So I'm mostly looking for the opinions of older people that have held permanent life insurance policies for 15+ years. I'm a financial advisor who is just starting out in the business. I made a post a couple months back about just missing my Series 7 by 6 questions. Well I passed it a few weeks back and am now moving forward w/ clients. I hold my Life & Health Licenses & Series 7 General Securities licenses.

I work for a very well respected company who preaches Life Insurance just as much as Investments. I feel that every person should have a mix of each depending on their individual and family situations. My concern is Life Insurance vehicles as an investment. Over the past couple of weeks I've been doing research and Dave Ramsey and Suzie Orman totally rip apart permanent life policies.

As everybody w/ a policy knows there is a 'Guaranteed' and a 'Projected' Column on permanent policies. I feel that I'm too young and have not seen enough older policies but it seems as though these 'projections' fall drastically short of their expectations from what many bad reviews are saying. I'm speaking mainly for whole life and NOT variable b/c I feel that a terrible idea all 2gether and I know many older variable policies have blown up.

Sorry if I'm kind of just rambling, but it looks like these permanent policies are unbelievable yielding 6-8% over 30+plus years and spitting out tax free money at retirement. I'm just worried that its too good to be true...

Any feedback appppreciateddddd

Yeah whole life and universal life are mainly what I'm dealing with. My thing is alot of people I'm dealing with are going to be people just starting out families and seeing what has happened to some of these policies in the past scares me.

It feels as tho they have corrected the situation with these old policies so it will not happen again. But who knows how things will be in 5, 10, years with these insurance policies let alone 30+years.

With that said, I guess you can say the same thing as far as uncertainty on the investment side.

Yea, I was just gonna say in our two offices we have three financial guys that deal outside of insurance options....only 1 of them really utilizes ULs as an investment vehicle due to other options being available and even so he only uses them in unique situations...and yes they're Variable ULs...goodcall nips

I got all my licenses about 5 years ago. The company I worked for only sold VUL's (loaded with fees) .

I didn't know this until I paid for and passed all my tests. I couldn't sell that to people because I know there were better options out there. I quit without making any money (actually, I lost a lot because I had to pay for my own tests). I just checked and I can't find the company's website anymore. GG.

 

Originally Posted by FistFights

Whole life is a scam. It is not an investment because the cash value portion that you pay a high premium to save up gets deducted from your death benefit when you pass away if you take it out as a loan and do not pay it back at interest before your time of death. So these people have the balls to "allow" you to take a loan against yourself only if you pay them back your own money on interest. They make it seem as though your cash value is a separate amount that is yours to keep and build up a "savings" for you but when you die if that money hasn't been used it goes strait to them and you only get the death benefit. It is so retarded its not even funny.

yeah, basically this is what I wanted to say but was having trouble coming up with the exact explanation.

 

Originally Posted by niptuck

THey were okay in some situations for individuals and some business owners and still are for soem Estate planning for large estates (over 5Million or so).

They have some tax advantages because of their loan feature but when the roth came out most planners realized that is prob best to buy term and invest in a roth for 'tax free' growth.

The commissions are much higher if you getsomeone to invest $150/month or something in perm life insurance instead of a mutual fund. Which may be why your company pushes them.

OTher than estate planning, I haven't recommended a permenant insurance policy for a client in 15 years because of the reasons above. THey are better than doing nothing but if you have a series 7, you have a lot more to offer clients than insurance investments. BTW you are prob referring to VUL, not Whole Life or reg UL I hope.

Nah, one of our main products is and Indexed UL policy tied to the performance of the S&P 500. It has a 1% floor and 13% ceiling. Over the last 20 years it outperformed the actual S&P by .75%. Even w/ 01' and 08' over the last 20 years its returned 8.4%.

It has 100% participation. Its clocked in on a specific predetermined day on a month by month basis. So its possible for the S&P 500 to have a down year, however, this policy to have a positive year, vice versa.

The thing is, you say OK I'm guaranteed 1% I've gotta be an idiot not to do it. But thats not true due to all the insurance costs, etc. So an actual breakeven is around 3%. So in reality, the S&P will yield at least a 6-7% return over the next 20 years and you will have a 4-5% TAX FREE growth.

So I'm looking @ all this trying to figure out why its not the greatest thing in the world...

 

Originally Posted by DoubleUp28

[/B]
Nah, one of our main products is and Indexed UL policy tied to the performance of the S&P 500. It has a 1% floor and 13% ceiling. Over the last 20 years it outperformed the actual S&P by .75%. Even w/ 01' and 08' over the last 20 years its returned 8.4%.

It has 100% participation. Its clocked in on a specific predetermined day on a month by month basis. So its possible for the S&P 500 to have a down year, however, this policy to have a positive year, vice versa.

The thing is, you say OK I'm guaranteed 1% I've gotta be an idiot not to do it. But thats not true due to all the insurance costs, etc. So an actual breakeven is around 3%. So in reality, the S&P will yield at least a 6-7% return over the next 20 years and you will have a 4-5% TAX FREE growth.

So I'm looking @ all this trying to figure out why its not the greatest thing in the world...

Now it sounds like an Index annuity with a life insurance rider packaged as a new type of UL. Learn the problems of UL with keeping the money in the insurance companies General Account instead of a seperate account.

The reason it may not be great is because you can buy cheap term life insurance and use the difference to buy an index annuity if that is what you want. I'm not saying what you are trying to explain in necessarly bad but it isn't the best thing in the world in most cases either.

IF you are describing the growth as TAX Free you are doing it wrong. It is prob tax defered and you can take a portion of the growth out thru a loan. But there are soooo many fees both in the growth stage, the insurance part, and the loan part that the actual IRR isn't as great as you may think. Also it may turn into a modified endowment contract (i think that's the name) if you borrow money out and then you run out of cash value and then the whole thing collapses and there are a bunch of taxes due and you may lose insurance coverage.

It doens't sound like you know how all the moving parts work yet. Good luck, it sounds like you are pretty motivated to learn.

buy term life, and invest the difference

only way to go.

 

Originally Posted by FistFights

this + infinity

unfortunetley working in the biz doing what is right for your customers won't put food on the table unless you plan their investments also. ive been told this by the people who actually become successful doing it.

I hope that isn't true of most experienced advisors. I can see where it may be true for many just starting out.

 

Originally Posted by gillabong

Life insurance? I got so much insurance I can insure your insurance.

you know reinsurance is an actual thing?