Variable Universal Life Insurance Experts - Seems Like a No Brainer - Please Read

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Stinky
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Re: Variable Universal Life Insurance Experts - Seems Like a No Brainer - Please Read

Post by Stinky »

FoolStreet wrote: Tue Sep 15, 2020 1:46 am Lots of 37%ers on Bogleheads. No one recommends VUL. Saying there are benefits seems to be more of a theoretical math problem that you work on for fun, but don’t actually want to implement. .

Honestly, if there really is a reason to buy one, you nor anyone else is explaining why.
LFKB wrote: Tue Sep 15, 2020 12:55 am I see the fees. I see the commissions. The after tax returns are still higher.
LFKB, if you want additional useful quantitative or qualitative input from the folks on this Board on the purchase you plan to make, you should do two things.
---- Confirm that the link to the NWML prospectus cited above is the correct one, or post the correct link if it's not.
---- Post a redacted view of your illustration.

If you choose to not provide additional information, that's just fine. However, I'd encourage you to look critically at the illustration.
---- Do a calculation of the "hard dollar" costs that you are paying in fees, especially in the early years of the policy. Those dollars are forever lost to you, no matter what the tax code or your personal tax situation turn out to be.
---- Look at how much you're "in the hole" after the first policy year or two. Your surrender value in year 1 or 2 will be much less than your cumulative premiums paid.
---- Look at how many years it will take the policy to "break even"; that is, how long until the surrender value is greater than the cumulative premiums paid. Is it a decade, or more?
---- Look at how many years it will take for the policy's performance to surpass what would have happened if you had bought a term policy and invested the difference in the S&P 500 in a taxable account. Is it 15 years? 20 years? 25 years?
---- Consider the trade-off between the hard dollar costs that you're certain to pay if you buy the policy, versus the unknowable tax benefits that you will harvest in 2040, 2050, 2060, or 2070.

It sounds like you've decided this policy is the right thing for you to purchase. Nothing that has been posted on this thread seems to have swayed your opinion. Maybe an objective look at the hard dollar costs and break-even dates will move you; maybe it won't.

Whatever you decide to do, I wish you the best.
It's a GREAT day to be alive - Travis Tritt
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HomerJ
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Re: Variable Universal Life Insurance Experts - Seems Like a No Brainer - Please Read

Post by HomerJ »

LFKB wrote: Tue Sep 15, 2020 12:55 am
HomerJ wrote: Mon Sep 14, 2020 10:31 pm
LFKB wrote: Mon Sep 14, 2020 9:49 pm The math is pretty simple - the after tax returns are better because the tax savings are greater than cost of insurance and commissions. It’s a win win.
If the math is simple, then buy it.

How many pages in that NW prospectus? Did you see the part about 2% + 0.55% + 6.95% charges on each Premium payment for the first 10 years? (3.95% instead of 6.95% for years 11-20).

Are you sure the math is simple? Dividend taxes are only 0.4%-0.6%... You're paying 0.2% in normal expenses (instead of 0.04%), plus all those extra fees on premiums... 10% fees on your premiums for the first 10 years is a pretty big hit. It will take time for the tax savings to catch up.

But maybe your prospectus is different.

You might indeed have more after 30-40 years... maybe.

Note that they can raise their fees any time they want. It says it very plainly. Multiple times.

Good luck!
I see the fees. I see the commissions. The after tax returns are still higher.
But that's assuming the variables don't change. That tax rates don't change, that you stay in the highest tax bracket, that you stay in CA, that the insurance company doesn't change its fee structure. That dividends remain the same (I used 2% dividends from S&P 500, but dividends are down around 1.8%, 1.7% these days).

I don't know what your prospectus says. I'm assuming you've done the math.

But looking at that NW prospectus someone linked above, with nearly 10% premium fees, it will take a LONG time to make more money inside that annuity. A long time assuming nothing changes.

$100,000 invested in year 1 in a normal index fund would have a drag of 0.04% for expenses, and 0.50% for dividend taxes (let's say you stay in CA your whole life)

After 30 years of 7% returns - 0.54 = 6.46% returns, you'd have $654,000

$90,000 (after 10% commissions) invested in year 1 in this annuity would have a drag of 0.20% for expenses and no taxes. Let's assume we didn't miss anything, and that's it, no other fees.

After 30 years of 7% returns - 0.20 = 6.8% returns, you'd have $647,000

That 10% haircut on year 1-10 premiums is steep, and it takes a long time to make the money back. More than 30 years.

But I'm sure your numbers are different.

If your numbers add up, they add up. Go ahead and buy it.
A Goldman Sachs associate provided a variety of detailed explanations, but then offered a caveat, “If I’m being dead-### honest, though, nobody knows what’s really going on.”
senex
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Re: Variable Universal Life Insurance Experts - Seems Like a No Brainer - Please Read

Post by senex »

Greetings, OP. Finance is done with numbers. Post the "no-brainer" equations, and we can tell you if your math is correct or incorrect, and if your assumptions are reasonable or unreasonable. (basically, do what Stinky suggested)

I personally would not buy a product that requires me to maintain life insurance when (a) it is expensive and (b) I don't need it. Especially if the main "benefit" is avoiding an annual tax on qualified dividends. (The other benefits you cite are mostly irrelevant; there are many ways to rebalance tax-free; you can take margin loans against etfs; and you can use irrevocable trusts to reduce estate tax. None of those require a complicated insurance contract).
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Re: Variable Universal Life Insurance Experts - Seems Like a No Brainer - Please Read

Post by Greenman72 »

To the OP - you might want to consider buying term life insurance and an IOVA (Investment Only Variable Annuity). You get the death benefit through the term life. And you get all the other benefits you're considering (tax deferral, tax-free rebalancing, etc.) with zero taxable income. Basically, you get all the benefits of the VUL, but at a lower cost.

--------------

More importantly--It sounds like you've already made up your mind, and nothing that anybody says will change that. You refuse to seek the counsel of an estate attorney who could save you millions. You refuse to seek the counsel of a CPA that can save you millions. You refuse to seek the counsel of a "real" financial advisor (not a phony salesman) who could make you millions.

Basically--you're smarter than the collective wisdom of all the educated, technical professionals who evaluate these kinds of decisions for a living. I'm sure that nothing bad will happen to you. Venture forth and prosper, my friend. You need help from no one. (Except for a bunch of people on the internet.)
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Re: Variable Universal Life Insurance Experts - Seems Like a No Brainer - Please Read

Post by Greenman72 »

I would also add this: assuming the S&P 500 has an expected return of 10%, and an expected distribution rate of 2% (which includes dividends and capital gains distributions), then you have a 2% gain and an 8% unrealized capital gain.

If you are in the highest of all tax brackets, then you owe a 37.1% tax rate on all income. 2% times 37.1% = a "tax expense ratio" of 75 basis points. This reduces your return from 10% to 9.25%. Not ideal--but also not the end of the world. Plus, you have instant liquidity, virtually no expenses, and the flexibilty to transfer these assets to an IRA, a trust, a charity, a FLP, etc. It's much more difficult to do this with a life insurance contract.

I think, at the end of all things, you will regret your decision to buy permanent insurance--especially when it is certain that you will have no need for it.
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Re: Variable Universal Life Insurance Experts - Seems Like a No Brainer - Please Read

Post by Raybo »

Many years ago, I was in the same situation as the OP. I, too, checked out VUL and bought a policy. My logic at the time was that the insurance expenses were a kind of "prepaid taxes."

First off, it took me several readings of the 50+ page contract to understand how it worked. The salesman was no help as he didn't really understand the actual working of the policy. Don't believe what they tell you unless you have read the contract and KNOW how it works.

The way mine worked was that I put money in every month that I though was my insurance payment. But, in fact, it was a contribution to the policy and a 5% load was immediately taken off. The rest of my "payment" was put into various investment funds I choose. My actual insurance payment was taken out of the investment funds. This way, the insurance company got its load off the money I sent them before charging for the insurance.

When I wanted to borrow the money out, the way it worked was that the money I had in my investment funds were moved to a cash fund that, in theory, paid the interest on money I was borrowing from the policy. In today's interest rate environment, I'm not sure that would be the case. What happens if the cash account interest rate is below the policy's interest rate on borrowings? Keep in mind you are paying the insurance company to borrow out your own money. If, in addition, you have to pay them interest to do so, this is a bad plan.

The funds being offered were expensive, opaque, and not all that diverse. It wasn't clear how the S&P 500 fund was created. IIRC (it has been 20+ years), the S&P500 fund was expensive and not necessarily well-implemented. Keep in mind that the insurance company funds will not be transparent.

In the end, my high income stopped (I retired early) and my need for this insurance lapsed. I stopped paying monthly and the investment value of the policy slowly went down. After the surrender charge went away, I cashed in the policy and was able to report a loss on my taxes.

The assumption that you will always have a need for this kind of tax avoidance is one of the hooks used to convince people this is a good product. But, keep in mind that you may not always have such a high income and when you retire your need for this kind of tax avoidance scheme will go away.
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Stinky
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Re: Variable Universal Life Insurance Experts - Seems Like a No Brainer - Please Read

Post by Stinky »

Raybo wrote: Tue Sep 15, 2020 9:38 am Many years ago, I was in the same situation as the OP. I, too, checked out VUL and bought a policy. My logic at the time was that the insurance expenses were a kind of "prepaid taxes."

First off, it took me several readings of the 50+ page contract to understand how it worked. The salesman was no help as he didn't really understand the actual working of the policy. Don't believe what they tell you unless you have read the contract and KNOW how it works.

The way mine worked was that I put money in every month that I though was my insurance payment. But, in fact, it was a contribution to the policy and a 5% load was immediately taken off. The rest of my "payment" was put into various investment funds I choose. My actual insurance payment was taken out of the investment funds. This way, the insurance company got its load off the money I sent them before charging for the insurance.

When I wanted to borrow the money out, the way it worked was that the money I had in my investment funds were moved to a cash fund that, in theory, paid the interest on money I was borrowing from the policy. In today's interest rate environment, I'm not sure that would be the case. What happens if the cash account interest rate is below the policy's interest rate on borrowings? Keep in mind you are paying the insurance company to borrow out your own money. If, in addition, you have to pay them interest to do so, this is a bad plan.

The funds being offered were expensive, opaque, and not all that diverse. It wasn't clear how the S&P 500 fund was created. IIRC (it has been 20+ years), the S&P500 fund was expensive and not necessarily well-implemented. Keep in mind that the insurance company funds will not be transparent.

In the end, my high income stopped (I retired early) and my need for this insurance lapsed. I stopped paying monthly and the investment value of the policy slowly went down. After the surrender charge went away, I cashed in the policy and was able to report a loss on my taxes.

The assumption that you will always have a need for this kind of tax avoidance is one of the hooks used to convince people this is a good product. But, keep in mind that you may not always have such a high income and when you retire your need for this kind of tax avoidance scheme will go away.
Just curious - how many years did keep your policy?

And after all those years, you still got less in surrender value than your premiums paid?
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Re: Variable Universal Life Insurance Experts - Seems Like a No Brainer - Please Read

Post by Raybo »

Stinky wrote: Tue Sep 15, 2020 9:43 am
Just curious - how many years did keep your policy?

And after all those years, you still got less in surrender value than your premiums paid?
It was a long time ago. If I recall correctly, I waited until just after the surrender charges lapsed, maybe 8 years? One reason I got less back was because I stopped contributing for a couple years, so the value of the policy fell.
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Re: Variable Universal Life Insurance Experts - Seems Like a No Brainer - Please Read

Post by Watty »

There was a lot of mention about the high capital gains tax rate.

One thing that has not been mentioned is that if you buy an S&P 500 index fund(or similar) in a taxable account then there is a chance that some of the tax lots will have a capital loss at some point instead of a capital gain and you could take those capital losses.

With something like a total stock market index funds you will need to sell very little of them during your working years when you are in the highest tax brackets.
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Re: Variable Universal Life Insurance Experts - Seems Like a No Brainer - Please Read

Post by HomerJ »

Greenman72 wrote: Tue Sep 15, 2020 9:11 am I would also add this: assuming the S&P 500 has an expected return of 10%, and an expected distribution rate of 2% (which includes dividends and capital gains distributions), then you have a 2% gain and an 8% unrealized capital gain.

If you are in the highest of all tax brackets, then you owe a 37.1% tax rate on all income. 2% times 37.1% = a "tax expense ratio" of 75 basis points. This reduces your return from 10% to 9.25%.
Just a nitpick... 100% of dividends from the Vanguard 500 Index Fund are qualified... meaning they are not taxed as income in your federal tax return.

The highest federal tax rate for qualified dividends (if you make like $450,000+ a year) is 23.8%.

But you are right that CA doesn't make a distinction between dividends and taxes all dividends as income at 13.3% and does make the total tax burden 37.1%. That is indeed ugly, and it does make the math favor the annuity more favorably.
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Re: Variable Universal Life Insurance Experts - Seems Like a No Brainer - Please Read

Post by Soon2BXProgrammer »

LFKB wrote: Mon Sep 14, 2020 1:01 pm Please only respond if you have looked into a variable universal policy from a reputable company like Northwest Mutual and properly understood the tax benefits of it...I am looking for what I am missing/not thinking of...

It seems pretty straight forward
1) Yes, there is a commission involved and you have to pay for the insurance
2) The tax savings (for me) are far greater than the cost of insurance and commission, which means the after tax returns are greater

For a variable policy, I can invest in the S&P500 as I otherwise would and the expense ratio of the fund is only 19bps (not as low as Vanguard, but not bad). I also am young and in the best health class which makes the insurance cheaper on a relative basis.

There are dramatic tax benefits as an individual in the top tax bracket in the most punitive tax state (CA)
1) Dividends are not taxed
2) I can re-balance over time without realizing capital gains and being taxed
3) I am in a position where my assets at death will almost certainly be in excess of the estate tax threshold of $11.2M. I can both eliminate the estate tax through a life insurance policy and gift it to a trust and still enjoy a step up in basis when inherited.

What am I missing? Why is this not a no brainer for HNW individuals in high tax states?
Are you already confident that you will have more money then you need in your life? If so, you could ignore the pitch for permanent life insurance, and just start gifting the maximum yearly gift to your heirs now.

Giving the money to your heirs when they could use the money and you could find enjoyment of seeings its use. Or you can try to have them invest it and teach them how to be a good steward now. Sure you could create a trust with crummy demand powers and do something fancy, but most of the time this doesn't make sense. Even with crummy demand powers, you are using the threat of no future gifts to the trust, to make sure they don't take the money and spend it now.

That is just one idea that comes to mind... there are a lot of ways to try to solve your situation, but any time you visit a salesman, they find something they can sell to solve your problem, not look at the whole situation, and come up with more creative solutions.
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LFKB
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Re: Variable Universal Life Insurance Experts - Seems Like a No Brainer - Please Read

Post by LFKB »

Stinky wrote: Tue Sep 15, 2020 3:58 am
FoolStreet wrote: Tue Sep 15, 2020 1:46 am Lots of 37%ers on Bogleheads. No one recommends VUL. Saying there are benefits seems to be more of a theoretical math problem that you work on for fun, but don’t actually want to implement. .

Honestly, if there really is a reason to buy one, you nor anyone else is explaining why.
LFKB wrote: Tue Sep 15, 2020 12:55 am I see the fees. I see the commissions. The after tax returns are still higher.
LFKB, if you want additional useful quantitative or qualitative input from the folks on this Board on the purchase you plan to make, you should do two things.
---- Confirm that the link to the NWML prospectus cited above is the correct one, or post the correct link if it's not.
---- Post a redacted view of your illustration.

If you choose to not provide additional information, that's just fine. However, I'd encourage you to look critically at the illustration.
---- Do a calculation of the "hard dollar" costs that you are paying in fees, especially in the early years of the policy. Those dollars are forever lost to you, no matter what the tax code or your personal tax situation turn out to be.
---- Look at how much you're "in the hole" after the first policy year or two. Your surrender value in year 1 or 2 will be much less than your cumulative premiums paid.
---- Look at how many years it will take the policy to "break even"; that is, how long until the surrender value is greater than the cumulative premiums paid. Is it a decade, or more?
---- Look at how many years it will take for the policy's performance to surpass what would have happened if you had bought a term policy and invested the difference in the S&P 500 in a taxable account. Is it 15 years? 20 years? 25 years?
---- Consider the trade-off between the hard dollar costs that you're certain to pay if you buy the policy, versus the unknowable tax benefits that you will harvest in 2040, 2050, 2060, or 2070.

It sounds like you've decided this policy is the right thing for you to purchase. Nothing that has been posted on this thread seems to have swayed your opinion. Maybe an objective look at the hard dollar costs and break-even dates will move you; maybe it won't.

Whatever you decide to do, I wish you the best.
Thank you. All good points/advice. I still need to go through and understand all the underlying math. So far my analysis has been that the tax benefits outweigh the costs but I have asked the rep for the underlying excel so I could understand all the variables. Once I have all the info, I will review in more detail.
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Re: Variable Universal Life Insurance Experts - Seems Like a No Brainer - Please Read

Post by petulant »

HomerJ wrote: Tue Sep 15, 2020 7:16 am
LFKB wrote: Tue Sep 15, 2020 12:55 am
HomerJ wrote: Mon Sep 14, 2020 10:31 pm
LFKB wrote: Mon Sep 14, 2020 9:49 pm The math is pretty simple - the after tax returns are better because the tax savings are greater than cost of insurance and commissions. It’s a win win.
If the math is simple, then buy it.

How many pages in that NW prospectus? Did you see the part about 2% + 0.55% + 6.95% charges on each Premium payment for the first 10 years? (3.95% instead of 6.95% for years 11-20).

Are you sure the math is simple? Dividend taxes are only 0.4%-0.6%... You're paying 0.2% in normal expenses (instead of 0.04%), plus all those extra fees on premiums... 10% fees on your premiums for the first 10 years is a pretty big hit. It will take time for the tax savings to catch up.

But maybe your prospectus is different.

You might indeed have more after 30-40 years... maybe.

Note that they can raise their fees any time they want. It says it very plainly. Multiple times.

Good luck!
I see the fees. I see the commissions. The after tax returns are still higher.
But that's assuming the variables don't change. That tax rates don't change, that you stay in the highest tax bracket, that you stay in CA, that the insurance company doesn't change its fee structure. That dividends remain the same (I used 2% dividends from S&P 500, but dividends are down around 1.8%, 1.7% these days).

I don't know what your prospectus says. I'm assuming you've done the math.

But looking at that NW prospectus someone linked above, with nearly 10% premium fees, it will take a LONG time to make more money inside that annuity. A long time assuming nothing changes.

$100,000 invested in year 1 in a normal index fund would have a drag of 0.04% for expenses, and 0.50% for dividend taxes (let's say you stay in CA your whole life)

After 30 years of 7% returns - 0.54 = 6.46% returns, you'd have $654,000

$90,000 (after 10% commissions) invested in year 1 in this annuity would have a drag of 0.20% for expenses and no taxes. Let's assume we didn't miss anything, and that's it, no other fees.

After 30 years of 7% returns - 0.20 = 6.8% returns, you'd have $647,000

That 10% haircut on year 1-10 premiums is steep, and it takes a long time to make the money back. More than 30 years.

But I'm sure your numbers are different.

If your numbers add up, they add up. Go ahead and buy it.
Math is wrong. After 30 years with the taxable investment, assuming composition of returns is 2% dividend and 5% capital gains, the investor would actually have $558650. You left out the capital gains. The OP is talking about aftertax returns. You have to include capital gains tax. Why are you being deceitful in your math?
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Re: Variable Universal Life Insurance Experts - Seems Like a No Brainer - Please Read

Post by petulant »

Soon2BXProgrammer wrote: Tue Sep 15, 2020 10:31 am
LFKB wrote: Mon Sep 14, 2020 1:01 pm Please only respond if you have looked into a variable universal policy from a reputable company like Northwest Mutual and properly understood the tax benefits of it...I am looking for what I am missing/not thinking of...

It seems pretty straight forward
1) Yes, there is a commission involved and you have to pay for the insurance
2) The tax savings (for me) are far greater than the cost of insurance and commission, which means the after tax returns are greater

For a variable policy, I can invest in the S&P500 as I otherwise would and the expense ratio of the fund is only 19bps (not as low as Vanguard, but not bad). I also am young and in the best health class which makes the insurance cheaper on a relative basis.

There are dramatic tax benefits as an individual in the top tax bracket in the most punitive tax state (CA)
1) Dividends are not taxed
2) I can re-balance over time without realizing capital gains and being taxed
3) I am in a position where my assets at death will almost certainly be in excess of the estate tax threshold of $11.2M. I can both eliminate the estate tax through a life insurance policy and gift it to a trust and still enjoy a step up in basis when inherited.

What am I missing? Why is this not a no brainer for HNW individuals in high tax states?
Are you already confident that you will have more money then you need in your life? If so, you could ignore the pitch for permanent life insurance, and just start gifting the maximum yearly gift to your heirs now.

Giving the money to your heirs when they could use the money and you could find enjoyment of seeings its use. Or you can try to have them invest it and teach them how to be a good steward now. Sure you could create a trust with crummy demand powers and do something fancy, but most of the time this doesn't make sense. Even with crummy demand powers, you are using the threat of no future gifts to the trust, to make sure they don't take the money and spend it now.

That is just one idea that comes to mind... there are a lot of ways to try to solve your situation, but any time you visit a salesman, they find something they can sell to solve your problem, not look at the whole situation, and come up with more creative solutions.
This is my deal. With that much income and all needs likely taken care of, I have a hard time seeing how the VUL would be the best alternative. As I initially indicated for OP, the VUL only comes out ahead on an aftertax basis if the money is locked up in the VUL for 30 years and then actually taken out to spend. It doesn't make sense if the money could be given away, spent earlier, left as an inheritance, etc.
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Re: Variable Universal Life Insurance Experts - Seems Like a No Brainer - Please Read

Post by HomerJ »

petulant wrote: Tue Sep 15, 2020 12:40 pm Math is wrong. After 30 years with the taxable investment, assuming composition of returns is 2% dividend and 5% capital gains, the investor would actually have $558650. You left out the capital gains. The OP is talking about aftertax returns. You have to include capital gains tax. Why are you being deceitful in your math?
There is rarely (never?) any annual capital gains tax on SP500 or Total Market Index Funds. They are extremely tax-efficient. Makes sense, since they are usually selling losers that dropped off the index, winners stay on the index and don't get sold.

You only pay long-term capital gain taxes when you sell the funds yourself at the end to withdraw money (pulling money from an annuity on the other hand is considered income and taxed at a higher rate under current tax law)

Dividend taxes are all that matter in this comparison when talking about accumulation.

No one is being deceitful. I could be wrong, but not deceitful.

Looks like I did lowball the CA dividend taxes... Using the 0.75% drag on a taxable account in CA, the annuity catches up to the taxable in around 20 years instead of 30.

But that's still a long time to have less money. A lot can change in 20 years (if nothing else, the OP could move out of CA)
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petulant
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Re: Variable Universal Life Insurance Experts - Seems Like a No Brainer - Please Read

Post by petulant »

HomerJ wrote: Tue Sep 15, 2020 12:55 pm
petulant wrote: Tue Sep 15, 2020 12:40 pm Math is wrong. After 30 years with the taxable investment, assuming composition of returns is 2% dividend and 5% capital gains, the investor would actually have $558650. You left out the capital gains. The OP is talking about aftertax returns. You have to include capital gains tax. Why are you being deceitful in your math?
There is rarely (never?) any annual capital gains tax on SP500 or Total Market Index Funds. They are extremely tax-efficient. Makes sense, since they are usually selling losers that dropped off the index, winners stay on the index and don't get sold.

You only pay long-term capital gain taxes when you sell the funds yourself at the end to withdraw money (pulling money from an annuity on the other hand is considered income and taxed at a higher rate under current tax law)

Dividend taxes are all that matter in this comparison when talking about accumulation.

No one is being deceitful. I could be wrong, but not deceitful.

Looks like I did lowball the CA dividend taxes... Using the 0.75% drag on a taxable account in CA, the annuity catches up to the taxable in around 20 years instead of 30.

But that's still a long time to have less money. A lot can change in 20 years (if nothing else, the OP could move out of CA)
I have bolded the relevant part. We are talking about aftertax returns for using the money. You have to add long-term capital gains tax at the end for using the money. You did not.

If the money is not used in a way that would incur long-term capital gains, for example by leaving to heirs with a step-up basis or donation, then the VUL is difficult or impossible to justify. Nobody here is claiming otherwise. I have said that nine ways to Sunday throughout the thread.

Please read the thread.
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HomerJ
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Re: Variable Universal Life Insurance Experts - Seems Like a No Brainer - Please Read

Post by HomerJ »

petulant wrote: Tue Sep 15, 2020 1:59 pm
HomerJ wrote: Tue Sep 15, 2020 12:55 pm
petulant wrote: Tue Sep 15, 2020 12:40 pm Math is wrong. After 30 years with the taxable investment, assuming composition of returns is 2% dividend and 5% capital gains, the investor would actually have $558650. You left out the capital gains. The OP is talking about aftertax returns. You have to include capital gains tax. Why are you being deceitful in your math?
There is rarely (never?) any annual capital gains tax on SP500 or Total Market Index Funds. They are extremely tax-efficient. Makes sense, since they are usually selling losers that dropped off the index, winners stay on the index and don't get sold.

You only pay long-term capital gain taxes when you sell the funds yourself at the end to withdraw money (pulling money from an annuity on the other hand is considered income and taxed at a higher rate under current tax law)

Dividend taxes are all that matter in this comparison when talking about accumulation.

No one is being deceitful. I could be wrong, but not deceitful.

Looks like I did lowball the CA dividend taxes... Using the 0.75% drag on a taxable account in CA, the annuity catches up to the taxable in around 20 years instead of 30.

But that's still a long time to have less money. A lot can change in 20 years (if nothing else, the OP could move out of CA)
I have bolded the relevant part. We are talking about aftertax returns for using the money. You have to add long-term capital gains tax at the end for using the money. You did not.

If the money is not used in a way that would incur long-term capital gains, for example by leaving to heirs with a step-up basis or donation, then the VUL is difficult or impossible to justify. Nobody here is claiming otherwise. I have said that nine ways to Sunday throughout the thread.

Please read the thread.
Ah, then we have to add income taxes at the end for using the money as well when pulling from the annuity.

Which are currently HIGHER than long-term capital gains taxes.

My comparison was fair... I was showing accumulation values for both types only.

If you want to talk about pulling the money out, then yes, you have to compare capital gain taxes for the taxable account vs. income taxes for the annuity (in that comparison the annuity looks even worse).

Or I suppose you're thinking about some tax-free loans at the end from the annuity, but then you're paying interest, and there are other factors to consider there. There is no free lunch.

But if you want to compare those options, that's fair.
A Goldman Sachs associate provided a variety of detailed explanations, but then offered a caveat, “If I’m being dead-### honest, though, nobody knows what’s really going on.”
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Nate79
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Re: Variable Universal Life Insurance Experts - Seems Like a No Brainer - Please Read

Post by Nate79 »

LFKB wrote: Tue Sep 15, 2020 12:54 am
Nate79 wrote: Mon Sep 14, 2020 10:10 pm
LFKB wrote: Mon Sep 14, 2020 9:54 pm
HomerJ wrote: Mon Sep 14, 2020 8:45 pm
LFKB wrote: Mon Sep 14, 2020 8:37 pm There aren’t any other ways to create this type of tax benefit and hold equities, so not sure I need to
Quit worrying about taxes. Don't let the tax tail wag the dog.

The Total Stock Market Index fund is extremely tax-efficient. You only pay on dividends, and no capital gains unless you sell.

Or maybe buy a tax-managed fund. Vanguard has them. At least investigate how they compare to an insurance company junk offerings.
I realize you have a serious aversion to these but many knowledgeable people on this board have recommended them for people in my tax situation

1) my current capital gains rate is 37% and likely to go up
2) I will need to rebalance (i.e. sell equities) and my tax advantaged space will not be sufficient enough to do this, which will lead to massive capital gains payments, which I can avoid through this structure

Again, the after tax returns are better, so in spite of the commission I’ll be better off in any case, and my heirs will be much much better off
Why do you need to rebalance?
As I get older I will shift more into bonds, just like virtually everyone else on this board
I would try all strategies before buying a VUL. First, I would make sure that if you loaded all tax advantage space with bonds and used taxable for stocks then you need to think why do you want to rebalance beyond that? Certainly one idea is to have a stock/bond allocation that adds more bonds with age. But certainly that is not universal. Another option would be to have a fixed amount of fixed income (for example 5 years of expenses) and then just keep adding more and more to stocks and letting them grow with time. No reallocation needed. Maybe use dividends and additional contributions to add to the fixed income. That is much more tax efficient. You can also tax loss harvest which is another benefit.
bikesandbeers
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Re: Variable Universal Life Insurance Experts - Seems Like a No Brainer - Please Read

Post by bikesandbeers »

The big what if that I don't see as much discussion on is the estate tax. It seems like the VUL could be not worse than a vanilla index fund after 20 or 30 years, but you are lossing a ton of flexibility to ever use the funds. We dont know what will happen to the estate tax, but if you are sure you will have a large amount overwhatever limit is in place, maybe that tips the equation to VUL

However, other irevocable trust planning can help with this too. If you have enough money to be worried about that, you should high a CPA or tax attorney to run some different scenarios for you
Rex66
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Re: Variable Universal Life Insurance Experts - Seems Like a No Brainer - Please Read

Post by Rex66 »

You still have to put the VUL In an irrevocable trust for it to avoid estate taxes.
Greenman72
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Re: Variable Universal Life Insurance Experts - Seems Like a No Brainer - Please Read

Post by Greenman72 »

bikesandbeers wrote: Tue Sep 15, 2020 2:57 pm However, other irevocable trust planning can help with this too. If you have enough money to be worried about that, you should high a CPA or tax attorney to run some different scenarios for you
Our multimillionaire-at-age-30, top-1%-of-all-income-earners has already told us that he has no desire to seek the assistance of an attorney or CPA.
petulant
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Re: Variable Universal Life Insurance Experts - Seems Like a No Brainer - Please Read

Post by petulant »

HomerJ wrote: Tue Sep 15, 2020 2:23 pm
petulant wrote: Tue Sep 15, 2020 1:59 pm
HomerJ wrote: Tue Sep 15, 2020 12:55 pm
petulant wrote: Tue Sep 15, 2020 12:40 pm Math is wrong. After 30 years with the taxable investment, assuming composition of returns is 2% dividend and 5% capital gains, the investor would actually have $558650. You left out the capital gains. The OP is talking about aftertax returns. You have to include capital gains tax. Why are you being deceitful in your math?
There is rarely (never?) any annual capital gains tax on SP500 or Total Market Index Funds. They are extremely tax-efficient. Makes sense, since they are usually selling losers that dropped off the index, winners stay on the index and don't get sold.

You only pay long-term capital gain taxes when you sell the funds yourself at the end to withdraw money (pulling money from an annuity on the other hand is considered income and taxed at a higher rate under current tax law)

Dividend taxes are all that matter in this comparison when talking about accumulation.

No one is being deceitful. I could be wrong, but not deceitful.

Looks like I did lowball the CA dividend taxes... Using the 0.75% drag on a taxable account in CA, the annuity catches up to the taxable in around 20 years instead of 30.

But that's still a long time to have less money. A lot can change in 20 years (if nothing else, the OP could move out of CA)
I have bolded the relevant part. We are talking about aftertax returns for using the money. You have to add long-term capital gains tax at the end for using the money. You did not.

If the money is not used in a way that would incur long-term capital gains, for example by leaving to heirs with a step-up basis or donation, then the VUL is difficult or impossible to justify. Nobody here is claiming otherwise. I have said that nine ways to Sunday throughout the thread.

Please read the thread.
Ah, then we have to add income taxes at the end for using the money as well when pulling from the annuity.

Which are currently HIGHER than long-term capital gains taxes.

My comparison was fair... I was showing accumulation values for both types only.

If you want to talk about pulling the money out, then yes, you have to compare capital gain taxes for the taxable account vs. income taxes for the annuity (in that comparison the annuity looks even worse).

Or I suppose you're thinking about some tax-free loans at the end from the annuity, but then you're paying interest, and there are other factors to consider there. There is no free lunch.

But if you want to compare those options, that's fair.
Wrong. This is not an annuity. This is VUL, which is clear from the thread. Premiums can be removed from the VUL tax-free, and the remainder can be accessed through policy loans that have extremely low, near-zero net costs. Why are you being deceitful? These policies are bad enough without lying about them.
Greenman72
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Re: Variable Universal Life Insurance Experts - Seems Like a No Brainer - Please Read

Post by Greenman72 »

^OOC - are you an expert on VUL taxation?
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HomerJ
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Re: Variable Universal Life Insurance Experts - Seems Like a No Brainer - Please Read

Post by HomerJ »

petulant wrote: Tue Sep 15, 2020 3:38 pmWrong. This is not an annuity. This is VUL, which is clear from the thread.
You are correct. I was comparing withdrawals from the taxable account to the wrong product. My apologies.
Premiums can be removed from the VUL tax-free
The original money in a taxable account is tax-free when you pull it out too.. You only pay capital gain taxes on your gains, not the original money you put in the account.

(Although you can't pull JUST your original money, like you can with a VUL, so advantage to VUL there)
and the remainder can be accessed through policy loans that have extremely low, near-zero net costs.
How do you figure that? My understanding is the loans have higher than normal interest rates. Looking at various blogs written in 2020, I see mention of 5%-8% interest rates for VUL loans. Is that incorrect?

There are tax issues, that interest is considered phantom income, and you can't borrow ALL the money (they usually have a hard limit of 90%, and as a practical matter, you better keep your loans lower than that, if you have a good chunk in the market which could crash, and cause the policy to lapse - where either you find money to keep it solvent or you get a huge tax bill)

There are a lot of things to consider when pulling money from a VUL...
Why are you being deceitful? These policies are bad enough without lying about them.
I made a mistake. I was thinking annuities, not Variable Life insurance when thinking about withdrawal strategies.

I was wrong. Thank you for correcting me.

I'd appreciate it if you could correct me without being rude. I'm willing to admit when I'm wrong. There was no purposeful deceit here. I have nothing to gain in this conversation.
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petulant
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Re: Variable Universal Life Insurance Experts - Seems Like a No Brainer - Please Read

Post by petulant »

HomerJ wrote: Tue Sep 15, 2020 4:34 pm
petulant wrote: Tue Sep 15, 2020 3:38 pmWrong. This is not an annuity. This is VUL, which is clear from the thread.
You are correct. I was comparing withdrawals from the taxable account to the wrong product. My apologies.
Premiums can be removed from the VUL tax-free
The original money in a taxable account is tax-free when you pull it out too.. You only pay capital gain taxes on your gains, not the original money you put in the account.

(Although you can't pull JUST your original money, like you can with a VUL, so advantage to VUL there)
and the remainder can be accessed through policy loans that have extremely low, near-zero net costs.
How do you figure that? My understanding is the loans have higher than normal interest rates. Looking at various blogs written in 2020, I see mention of 5%-8% interest rates for VUL loans. Is that incorrect?

There are tax issues, that interest is considered phantom income, and you can't borrow ALL the money (they usually have a hard limit of 90%, and as a practical matter, you better keep your loans lower than that, if you have a good chunk in the market which could crash, and cause the policy to lapse - where either you find money to keep it solvent or you get a huge tax bill)

There are a lot of things to consider when pulling money from a VUL...
Why are you being deceitful? These policies are bad enough without lying about them.
I made a mistake. I was thinking annuities, not Variable Life insurance when thinking about withdrawal strategies.

I was wrong. Thank you for correcting me.

I'd appreciate it if you could correct me without being rude. I'm willing to admit when I'm wrong. There was no purposeful deceit here. I have nothing to gain in this conversation.
The reason I am rude is because all of this information is available in this thread if you would read it. For example, on the interest rate for policy loans--some may have high interest rates, but I posted a prospectus *earlier in this thread* where the net interest rate after 10 years drops to 0.05%. Not 5%, 5 bps.

The blogs may not be reporting the net interest rate. The way a policy loan works is that it is a new loan issued by the insurance company to a policyholder with the policy as collateral. For most VUL policies, the company will also identify that the policy has a loan against it and set aside a matching amount to earn a special interest rate. The special interest rate is funded by the loan interest, so most of the interest paid on a loan goes right into match interest paid on the balance inside the policy. So the policyholder could be paying 6% on a loan but that portion of the balance could be paying a special rate of 5% (funded by the loan interest), for a net cost of 1%. Further, the policyholder has no obligation to repay the money on any particular schedule. The *effect* of these rules is that a policyholder can practically take their money out of the policy with no taxes and little net cost.
Rex66
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Re: Variable Universal Life Insurance Experts - Seems Like a No Brainer - Please Read

Post by Rex66 »

While some have situations where the loan cost is low, they have gotten around that and guaranteed interest rates by increasing cost of insurance.

This would be in addition to all those years of higher fees/costs/loads or whatever on the investment itself.

If I take a loan against my taxable account they don’t get to reduce my performance of my investments.
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Re: Variable Universal Life Insurance Experts - Seems Like a No Brainer - Please Read

Post by Mako »

Greenman72 wrote: Tue Sep 15, 2020 3:34 pm Our multimillionaire-at-age-30, top-1%-of-all-income-earners has already told us that he has no desire to seek the assistance of an attorney or CPA.
Yeah, this is more interesting to me than the rest of the thread (as I know nothing of these various life insurance products and have no interest in or need to learn): this guy is planning on a $12M estate but doesn’t want a professional to help him with an estate plan? He’s relying on a salesman, unaccountable people on the internet, and his own reading of 50 pages of legalese. Good luck man. I know people hate lawyers but a few hours at a couple hundred bucks an hour for a $12M expected asset seems worthwhile.
Soon2BXProgrammer
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Re: Variable Universal Life Insurance Experts - Seems Like a No Brainer - Please Read

Post by Soon2BXProgrammer »

petulant wrote: Tue Sep 15, 2020 12:43 pm
Soon2BXProgrammer wrote: Tue Sep 15, 2020 10:31 am
LFKB wrote: Mon Sep 14, 2020 1:01 pm Please only respond if you have looked into a variable universal policy from a reputable company like Northwest Mutual and properly understood the tax benefits of it...I am looking for what I am missing/not thinking of...

It seems pretty straight forward
1) Yes, there is a commission involved and you have to pay for the insurance
2) The tax savings (for me) are far greater than the cost of insurance and commission, which means the after tax returns are greater

For a variable policy, I can invest in the S&P500 as I otherwise would and the expense ratio of the fund is only 19bps (not as low as Vanguard, but not bad). I also am young and in the best health class which makes the insurance cheaper on a relative basis.

There are dramatic tax benefits as an individual in the top tax bracket in the most punitive tax state (CA)
1) Dividends are not taxed
2) I can re-balance over time without realizing capital gains and being taxed
3) I am in a position where my assets at death will almost certainly be in excess of the estate tax threshold of $11.2M. I can both eliminate the estate tax through a life insurance policy and gift it to a trust and still enjoy a step up in basis when inherited.

What am I missing? Why is this not a no brainer for HNW individuals in high tax states?
Are you already confident that you will have more money then you need in your life? If so, you could ignore the pitch for permanent life insurance, and just start gifting the maximum yearly gift to your heirs now.

Giving the money to your heirs when they could use the money and you could find enjoyment of seeings its use. Or you can try to have them invest it and teach them how to be a good steward now. Sure you could create a trust with crummy demand powers and do something fancy, but most of the time this doesn't make sense. Even with crummy demand powers, you are using the threat of no future gifts to the trust, to make sure they don't take the money and spend it now.

That is just one idea that comes to mind... there are a lot of ways to try to solve your situation, but any time you visit a salesman, they find something they can sell to solve your problem, not look at the whole situation, and come up with more creative solutions.
This is my deal. With that much income and all needs likely taken care of, I have a hard time seeing how the VUL would be the best alternative. As I initially indicated for OP, the VUL only comes out ahead on an aftertax basis if the money is locked up in the VUL for 30 years and then actually taken out to spend. It doesn't make sense if the money could be given away, spent earlier, left as an inheritance, etc.
I am in agreement with you. in general I'm against permanent life insurance. Only for very very rare situations could it potentially be a valid option. There are normally much better options.
ralph124cf
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Re: Variable Universal Life Insurance Experts - Seems Like a No Brainer - Please Read

Post by ralph124cf »

I may have been one of the few people that has had a positive experience with Universal Life.

I had a Group Term Universal Life policy through my employer. As I was approaching retirement age of 65, I realized that I would need to keep the policy in force for five more years due to how my retirement plan payout was figured. My policy had a fixed income account that was guaranteed to pay a 4% yearly interest rate, paid monthly.

The policy had five year groups for premium increases, and the yearly cost of the insurance was annoying after age 65, but I had a couple of medical problems would have rated me up quite a bit, so I stayed with the group term policy.

I figured out what the cost of the five years of insurance would be, subtracted the interest that I would be paid at 4% over those five years, and sent them a check to deposit into the fixed account.

They still sent me a premium due notice every month with the warning that if I did not pay, they would have to deduct the premium from my investment account. I got a statement every quarter showing interest earned and premiums deducted from my account.

I almost came out even with my calculations, I had something like $18 left in the account at the end of the five years, when I started my pension and no longer needed the insurance.

Ralph
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Re: Variable Universal Life Insurance Experts - Seems Like a No Brainer - Please Read

Post by JBTX »

Nevermind
Oregano
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Re: Variable Universal Life Insurance Experts - Seems Like a No Brainer - Please Read

Post by Oregano »

A common problem with policies like these is that the Cost of Insurance can get outrageous in your later years and you may run into a scenario where you need to pump huge sums of new money into them decades from now if you want them to avoid lapsing. Insurance salespeople use a pretty simple trick to make this risk invisible - they run policy projections at high, straight-line rates of return. What rate has your salesperson used? Ask them to change it to 5% and see if the policy blows up. Or, if they can, run it at 0% for a decade, then 7% after that. You will often find that stress tests like this show the major weaknesses in this "no brainer" strategy.
Rex66
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Re: Variable Universal Life Insurance Experts - Seems Like a No Brainer - Please Read

Post by Rex66 »

You don’t even have to do that

Just look at the article I linked

It talks about results with Monte Carlo using historical returns


Most of these fail with pumping in more money
afan
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Re: Variable Universal Life Insurance Experts - Seems Like a No Brainer - Please Read

Post by afan »

The analyses require the numbers. Until the OP posts them, no one can know whether this pays.

Many years ago I looked at a NWML variable life policy. The prospectus was less than 291 pages but well over 100. It took a long time to read through, find each fee and where it was extracted. The fees were much more than just the expense ratio on the atock fund. The result was that it was a terrible deal.

They may well have changed the policy since then.

Part of the confusion here is that the OP indicated this would address estate taxes AND that they were able to access the funds during life. Unclear how it could be in an irrevocable trust for which OP is not the beneficiary and also available to them.

Rebalancing is not much of a reason to do this. Just start adjusting the proportion that goes i to stock as time goes by. If the goal is to leave an inheritance-as implied by the estate tax concerns- then there is no reason to reduce stock exposure as the OP ages. The relevant figure is the age of the beneficiary, not the OP. Even as the beneficiary ages, the proportion needed in stocks need not change as long as the amount is large enough.

If the OP will accumulate as much money as anticipated, there may be no reason to cut stock allocation with age. 10% in fixed income can be plenty as long as the total dollars are enough to live on. Five percent or two percent would be dine if the asset base is large enough. Of course, if the OP is going to use the money, then the insurance policy does not help with estate taxes.


Remember that you cannot take out all the accumulated cash value without lapsing the policy and incurring taxes on all the gains. Therefore, must compare the after tax returns based on the amounts that would be taken out, not the full amount.

Of course, this would not apply if the policy were in an irrevocable trust and the OP was not accessing the money. But then there would be no income or estate taxes at all. Then it would be a comparison of the pretax value of a simple index fund to the pretax value of the policy, assuming neither is touched until death. As others have noted, the taxable income would be the dividends. The capital gains taxes would only come up when sold and it is unclear why they would be sold if held in the trust.

If OP shows all the fees and clarifies the estate planning ambiguity, we have have something to say.

If this really is a case where the variable life policy works, that would be quite a find.
We don't know how to beat the market on a risk-adjusted basis, and we don't know anyone that does know either | --Swedroe | We assume that markets are efficient, that prices are right | --Fama
Bfwolf
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Re: Variable Universal Life Insurance Experts - Seems Like a No Brainer - Please Read

Post by Bfwolf »

OP has trolled this board twice with this post, and people are still responding?

He refuses to post the number but says the numbers show the VUL is better.

Stop feeding the troll.
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Nate79
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Re: Variable Universal Life Insurance Experts - Seems Like a No Brainer - Please Read

Post by Nate79 »

Bfwolf wrote: Fri Sep 18, 2020 8:05 pm OP has trolled this board twice with this post, and people are still responding?

He refuses to post the number but says the numbers show the VUL is better.

Stop feeding the troll.
Maybe just an insurance salesman..... :twisted:
reln
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Re: Variable Universal Life Insurance Experts - Seems Like a No Brainer - Please Read

Post by reln »

LFKB wrote: Mon Sep 14, 2020 1:01 pm Please only respond if you have looked into a variable universal policy from a reputable company like Northwest Mutual and properly understood the tax benefits of it...I am looking for what I am missing/not thinking of...

It seems pretty straight forward
1) Yes, there is a commission involved and you have to pay for the insurance
2) The tax savings (for me) are far greater than the cost of insurance and commission, which means the after tax returns are greater

For a variable policy, I can invest in the S&P500 as I otherwise would and the expense ratio of the fund is only 19bps (not as low as Vanguard, but not bad). I also am young and in the best health class which makes the insurance cheaper on a relative basis.

There are dramatic tax benefits as an individual in the top tax bracket in the most punitive tax state (CA)
1) Dividends are not taxed
2) I can re-balance over time without realizing capital gains and being taxed
3) I am in a position where my assets at death will almost certainly be in excess of the estate tax threshold of $11.2M. I can both eliminate the estate tax through a life insurance policy and gift it to a trust and still enjoy a step up in basis when inherited.

What am I missing? Why is this not a no brainer for HNW individuals in high tax states?
You are a good candidate for the policy. Congrats!
reln
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Re: Variable Universal Life Insurance Experts - Seems Like a No Brainer - Please Read

Post by reln »

HomerJ wrote: Mon Sep 14, 2020 3:45 pm
LFKB wrote: Mon Sep 14, 2020 1:01 pm Please only respond if you have looked into a variable universal policy from a reputable company like Northwest Mutual and properly understood the tax benefits of it...I am looking for what I am missing/not thinking of...

It seems pretty straight forward
1) Yes, there is a commission involved and you have to pay for the insurance
2) The tax savings (for me) are far greater than the cost of insurance and commission, which means the after tax returns are greater

For a variable policy, I can invest in the S&P500 as I otherwise would and the expense ratio of the fund is only 19bps (not as low as Vanguard, but not bad). I also am young and in the best health class which makes the insurance cheaper on a relative basis.
Here's how they get you.

You will not get the full return of the S&P500. If the S&P500 returns 11% over a year (including dividends), your variable annuity will not go up 11%. It will go up less. Maybe 8%-10%.

This will not be shown as a "fee", but it will indeed be a drag on your returns and you will end up with far less money.

It's in the paperwork somewhere. Deep in the paperwork. Maybe they have a upside limit of 1%-2% a month (so if S&P500 goes up 3% in single month, you won't get all of that). Or maybe you get less dividends than are actually paid out.

The insurance company gets paid. And paid well. Why do you think they have whole teams of salespersons selling this stuff?

Do not spend 2%-3% in hidden fees every year to save 0.4% in dividend taxes (2% dividends times 20% taxes)

Also if you ever take the money out, it will be taxed as income, not capital gains, so probably higher taxes in the end.

And check, are there two numbers? An account balance and a cash surrender value? Because those will be different numbers. If you ever annuitize the annuity, that's how they will really get you. They'll pay you less than you could get on the open market for a SPIA at that point.
Lol 🤣 auto corrected the entire response.
afan
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Re: Variable Universal Life Insurance Experts - Seems Like a No Brainer - Please Read

Post by afan »

Nate79 wrote: Fri Sep 18, 2020 8:29 pm
Bfwolf wrote: Fri Sep 18, 2020 8:05 pm OP has trolled this board twice with this post, and people are still responding?

He refuses to post the number but says the numbers show the VUL is better.

Stop feeding the troll.

Maybe just an insurance salesman..... :twisted:

Perhaps a sales pitch. If so, it is not working very well.
We don't know how to beat the market on a risk-adjusted basis, and we don't know anyone that does know either | --Swedroe | We assume that markets are efficient, that prices are right | --Fama
djscal
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Re: Variable Universal Life Insurance Experts - Seems Like a No Brainer - Please Read

Post by djscal »

No one has mentioned the elephant in the room.

There is no way to get your money out w/out terminating the policy and incurring termination fees and taxable gains! And I don’t consider loans that have yet more fees and other restrictions “getting your money out”.

This product is designed by and for the benefit of the insurance company.

It’s evil genius - if you terminate its painful due to termination fees and taxes - if you stay you get eaten alive with policy fees, and high cost of insurance.

It’s a horrible product for a plethora of reasons. Except for the insurance company!

Why anyone would eliminate their liquidity by locking away money in a VUL for a questionable minimal potential tax benefit makes absolutely no sense to me.

I believe that the OP is an agent who is either trolling for business or he is trying to understand the downsides after his NWM indoctrination and brainwashing.
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FiveK
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Re: Variable Universal Life Insurance Experts - Seems Like a No Brainer - Please Read

Post by FiveK »

afan wrote: Sat Sep 19, 2020 9:08 am
Nate79 wrote: Fri Sep 18, 2020 8:29 pm
Bfwolf wrote: Fri Sep 18, 2020 8:05 pm OP has trolled this board twice with this post, and people are still responding?

He refuses to post the number but says the numbers show the VUL is better.

Stop feeding the troll.
Maybe just an insurance salesman..... :twisted:
Perhaps a sales pitch. If so, it is not working very well.
Perhaps even a variation of https://en.wikipedia.org/wiki/Streisand_effect: by the OP trying to promote VUL, this thread gives much more publicity to VUL's problems. :)
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vineviz
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Re: Variable Universal Life Insurance Experts - Seems Like a No Brainer - Please Read

Post by vineviz »

LFKB wrote: Mon Sep 14, 2020 8:37 pm
Watty wrote: Mon Sep 14, 2020 8:00 pm
LFKB wrote: Mon Sep 14, 2020 7:29 pm
Greenman72 wrote: Mon Sep 14, 2020 4:54 pm
LFKB wrote: Mon Sep 14, 2020 4:24 pm Thanks. I am mid 30s in California with income well above the highest state and federal tax levels and currently paying 37.1% capital gains rates, so it appears I am exactly the person you are saying it would make sense for.
Which means you can afford to pay a CPA and a "real" investment advisor (and probably and attorney) to do the heavy lifting for you--not just a bunch of randos on the internet.
Can, but don’t want to
Then it would be good to defer the purchase of it until you are at a point where you are willing to do your due diligence on something like that.
There aren’t any other ways to create this type of tax benefit and hold equities, so not sure I need to
Whatever it costs to find someone who can look you in the eyes and, with a fiduciary fury to be honest, tell you how wrong you are will be money well spent .
"Far more money has been lost by investors preparing for corrections than has been lost in corrections themselves." ~~ Peter Lynch
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