Kudos!!!!!!


+1

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Re:

Post by oragne lovre » Tue Feb 07, 2012 6:26 pm

Steelersfan wrote:Or, as that great American philosopher, Woody Allen, said:

"Never argue with a fool. They will lower you to their level and then beat you with experience."

He wrote this well before the days of internet forums, or he might have had something to include about moderators and message boards.

:lol:


This is an excellent quote worth remembering.
Thanks.
The finest, albeit the most difficult, of all human achievements is being reasonable.

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Re: Be Wary of Whole Life threads

Post by Deepsea » Tue Mar 06, 2012 11:24 pm

Hopefully this question is not against the rules.

Why can't there be an intelligent discussion about the pros and cons of whole life, term, and or a blended product ?

We can talk about umbrella insurance, car insurance, and life insurance.....also homeowners.

I understand that the folks here are wary of sales pitches, and all that.....but an intelligent discussion throwing out different points of views, and letting various people make their minds about the merits or lack there of whatever is being discussed.

Or is it against the rules to bring up different questions or opinions about Life Insurance ?

Thanks (not trying to break any rules)

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Re: Be Wary of Whole Life threads

Post by Alex Frakt » Wed Mar 07, 2012 12:02 am

Deepsea wrote:Why can't there be an intelligent discussion about the pros and cons of whole life, term, and or a blended product ?

We can talk about umbrella insurance, car insurance, and life insurance.....also homeowners.

I understand that the folks here are wary of sales pitches, and all that.....but an intelligent discussion throwing out different points of views, and letting various people make their minds about the merits or lack there of whatever is being discussed.

Or is it against the rules to bring up different questions or opinions about Life Insurance ?

I take it from this question that you still plan on embarking on a new career as an insurance agent?

Anyway, the forum posting guidelines offer the answer to your question:
This subforum is for personal financial issues that don't involve investments. Examples of acceptable topics are:

- insurance
...

Note that topics must be directly connected to your (or your friend's or family's) financial life. General comments or complaints about these topics will be removed.

So if someone has a question about whole life or you believe that whole life is a potential answer to a question they do have, you may certainly respond with its pros and cons. But as far as insurance agents posting new threads dedicated to discussions of whole life or any other type of product - that is not acceptable here.

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Re: Be Wary of Whole Life threads

Post by Deepsea » Wed Mar 07, 2012 12:18 pm

Actually have no idea yet if I will pursue this course of action---

i.e. trying to sell life insurance. For me personally at the time I bought it---it worked out well.

However, both people that I seriously talked about it with ( interviewed, and or seriously discussed), did make me reconsider the possibility of pursuing this at least on a part time basis.

I still think the product has its merits, but everyone has to make up their own minds about the suitability of any investment they undertake, and any and all financial planning they do.

It's a true shame that you can't get paper EE and I bonds anymore (will be getting a paper I bond with my tax return refund).

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Re: Be Wary of Whole Life threads

Post by dhodson » Wed Mar 07, 2012 12:25 pm

whole life that is purchased for any primary reason that isnt a death benefit is a mistake. It is discussed here time and time again. You likely dont know enough about insurance to sell it without being dangerous although that is typical of most agents. The percentage of people who should buy permanent insurance is less than 1%. That doesnt matter if you blend it, max PUAs, buy from non direct recognition etc. No matter how you slice it, its a horrible investment. Its fine for permanent insurance but almost nobody needs that.

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Re: Be Wary of Whole Life threads

Post by fishndoc » Fri Mar 09, 2012 8:05 pm

Deepsea wrote:Why can't there be an intelligent discussion about the pros and cons of whole life, term, and or a blended product ?


Sure, but really not much to say or discuss:
For permanent insurance needs (disabled child, buy/sell or estate taxes for a business or farm), buy permanent insurance.
For temporary insurance needs (the vast majority of us), buy term.

The words "Insurance" and "Investment" should almost never be used together.
" Successful investing involves doing just a few things right, and avoiding serious mistakes." - J. Bogle

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Brief and to the point !

Post by Taylor Larimore » Fri Mar 09, 2012 8:48 pm

fishndoc wrote:
Deepsea wrote:Why can't there be an intelligent discussion about the pros and cons of whole life, term, and or a blended product ?


Sure, but really not much to say or discuss:
For permanent insurance needs (disabled child, buy/sell or estate taxes for a business or farm), buy permanent insurance.
For temporary insurance needs (the vast majority of us), buy term.

The words "Insurance" and "Investment" should almost never be used together.


Hi fishndoc:

Thank you for succinctly describing the difference between permanent and termporary insurance.

Best wishes.

Taylor
(former insurance agent)
"Simplicity is the master key to financial success." -- Jack Bogle

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Re: Be Wary of Whole Life threads

Post by Dave C. » Wed Mar 21, 2012 8:53 pm

nisiprius wrote:
LadyGeek wrote:I didn't know what a "shill" was.
Originally, a shill was someone at a carnival game who's in cahoots with the game operator. The game is rigged and the operator lets the shill pretend to win and get a prize so as to encourage others to play. Or the shill may simply stroll around the carnival carrying a huge stuffed toy that he or she has apparently won, to arouse the greed of small children.

The shill may be someone who pretends to be betting on or participating in a three-card monte game. The purpose is to encourage the mark (victim) to see that lots of people are playing, so it must be OK.

Remembering that "you can't cheat an honest man," the shill may also encourage the mark to cheat the dealer. the dealer's technique isn't good, or the card has a visible scratch on it or something, so it's easy to win. The shill wants to bring the mark into partnership with him for one last giant bet in which they are going to clean out the dealer.

All strictly from reading old novels and such. Never seen a real three-card-monte game and the argot may be out of date. Of course I have seen shills carrying huge stuffed toys around carnivals, and I was one of the little kids that desperately wanted to win one.[/quote)

Funny thing....I saw the three-card-monte operate with a shill near pier 39 in San Francisco about 20 years ago! It was very cool to watch! A bystander bet $10, the operator did the three card switch-a-roo...the bystander picked the correct card and won his $10 bucks. I was laughing to myself watching this, but believe it or not, my friend (also watching) thought it was so easy....he bet $20 bucks! Not only did he lose his 20, but he dug into his wallet to try again! I put the nix on his second attempt...but it just goes to show a person like my friend who owns and operates a thriving advertisng agency in Chicago could be so fooled so easily.
Who was the guy who said....." a sucker is born every minute". :shock: 8-)
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Re: Be Wary of Whole Life threads

Post by dratkinson » Thu Mar 22, 2012 10:13 am

LadyGeek wrote:I didn't know what a "shill" was.


You will also find shills working at auctions. They are excited to win the first few items sold and get the crowd in the mood to buy more for too much---like a warm-up comedian or opening act.
d.r.a, not dr.a. | I'm a novice investor, you are forewarned.

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Re: Be Wary of Whole Life threads

Post by bluemarlin08 » Mon Mar 26, 2012 5:56 pm

There are also shills in Vegas.

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Re: Be Wary of Whole Life threads

Post by flgatorray » Wed Mar 28, 2012 1:24 pm

Where are the facts that back up your conclusion? Only thing I read here were opinions.

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Re: Be Wary of Whole Life threads

Post by flgatorray » Wed Mar 28, 2012 1:40 pm

fishndoc wrote:
Deepsea wrote:Why can't there be an intelligent discussion about the pros and cons of whole life, term, and or a blended product ?


Sure, but really not much to say or discuss:
For permanent insurance needs (disabled child, buy/sell or estate taxes for a business or farm), buy permanent insurance.
For temporary insurance needs (the vast majority of us), buy term.

The words "Insurance" and "Investment" should almost never be used together.



I agree with one thing you said. Insurance should not be considered a investment. To be considered a investment there must be a chance of loss.

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Re: Be Wary of Whole Life threads

Post by fishndoc » Wed Mar 28, 2012 2:28 pm

flgatorray wrote:
fishndoc wrote:
Deepsea wrote:Why can't there be an intelligent discussion about the pros and cons of whole life, term, and or a blended product ?


Sure, but really not much to say or discuss:
For permanent insurance needs (disabled child, buy/sell or estate taxes for a business or farm), buy permanent insurance.
For temporary insurance needs (the vast majority of us), buy term.

The words "Insurance" and "Investment" should almost never be used together.



I agree with one thing you said. Insurance should not be considered a investment. To be considered a investment there must be a chance of loss.

Well, there is certainly the possibility of loss with buying an insurance product - the company could go under and you could recover only part or possibly none of your dollars spent on the product. Or, the high fees could eat up so much of your money that the return on your dollars ends up being less than you would have received on a risk free investment such as US Treasuries, and you do not receive compensation for your loss of liquidity. Or, one could have an unexpected life event and need the money you have tied up in an insurance product, and then face a big loss due to early withdrawal.
So, one could certainly sustain a loss of money spent on buying insurance. But, I still don't think that makes an insurance policy a wise investment for the vast majority of us.

Perhaps it would be more accurate if I restated what I originally wrote as:
"The words 'insurance' and 'good investment" should never be used together".
" Successful investing involves doing just a few things right, and avoiding serious mistakes." - J. Bogle

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Re: Be Wary of Whole Life threads

Post by BruceM » Wed Mar 28, 2012 3:01 pm

flgatorray wrote: I agree with one thing you said. Insurance should not be considered a investment. To be considered a investment there must be a chance of loss.


That's correct....a CHANCE of a loss is an investment. With these insurance products, a loss is GUARANTEED, where the loss represents its real future value compared with what the marketing literature promised or implied.

BruceM

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Re: Be Wary of Whole Life threads

Post by dhodson » Wed Mar 28, 2012 3:06 pm

Actually when you look at lapse/surrender rates, most people do lose money. Permanent insurance is a money loser for most, a poor choice for some, a necessity for 0.1% of people.

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Re: Be Wary of Whole Life threads

Post by flgatorray » Wed Mar 28, 2012 6:18 pm

Funny how the Dalbar study shows that the average investor has earned only 2.3% over the past 25 years.

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Re: Be Wary of Whole Life threads

Post by dhodson » Wed Mar 28, 2012 6:38 pm

Actually it's not funny. It's likely do to other non fiduciary behavior. Unethical behavior by others isn't a legit excuse for what the insurance industry does and the return for most people with whole life is worse than that. It's sad to see what people use to justify pushing whole life.

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Boglehead investing results in above-average returns.

Post by Taylor Larimore » Wed Mar 28, 2012 6:40 pm

flgatorray wrote:Funny how the Dalbar study shows that the average investor has earned only 2.3% over the past 25 years.


A Boglehead, stay-the-course, index investor, is not average.

In his "Little Book of Common Sense Investing," Mr. Bogle wrote:

"During the quarter century (25 years) from 1980 to 2005, the return on the stock market, measured by the S&P 500 Index, averaged 12.5% per year. -- A $10,000 initial investment in the (Vanguard) index fund grew by a remarkable $170,800."


As a former life insurance salesman, I know that it is very misleading to suggest that any Whole Life Insurance Policy provided a superior return (unless the policyholder died first).

Best wishes.
Taylor
"Simplicity is the master key to financial success." -- Jack Bogle

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Re: Be Wary of Whole Life threads

Post by flgatorray » Wed Mar 28, 2012 6:54 pm

Guess he needs to revise his book to reflect 2008 when the S&P lost 37%! Since I have a Masters in Accounting then I should also advise you in 1980 the highest marginal tax rate was 70%. From 1980-1986 was 50%. Dividends used to be taxed at OI rates not CG. I'm sure you also know that it's not what you make but what you get to keep.

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Re: Be Wary of Whole Life threads

Post by yobria » Wed Mar 28, 2012 6:56 pm

flgatorray wrote:Funny how the Dalbar study shows that the average investor has earned only 2.3% over the past 25 years.


DALBAR makes its money selling these results to "financial advisors" who use it to prospect. Would be hard to imagine a more biased source. That's why they reach amusing conclusions like:

Investors who limit the time retention for investments erode the alpha created by professional investment management.


http://www.dalbar.com/Portals/dalbar/ca ... 040111.pdf

Yep, if we stupid indpendent investors just held on a little longer, we could gorge ourselves on all that professional management alpha.

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Re: Be Wary of Whole Life threads

Post by Mel Lindauer » Wed Mar 28, 2012 7:00 pm

flgatorray wrote:Funny how the Dalbar study shows that the average investor has earned only 2.3% over the past 25 years.


Funny (as in ironic) how an insurance person shows up on this very thread which is warning about life insurance shills and gets all defensive about the facts of life about insurance without disclosing the fact that they're actually in the business. Even though I've done the necessary checking and know the full story, even those who don't do any detective work at all will find it easy to identify that person on this thread.

I will say that we do have other insurance folks on this forum (and even on this thread) who tell it like it is, and I admire them for their honesty.
Best Regards - Mel | | Semper Fi

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Re: Be Wary of Whole Life threads

Post by Taylor Larimore » Wed Mar 28, 2012 7:02 pm

flgatorray wrote:Guess he needs to revise his book to reflect 2008 when the S&P lost 37%! Since I have a Masters in Accounting then I should also advise you in 1980 the highest marginal tax rate was 70%. From 1980-1986 was 50%. Dividends used to be taxed at OI rates not CG. I'm sure you also know that it's not what you make but what you get to keep.


flgatorray:

I am impressed with your masters Degree in Accounting.

Please tell us how life insurance profits are taxed at withdrawal compared with index fund profits at withdrawal.

Thank you and best wishes.
Taylor
"Simplicity is the master key to financial success." -- Jack Bogle

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Re: Be Wary of Whole Life threads

Post by flgatorray » Wed Mar 28, 2012 7:14 pm

I'm sure you are aware of how LI w/d are taxed, gains are taxed at OI. AS OF TODAY (stay tuned to tax laws because this will change), gains (if any) are taxed at CG rates. Just find it funny how everyone on here bashes WL insurance when they have no idea how it works. I never said that I did not sell WL insurance. I have nothing to hide. More of my income comes from investment products than insurance products. As in ANY business, there are people/companies that give the rest of their industry a bad rap.

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Re: Be Wary of Whole Life threads

Post by dhodson » Wed Mar 28, 2012 7:40 pm

I know more than 98% of agents

The bottom conclusion is its a horrible investment and likely even you know it.

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Re: Be Wary of Whole Life threads

Post by flgatorray » Wed Mar 28, 2012 7:48 pm

In today's environment a 2.45% GUARANTEED PRE TAX 5 year ROR is NOT A HORRIBLE INVESTMENT. This is the actual return for a 40 year old male purchasing a single premium whole life insurance policy today. I'm not 1 of the 98%. Move on...

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Re: Be Wary of Whole Life threads

Post by mephistophles » Wed Mar 28, 2012 7:59 pm

flgatorray wrote: Just find it funny how everyone on here bashes WL insurance when they have no idea how it works.


Hello flagatory,
I am a Chartered Life Underwriter with four plus decades in the life insurance business. I think I am reasonably familiar with how whole life insurance works, as are many of our regular posters here. My guess is that you already know that to be the case, and I do not intend to feed you further on this or any other thread.
I reiterate from my previous posts on this subject. Whole life insurance sold as an investment for living needs is almost never a good choice for consumers, and I can't think of one single Boglehead who would or should ever buy this product as an investment for living needs.
That said, your lack of knowledge about financial markets and investing in general is readily apparent.
ole meph

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Re: Be Wary of Whole Life threads

Post by flgatorray » Wed Mar 28, 2012 8:05 pm

mephistophles wrote:
flgatorray wrote: Just find it funny how everyone on here bashes WL insurance when they have no idea how it works.


Hello flagatory,
I am a Chartered Life Underwriter with four plus decades in the life insurance business. I think I am reasonably familiar with how whole life insurance works, as are many of our regular posters here. My guess is that you already know that to be the case, and I do not intend to feed you further on this or any other thread.
I reiterate from my previous posts on this subject. Whole life insurance sold as an investment for living needs is almost never a good choice for consumers, and I can't think of one single Boglehead who would or should ever buy this product as an investment for living needs.
That said, your lack of knowledge about financial markets and investing in general is readily apparent.
ole meph


Your facts are.....?????

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Re: Be Wary of Whole Life threads

Post by dhodson » Wed Mar 28, 2012 8:10 pm

The majority of people who purchase whole life lose money. That's a fact.

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Re: Be Wary of Whole Life threads

Post by flgatorray » Wed Mar 28, 2012 8:12 pm

That is your best fact??? Guess you like dealing with the other 98% that just have a "opinion" like the CLU poster above.

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Re: Be Wary of Whole Life threads

Post by dhodson » Wed Mar 28, 2012 8:22 pm

No such thing as best fact but the bottom line conclusions will always remain the same since there are no magical investments for insurance companies. He knows what he is talking about. You on the other hand want to promote lousy ideas bc such sales would benefit the insurance industry. You can try your garbage but it won't get far. Too many of us know the truth.

One should never take financial advise from an insurance agent. Too many of us have learned that the hard way. Most don't know what they are doing. Some do but have poor ethics. Any insurance agent promoting whole life as an investment is not a friend.

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What is a CLU ?

Post by Taylor Larimore » Wed Mar 28, 2012 8:47 pm

Guess you like dealing with the other 98% that just have a "opinion" like the CLU poster above.


According to Investopedia, this is a CLU:

The CLU® is widely considered to be the most respected insurance designation in the industry. This designation was created in 1927 by the American College in Bryn Mawr, Pa. The CLU®; has traditionally been pursued by agents who wish to specialize in life insurance for business or estate-planning purposes. The current course curriculum for the CLU® includes five required courses plus three elective courses.

Fundamentals of insurance planning
Life insurance law
Individual life insurance
Estate planning
Planning for business owners


Best wishes
Taylor
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Re: Be Wary of Whole Life threads

Post by flgatorray » Wed Mar 28, 2012 9:05 pm

GUARANTEED 2.45% 5 year return. Did I say guaranteed? Based on your definition of a CLU then I am sure he/she knows what that word means. :)

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Re: Be Wary of Whole Life threads

Post by norookie » Wed Mar 28, 2012 9:07 pm

flgatorray wrote:I'm sure you are aware of how LI w/d are taxed, gains are taxed at OI. AS OF TODAY (stay tuned to tax laws because this will change), gains (if any) are taxed at CG rates. Just find it funny how everyone on here bashes WL insurance when they have no idea how it works. I never said that I did not sell WL insurance. I have nothing to hide. More of my income comes from investment products than insurance products. As in ANY business, there are people/companies that give the rest of their industry a bad rap.
:oops: It's me you are correct SIR! Whole life insurance is as the kids say, "THE BOMB!" :P Thats a razz!
" Wealth usually leads to excess " Cicero 55 b.c

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Re: Be Wary of Whole Life threads

Post by HomerJ » Thu Mar 29, 2012 10:05 am

flgatorray wrote:GUARANTEED 2.45% 5 year return. Did I say guaranteed?


So you're saying that I can invest $50k into a whole life insurance policy today, and withdraw everything in 5 years, and I will have made 2.45% each year before tax? No penalties? What if I need to withdraw the money in 2 years?

Of course, I could get about 2% in a 5-year CD, FDIC insured, and pull my money out anytime (with a penalty on the interest, but never the capital).

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Re: Be Wary of Whole Life threads

Post by HomerJ » Thu Mar 29, 2012 10:07 am

flgatorray wrote:Guess he needs to revise his book to reflect 2008 when the S&P lost 37%!


Weird, I didn't lose any money from 2008 to today... Oh that's right, I didn't sell at the bottom. In fact, I bought more, and I'm quite a bit richer today BECAUSE of the crash.

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Re: Be Wary of Whole Life threads

Post by flgatorray » Thu Mar 29, 2012 10:21 am

rrosenkoetter wrote:
flgatorray wrote:GUARANTEED 2.45% 5 year return. Did I say guaranteed?


So you're saying that I can invest $50k into a whole life insurance policy today, and withdraw everything in 5 years, and I will have made 2.45% each year before tax? No penalties? What if I need to withdraw the money in 2 years?

Of course, I could get about 2% in a 5-year CD, FDIC insured, and pull my money out anytime (with a penalty on the interest, but never the capital).


That is correct. No penalties. The two year return of single premium WL is 2.12%. Best 5 year CD I found was 1.8%, two year rate on CD's are 1.26%.

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Re: Be Wary of Whole Life threads

Post by HomerJ » Thu Mar 29, 2012 10:26 am

flgatorray wrote:
rrosenkoetter wrote:
flgatorray wrote:GUARANTEED 2.45% 5 year return. Did I say guaranteed?


So you're saying that I can invest $50k into a whole life insurance policy today, and withdraw everything in 5 years, and I will have made 2.45% each year before tax? No penalties? What if I need to withdraw the money in 2 years?

Of course, I could get about 2% in a 5-year CD, FDIC insured, and pull my money out anytime (with a penalty on the interest, but never the capital).


That is correct. No penalties. The two year return of single premium WL is 2.12%. Best 5 year CD I found was 1.8%, two year rate on CD's are 1.26%.


Sweet! Who do I talk to buy a 2-year whole life policy that I can cash out in 2 years with no penalties and guarenteed 2.12% returns?

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Re: Be Wary of Whole Life threads

Post by flgatorray » Thu Mar 29, 2012 10:31 am

Call any one of the large mutual life insurance companies such as NWM, Mass Mutual, NY Life or Guardian.

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Re: Be Wary of Whole Life threads

Post by HomerJ » Thu Mar 29, 2012 10:52 am

flgatorray wrote:Call any one of the large mutual life insurance companies such as NWM, Mass Mutual, NY Life or Guardian.


Just to be clear, I could invest $100k in a singe-premium whole life policy that gives $X amount of life insurance, and cancel the policy in 2 years and withdraw $104,284 in cash?

Hate to bother some hard-working agent if that's not correct.

Because that's pretty sweet.... 2.12% return with some free life insurance for 2 years to boot... I wonder how they can afford to pay the agent's commission.

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Re: Be Wary of Whole Life threads

Post by flgatorray » Thu Mar 29, 2012 10:57 am

rrosenkoetter wrote:
flgatorray wrote:Call any one of the large mutual life insurance companies such as NWM, Mass Mutual, NY Life or Guardian.


Just to be clear, I could invest $100k in a singe-premium whole life policy that gives $X amount of life insurance, and cancel the policy in 2 years and withdraw $104,284 in cash?

Hate to bother some hard-working agent if that's not correct.

Because that's pretty sweet.... 2.12% return with some free life insurance for 2 years to boot... I wonder how they can afford to pay the agent's commission.



That is correct. The 2.12 return was based on a 40 yer old male. Could get a better rate if younger or a female.

fishndoc
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Re: Be Wary of Whole Life threads

Post by fishndoc » Thu Mar 29, 2012 11:11 am

flgatorray wrote:
rrosenkoetter wrote:
flgatorray wrote:Call any one of the large mutual life insurance companies such as NWM, Mass Mutual, NY Life or Guardian.


Just to be clear, I could invest $100k in a singe-premium whole life policy that gives $X amount of life insurance, and cancel the policy in 2 years and withdraw $104,284 in cash?

Hate to bother some hard-working agent if that's not correct.

Because that's pretty sweet.... 2.12% return with some free life insurance for 2 years to boot... I wonder how they can afford to pay the agent's commission.



That is correct. The 2.12 return was based on a 40 yer old male. Could get a better rate if younger or a female.

If the insurance company can pay that rate of return, why even bother to link it to life insurance? I assume the return would be even higher without the cost of life insurance?
And the other question that has to be asked: how can they give returns above the market rate? Obviously, higher risk because no FDIC insurance and the potential of another AIG is always there, but hope you can explain how they can make a profit by giving an investor such a higher than market return and still pay the agent, their overhead, and profit for their shareholders???

Sounds to good to be true...

Also interesting none of the legitimate agents who post here have not jumped in to confirm this offer.
" Successful investing involves doing just a few things right, and avoiding serious mistakes." - J. Bogle

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BruceM
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Re: Be Wary of Whole Life threads

Post by BruceM » Thu Mar 29, 2012 11:59 am

flgatorray wrote:GUARANTEED 2.45% 5 year return. Did I say guaranteed? Based on your definition of a CLU then I am sure he/she knows what that word means. :)


Why do insurance producers insist on using 'GUARANTEED', when what they mean to say is 'as long as we can pay it'. 'Gurarnteed', 'safety' and 'protections' are favorite marketing terms of the insurance industry that in reality, mean nothing except 'intent'.

And if a WL policy 'guarantees' a 2.12% return on a $100,000 single premium policy, why couldn't the policy attach to it the following schedule....

"The insurer guarantees that the cash surrender value of this policy will not be less than the amounts shown below at the completion of the year shown:

2012: $102,120.00
2013: $104,284.94
2014: $106,495.78
2015: $108,753.50
2016: $111.059.07

This represents the full value available to the insured. There will be no other charges, fees or other costs that will reduce the amounts shown"

And if the policy will provide higher returns due to higher market performance, then the above schedule would be rewritten with new future projected minimum surrender values at the start of each year.

Do insurance companies provide such written 'guarantee' schedules? If not, why not?

BruceM

flgatorray
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Re: Be Wary of Whole Life threads

Post by flgatorray » Thu Mar 29, 2012 12:15 pm

fishndoc wrote:
flgatorray wrote:
rrosenkoetter wrote:
flgatorray wrote:Call any one of the large mutual life insurance companies such as NWM, Mass Mutual, NY Life or Guardian.


Just to be clear, I could invest $100k in a singe-premium whole life policy that gives $X amount of life insurance, and cancel the policy in 2 years and withdraw $104,284 in cash?

Hate to bother some hard-working agent if that's not correct.

Because that's pretty sweet.... 2.12% return with some free life insurance for 2 years to boot... I wonder how they can afford to pay the agent's commission.



That is correct. The 2.12 return was based on a 40 yer old male. Could get a better rate if younger or a female.

If the insurance company can pay that rate of return, why even bother to link it to life insurance? I assume the return would be even higher without the cost of life insurance?



And the other question that has to be asked: how can they give returns above the market rate? Obviously, higher risk because no FDIC insurance and the potential of another AIG is always there, but hope you can explain how they can make a profit by giving an investor such a higher than market return and still pay the agent, their overhead, and profit for their shareholders???

Sounds to good to be true...

Also interesting none of the legitimate agents who post here have not jumped in to confirm this offer.



Mutual Insurance companies have no shareholders.

flgatorray
Posts: 104
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Re: Be Wary of Whole Life threads

Post by flgatorray » Thu Mar 29, 2012 12:17 pm

BruceM wrote:
flgatorray wrote:GUARANTEED 2.45% 5 year return. Did I say guaranteed? Based on your definition of a CLU then I am sure he/she knows what that word means. :)


Why do insurance producers insist on using 'GUARANTEED', when what they mean to say is 'as long as we can pay it'. 'Gurarnteed', 'safety' and 'protections' are favorite marketing terms of the insurance industry that in reality, mean nothing except 'intent'.

And if a WL policy 'guarantees' a 2.12% return on a $100,000 single premium policy, why couldn't the policy attach to it the following schedule....

"The insurer guarantees that the cash surrender value of this policy will not be less than the amounts shown below at the completion of the year shown:

2012: $102,120.00
2013: $104,284.94
2014: $106,495.78
2015: $108,753.50
2016: $111.059.07

This represents the full value available to the insured. There will be no other charges, fees or other costs that will reduce the amounts shown"

And if the policy will provide higher returns due to higher market performance, then the above schedule would be rewritten with new future projected minimum surrender values at the start of each year.

Do insurance companies provide such written 'guarantee' schedules? If not, why not?

BruceM


Your math is correct for the second year but the first year return is negative based on the costs. Those figures are net of all surrender charges

bluemarlin08
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Re: Be Wary of Whole Life threads

Post by bluemarlin08 » Thu Mar 29, 2012 4:12 pm

My dad is an agent for one of the big mutuals and he showed me some illustrations about this product. From my memory the rates are not guaranteed, projected. That was last year, maybe there are some better products around now that will give you this guaranteed, what particular company are you referring to?

flgatorray
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Re: Be Wary of Whole Life threads

Post by flgatorray » Thu Mar 29, 2012 4:35 pm

bluemarlin08 wrote:My dad is an agent for one of the big mutuals and he showed me some illustrations about this product. From my memory the rates are not guaranteed, projected. That was last year, maybe there are some better products around now that will give you this guaranteed, what particular company are you referring to?



All 4 of the companies I mentioned earlier have guaranteed cash value in second year that's a positive ROR.

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