I concur...good points

Thanks for these points as these questions are frequently asked about cash value life insurance.

First I would like to point out that Cash Value insurance does have its Pro's and Con's and I didn't really go into the differences between investing in a SEP, Traditional, Roth, or 401K plan. While there are always good and bad things to any investment vehicle, I BELIEVE that Cash Value Insurance could be the best for some valid reasons.

1. Yes, cash value insurance is paid with after tax dollars at today's current rate. But I have talked and read a lot of taxation and truely believe that taxes will be higher (possibly much higher with Social Security problems, etc) when we are older so all of the money that is in a SEP IRA or 401K could be taxed at a much higher rate.

2. If you want to research about the tax free withdrawals you will find that you can "borrow" money from your cash value that is not taxed. If you withdrawal all of your cash value and lapse the policy then you have to pay taxes, but as long as you "borrow" under the maximum allowed you don't ever pay any taxes.

3. It is not as easy as you think to get money from a 401k. A traditional retirement plan is much harder to get at than cash value insurance. The reason the government is giving you tax treatment in 401k's and IRA's is so you won't touch it until 59 1/2, and they do a great job of keeping it that way.

4. The cash value policy that I was recommending is a "Variable Universal Life" policy from Pacific Life. The Seperate accounts are managed by large mutual fund companies like Fidelity and American Funds. Cash value insurance has really made it easy for people to take care of life insurance and retirement planning all in one. When you add in the tax benefits it makes it even that much more appealing. A VUL policy is extremely flexible as you only have to meet a minimum payment for the entire year. VUL is also permanent insurance so you only have to qualify the 1 time for it.

Term Life insurance is like "renting" insurance. You only have it for a certain period of time and then have to requalify for it every renew period. (which can be much harder to do when your older or develop a medical condition). Also, they cancel your Term policy if you miss one 30 day payment, so losing your job or not paying is way more serious in a term policy.

I don't think Term insurance is a bad idea but with a VUL you can take care of savings as well as insurance. You can give someone a great plan that involves term insurance and another investment vehicle or two, but that complicates things for the average investor, and usually ends up with the person not saving any money for things like college or retirement.

5. The IRS can't just tap into your cash value insurance investment during an audit like regular investments. Cash value insurance is protected heavily by insurance companies and can only be looked at in very special circumstances - which is not a situation many of us would be in.

6. The reason I am working in this industry is becuase I truely believe that everything I do is WIN-WIN-WIN.

1. When I help someone invest for their future, they will be making money in the long run, protecting their families, getting out of debt, and reaching their financial goals.

2. The companies I represent will be making money with the invested funds so they are happy too.

3. Plus when I recieve a commission it is from the companies I represent and NOT the client, so I feel more comfortable than I would charging a fee from them or charging a percentage of THEIR assets.

If you have any other questions feel free to ask.

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spoken like a true commissioned advisor.

Nothing personal but I've been screwed by an American Express Advisor selling just what you are pitching, a VUL. We never should have been put into a VUL because we couldn't afford to pay the high premium that was required to get the amount of life insurance that we needed, so what did he do? He put us into a policy that we could afford, without enough life insurance. So basically he made sure that he still made his lofty commission, regardless if we had enough insurance or not.

A ROTH IRA is paid with after tax dollars at TODAY's tax rate and then grows tax free. Most truthful advisors that I've talked to suggests first and foremost if you have an employer match 401k take the maximum match, then dump the rest into a Roth, if you max that out then look for more investments. When you get to the point of maxing out a Roth, I would suggest checking out Dave Ramsey's website and talk to one of his Endorsed Local Providers in your area.

edit:

I have to apologize for being kind of harsh, just everytime I think of what that scum at amex did i get pissed off. The overall idea that was being made in the article is great, just be careful with who you trust to do your financial advising.

Just to clear some things up.

Cash value insurance is not for everyone. The average investor who purchases a VUL would only be paying what they could afford. (100K death benefit, $150 a month, $50 of it towards insurance and $100 to your investment for example)

To clear up some of the confusion, in the article I said that "front loading" cash value insurance was the best IMO when hitting a big score. What this means is putting a very large chunk away for the next 5 years in a row and then NEVER putting money into the policy again. (unless you want to add to the investment portion later on in life, 10+ years)

By front loading it correctly, the policy should start to grow rapidly and the front loaded investment should cover easily the cost of insurance for the rest of your life.

Yes, the investment could fall and you could lose some of the investment but that is part of the risk of any investment you take.

You should see how many 401k and 403b plans Ive seen where the fees have been so high and the mutual fund so bad (since you can't choose your own company in a 401k plan) that they are actually losing on their principal! (over many years)

A 401k plan is only a good investment IF you are getting an employer match, which is a very small percentage of poker players. Plus the only reason a 401k is good is the extra free money so I don't recommend a 401k without the employer match.

Lastly I did mention a Roth IRA as a really good investment as cash value insurance has the same concept as a Roth IRA (grows tax free - tax free withdrawal) but I pointed out that there is a limit each year to a Roth - which is $4k a year.

Some people have $25k - $100k -$250k and more to invest, which can be taken care of by "front loading" cash value insurance.

PS Here is very my own VUL Policy.

Pacific Life VUL - $500,000 Death Benefit - $14,800 front loaded each year for 5 years - Cost of Insurance is around $67 a month while the rest is alllocated in an array of growth mutual funds.

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