Permanent Life Insurance
- Thread starter Doctor M
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Full Life annuity type of insurance? Most experts advise against it. There are better financial investment options. But you should have enough term life insurance to take care of your family...
My term life expires when I turn 70.
Get it while you're young and he a long term.
My term life expires when I turn 70.
Get it while you're young and he a long term.
Why do they advise against it? Why Term Life Insurance? If you dont die within the term limits, they get nothing. With permanent, there is always a payout. Explain please.
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well, what do you get from your auto insurance if you don't ever get into an accident? Nothing.
Well... do you for the sake of trying to get something back from the auto insurance, should you pay more so you can have the insurance + investment? No you don't.
Why should life insurance must have an investment portfolio? Why combine them? Does it make sense?
Your sales rep asked the same question you just asked me.
My answer is the question...why combine an insurance with an investment? Considering full life policy is one of the most lucrative sales...wouldn't you think it's a poor investment?
Do the math. If you were to get a term life and investment separately...which would you come out ahead? More often than not, full life is an expensive investment with less return.
They confuse you with a sales pitch...you get life insurance + money back.. well, of course you do. But if you did it separately, you'll get more in return. Also, watch out for the terms...it may be cheaper for the first 10 years then the insurance rate will go up progressively after 10 years.
Stick with Term Life if you're wanting a life insurance. Then invest your money separately for retirement. Not together.
Well... do you for the sake of trying to get something back from the auto insurance, should you pay more so you can have the insurance + investment? No you don't.
Why should life insurance must have an investment portfolio? Why combine them? Does it make sense?
Your sales rep asked the same question you just asked me.
My answer is the question...why combine an insurance with an investment? Considering full life policy is one of the most lucrative sales...wouldn't you think it's a poor investment?
Do the math. If you were to get a term life and investment separately...which would you come out ahead? More often than not, full life is an expensive investment with less return.
They confuse you with a sales pitch...you get life insurance + money back.. well, of course you do. But if you did it separately, you'll get more in return. Also, watch out for the terms...it may be cheaper for the first 10 years then the insurance rate will go up progressively after 10 years.
Stick with Term Life if you're wanting a life insurance. Then invest your money separately for retirement. Not together.
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Agreed, term life is the best way to go. Separate out insurance from investment...the purpose of insurance isn't to "pass along" anything to your heirs.
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Term life ins only... term4sale.com
Don't ever buy whole/permanent.. if you do, you are going to the cleaner, you just don't know it YET. The only advocate of other type of ins is the sales man.
Don't ever buy whole/permanent.. if you do, you are going to the cleaner, you just don't know it YET. The only advocate of other type of ins is the sales man.
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Huge scam . Life insurance should be for covering death related costs and no more .
You might as well just buy safe bonds or dividend paying stock and accomplish pretty much the same thing but without paying exorbitant profits to insurance company. This type of life insurance only exists because old people and financially uneducated middle aged people are nervous about guaranteed returns and fall for the scam. Well there are other low risk reliable returning investments out there , it is known as the financial market .
You might as well just buy safe bonds or dividend paying stock and accomplish pretty much the same thing but without paying exorbitant profits to insurance company. This type of life insurance only exists because old people and financially uneducated middle aged people are nervous about guaranteed returns and fall for the scam. Well there are other low risk reliable returning investments out there , it is known as the financial market .
When i got life insurance even the salemans said perm is a scam and with term policies being dirt cheap for myself it was a no brainer.
Exactly, get the dirt cheap term life and invest the rest. Ask yourself, if you have net $5 mil worth when you retire having invested smartly, do you even need life insurance?
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Slightly more explanation , because people don't always understand annuities .
"full" or annuity based life insurance is similar to hedge fund but with some slight pyramid scheme characteristics .
Both the hedge fund and annuity cater to specialized populations and provide a niche investment service. For both you are paying the manager x % of your returns in order for them to do their magic and bring you returns that are different than the market would bring alone. With hedge funds you're paying to get extra high return with only moderately high risk, and with annuities you are paying to turn what is mostly a sure bet (low risk instruments) into a sure bet ( 0 risk ) . Both services provide something that you can't really get from the market alone, and both basically change your fees into some alteration of market characteristics that the manager and the company create. The main difference that comes into play is that you cannot really do what a hedge manager can do, in terms of finding perfect returns, but a 10 year old could build a portfolio with lowest risk . At that point you have to ask yourself do you need "guaranteed" income ? If you are ok with even 1-2% risk, in which case skip the annuity and just buy bonds.
Another way to look at annuities is that you are basically buying insurance on your market returns . If you think about it for a second or 5 , you realize that it is too good to be true and that takes the form of high admin fees.
"full" or annuity based life insurance is similar to hedge fund but with some slight pyramid scheme characteristics .
Both the hedge fund and annuity cater to specialized populations and provide a niche investment service. For both you are paying the manager x % of your returns in order for them to do their magic and bring you returns that are different than the market would bring alone. With hedge funds you're paying to get extra high return with only moderately high risk, and with annuities you are paying to turn what is mostly a sure bet (low risk instruments) into a sure bet ( 0 risk ) . Both services provide something that you can't really get from the market alone, and both basically change your fees into some alteration of market characteristics that the manager and the company create. The main difference that comes into play is that you cannot really do what a hedge manager can do, in terms of finding perfect returns, but a 10 year old could build a portfolio with lowest risk . At that point you have to ask yourself do you need "guaranteed" income ? If you are ok with even 1-2% risk, in which case skip the annuity and just buy bonds.
Another way to look at annuities is that you are basically buying insurance on your market returns . If you think about it for a second or 5 , you realize that it is too good to be true and that takes the form of high admin fees.
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If you're graduating with high student loans debt, you sort of have a nice life insurance policy already. Drop dead within the next 10 years, and you saved $100k in loan payments. Assuming you didn't have some schmuck cosign, of course.
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Depending on the loan, if the borrower dies, the cosigners/coborrowers aren't liable. I think it's for federal only, as always...private loans get screwed. Check your fine print.
As an investment advisor (with an insurance license) I would like to clear up a number of misconceptions stated in this post.
1. For the most part term insurance pays a higher commission %, just so happens permanent life insurance has a larger premium.
2. Perm Ins is only as good as the person constructing it. A policy can be constructed to favor higher compensation to rep or higher performance for the insured. This is why working with a fiduciary is important.
3. Low/safe returns: a 20 year treasury is yielding 2.5% while a properly constructed life policy (for a healthy individual) would yield nearly 4% in the same time horizon.
A few items not mentioned:
1. Tax preferred status: if your income exceeds the threshold to contribute to a ROTH your tax-deferred and tax-free income shelters are rather limited (529, muni bonds, or life insurance). Without building assets in this tax preferred way you are limiting the ability to control your taxes in retirement.
2. Leveraging funds inside the contract: if designed properly with a favorable insurance company one can access their funds (no 59.5 rule) without disrupting the compounding growth on the funds borrowed.
Now with all that said, I would never purchase a permanent life insurance plan from an individual who is not a fiduciary. For the most part, people who call themselves financial advisors and sell permanent life insurance are registered representative (salespeople) who have no fiduciary duty to their client, only that of increasing revenue for themselves and their company.
If used properly it can be a great asset to complement ones more traditional savings/investment/retirement vehicles.
now....bracing for backlash from the forum members 🙂
1. For the most part term insurance pays a higher commission %, just so happens permanent life insurance has a larger premium.
2. Perm Ins is only as good as the person constructing it. A policy can be constructed to favor higher compensation to rep or higher performance for the insured. This is why working with a fiduciary is important.
3. Low/safe returns: a 20 year treasury is yielding 2.5% while a properly constructed life policy (for a healthy individual) would yield nearly 4% in the same time horizon.
A few items not mentioned:
1. Tax preferred status: if your income exceeds the threshold to contribute to a ROTH your tax-deferred and tax-free income shelters are rather limited (529, muni bonds, or life insurance). Without building assets in this tax preferred way you are limiting the ability to control your taxes in retirement.
2. Leveraging funds inside the contract: if designed properly with a favorable insurance company one can access their funds (no 59.5 rule) without disrupting the compounding growth on the funds borrowed.
Now with all that said, I would never purchase a permanent life insurance plan from an individual who is not a fiduciary. For the most part, people who call themselves financial advisors and sell permanent life insurance are registered representative (salespeople) who have no fiduciary duty to their client, only that of increasing revenue for themselves and their company.
If used properly it can be a great asset to complement ones more traditional savings/investment/retirement vehicles.
now....bracing for backlash from the forum members 🙂
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I'm going to say something that might shock and offend some so make sure the kids aren't reading over your shoulder when I said this: life insurance is for people who don't have the balls to save and invest their money.
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Only if you think you can guarantee you have absolutely 0 chance of dying before you are 70 yo, and don't give a chit about your wife and young kids.
If you are 65 yo, you live a long life, everyone you know can take care of themselves, time to die.
If you are single, you can die also, no one is dependent on you >_>;
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As a person who watched his father die of a heart attack at 39, this is about the most *****ic statement I have seen in a long time. In fact people who have dependents and do not have live insurance to provide for them in the event of a tragedy is someone who doesn't have the balls to take care of his family.
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Blah blah blah is all I read. You can be better prepared for a disaster with smart investing than you ever could with life insurance. Life insurance is such a scam and it's a shame to see you guys falling for it.
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Tell us how you can amass 10 to 20 times your annual earnings while you're in your early stages of your career that can take care of your family in case you die. And tax free.
Insurance is not an investment.
What's wrong with having both?
Term life is dirt cheap.
Smart investor who is smart enough to accrue a large amount of investment would see the value in term life insurance. Which you ain't.
Insurance is not an investment.
What's wrong with having both?
Term life is dirt cheap.
Smart investor who is smart enough to accrue a large amount of investment would see the value in term life insurance. Which you ain't.
Life insurance death benefits are income tax free but are subject to the estate tax if one does not plan properly.
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At less than a dollar a day for a 500,000$ policy it's kinda stupid to not take it, for me at least. 0.1% chance of dying while in my 30s isn't the greatest odds (and mine are slightly higher due to riding bikes and stuff on the road)
http://deathriskrankings.com/
Kinda fun to see your chance of kicking it
http://deathriskrankings.com/
Kinda fun to see your chance of kicking it
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As simple as having a life insurance trust to exclude insurance from taxable estate?
In a nutshell yes.
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I AM a smart investor because I don't have life insurance. Life insurance is not an investment, big guy. You are not going to bring your family the kind of money you want through a cheap insurance plan like I can with investments. No matter how you slice it, life insurance is for people who are too stupid to invest.
By the way, I love these "tax free" arguments as if they're relevant to begin with. Go ahead and tax the hell out of me and I will still get a higher return out of all my investments then you ever will with life insurance. Just arguing tax shows you have no idea what you're talking about. Reminds me of the Chili's chef who went on a rant to me about how he wants a tax cut because as a chef he's paying lots of taxes? Give me a break.
How can you get me 500k in 10 years with a only 300 being invested each year? How should invest so that the 300$ I paid 6 months ago will turn into 500k if I get hit by a truck walking home? You must know someone better than Madoff
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Think outside the box.
Either marry rich or be born as a trust fund baby. No life insurance worries here.
Either marry rich or be born as a trust fund baby. No life insurance worries here.
My only regret in life was being born to a lower middle class family
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He won't answer your questions. He's trolling. At least I hope so.
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Better than being born in a third world country.
Everyone with any sense knows you need term life insurance AND investments. The life insurance protects your family if you die young and the investments support you in retirement/pay for kids college/provide an estate for you to pass on after you die. At a certain point, if you are doing it right, you'll be self insured via investments and can let the life insurance lapse. But people with dependent spouse/mortgage/children/obligations need life insurance to protect their loved ones if they die.
Life insurance is for people who are too stupid to invest? Really? I manage money for a living and my wife and I place nearly 40% of our free-cash-flow into cash value life insurance because I know how it will complement my other assets over my lifetime and beyond.
Additionally, if you are working full-time as a pharmacist you do not have enough time to produce these "tax the hell out of me" and still doesn't matter returns.
Hey, that did not stop me or the millions of immigrants that this country is made of. I would argue being born into nothing fairly and mercilessly separate the fit from the others.
I agree. You work a lot harder if you know there is no daddy to bail you out if you fail.
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Do you know how I know you're an idiot? I bet you dont.
I do, you read his posts.
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i don't think he understands the point of insurance.
you can be a guru at saving/investing, but that's kind of moot point if you've expire at age 30.
you can be a guru at saving/investing, but that's kind of moot point if you've expire at age 30.
