Whole life insurance

Discuss all general (i.e. non-personal) investing questions and issues, investing news, and theory.
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mephistophles
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Re: KEEPING IT SIMPLE

Post by mephistophles » Mon Dec 10, 2007 5:13 pm

mephistophles wrote:So, there you go again Iguy, not answering the question but posing one of your own.

The questios are: Do you back the thinking of Taylor, Mel and Michael in their book mentioned above? If you do not back the written remarks on the the subject of whole life in the Bogleheads guide, why not? What qualifications, if any, do you have that enables you to post repeatedly, as if you were knowledgeable on these subjects? Are you insurance licensed? Are you a CLU?

I post anonymously as ole meph. I don't think that telling one I am among the hundreds of thousands of insurance agents passing by nor that I am a CLU nor that I have 40 years of experience poses any danger to my anoymity.

Please just answer my questions, all of them, insuranceguy. Quit hiding your lack of qualifications and your lack of education and your lack of credentials.
I do not think that giveing us your qualificatin, if any, poses any threat to your identity being exposed here.

What I do think, based on reading your voluminious posts, since you joined here just a few months ago, is that you are on some kind of ego trip to push your private agenda of whole life.

What I do know is that you cannot be objective because of the proportionately large commissions whole life exacts as opposed to other solutions.

So, try answering these questions, which have been repeatedly asked of you in one context or another.

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mephistophles
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I guy

Post by mephistophles » Mon Dec 10, 2007 5:16 pm

Please answer all the questions I asked of you.

What, if any, credentials do you have to post hear as a person who is knowledgeable about life insurance?

Why don't you have a CLU?

Why don't you read the Bogleheads book or learn the Boglehead philosophy of investing?

bearcat98
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Post by bearcat98 » Mon Dec 10, 2007 9:03 pm

Insurance Guy,

There's something that you've been saying that troubles me a bit. I think you will agree that:

1) Given expected rates of return, aggressive investments (total stock market, perhaps some slice and dice with emerging markets and small value or something else thrown in) are likely to give you a better total return than whole life insurance. On the other hand, whole life shows way less volatility. Therefore, you advocate comparing whole life to the more conservative portion of your portfolio.

2) You can access the cash value of your policy by taking out a loan from the insurance company, which results in you paying interest on money that came from you and is being let back to you. This makes whole life a less convenient and more expensive place to pull money from than many more ordinary investment vehicles. Therefore, you advocate not using whole life to invest money that you need to keep liquid.

My issue is this: most folks invest some money conservatively so they will have money to spend in retirement if their aggressive investments tank. Therefore, liquidity is an essential feature of the truly conservative portion of the typical retirees portfolio. In terms of planning for a person's life, then, whole life should go on the end of the spectrum where you expect higher returns...an illiquidity premium, in addition to the bond returns.

Of course, that's not necessarily true in terms of planning for a person's death. Even the folks who are picking at you pretty hard have agreed that whole life can have uses in the estate tax planning and business planning. I can also understand that some people are more concerned with protecting their financial legacy after death than with maximizing their legacy by investing aggressively when alive.

But it seems to me that the combination of conservative/mediocre returns with restricted access to the asset would make whole life inappropriate as a retirement planning tool. Let me know if you disagree.

bolt
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Post by bolt » Tue Dec 11, 2007 1:30 am

[removed at request of poster]

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LH
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Post by LH » Tue Dec 11, 2007 8:38 am

insuranceguy wrote:You may think that it is appropriate 1/10,000,000,000 times and all who sell it are ripping people off either intentionally or due to their own ignorance. That's fine.


From what I gather, and I certainly may be missing some of the finer points, but insuranceguy is merely stating that whole life may be appropriate for some people.

This position seems almost impossible to argue with that there are relatively rare situations where a good whole life insurance policy may fit the needs of the individual.

I have not noted him to say anything factually wrong, he is simply arguing at the extreme, basically taking a position against the statement that whole life policies are good for NO ONE. A hard standard to come up short against, even for something thats seems almost universally abused and wrongly sold as whole life is.

His three points seems somewhat semantical to me, but not clearly wrong. But I have heard nothing that states whole life is not something to be avoided in almost all circumstances. In fact, I see no definitive reason to EVER use whole life listed yet, though I may have missed it.

A good rule of thumb is simply to never use it.

I have life insurance, all of it is term. I see no reason to add any whole life to the mix listed yet in this thread. I do not understand why most of insuranceguy clients have some WL.

LH
Last edited by LH on Thu Dec 13, 2007 12:31 am, edited 1 time in total.

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White Coat Investor
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Post by White Coat Investor » Tue Dec 11, 2007 2:37 pm

LH wrote:A good rule of thumb is simply to never use it.

I have 1.5 million of insurance, all of it is term. I see no reason to add any whole life to the mix listed yet in this thread. I do not understand why most of insuranceguy clients have some WL.


Because he sells it to them. Same reason anyone owns it.
1) Invest you must 2) Time is your friend 3) Impulse is your enemy | 4) Basic arithmetic works 5) Stick to simplicity 6) Stay the course

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mephistophles
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FOR LH

Post by mephistophles » Tue Dec 11, 2007 3:05 pm

Just for the record, LH. I post often on the subject of life insurance and I do not recall ever saying that whole life is never appropriate.

I have repeatedly said that whole life and or other forms of permanent insurance are frequently good solutions in the estate and business markets and in a minority of family market situations. I also frequently state, the vast majority of Americans insuring for family market needs should use term insurance because of its low cost and practicality.

ole meph

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LH
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Re: FOR LH

Post by LH » Thu Dec 13, 2007 12:29 am

mephistophles wrote:Just for the record, LH. I post often on the subject of life insurance and I do not recall ever saying that whole life is never appropriate.

I have repeatedly said that whole life and or other forms of permanent insurance are frequently good solutions in the estate and business markets and in a minority of family market situations. I also frequently state, the vast majority of Americans insuring for family market needs should use term insurance because of its low cost and practicality.

ole meph



Hello meph,

For the record, I do not recall you saying that either : ) We are in complete agreement as far as I know.

My quote, which I unfortunately see has no name attached to it(fixed), is from original poster insuranceguys original post in this thread. I did not mean to imply you said or did not say anything, nor did I mean my post to be interpreted as refering to you in any way. Sorry if I was unclear. Its good to have knowlegeable people like yourself on the board.

thanks for your help,

LH
Last edited by LH on Thu Dec 13, 2007 2:23 am, edited 2 times in total.

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mephistophles
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Thanks

Post by mephistophles » Thu Dec 13, 2007 1:55 am

Forgot what OP means.

Willy
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Post by Willy » Thu Dec 13, 2007 7:01 am

Insurance Guy, one comment and one question:

Comment: While some may see it otherwise, my non-expert's take on this and the other insurance mega-thread is that you have been exceedingly well mannered and fair. Your peers should be glad they have you representing them.

Question: In your opinion, would it be wrong and/or grossly overly simplifying things to say that the question about the value of WL insurance often boils down to whether or not the unique tax advantages of WL are sufficient to outweigh the otherwise avoidable costs, e.g., hefty early commissions, administrative costs, etc.?

Cheers, Bill

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White Coat Investor
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Re: Thanks

Post by White Coat Investor » Thu Dec 13, 2007 3:59 pm

mephistophles wrote:Forgot what OP means.


Original Poster
1) Invest you must 2) Time is your friend 3) Impulse is your enemy | 4) Basic arithmetic works 5) Stick to simplicity 6) Stay the course

retengr
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Unguided

Post by retengr » Thu Dec 13, 2007 7:44 pm

My partner and I live on my pension and savings. When I start getting SS, it will substitute for most of the savings and take care of some inflation.

When I die, all that income will stop. My partner has no pension and cannot qualify to share my SS. His SS benefit will be small.

So if I need life insurance at all, I think I need it until I die, not until someone 'leaves the nest'.

I have a small Universal Life policy (outside of my estate). I did not buy it for any of the reasons I have outlined (I bought it for other, probably wrong reasons).

Perhaps we are part of the fringe for whom this product offers some value?

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Post by White Coat Investor » Thu Dec 13, 2007 10:12 pm

Someone without significant assets living off a pension may qualify. The problem however, is this:

1) You may now be so old that you are no longer insurable or buying a whole life policy is no longer financially reasonable or

2) You are young enough that you would be better off investing traditionally

It seems you could solve your issue more simply than a universal life policy. How about using your savings to purchase a single premium whole life policy or an annuity that would begin upon your death and last until your partner's death? A single premium policy is much more transparent to price in my opinion.
1) Invest you must 2) Time is your friend 3) Impulse is your enemy | 4) Basic arithmetic works 5) Stick to simplicity 6) Stay the course

MP173
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Post by MP173 » Thu Dec 13, 2007 10:42 pm

Insurance Guy:

I really appreciate your explanation of the WL insurance product. I have a couple of small policies (taken out at ages 2 and 10) and have never really understood them. Investing an hour on this thread has helped.

Also, for the record, term life insurance has been an important part of financial planning for my family. The low cost for high $$$ amount certainly is a valuable method of managing risk.

There appear to be solid reasons for certain people to own WL. Blanket statements tend to always exclude certain scenarios. If there was never a valid reason for WL to be sold, the product would have disappeared by now.

BTW, does anyone (either IG or OleM) have data on either the value of WL insurance policies being sold, or the number of policies being sold on an historic basis. Surely the number of policies has dropped over the years, but I wonder if the value per policy has risen?

BTW, IG did you have a chance to take a look at my 401k question I asked you?

Again, thanks.

ed

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