Indexed Universal Life Insurance

[Wayde]

Nor should they. Your retirement account is a LONG TERM investment. You shouldn't be watching it on a daily basis. You shouldn't be constantly trading or adjusting it. You should set up your desired asset allocation and check in maybe quarterly and readjust as needed

.

Check it quarterly? Ask the 55 yr old who has their money in a 401k about to retire and see if they are happy that they only checked it once or twice a year. This is the reason why so many people who have been saving for 10,20,30,40 years and all of sudden their nest egg is a Quarter of what it used to be.

First off, you are lumping together things that simply don't go together. 401ks and IRAs are types of accounts, not types of investments, so saying they are a "thing of the past" makes no sense at all. And mutual funds span the spectrum of types of investments - stocks, bonds, real estate, commodities, precious metals, etc. so to just use the term "mutual fund" and say anything good or bad about it also doesn't make sense.

Thing of the past was just me talking. What I meant is, we live in a time frame where the market is very volatile. To use the past strategy like Buy and Hold and only look at it 2-4 times a year is very dangerous. Especially for those who have been saving and don't have much time left before retiring.

As for promoting "active management", virtually every study ever done has shown that active management results in worse returns over time. Index funds that track the market always outperform over the long run. Sure there will be times when an individual beats the market average but it can never be sustained. So telling people to give up on passive investing in favor of active management is pretty irresponsible advice.

Passing Investing, Active Management, etc...are all strategies...Again, there is no one magic formula but diversifying within these forms of strategies, just like we diversify our investments, should be carefully looked at.

I won't even comment on this statement. I think it has already been adequately addressed.

So tell us, Wayde, what do you do for a living?

My goodness. I'm just like all of you. Doing my research and giving my opinions. And yes, I've been in the Financial Industry for 15 years. Insurance, Securities, etc...

[Scanner]

Yes, there are good and bad insurance agents. . .the problem I think you having with the forum is insurance is meant for insurance, not investment. If you confound and complicate the two, the customer usually ends up being taken for a ride.

I have a good ins. agent and I went through him for my term life insurance policy. He handles my auto and home and business too.

I thought about renting my house out for the summer this year and I sat down with lunch with him to discuss the implications from a landlord/tenant type of insurance and potential liabilities, etc.

In that, yes, he's been on "my team" the last 15 years (he doesn't sell malpractice so I have another brokerage for that) and I'd rather actually go through him vs. shop for a Discount/No-Broker insurance online (GEICO/Progessive). I want someone watching the ratings (AAA or AA at least) and someone who knows the company won't tighten up tighter than a snare drum when a claim is filed.

And let's face it - financial advisors sell insurance also (when they are licensed).

So, I know the two entities are getting "mixed up."

Still, if you are going to do financial advising, the core investment strategies would be:

401(k)'s/403(b)'s
Roth IRA's
Traditional IRA's
529's/Education IRA's

I think this would handle 95% of 95% of the populations needs.

I am not saying there isn't a place for whole life/universal life/cash life insurance or annuities (kind of like "death insurance"), but it appears to be misapplied based entirely on a hefty commission process.

I always thought the fairest way to go about financial advising was charging a 1% advisor fee for products held in house. And then keep insurance seperate from that.

[jpg7n16]

Oh, call the SEC and say 401K's are not Investments.

They aren't. 401ks are types of accounts. The mutual funds IN the 401k are most definitely investments.

The 401k is the house, the mutual funds are the furniture. So, call your local furniture store and tell them a house is not furniture. They'll likely say what the SEC would say, "Yeah. We know."

So what does the SEC have to say about 401ks?

From: SEC.GOV - 401(k) Questions and Complaints

The Securities and Exchange Commission does not regulate or oversee retirement plans, such as pensions or 401(k) plans. If you have a question about your retirement plan, please contact: U.S. Department of Labor, Employee Benefits Security Administration...

From: US Department of Labor - 401(k) Plans For Small Businesses

Investing 401(k) Plan Monies - After you decide on the type of 401(k) plan, you can consider the variety of investment options

Nothing will save you from market crashes? Doesn't selling your investments before it crashes, save it? Yes, if you leave it alone...you are just recovering your lost when the market comes back up. Why not sell before the crash and buy when it's recovering?

Yes, there are no crystal balls. Having an Adviser is different from having it Actively Managed.

I believe you answered your own question.

[disneysteve]

Why not sell before the crash and buy when it's recovering?

Yes, there are no crystal balls.

You answered your own question there.

If I was an insurance agent, why all the hate? There are good Ins Agents and bad ones. You make it sound like they are all bad.

Note that I did not write insurance "agent." I wrote insurance "salesman." Somebody who actually take the customer's needs into account and recommends products that are truly appropriate for that person's needs is a good agent. Somebody who tries to talk customers into lousy pseudo-investments is not an agent. He is a salesman, and a sleazy one at that.

Check it quarterly? Ask the 55 yr old who has their money in a 401k about to retire and see if they are happy that they only checked it once or twice a year. This is the reason why so many people who have been saving for 10,20,30,40 years and all of sudden their nest egg is a Quarter of what it used to be.

First off, "once or twice a year" isn't quarterly last time I checked. Secondly, I will agree that someone about to retire ought to be watching things a bit more closely although even then, they've got to remember that they need to make that money last for 30 years. They can't just cash out and stash the money in their mattress.

If someone is about to retire at 55, good for them. That means they have saved well and accumulated substantial wealth to be able to retire so young. If, however, someone has been saving for decades and suddenly finds their balance down 75%, they've been doing a really lousy job of diversifying their portfolio. You'd have to have some majorly risky investments to see that kind of drop.

To use the past strategy like Buy and Hold and only look at it 2-4 times a year is very dangerous. Especially for those who have been saving and don't have much time left before retiring.

Same answer basically. For someone early in their investing life or mid-way into their careers, I'd still propose a buy and hold strategy, dollar cost averaging and not over-managing the portfolio. I'm 47 and haven't made any changes to my portfolio holdings for several years. I just keep sending money in month after month after month. For the person within a few years of retirement, changes do need to be made to dial back the risk and shift into more of an income stream and capital preservation mode without forgetting there is still a 30-year timeline ahead of them.

[dczech09]

Wayde, I have no "hate" towards anybody. Ask any of my friends and they will tell you that Devin and hate do not go together. I simply disagree with the way cash value insurance is sold today. It is sold as a "psuedo-investment" to quote DS. It is sold by sleazy salepeople, again from DS.

To call any cash value policy an investment triggers a "BS detector" in my mind. There are few things that grind my gears in this world, but that is definitely one of them. I have seen and heard of too many people getting taken for a ride with cash value policies under the guise that it is supposed to help them in their golden years. Last time I checked, insurance is about protection, not "getting something back."

It is illegal to call cash value an investment when selling. Its called malpractice, but most cases only go to arbitration and not class action because it is tough to prove negligence on the financial advisor's part.

Now if sleazy salesmen want to tinker with their little whole life insurance policies, treat it as an investment, and "bank on themselves" then they are free to do so. They can screw up their own finances and I won't care because they brought it upon themselves. But for these people to take advantage of innocent people with no formal training on financial products- I am going to bust on these con-artists.

Yes, intentionally selling a cash value policy as an investment and getting an innocent person's hopes up does make the salesperson a con-artist. I have seen these con-artists in action with my own eyes.

There are a few good intentioned people who were just as uninformed as the customer. But a lot of insurance salespeople let the truth go in one ear and out the other. They dismiss the truth because they do not want to have cognitive dissonance haunt them. Ego rises, their mind is closed, they see money is to be made, and unsuspecting people end up getting hurt.

That is why this forum exists. To fight asymetric information.

Side note: Comparing cash value insurance to a garbage can is only extreme if you think cash value is the best thing since sliced bread. Last time I checked, I wouldn't even be able to buy sliced bread with cash value as any BORROWED amount has to be REPAID. But seriously, cash value insurance is garbage once you understand that the NEED for life insurance is not permanent for most folks.

Onto investments...

You just said that there is no crystal ball. Guess what? Nobody can time the market consistently. So what good is trying to sell out at the top and buy in at the bottom. I cannot do it consistently, DS cannot do it consistently, and I would be willing to bet some big money that you cannot do it consistently. The fact is no one can do it. So why should someone get their investments "actively managed" by some Joe Schmo who claims to understand the wild beast that is the stock market? Last time I checked, this is how we have 55% of baby-boomers not able to retire at 65.

Buy and hold is not a strategy, it is a principle. It is the principle of having resolve when the market goes soft, and having vision when the market goes up. Its about NOT jumping off the roller coaster while it is in motion.

Buy and hold is not practiced that much these days. Having 2-4 year window is not "buy and hold." Do people need to adjust their portfolios as they get older? Yes they should. But they do not need to do it every single day.

When wealth preservation becomes the goal, too many people fail to realize that risk is two sided and that their nest egg needs to survive for some more time. Sinking everything into low risk/low return investments is a dumb idea. Guess what? Savings accounts do not outpace inflation and taxes.

[Robert742]

It is illegal to sell life insurance as an investment. Life insurance has tax advantages precisely because it is insurance, and not an investment.

But the value of cash value life insurance is the cash value grows over time, and can be used for policy loans or withdrawals. Thus, agents often sell it based on the "living" benefits.

If it is crooked to sell cash value life insurance based on its ability to build cash value and/or pay dividends, how should it be sold?

What type of business opportunity exists to properly educate agents about permanent life insurance, when the education leads to the conclusion it is not something which should be sold?

Avoiding an insurance agent's cash value life insurance pitch is sound advice, because the product is too complex for the average consumer to objectively decide if it is a wise purchase for them. Usually, it is an extremely poor choice.

Most insurance agents are dangerous because they are NOT sleazy sales people; they are usually nice people who sincerely care about their clients. But agents are not trained, have the knowledge/expertise, or inclination, to provide objective, fiduciary insurance or financial planning advice.

The agent may tell you about one of their clients, putting their child through college during a market crash, and how they used the "safe" money accumulated in their whole life policy, to pay their child's tuition. The agent won't know there may have been a much better way to have saved for the college education. The agent only knows this client was very happy to have purchased cash value life insurance.

The agent most likely uses cash value life insurance for his own kid's tuition. Though, there is the old joke about the best way to use cash value life insurance to finance your child's education is to sell it. Few agents think they are suckering you; they drink the koolaid themselves. But the commissions they earn cures them of any poison within the koolaid. Their clients may not be so lucky.

I think cash value life insurance has its place for some customers.

In the spirit of asymmetry, I would like to see one of you mathematical types reverse engineer a specific whole life insurance policy from a company like Guardian, to see what the expected IRR would be, over how long a holding period, to see if this type of life insurance has value for anyone.

As it has been wisely pointed out, it's hard to find an insurance agent knowledgeable about this product, and the agents appearing well informed rarely have any criticism about it, other than some people can't afford it.

[dczech09]

But the value of cash value life insurance is the cash value grows over time, and can be used for policy loans or withdrawals. Thus, agents often sell it based on the "living" benefits.

The living benefit argument is a crock. It is a benefit to have another option to borrow money from? The cash exists for one reason- government regulation. All the cash value is is excess premium that the policyowner can take when they cancel the policy since they were never liable to pay that premium yet.

The younger you are, the lower risk you are. The older you are, the higher risk you are. Yet the premium stays level and does not reflect the amount of the risk that the carrier is taking on. That is why the cash value exists in the first place.

Have you ever asked yourself why no other type of insurance has cash value? Also, why is it that there are no permanent life insurance policies without cash value? It is all regulatory yet it has been twisted to be a "benefit" to people so that insurance companies can sell the policies. They want to sell these policies because they make the most money on them.

The insurance company does not make money when they provide coverage. They make money when they can invest excess premiums and generate a return. The high premiums of permanent life allows for this.

If it is crooked to sell cash value life insurance based on its ability to build cash value and/or pay dividends, how should it be sold?

Life insurance should be sold as for what it is. Insurance.

I never said cash value insurance had no value. I said that cash value insurance is not an investment.

A permanent life insurance policy makes sense when someone has a PERMANENT need for life insurance. It can also be used as a secondary policy for someone who WANTS additional coverage, once they have covered all other financial matters. Such a case would be in estate planning.

There is a basic need for life insurance. There is a want for life insurance. The two of totally different.

What I dislike is that these policies are irresponibly sold as investments. Even though it is illegal to do so, many salespeople still do this and get away with it. And as a result people get into stupid messes.

You mentioned that people should not buy these policies if they do not understand them. I could not agree with you more. People should not buy a financial product that they do not understand.

However we live in a culture where the majority of people are not financially literate. These people take their advice and base their decisions on what a salesman in a fancy suit says.

Salesmenship 101 taught by Dewey Cheatem & Howe. How can we sell a life insurance policy for something other than what it is intended for? Misrepresent the product! Of course! The consumer won't know the difference and this buys me time to run for the hills!

That last part may have been a little "cartoony." But is it ever any wonder why life insurance salespeople rarely make a career out of it?

[Wayde]

Words

You know, the more I read my posts and other people's replies and vice versa...it's a never ending battle...not anything productive. It seems like all we do is turn each other's sentences around and try to make it look bad.

Instead of doing this...cause it's not going anywhere...and not helping those who really need some helpful tips.

Why don't we share the actual Pros and Cons of the particular vehicles, Life Insurance or not. Oh, and let's not share opinions but actual facts about how each vehicle works. I believe in this way, when people come to this forum for help...they don't see a bunch of people arguing and debating cause they FEEL it's bad or Think it's bad etc... but they find information, comparisons, etc...and hopefully they can make a good decision after coming to this forum...Sorry, it's 3am in the morning so I apologize for my english grammar

Example: Please Add On...

Term Life
Pros Cons
Cheapest form of Life Ins Not permanent

Cash Value Policies
Pros Cons
Permanent more costly
Tax deferred Growth cap on upside growth
Minimum Interest earned
Loans/withdrawal for Access

401K
Pros Cons
Multiple Funds to choose from penalties for early access
No cap on growth no minimum on losses

Now add on, but again...

[dczech09]

Example: Please Add On...

Term Life
Pros Cons
Cheapest form of Life Ins Not permanent

Cash Value Policies
Pros Cons
Permanent more costly
Tax deferred Growth cap on upside growth
Minimum Interest earned
Loans/withdrawal for Access

401K
Pros Cons
Multiple Funds to choose from penalties for early access
No cap on growth no minimum on losses

Now add on, but again...

Term:
Pros
Cheaper, cheaper, and cheaper.
Allows more money to go towards investments.
Easier for regular folk to understand.
Can be purchased to fit ones needs.
Fits the scope of the need for life insurance, which is not permanent for most people (not an opinion- fact)

Cons
When the policy expires, there is no more coverage.

Permanent:
Pros
Good for those with special needs and a legitimate permanent need for life insurance.
Only option available for those who need coverage past 30 years.

Cons
Sold as if it were an investment.
Does not provide a tax benefit despite what salespeople would have you believe.
The cash value is the property of the insurance company (says so in the contract)
Much more expensive that term.
Feeds this idea that the need for life insurance is permanent.
Accessing the cash value requires an application, about 60 days notice, and interest to be paid back to the insurance company.
Operates much like a home equity line of credit.
When you die, your beneficiaries only get the death benefit (not the cash value)
If you surrender, the insurance company takes a bite of your money so that your cash value does not exceed the tax basis (total of premiums paid) thus creating the illusion that the insurance company is doing you a favor.
Sold as a "bank on yourself" scheme which has screwed a lot of people over.

Look Wayde. I have posted facts. You have posted opinions. Your opinions are based on the assumption that the cash value is an investment. However I can point out numerous reasons how the cash value is not an investment or savings.

The most basic one is that the cash value is not the property of the policyowner. It is the property of the insurance company.

Also when you pull money out it, it is a loan that is repaid to the insurance company. It is not paid to the policyowner because they don't even own the darn thing in the first place.

The cash value is said to build "tax deferred" because if you surrender your policy, you get your money back with no taxes most of the time. There is no taxes because the cash surrender value almost never exceeds the tax basis. So it creates this illusion that is nothing more than false.

May I also point out that surrender is the only way you get the cash value- which means the coverage is gone. So you get either the cash value or the death benefit. Not both.

You cannot consider this an investment because what you have paid in is almost certain to exceed what you get back. If by some stroke of a mericle there was a growth in the cash value that made it exceed tax basis, the taxes would still cut it down to such a minimal amount that it would be hardly worth noticing. Inflation will crush the rest as cash value growth usually doesnt even cover inflation. So where is there is possible return on investment? Oh thats right! If the unrealistic projections go into fruition.

Some people say "hey my cash value grew $10,000! Party!" But if they paid in $50,000 in premiums, they still have a $40,000 loss don't they? Of course a life insurance salesperson would view this as a positive.

Any tax benefit of the death benefit is a wash because term insurance has the same benefit.

All of these things prove that the cash value is not an investment or savings account. Am I getting through to you at all?

I have got my information from the following:
Securities and Exchange Commission
Internal Revenue Service
Financial Industry Regulatory Authority
Series 6 manuals
Series 7 manuals
State Insurnace manuals
Kiplingers Personal Finance
Fidelity

I also subjected myself to a 124 page research report by Richard Weber, MBA, CLU and Christopher Hause, FSA, MAAA. The report was titled Life Insurnace as an Asset Class. Rather than indoctrinate me, the report further allowed me to understand the product differently and further grap that it is not an investment. Isn't it surprising that a research report actually made me conclude the opposite of what it taught?

You see, I have done something that you have not done. I have read stuff, researched, articulated, and understood these policies for what they really are. You on the otherhand are going with the industry mindset. All you have done is try to indoctrinate people into this industry theory. You are a follower. You also have a bias because you are in the industry and sell these things.

The only reason why the industry constantly pushes this as an investment is because "you get something back for your money" whereas with term "you just pay and pay and pay premium and get nothing back." This totally ignores what insurance is supposed to do. Provide coverage. The coverage alone should be worth the cost of admission.

As I said before, the value of permanent life insurance has to do with the fact that it is permanent. Anything regarding it as an investment needs to be thrown out the window because its all theory.

[Petunia 100]

You know, the more I read my posts and other people's replies and vice versa...it's a never ending battle...not anything productive. It seems like all we do is turn each other's sentences around and try to make it look bad.

Instead of doing this...cause it's not going anywhere...and not helping those who really need some helpful tips.

Why don't we share the actual Pros and Cons of the particular vehicles, Life Insurance or not. Oh, and let's not share opinions but actual facts about how each vehicle works. I believe in this way, when people come to this forum for help...they don't see a bunch of people arguing and debating cause they FEEL it's bad or Think it's bad etc... but they find information, comparisons, etc...and hopefully they can make a good decision after coming to this forum...Sorry, it's 3am in the morning so I apologize for my english grammar

Example: Please Add On...

Term Life
Pros Cons
Cheapest form of Life Ins Not permanent

Cash Value Policies
Pros Cons
Permanent more costly
Tax deferred Growth cap on upside growth
Minimum Interest earned
Loans/withdrawal for Access

401K
Pros Cons
Multiple Funds to choose from penalties for early access
No cap on growth no minimum on losses

Now add on, but again...

It is true that a cash value policy can provide tax deferred growth. However, that growth will eventually be taxed at ordinary income tax rates. I suggest to you that this feature is a disadvantage. Instead of having your growth taxed as ordinary income, you could instead invest the same dollars in a nice rock-bottom-cost index fund. It will throw off some taxable income, but the bulk will be taxed at long-term capital gains rates, which are substantially lower than ordinary income tax rates.

[Wayde]

Term:
Pros
Cheaper, cheaper, and cheaper.
Allows more money to go towards investments.
Easier for regular folk to understand.
Can be purchased to fit ones needs.
Fits the scope of the need for life insurance, which is not permanent for most people (not an opinion- fact)

Cons
When the policy expires, there is no more coverage.

Permanent:
Pros
Good for those with special needs and a legitimate permanent need for life insurance.
Only option available for those who need coverage past 30 years.

Cons
Sold as if it were an investment.
Does not provide a tax benefit despite what salespeople would have you believe.
The cash value is the property of the insurance company (says so in the contract)
Much more expensive that term.
Feeds this idea that the need for life insurance is permanent.
Accessing the cash value requires an application, about 60 days notice, and interest to be paid back to the insurance company.
Operates much like a home equity line of credit.
When you die, your beneficiaries only get the death benefit (not the cash value)
If you surrender, the insurance company takes a bite of your money so that your cash value does not exceed the tax basis (total of premiums paid) thus creating the illusion that the insurance company is doing you a favor.
Sold as a "bank on yourself" scheme which has screwed a lot of people over.

Look Wayde. I have posted facts. You have posted opinions. Your opinions are based on the assumption that the cash value is an investment. However I can point out numerous reasons how the cash value is not an investment or savings.

The most basic one is that the cash value is not the property of the policyowner. It is the property of the insurance company.

Also when you pull money out it, it is a loan that is repaid to the insurance company. It is not paid to the policyowner because they don't even own the darn thing in the first place.

The cash value is said to build "tax deferred" because if you surrender your policy, you get your money back with no taxes most of the time. There is no taxes because the cash surrender value almost never exceeds the tax basis. So it creates this illusion that is nothing more than false.

May I also point out that surrender is the only way you get the cash value- which means the coverage is gone. So you get either the cash value or the death benefit. Not both.

You cannot consider this an investment because what you have paid in is almost certain to exceed what you get back. If by some stroke of a mericle there was a growth in the cash value that made it exceed tax basis, the taxes would still cut it down to such a minimal amount that it would be hardly worth noticing. Inflation will crush the rest as cash value growth usually doesnt even cover inflation. So where is there is possible return on investment? Oh thats right! If the unrealistic projections go into fruition.

Some people say "hey my cash value grew $10,000! Party!" But if they paid in $50,000 in premiums, they still have a $40,000 loss don't they? Of course a life insurance salesperson would view this as a positive.

Any tax benefit of the death benefit is a wash because term insurance has the same benefit.

All of these things prove that the cash value is not an investment or savings account. Am I getting through to you at all?

I have got my information from the following:
Securities and Exchange Commission
Internal Revenue Service
Financial Industry Regulatory Authority
Series 6 manuals
Series 7 manuals
State Insurnace manuals
Kiplingers Personal Finance
Fidelity

I also subjected myself to a 124 page research report by Richard Weber, MBA, CLU and Christopher Hause, FSA, MAAA. The report was titled Life Insurnace as an Asset Class. Rather than indoctrinate me, the report further allowed me to understand the product differently and further grap that it is not an investment. Isn't it surprising that a research report actually made me conclude the opposite of what it taught?

You see, I have done something that you have not done. I have read stuff, researched, articulated, and understood these policies for what they really are. You on the otherhand are going with the industry mindset. All you have done is try to indoctrinate people into this industry theory. You are a follower. You also have a bias because you are in the industry and sell these things.

The only reason why the industry constantly pushes this as an investment is because "you get something back for your money" whereas with term "you just pay and pay and pay premium and get nothing back." This totally ignores what insurance is supposed to do. Provide coverage. The coverage alone should be worth the cost of admission.

As I said before, the value of permanent life insurance has to do with the fact that it is permanent. Anything regarding it as an investment needs to be thrown out the window because its all theory.

You keep saying that I am saying that Cash Value Policies are Investments? I have never said that and if you look at some of the postings I have stated it is not an investment. If you believe I stated a fact that is not part of the vehicle, just state so and we will look it up. I know you don't like Cash Value policies, that doesn't make there bad. Again...stick to the Pros and Cons of each vehicle. You have done a lot of research and I respect that. Again, put the research in the Cons and Pros. You have stated that I'm stating opinions...well, point out which one and so it can be corrected. You have posted an opinion too! You say that Cash Value policies are being sold as Investments. That again is an opinion or your own experience with some agents.

[dczech09]

Wayde, your pros were under the assumption that it is an investment.

Tax Deferred Growth? How the heck is there growth? The cash value almost never exceeds the amount of premiums paid. By paying into this, people are sinking money into a pit in which they will never retrieve it.

You seem like a fairly astute guy. So tell me, how can you say it has tax deferred growth one minute, and then turn around and say its not an investment. I just read through the entire thread and you keep contradicting yourself.

[jpg7n16]

Instead of doing this...cause it's not going anywhere...and not helping those who really need some helpful tips.

Why don't we share the actual Pros and Cons of the particular vehicles, Life Insurance or not.

Sounds like a great idea. Especially since you missed so much.

Example: Please Add On...

Term Life
Pros Cons
Cheapest form of Life Ins Not permanent

Pros:
Low premium allows for greater investment savings
Higher cashflow each month
Significantly higher protection levels for your money
Flexibility in coverage levels

Cash Value Policies
Pros Cons
Permanent more costly
Tax deferred Growth cap on upside growth
Minimum Interest earned
Loans/withdrawal for Access

Wait a sec, you can borrow your own cash value from the ins company, pay them interest to do so, and that is a pro? Okay...

Pros:
Once established, no preexisting conditions requirement
Can be purchased in business entities

Cons:
Commissions
Delay in cash value buildup
Loss in cash value at death
Surrender charges
Taxed on withdrawal (earnings)
Continues protection beyond the needed period (aka paying for what you don't need)

401K
Pros Cons
Multiple Funds to choose from penalties for early access
No cap on growth no minimum on losses

Pros:
Tax deferred growth (somehow you got this for cash value you don't keep, but forgot it on 401k's that you do)
Tax deduction on contributions (kind of a big deal)
Employer matching/contribution capability
Flexible investment variety
Easy to change investments
401k loan option (you said it was a pro for cash value, but forgot it here)

Cons:
RMDs
Taxed on withdrawal

Now add on, but again...

So when you say you've been in the industry 15 years, you mean the insurance industry don't you? No way you could be in the investment industry that long and leave out so much.

[Wayde]

Sounds like a great idea. Especially since you missed so much.


Pros:
Low premium allows for greater investment savings
Higher cashflow each month
Significantly higher protection levels for your money
Flexibility in coverage levels


Wait a sec, you can borrow your own cash value from the ins company, pay them interest to do so, and that is a pro? Okay...

Pros:
Once established, no preexisting conditions requirement
Can be purchased in business entities

Cons:
Commissions
Delay in cash value buildup
Loss in cash value at death
Surrender charges
Taxed on withdrawal (earnings)
Continues protection beyond the needed period (aka paying for what you don't need)


Pros:
Tax deferred growth (somehow you got this for cash value you don't keep, but forgot it on 401k's that you do)
Tax deduction on contributions (kind of a big deal)
Employer matching/contribution capability
Flexible investment variety
Easy to change investments
401k loan option (you said it was a pro for cash value, but forgot it here)

Cons:
RMDs
Taxed on withdrawal



So when you say you've been in the industry 15 years, you mean the insurance industry don't you? No way you could be in the investment industry that long and leave out so much.

Wow, it's pointless. If I sat here and listed every single pros and cons...what do we need you smart people for? I only just started it...I guess you fellas don't call earned interest compounded yearly without taxation not Tax Deferred? Well...this is my last post. Have fun reading everyday and arguing with folks while my earnings compound yearly with no taxation...called tax deferred growth...whether in an insurance product or in an investment vehicle. What I've learned from this forum is...well...nothing really...just that people debate and stab at each other for the sake of I believe I know more than you. I truly hope people don't come here for real Advice. Good Luck!

[dczech09]

Again, tax deferred growth assumes that the thing is an investment. Cool beans that there is this "tax deferred growth" but the cash value (and that "growth" for that matter) does not mean anything if its not your money. Thats what I have been getting at.

Some people just do not get it. Oh well, I still think this thread has some good information for some people.