Investment Vehicle: Life Insurance Policy

[VolksFaggin]

I current have a Life Insurance that is being used as a investment vehicle that works like a IRA brings in 6%.

What other types of investment vehicles are out on the market that help you bring in a good return but also helps bypass the taxes (being able to borrow against the loan)?

[joshoowa]

401k

[VolksFaggin]

what kinda return does a 401 give?

[azinwood]

i have universal life which i have read is a big scam. i dont contribute too much to it but i dont know what to do with it.

[Stevenc]

Life insurance should never be used for investment purposes.

Term life is so damn cheap, you should buy term and take the rest and do some real investing with it, preferably in a tax deferred account

[Flores]

what kinda return does a 401 give?

It depends. the nice thing about 401k is that it is funded pre-tax. Your rate of return is going to depend on what kind of funds are available via your plan, and how much risk your willing to take.

For example : by setting my own personal account up in such a way that about half of my money is in international high risk growth funds, my 2 year growth rate on my 401k is about 30%

If I dont keep an eye on it, however, and remain ready to shift my money around if the market starts to get really evil, I stand to lose a lot of my money as well.

On the other hand, if I put most of my money in a 'safe' bet fund, I can probably manage between 4 and 7% long term, which barely keeps me ahead of inflation.

Consider, if you have $100k in your 401k, a 30% growth rate = 30k more for next year, but only 7k more if your doing the 'safe' bet.

and it all compounds one way or another.

Most 401k programs let you borrow money from yourself, at interest, as well. So if you want to buy your primary residence, or bail out some debt, you can borrow the money from your savings, and pay yourself the interest, instead of another company.

Look into a Roth 401k as well, as the tax benefits to that are substantial.

[cabajaba]

I current have a Life Insurance that is being used as a investment vehicle that works like a IRA brings in 6%.

What other types of investment vehicles are out on the market that help you bring in a good return but also helps bypass the taxes (being able to borrow against the loan)?

all the vehicles mentioned in this thread. 401k, Roth, Traditional IRA, and Variable Life Insurance typically powered with the same thing...Mutual funds.

So your rate of return varies on the performance of these Mutal funds.

My suggestion is to contribute to your 401k, Especially if you have a match - (that equates to 100% return, free money)

I applaud you doing was the VUL which I believe is a good product because you need Life Insurance, you need cash growth backed by the performance of stock market, and its tax deferred--- a VUL is the only product that gives you both things - Don't listen to the people that say its a rip off or that cash value life insurance sucks. I can show with numbers how it blows the socks off the competition. advice = make sure your fund it properly, you want this to be there for you in your old age

I would create a Roth IRA, as apposed to a 401k you pay your taxes today and in retirement age 59.5...the value of your Roth is Tax free, and you never paid taxes on the gains (this is pretty much the same mechanics of the VUL, except the VUL is liquid before 59.5.

[cabajaba]

i have universal life which i have read is a big scam. i dont contribute too much to it but i dont know what to do with it.

is it regular Universal life or Variable universal life?

[cabajaba]

Life insurance should never be used for investment purposes.

Term life is so damn cheap, you should buy term and take the rest and do some real investing with it, preferably in a tax deferred account


that is the theory out there. However Buy term and invest the difference only works if the person is comparing "the difference" from the price of buying whole life.

No one does this. They typically buy term and invest what they have left over after paying bills and not the difference which should be invested to pay yourself first.

if a person does follow it...it looks real good in the early years but in the later years (when in my opinion it really counts) there is more money in the value of the life insurance then in the supposed account.

[cabajaba]

i have universal life which i have read is a big scam. i dont contribute too much to it but i dont know what to do with it.

lemme guess. David Ramsey or Suzy Orman?

I assure you its not a big scam....Its really a shame on what a poor job agents out there do in explaining product to clients.

lemme know if you wanna know how it works.

[VolksFaggin]

all the vehicles mentioned in this thread. 401k, Roth, Traditional IRA, and Variable Life Insurance typically powered with the same thing...Mutual funds.

So your rate of return varies on the performance of these Mutal funds.

My suggestion is to contribute to your 401k, Especially if you have a match - (that equates to 100% return, free money)

I applaud you doing was the VUL which I believe is a good product because you need Life Insurance, you need cash growth backed by the performance of stock market, and its tax deferred--- a VUL is the only product that gives you both things - Don't listen to the people that say its a rip off or that cash value life insurance sucks. I can show with numbers how it blows the socks off the competition. advice = make sure your fund it properly, you want this to be there for you in your old age

I would create a Roth IRA, as apposed to a 401k you pay your taxes today and in retirement age 59.5...the value of your Roth is Tax free, and you never paid taxes on the gains (this is pretty much the same mechanics of the VUL, except the VUL is liquid before 59.5.

Thanks for your input, it reassures me of what I have been reading but not totally grasping.

[azinwood]

is it regular Universal life or Variable universal life?
thats a good question, not sure. what is the main difference?

[cabajaba]

thats a good question, not sure. what is the main difference?

I will do my best not to confuse anyone. Please let me know if I made something unclear along the way.

well they are both different types of permanent life insurance.

imagine your premium dollar going into a bucket. Before that money reaches the bucket, there are administrative fees that come out. so out of 100 dollars a month you pay 85 makes its way into the bucket. That 85 dollars receives interest rate credit. (this is where the difference is)

Universal life or UL = it goes up and down with the changes in the interest rate market.

Variable Universal Life or VUL = the interest rate credit is based on the performance of your mutual funds.

Once this credit is applied, it makes its way into the bucket and that is where your cash value sits. The cash value has fees built in as well. One fee to worry about is the cost of insurance (this fee is constantly growing every year for the rest of your life) That is why it is important to fund a UL or VUL properly in the early years of the policy to make sure there is enough cash value for the later years - which is when you need it)

so if your investments perform poorly your cash value moves up and down in value.

if the interest market goes down. your future premium payments will be credited less along with the existing cash value.

I hope that helps in understanding the difference.

[IgotThatWenis]

i have universal life which i have read is a big scam. i dont contribute too much to it but i dont know what to do with it.

Life insurance should never be used for investment purposes.

Term life is so damn cheap, you should buy term and take the rest and do some real investing with it, preferably in a tax deferred account

Listen to these people, they know what they're talking about.

I would stop putting money in to that right a way. It's a big scam. If you want to invest money, there are much better ways to invest your money. Life insurance is just that and that alone.

Here's a link to what these so called "insurance companies" are doing to individuals who take insurance companies as investments.

http://smallbusiness.yahoo.com/r-answers-a-20070804063227AA69rlB-k-last+Friday

Here's what I posted in another thread.

I was explained how this works in my corporate finance class. Since we're young and we have lot of time to invest. Our best bet is a ROTH IRA and instead of letting a company or firm manage your investment you should do it on your own. The way investment companies work is to guarantee you a 5-6% return on your investment, but the company is usually making 15%+ on your money and giving you a small percentage. Although the risk is higher when you invest, you also are able to get a good return and since you're young you can come back from a loss.

The difference between a traditional IRA and a ROTH IRA is the tax that is charged on them. In a traditional IRA you get a tax deduction on the amount of money you put in to the IRA, but when you're ready to retire and take the money out they hit you with a tax charge.

In a ROTH IRA, you get no tax refund for your investment in to the IRA at the end of the year, but when you retire, you're not taxed on what you take out. So in the end, you may have saved a couple of dollars with a traditional IRA, but you would save a lot more at the end when you're ready to retire. A ROTH IRA is where it's at.

I think the max that you can invest in a ROTH IRA is around 4k per year. If you have an emergency situation and you need to get the money out, you will be charged a penalty for taking the money before retirement, but if you need the money to buy a house or for a child or your education, I think they will not tax you. You can also choose do the investing yourself if you like.

[cabajaba]

what is in question is suitability of the product for the client and the thread has shifted into product vs product. (Universal life vs. Roth)

Universal Life is NOT a scam it is a good product that fits certain peoples necessity. It should not be the primary vehicle for investments (due to all the fees and cost of insurance incurred)

It does however give you the leverage of your dollar. You cant compare that to a Roth. If disciplines you to save money (what the general public needs to apply to their savings)

There are pros and cons to each vehicle....its a matter of what your objective is for your financial plan.

My point is that starting permanent life insurance when you are economically able to do so is better than paying cheap term and not doing shit with the supposed difference.

Volksdraggin already started a VUL.. it would be stupid to recommend him to cancel it and open a Roth just cause a some people call it a scam.

[IgotThatWenis]

what is in question is suitability of the product for the client and the thread has shifted into product vs product. (Universal life vs. Roth)

Universal Life is NOT a scam it is a good product that fits certain peoples necessity. It should not be the primary vehicle for investments (due to all the fees and cost of insurance incurred)

It does however give you the leverage of your dollar. You cant compare that to a Roth. If disciplines you to save money (what the general public needs to apply to their savings)

There are pros and cons to each vehicle....its a matter of what your objective is for your financial plan.

My point is that starting permanent life insurance when you are economically able to do so is better than paying cheap term and not doing shit with the supposed difference.

Volksdraggin already started a VUL.. it would be stupid to recommend him to cancel it and open a Roth just cause a some people call it a scam.

VUL, sounds credible, but like it was stated before. Term is so cheap and that other money can be invested in ways that would provide a better return with out all the other fees and things like that.

The reason I say what I do is because I was going to start selling insurance and was in the process of getting certified. I was finding out all the intricacies that were involved with all sorts of life insurance plans. When I was learning, they taught about how universal and whole life insurance was just another way for insurance companies to make money. Life insurance is suppose to be just that, insurance, it should not be an investment tool.

With that said, he does not need that sort of life insurance when he can get term and invest the rest in to some thing with less fees and restrictions.

Do you sell life insurance by any chance? If you do, do you have a VUL?

[XAoPillz]

my grandfather recently took out a $5MM policy on himself and another duplicate policy on my grandmother. The rates are 10k a month each and they plan on selling the policies in a couple of years to bring in some extra cash flow. He explained the whole thing to me and i found it rather interesting...i had no idea you could do that.

[cabajaba]

my grandfather recently took out a $5MM policy on himself and another duplicate policy on my grandmother. The rates are 10k a month each and they plan on selling the policies in a couple of years to bring in some extra cash flow. He explained the whole thing to me and i found it rather interesting...i had no idea you could do that.


selling the policies? to who? strangers.

therefore the strangers collect when your grandparents die. I don't understand that...how would it work?

-sincerely curious.

[cabajaba]

VUL, sounds credible, but like it was stated before. Term is so cheap and that other money can be invested in ways that would provide a better return with out all the other fees and things like that.

The reason I say what I do is because I was going to start selling insurance and was in the process of getting certified. I was finding out all the intricacies that were involved with all sorts of life insurance plans. When I was learning, they taught about how universal and whole life insurance was just another way for insurance companies to make money. Life insurance is suppose to be just that, insurance, it should not be an investment tool.

With that said, he does not need that sort of life insurance when he can get term and invest the rest in to some thing with less fees and restrictions.

Do you sell life insurance by any chance? If you do, do you have a

VUL?

I do sell insurance for 2.5 years. All we are both doing is stating our opinions. I just believe mine is more credible cause that is what I do for living.

I don't own a VUL, not yet at least. I just know how it works.

Volksdraggin will make the call of what he needs, and I don't think it is wise to cancel something that he already started. Then he will in fact be contributing to insurance companies making money. All those months of premium, down the drain (thats not good advice) How much return would he then have to make to make up for that loss. VUL will give you a rate of return - maybe not the highest return of all but you are still receiving protection and tax deferred cash growth.

Statistics show that less than one percent of term policies even make it to the end of the term (ex. 20 years). They either are converted into permanent, lapse due to lack of payment, etc. That is the real money maker.

Some Life insurance companies only sell Term, cause that is the best product to make money on, not Permanent (whole life, VUL) as David Ramsey and Suzy Orman followers believe.

[RACER X]

Life insurance should never be used for investment purposes.

Term life is so damn cheap, you should buy term and take the rest and do some real investing with it, preferably in a tax deferred account+1

i don't sell ins. for a living, my term life is $6/mos. for $500k

[XAoPillz]

selling the policies? to who? strangers.

therefore the strangers collect when your grandparents die. I don't understand that...how would it work?

-sincerely curious.

yes, thats exactly how it works, the buyer purchases the policy for whatever price my grandparents and the buyer decide on. The buyer continues to pay the 10k a month on the policy and then when my grandparents pass away the buyer gets to collect the life insurance.

[cabajaba]

yes, thats exactly how it works, the buyer purchases the policy for whatever price my grandparents and the buyer decide on. The buyer continues to pay the 10k a month on the policy and then when my grandparents pass away the buyer gets to collect the life insurance.

oh Stranger owned life insurance (SOLI) or Investor Owned Life Insurance (IOLI). Its against policy for us to do that. If I do, its automatic termination.

so besides the fast cash your grandpa makes, whats the point? In theory, if the investor gets inpatient he can hurry along the process of time and collect earlier then life expectancy. Then your grandparents are at risk.

some states have even made it illegal to sell.

Google both or either of those, let me know what your thoughts are.

[VolksFaggin]

I am glad I started this thread, I am learning so much. :thumb:

[NisAznMonk]

+1

i don't sell ins. for a living, my term life is $6/mos. for $500k

Who do you go through? I've been looking at purchasing more life insurance since the military $400k is only while I'm in the service.

[XAoPillz]

oh Stranger owned life insurance (SOLI) or Investor Owned Life Insurance (IOLI). Its against policy for us to do that. If I do, its automatic termination.

so besides the fast cash your grandpa makes, whats the point? In theory, if the investor gets inpatient he can hurry along the process of time and collect earlier then life expectancy. Then your grandparents are at risk.

some states have even made it illegal to sell.

Google both or either of those, let me know what your thoughts are.

no advantage other then another way to make money. They both had their physicals done a week or so ago and were cleared for the policies so it looks like everything is good. According to what he said he will hold on to the policies for 2 years and then sell them for a couple million each. Guess he plans on using the money to throw back into the family business..i know we are making quite a few new ventures this year.

[IgotThatWenis]

Who do you go through? I've been looking at purchasing more life insurance since the military $400k is only while I'm in the service.

I think that they take your carreer in to consideration and you would be considered high risk. So you may have a tough time getting a good price on life insurance, good luck.

[cabajaba]

Who do you go through? I've been looking at purchasing more life insurance since the military $400k is only while I'm in the service.

I will check and get back to you

[IgotThatWenis]

I do sell insurance for 2.5 years. All we are both doing is stating our opinions. I just believe mine is more credible cause that is what I do for living.

I don't own a VUL, not yet at least. I just know how it works.

Volksdraggin will make the call of what he needs, and I don't think it is wise to cancel something that he already started. Then he will in fact be contributing to insurance companies making money. All those months of premium, down the drain (thats not good advice) How much return would he then have to make to make up for that loss. VUL will give you a rate of return - maybe not the highest return of all but you are still receiving protection and tax deferred cash growth.

Statistics show that less than one percent of term policies even make it to the end of the term (ex. 20 years). They either are converted into permanent, lapse due to lack of payment, etc. That is the real money maker.

Some Life insurance companies only sell Term, cause that is the best product to make money on, not Permanent (whole life, VUL) as David Ramsey and Suzy Orman followers believe.

I had an idea you sold life insurance. I'm not questioning your credibility, but I do have an insight in to what this is all about. You stated that this may not be the best form of investment, but it is a solid investment. If you're telling me that there are better investments out there, but since I can combine my life insurance with an investment plan I should, but for what the convience? If I can get a better return else where and still have life insurance, why would I consider a VUL? I'm not trying to be against you on this topic, but to me this is just a legal scam for insurance companies to make more money.

This is my opinion and the opinion of many people that I know that were in the industry. If Volksdraggin is fine with what he has invested in, more power to him, but if he knows that he can get out and have and still have life insurance with added benefits, I don't see why he wouldn't. Just my 2 cents.

I am glad I started this thread, I am learning so much. :thumb:

I am glad I started this thread, I am learning so much. :thumb:

How long have you been paying for your life insurance, because if your at a point where you will not take a considerable loss, I would consider getting out. You can always have term for your life insurance and invest the rest.

[RACER X]

Who do you go through? I've been looking at purchasing more life insurance since the military $400k is only while I'm in the service.

work. offers it. but any of your ins. co's will offer it.

[jlinky]

My buddy use to sell vul's and said it was his biggest money maker (due to the higher fees that were charged with them).....

My tax attorney-multimilliionaire agrees too....he gave me a scenario and says its not worth it.....just buy term

I'm not trying to step on insurance guys business, but you guys can make decent money without pushing vul's

Just my opinion so consult your attorney or cpa for advise (not your insurance agent)..

[cabajaba]

My buddy use to sell vul's and said it was his biggest money maker (due to the higher fees that were charged with them).....

My tax attorney-multimilliionaire agrees too....he gave me a scenario and says its not worth it.....just buy term

I'm not trying to step on insurance guys business, but you guys can make decent money without pushing vul's

Just my opinion so consult your attorney or cpa for advise (not your insurance agent)..


at my firm, the commission rate is the same for all products 50% of annual premium. The money maker is whole life which pays out 55%.

For the record, I am not on here to push my business, or to sell anyone. Just giving advice from what I know. Not from what my buddy's dad, or a guy I know said once, or from what I read somewhere. This is what I do for a living I see what the product does, how it works and that is what I base my opinion on.

buying term is appropriate from some peoples situation.

If your Multi-Millionaire Tax Attorney doesn't have any permanent life insurance as part of his estate plan, he is doing his descendants a disservice and he should talk to his life insurance agent. (not his CPA or attorney)

[IgotThatWenis]

at my firm, the commission rate is the same for all products 50% of annual premium. The money maker is whole life which pays out 55%.

For the record, I am not on here to push my business, or to sell anyone. Just giving advice from what I know. Not from what my buddy's dad, or a guy I know said once, or from what I read somewhere. This is what I do for a living I see what the product does, how it works and that is what I base my opinion on.

buying term is appropriate from some peoples situation.

If your Multi-Millionaire Tax Attorney doesn't have any permanent life insurance as part of his estate plan, he is doing his descendants a disservice and he should talk to his life insurance agent. (not his CPA or attorney)

Or he could always set up a living trust that way his assets go to who ever he wants them to, with out having to worry about the government trying to take a large portion of his money or all of it away. Being that he is a tax attorney, I'm sure he would know what it would take in order to get his heirs as much money as possible, but that is besides the point.

You may know more about it than I do, but you did the same thing as I did and got your information either from reading it or word of mouth. There are better forms of investment tools and you stil have the opportunity to set up some form of life insurance, why is it neccessary to combine the two. I see it as a legal scam for insurance companies to make more money.

I would like you to explain in detail why some one would need a VUL, whole life, universal life, or a term life insurance policy. I want to see the benefits of each and I'm sure each has its own down side. Then we can all make an honest decision based on the facts that you have, that we don't. Not saying that we do have different facts, but you seem to think that you know how all of this works and we just know what we read or heard, so please feel free to inform us. I'm sure it would not be too difficult for you.

I want to apologize if I'm coming off a little brass, but I tend to speak this way when I want to prove a point, please do not take any offense.

[cabajaba]

Or he could always set up a living trust that way his assets go to who ever he wants them to, with out having to worry about the government trying to take a large portion of his money or all of it away. Being that he is a tax attorney, I'm sure he would know what it would take in order to get his heirs as much money as possible, but that is besides the point.

You may know more about it than I do, but you did the same thing as I did and got your information either from reading it or word of mouth. There are better forms of investment tools and you stil have the opportunity to set up some form of life insurance,

I would like you to explain in detail why some one would need a VUL, whole life, universal life, or a term life insurance policy. I want to see the benefits of each and I'm sure each has its own down side. Then we can all make an honest decision based on the facts that you have, that we don't. Not saying that we do have different facts, but you seem to think that you know how all of this works and we just know what we read or heard, so please feel free to inform us. I'm sure it would not be too difficult for you.

I want to apologize if I'm coming off a little brass, but I tend to speak this way when I want to prove a point, please do not take any offense.

No offense taken

"why is it neccessary to combine the two?"

I don't think I said it was necessary to combine the two. Volksdraggin already started his VUL. I don't think it would be a good idea to drop the policy and buy a term and invest in a mutual fund. This was my point. Buy term and invest the difference is a popular idea that works if you don't want to have life insurance in retirement age (when it typically pays off to have).

If you wanna talk about return, then yeah I agree with you. A VUL is not the most efficient place to put your money if all you care about is return. If you have other concerns such as a death benefit for your wife/kids then it is a great vehicle to have because it disciplines you to save, it protects your money from taxes (no 1099 on cash growth) and gives you peace of mind.

there are many products out there, it all revolves around what is important to YOU. I find out what that is, and make the recommendations that in my professional opinion fit your needs. If a guy wants to buy term and invest...thats fine. I just show him the ramifications of his decision long term and if he still wants to do that, then I want to sell him his term and invest his difference with me. I don't push VUL's on him cause I like it - if its not what he wants or needs I don't offer it.

I just don't like people that force their opinion on others. (not to say that you are). Or they say this is what I am doing, and its the best. Just cause it works for you doesn't mean it works for everyone.

as for the second part of the question. Utilizing life insurance in estate plan is everywhere on the internet. If you have more of a specific question I will do my best to tackle it.

[IgotThatWenis]

No offense taken

"why is it neccessary to combine the two?"

I don't think I said it was necessary to combine the two. Volksdraggin already started his VUL. I don't think it would be a good idea to drop the policy and buy a term and invest in a mutual fund. This was my point. Buy term and invest the difference is a popular idea that works if you don't want to have life insurance in retirement age (when it typically pays off to have).

If you wanna talk about return, then yeah I agree with you. A VUL is not the most efficient place to put your money if all you care about is return. If you have other concerns such as a death benefit for your wife/kids then it is a great vehicle to have because it disciplines you to save, it protects your money from taxes (no 1099 on cash growth) and gives you peace of mind.

there are many products out there, it all revolves around what is important to YOU. I find out what that is, and make the recommendations that in my professional opinion fit your needs. If a guy wants to buy term and invest...thats fine. I just show him the ramifications of his decision long term and if he still wants to do that, then I want to sell him his term and invest his difference with me. I don't push VUL's on him cause I like it - if its not what he wants or needs I don't offer it.

I just don't like people that force their opinion on others. (not to say that you are). Or they say this is what I am doing, and its the best. Just cause it works for you doesn't mean it works for everyone.

as for the second part of the question. Utilizing life insurance in estate plan is everywhere on the internet. If you have more of a specific question I will do my best to tackle it.

I just wanted to have specific info so that every one can make their own infromed decision based on what every one was saying. That's the only reason why I asked for some particulars.

I would like to know how you come to the conclusion that people need a VUL. What type of people need this and what are some of the things that you go off of? If you can be as specific as possible, that would be great. I want to understand what makes one person need a VUL more than the next.

[cabajaba]

I just wanted to have specific info so that every one can make their own infromed decision based on what every one was saying. That's the only reason why I asked for some particulars.

I would like to know how you come to the conclusion that people need a VUL. What type of people need this and what are some of the things that you go off of? If you can be as specific as possible, that would be great. I want to understand what makes one person need a VUL more than the next.

"I would like to know how you come to the conclusion that people need a VUL."

Never said all people need a VUL

"there are many products out there, it all revolves around what is important to YOU. I find out what that is, and make the recommendations that in my professional opinion fit your needs. If a guy wants to buy term and invest...thats fine. I just show him the ramifications of his decision long term and if he still wants to do that, then I want to sell him his term and invest his difference with me. I don't push VUL's on him cause I like it - if its not what he wants or needs I don't offer it."

"What type of people need this and what are some of the things that you go off of? If you can be as specific as possible, that would be great. I want to understand what makes one person need a VUL more than the next"

Here is a description of someone that I would likely recommend a VUL
a Young Husband/father - he wants to make sure that his wife is taken care of in case he dies, He want cash value growth inside the policy. He wants his cash value to pay for the policy itself one day. He wants to have insurance in retirement age. He wants a place to supplement and diversify his retirement income (ex. he has his 401k, Roth, and cash value inside his life insurance). And he is hoping to achieve higher returns than a regular Universal Life and Whole life offer by accepting market volatility (risk and reward). He wants his investments inside of a creditor protected vehicle (so even if he is sued, no one can touch that cash value).

thats just one example.

I am also using a VUL to fund a key employee retention plan.

[jlinky]

at my firm, the commission rate is the same for all products 50% of annual premium. The money maker is whole life which pays out 55%.

For the record, I am not on here to push my business, or to sell anyone. Just giving advice from what I know. Not from what my buddy's dad, or a guy I know said once, or from what I read somewhere. This is what I do for a living I see what the product does, how it works and that is what I base my opinion on.

buying term is appropriate from some peoples situation.

If your Multi-Millionaire Tax Attorney doesn't have any permanent life insurance as part of his estate plan, he is doing his descendants a disservice and he should talk to his life insurance agent. (not his CPA or attorney)

I don't know where you concluded that he has no life insurance. The debate was VUL vs term (which he has). Btw he is a CPA/ tax attorney and owns an insurance company so I guess he should talk to himself:thumb:...

[IgotThatWenis]

I don't know where you concluded that he has no life insurance. The debate was VUL vs term (which he has). Btw he is a CPA/ tax attorney and owns an insurance company so I guess he should talk to himself:thumb:...

That's exactly what I want to get into. I'm getting my degree in accounting and I was hoping on attending law school afterwards. Get my cpa and further specialize in taxes.

[jlinky]

That's exactly what I want to get into. I'm getting my degree in accounting and I was hoping on attending law school afterwards. Get my cpa and further specialize in taxes.

congrats and hang in there.....

[aznsupra]

You may know more about it than I do, but you did the same thing as I did and got your information either from reading it or word of mouth. There are better forms of investment tools and you stil have the opportunity to set up some form of life insurance, why is it neccessary to combine the two. I see it as a legal scam for insurance companies to make more money.

I would like you to explain in detail why some one would need a VUL, whole life, universal life, or a term life insurance policy. I want to see the benefits of each and I'm sure each has its own down side. Then we can all make an honest decision based on the facts that you have, that we don't. Not saying that we do have different facts, but you seem to think that you know how all of this works and we just know what we read or heard, so please feel free to inform us. I'm sure it would not be too difficult for you.



i figured i would chime in here...since i've used the overfunded vul concept to my clients. one thing after briefly skimming the posts, is that there is some misconceptions and misinterpretations of what the vul is.

if you are buying insurance for the sole purpose of buying insurance, then term is the way to go. shop it and get the best bang for your buck. DO NOT BUY THE VUL if you are looking for plain insurance.

for people saying that vul's should not be used for investment reasons i beg to differ. for the right client, absolutely this is a great product. Problem is that it is being oversold and sold for the wrong reasons. This is something that should only be considered when your client has the affordability to do it and either has exhausted all other investment options like 401k, roth etc or are not eligible for them. besides a roth ira, this is currently the best thing to get for any long term planning. b/c of the restrictions of a roth ira, some clients dont have much of a choice. Yes you are buying insurance, but you arent doing it for that purpose. as a matter of fact, the point of this is to purchase the LEAST amount of insurance while forcing as much cash into the policy as it will allow. this was designed really as more of a TAX free retirement vehicle. Here is the main thing to consider if a vul option is best for you...if youre tax liability is higher than the coi, then the vul is the better option. if not, then using the variable annuity or mutual funds will be better. YES it pays very high commissions, but it is probably only suitable for a very small percentage of the population, yet imo, there are a few firms out there that push this when it isnt the most suitable. for most, i recommend funding your ira, sep, 401 etc. first before considering the vul. but again, for the right client, this deal is definitely worth looking at.

i dont usually recommend regular ul policies, since i believe that the average annual return from the stock market will always be higher than the return of a basic ul policy. ul will credit onaverage 4-6 percent, while the historical average of the stockmarket has been 9-10%. any decent mutual fund will average 10-12%.

for the person who regretted ever doing the insurance policy, here are some suggestions. DO NOT JUST CANCEL THE POLICY....you will more than likely lose quite a bit in deferred sales or surrender charges since youve only had this for a couple years. your plan will fail if you do not continue to fund the policy, and when it lapses, you basically just rented a policy, and wasted your money. ask the insurance company to run an updated policy illustration assuming you dont put anymore cash in the plan and see how long your cash will take you. One thing to consider doing is to lower the deathbenefit amount to reduce your cost of insurance. if there is enough cash in the policy, it might be enough to support itself (assuming a moderate 8% on your investments if vul). if there isnt enough cash, consider putting some cash in there to make it a paid up policy. if its something that you can afford to do.

either way, if you have questions on your policy just ask.

[aznsupra]

My tax attorney-multimilliionaire agrees too....he gave me a scenario and says its not worth it.....just buy term

I'm not trying to step on insurance guys business, but you guys can make decent money without pushing vul's

Just my opinion so consult your attorney or cpa for advise (not your insurance agent)..

fyi, you consult your tax attorney for TAX advice, not financial advice.
clients come to me for financial/investment advice, and not tax advice.

if you ever come across someone who pushes the vul, run, otoh, if he offers it as a suggestion, consider it.

[aznsupra]

my grandfather recently took out a $5MM policy on himself and another duplicate policy on my grandmother. The rates are 10k a month each and they plan on selling the policies in a couple of years to bring in some extra cash flow. He explained the whole thing to me and i found it rather interesting...i had no idea you could do that.

this is called a viatical settlement. here is how it works in a nutshell....

your dad has a 1 million dollar policy with maybe 100k cash.
your dad doesnt want to continue paying the premium, or doesnt want the insurance policy anymore...rather than let it lapse, he sells it to a 3rd party.
3rd party offers 250k cash NOW to your dad, and agrees to continue paying on your dad's policy until your dad is deceased. when dad dies, 3rd party recieves the 1million dollars.

- dad can stop paying on the policy he doesnt want/need
- dad gets 250k cash, which is better than the 100k cash in the policy and less taxes on the earnings too...
- 3rd party investor gets a millions dollars when your dad passes, after only shelling out 250k and however long 3rd party has to pay for your dads life insurance.

[cabajaba]

i figured i would chime in here...since i've used the overfunded vul concept to my clients. one thing after briefly skimming the posts, is that there is some misconceptions and misinterpretations of what the vul is.

if you are buying insurance for the sole purpose of buying insurance, then term is the way to go. shop it and get the best bang for your buck. DO NOT BUY THE VUL if you are looking for plain insurance.

for people saying that vul's should not be used for investment reasons i beg to differ. for the right client, absolutely this is a great product. Problem is that it is being oversold and sold for the wrong reasons. This is something that should only be considered when your client has the affordability to do it and either has exhausted all other investment options like 401k, roth etc or are not eligible for them. besides a roth ira, this is currently the best thing to get for any long term planning. b/c of the restrictions of a roth ira, some clients dont have much of a choice. Yes you are buying insurance, but you arent doing it for that purpose. as a matter of fact, the point of this is to purchase the LEAST amount of insurance while forcing as much cash into the policy as it will allow. this was designed really as more of a TAX free retirement vehicle. Here is the main thing to consider if a vul option is best for you...if youre tax liability is higher than the coi, then the vul is the better option. if not, then using the variable annuity or mutual funds will be better. YES it pays very high commissions, but it is probably only suitable for a very small percentage of the population, yet imo, there are a few firms out there that push this when it isnt the most suitable. for most, i recommend funding your ira, sep, 401 etc. first before considering the vul. but again, for the right client, this deal is definitely worth looking at.

i dont usually recommend regular ul policies, since i believe that the average annual return from the stock market will always be higher than the return of a basic ul policy. ul will credit onaverage 4-6 percent, while the historical average of the stockmarket has been 9-10%. any decent mutual fund will average 10-12%.

for the person who regretted ever doing the insurance policy, here are some suggestions. DO NOT JUST CANCEL THE POLICY....you will more than likely lose quite a bit in deferred sales or surrender charges since youve only had this for a couple years. your plan will fail if you do not continue to fund the policy, and when it lapses, you basically just rented a policy, and wasted your money. ask the insurance company to run an updated policy illustration assuming you dont put anymore cash in the plan and see how long your cash will take you. One thing to consider doing is to lower the deathbenefit amount to reduce your cost of insurance. if there is enough cash in the policy, it might be enough to support itself (assuming a moderate 8% on your investments if vul). if there isnt enough cash, consider putting some cash in there to make it a paid up policy. if its something that you can afford to do.

either way, if you have questions on your policy just ask.

All very good points, thanks for chiming in.

[jlinky]

fyi, you consult your tax attorney for TAX advice, not financial advice.
clients come to me for financial/investment advice, and not tax advice.

if you ever come across someone who pushes the vul, run, otoh, if he offers it as a suggestion, consider it.

You have a point, but both should work together and a person should have a team.
Some tax attorneys specialties overlap (tax=financial (unless you mean a CPP-financial planner)), although your fees maybe lower.

I know a tax attorney specializes in working with taxpayers to solve their problems with the IRS. they generally focus only on tax issues and relief. A tax attorney can help a taxpayer in trouble make it through an audit, have fines reduced, liens removed, and self-employment tax issues.

Many small business owners consider their tax attorney to be as good as their accountant. This is because a good tax attorney can help head off tax problems before they even begin. He or she can see potential trouble spots for a business and can advise the owner how to avoid them.

U.S. tax law changes nearly every year. A good tax attorney will keep up with the latest changes and can advise clients accordingly. A tax attorney may also be helpful when setting up trust funds, stock portfolios and the like, so a taxpayer doesn't run into unexpected surprises on April 15.