IUL vs. Roth 401k/401k vs. Roth IRA/IRA

[disneysteve]

When I sell people permanent insurance, it lowers their long-term cost for insurance

Ok, let's stop talking in fantasy and show us all how this actually works in the real world.

I am a 52-year-old male non-smoker non-overweight in perfect health on no medications.

I currently have a $1.5 million term policy for which I pay $210/month.

How much would it cost me to replace that with a whole life policy if I walked into your office right now?

[Captain Save]

Oh, and this buy whole life to build cash and suppliment with term. You can't build past the face value of the account so if you only can afford a 50k$ policiy and you supppliment with term you'll never build more than 50k$ and it will take until you are 100 to see that much. Plan B options might allow more room to grow both, but it is stupidly slow and unnecesaryly high. For those wondering these policies by default are designed to have the cash value hit the face amount by age 100, unless you buy a paid up policy to hit it sooner(much higher premium), but you can't by law have the cash value pass the death benefit. Under plan b the insurance company is at the greatest risk since they allow the DB to move up, therefore these plans are even more absurdly high.

You keep talikng like these are even within reason for 70% of the population. Ive seen these policies hit 5k$ a MONTH for a million dollar poliicy. Most americans don't even make that much. But many, many can afford 200-300 if they really want 1 million coverage in a term. Thats a big difference and dollar cost averageing will pay off in the long run with an investment. Also, when you are in retirement you need to move that money into a more secure location and live off the interest. Not pull from it hoping the interest will even out with the internet you are paying to get your own money from one of these. iF the market is down to 0% when you are pulling the money out you are not making anything with this policy either since it is based on the market, but I gurantee you are paying in interest to the loan. the more money you pull out, the more money in interest you are paying in. They will get their money. It doesn't protect you.

If normal investing doesn't beat these policies the companies would go out of business. You simply can't do worse with mutal funds or index funds (if you use a properly mature account) because if you did do bad with say vanguard, then that means the whole market is down. The insurance companies can't sustain unless normal investing stays on top. That's why they don't invest into IUL's themselves, they invest into the market.

Stop drinking the coolade. Here are my final qestions to you. Do you have an IUL policiy? If you do, what is your age, premium, and coverage?

again I'm not picking on you.. you say you sell life insurance but you say you focus on term .. and it's great to have a niche.. but you need to learn more about permanent policies before making these statements..
regardless .. any insurance adviser should know that Insurance companies by law are required to have low risk investments... as their primary source of guaranteeing the policies.. they need to have a reserve that are usually backed with bonds..

we can have a difference in opinions but these are facts ...

you can build a 200-300 cash value policy that still builds cash fine..

when you're in retirement .. the life insurance is much safer than the markets because you don't lose your principal .. a life insurance product allows you to pull much more than a 4% rule because it's not as risky..

again you can disagree about certain things but the facts are that life insurance has a better risk profile than a 50/50 retirement account or whatever they recommend these days

[Captain Save]

Ok, let's stop talking in fantasy and show us all how this actually works in the real world.

I am a 52-year-old male non-smoker non-overweight in perfect health on no medications.

I currently have a $1.5 million term policy for which I pay $210/month.

How much would it cost me to replace that with a whole life policy if I walked into your office right now?

what is the purpose of your policy .. are you looking for pure death benefit or are you trying to build cash value..

if you're trying to build cash value for retirement.. ideally you would need to be younger...

so I would not blindly offer you a cash value policy if you're trying to retire in 10 or even 15 years..

also if the purpose is to build cash value .. I would get you as low of a death benefit i can get .. and get you a separate term policy.. and as your term policy expires .. your increasing death benefit on your permanent policy would be approaching the 1.5 million you wanted ..

let me know if that doesn't make sense

so I 'll take this moment to put the disclaimer for cash value life insurance for retirment..

- you need to be good to great health .. if you're less than standard ..the cost of the insurance would drag the cash value down ..
- ideally you want to be in your 30's or 40's .. the older you are the more cash you need to put in that policy .. but the IRS will limit how much cash you can put in based on the face amount ..
- also you want to let it accumulate for 20-30 years to get a freat IRR .. as I've mentioned before the costs are higher initially .. it's not a great short term investment.. you usually break even between 5-10 year mark .. but once you do .. the IRR keeps going up where you can easily achieve a conservative 5-6 % .. .and yes if you had whole life in the 80's and 90's .. and your policy was blended properly .. you would have a higher IRR

[DavidLewis]

How much would it cost me to replace that with a whole life policy if I walked into your office right now?

I have no idea. Why do you want whole life insurance?

[disneysteve]

what is the purpose of your policy

Why do you want whole life insurance?

Great question. So a customer walks into your office (either of you) and says, "I need life insurance so that my family is taken care of after I die." What has to occur next to make you recommend whole life over term?

As for me, I want life insurance. That's it. I want my wife to get a big old check when I die.

[Captain Save]

Great question. So a customer walks into your office (either of you) and says, "I need life insurance so that my family is taken care of after I die." What has to occur next to make you recommend whole life over term?

As for me, I want life insurance. That's it. I want my wife to get a big old check when I die.

When does your term policy expire?

once you policy expire .. do you still have a plan to leave your wife the 1.5 mil

the goal is not to recommend whole life over term... the goal is to offer the client the best solution ..and often times when someone is in his 30's and 40's .. whole life is a great option ...that's why they say to capitalize now and not wait until it's too late..

the good news is life insurance prices have been coming down .. and some 50+ year old who want stuff cash in a permanent policy still have some good options out there but your end goal has to be to build cash value..

[DavidLewis]

Great question. So a customer walks into your office (either of you) and says, "I need life insurance so that my family is taken care of after I die." What has to occur next to make you recommend whole life over term?

As for me, I want life insurance. That's it. I want my wife to get a big old check when I die.

I don't recommend one over the other because they both serve different purposes. If you want your wife to get a big old check when you die, then your probability of payout favors permanent insurance, not term. And if all you want is a death benefit, that's guaranteed no-lapse UL.

[Captain Save]

I don't recommend one over the other because they both serve different purposes. If you want your wife to get a big old check when you die, then your probability of payout favors permanent insurance, not term. And if all you want is a death benefit, that's guaranteed no-lapse UL.

yup GUL is the cheapest form of permanent death benefit.. but it won't be close to 210/month

[GoodSteward]

I wasn't ashamed of selling insuirance, I was concerned about my reputation as a minister. I couldn't afford to be seen as someone always trying to sell you something. As a salesman you have to earn trust, and most won't take you serious. As a matter of fact I was planning to get my securities license to offer investments on top of the term.

This has been drug out a lot but all we have done is spit out random generalities. If you can show me the numbers with a real, mature policiy, and compared it to a common index funs and show me how the policy was the better option, then I'll change my stance. Those policies you are throwing out are very expensive. What do you offer people that are on a limited budget but want to start an IRA and get insurance?

Do you have any other products you sell or just insurance?

[disneysteve]

If you can show me the numbers with a real, mature policiy and compared it to a common stock and show me how the policy was the better option, then I'll change my stance.

Good luck with that. And let me know if you see any unicorns wandering around.

[GoodSteward]

Good luck with that. And let me know if you see any unicorns wandering around.

I meant index fund, not common sock. haha

[Captain Save]

I wasn't ashamed of selling insuirance, I was concerned about my reputation as a minister. I couldn't afford to be seen as someone always trying to sell you something. As a salesman you have to earn trust, and most won't take you serious. As a matter of fact I was planning to get my securities license to offer investments on top of the term.

This has been drug out a lot but all we have done is spit out random generalities. If you can show me the numbers with a real, mature policiy, and compared it to a common index funs and show me how the policy was the better option, then I'll change my stance. Those policies you are throwing out are very expensive. What do you offer people that are on a limited budget but want to start an IRA and get insurance?

Do you have any other products you sell or just insurance?

Here is an actual policy from the bogleheads forum ..

https://www.bogleheads.org/forum/viewtopic.php?f=1&t=50626&sid=77c6a8540566d2cf19281616d8a007c7&start=50

this definitely outperformed the market.. and granted I never sell rosy outcomes about outpeforming the market.. it's about steady growth ... but the greatest benefit of permanent life is the ability to take money out . .you are not hamstrung by the 4% rule... a person could never put that much into a roth ... so they'd have to put some of this in a taxable account.. the flexbility and the liquidity ...

I bet you still won't change your position.. but I'm pretty sure you're learning a little bit more than you knew before ..

.. I wouldn't post a client's policy even with the name blurred out.. that's too iffy ... maybe a family member if they're ok with it . .. and mine but I'm uninsurable so I don't have a policy on myself .. I tried to get one 10 years ago before I knew anythign about it.. I was denied.. my health got worse since then .. also I've only been licensed for a year .. but I've done policy reviews with clietns who had crappy products that still had a 4-5 % IRR

[Captain Save]

the policy above is with Northwestern Mutual while is a good company ... I can think of 4 or 5 companies that have better whole life products...