peanutbroker,

With all due respect, I recommend that you both get your CLU and talk to some very high net worth individuals.  The cash value has no meaning.  They care about the death benefit.

"1) 6.5% Gov Agency Bond in Roth IRA"

The amount that can be put into a Roth is irrelevant for the wealthy, but I certainly agree that everyone eligible should take advantage.

"2) Overfunded VUL with balanced portfolio of high quality sub accounts." 

The wealthy don't want to assume investment risk in their life insurance.  VUL might build cash better, but it is not better for the death benefit.  You can find plenty of people who have $100 million of whole life insurance, but I've never heard of anyone having large quanties of VUL like this.

"3) INSURED TAX FREE BONDS....duh!!!"

No.  The only way that an insured tax free bond will give approximately the same rate of return is if someone lives past their life expectancy.  If a person dies early, the life insurance blows this away.  In other words, getting the return of municipal bond is about the WORST CASE scenario.

You won't get an argument from me that whole life is often inappropriate, but it's a phenomanal product when used appropriately.

My response was not just for the wealthy, so the roth qualifies for plenty of people. It was a general response to what is better returning investment while the person is alive, not dead. Overfunded VULS give a much larger bang for the buck and it can be used for income. Straight up VULs carry a very large death benefit for a lot less money in premium. By the way you can get no lapse riders for 20 years on VULS too. Works well for those guys 55ish like you listed before. Although, if you run a VUL to endow and have it set to run at a modest rate of return it should way out perform death benefits than WL without the lapse riders. For you to assume that the wealthy don’t want to place their money in a diversified portfolio of investments and take a modest amount of risk for a much larger death benefit, you are out of your mind. Oh by the way, last time I checked TF Bonds work really well for income for the wealthy, since they are taxed by feds or the state while they are alive or dead.



I guess if your pure intention is to pass wealth via a death benefit from life insurance then it should work better than tax free bonds. If that is the intention, use a VUL driven by a diversified portfolio and if you client really desires it, get a no lapse rider. WL is NOT an investment and shouldn’t be treated as one. It is an insurance policy. If it was an investment it would be regulated by the securities regulators not the state insurance commissioners.

cont…



If it is all just about death benefit, then run a no lapse UL, cash value goes down overtime, but the death benefit is guaranteed and still higher than the darn WL. Again, a modest rate of return on a VUL with good subaccounts…not those policies where the subaccounts are run by the insurance company either. VULs with real Subaccounts that are run by real money managers (ie fidelity).

I agree that a guaranteed UL can work better than WL sometimes.  However, if you run the numbers, you'll see that this is only the case for older ages.  For younger ages, the initial premium is lower, but dividends will cause WL to be the better performer.

Personally, I'm not fan of taking investment risk with insurance.  The increasing annual insurance cost of VUL should be a major concern.  Have you ever seen a VUL that was not going to be in danger of blowing up in the future?  I've never seen one.  In theory, an overfunded VUL can work, but I've never seen one that the insured keeps overfunding.  If a policy is not overfunded continuously, or the cost of insurance increases, or the investments don't do as well as expected, or money is taken out of the policy too soon....  I'd rather see someone buy term and invest the difference before buying a VUL policy.

Just about everybody should own term insurance.  Plenty of people should also own permanent insurance. 

So you say the younger want to pay higher premiums for a lower death benefit while they are younger??? Young people need more death benefit to pay off their mortgages, leave money to replace income so the family doesn’t collapse. Young people also need to invest for retirement, they need their money to go further for them when they are young, not wait 25 years until the dividends start paying out which (finally) start to increase the death benefit. What you write is ridiculous.



ULs with no lapse riders work so much better for a death benefit than WL. Again, you pay less for a greater death benefit. If you want to use the cash, then run to endow at 4.5% and let it go, or run a VUL at 6.5% with a diversified portfolio and let it run. The sub accounts should run it unless it is the insurance company’s subaccounts. Hopefully the your company doesn’t use its owns subaccounts inside of VULs. Hopefully it allows you to use a “real” money manager.



Many people should own either term and or permanent insurance. You Insurance guys are brainwashed into thinking WL is the best choice for just about everything (insurance coverage, college, retirement). ULS and VULs work so much better for the young. No lapse ULs and VUls or conservative UL and VUls destroy WL for the older folks.



By the way, ran into a client again today, 35 paying 150/mo for WL policy. He is so proud because it will be worth 50k at 67 years old. Didn’t have the heart to tell him he could have been doing a small perm and some affordable term to get him the coverage he needs less than half that. The insurance guy did a number on this guy.

Anon o Mouse, go home already!  

[quote=anonymous]

I'd also recommend the topgunproducers website.  There are some brilliant things on the site pertaining to life insurance.

[/quote]

Do you hear a whoosing sound?  It's your remaining credibility going down the toilet.

How embarassing for you.

There it is, the A$$hole comment from NASD Newbie, what a friggin douc$ebag you are. 

[quote=NASD Newbie][quote=anonymous]

I'd also recommend the topgunproducers website.  There are some brilliant things on the site pertaining to life insurance.

[/quote]

Do you hear a whoosing sound?  It's your remaining credibility going down the toilet.

How embarassing for you.

[quote=joedabrkr]

So because they wouldn't tolerate your BS it flushes his credibility down the toilet?

Your logic is convoluted but amusing......
[/quote]

Nah, suggesting that there is something to learn pretending to be a soldier interacting with Humprey Bogart is what cost him his credibilty.

Anonymous has shades of brilliance and shades of the typical “insurance guy” not to be confused with the “your company’s computer guy” from Saturday Night Live. But not too different.   



You have contradicted yourself in your many posts and it is obvious to anyone who has read this thread.



There is nothing wrong with WL if you want all those guarantees…but you can get a larger bang bang for your buck or larger with no lapse ULs and VULs if what you are looking for is purley a beath benefit. If you are looking for growth in cash value, after 35 years the WL policies are great!   



I do not need a CLU to know that WL is a crappy product. I also don’t need a CLU to understand why it is greatly oversold.



I am sure many people on here sell insurance, but aren’t one of “those insurance guys”

Peanutbroker, you haven't sold enough policies, nor do you have the educational background in the subject to know what you don't know.

People think that WL is "greatly oversold" think that is because of the commissions.  This shows a lack of understanding.   Ethical insurance people sell death benefit.   My commission is the same regardless of what I sell because it is based upon death benefit need and easy to afford cash flow.  If someone needs $1,000,000 of life insurance, but can afford $200/month premium, I'll make just as much by selling them $150,000 of whole life and $850,000 of term as I would by selling $200,000 of whole life.   In other words, budget will determine my commission and not type of insurance.  In fact, I'll make a lot more money by selling lots of term insurance becasue it can be converted without questions of insurability.

Regardless, don't judge insurance based upon unethical agents and don't judge investments based upon unethical brokers.

Life insurance should not be compared to investments.  We all need investments and we all need savings.  The money that should go into life insurance is money that should be saved, not invested, yet it blows away any savings vehicle.

Please humor me and point out my inconsistencies. 

Is there anyone on this board who sells lots of insurance and cares to disagree with me?

[quote=an]

Life insurance should not be compared to investments.  We all need investments and we all need savings.  The money that should go into life insurance is money that should be saved, not invested, yet it blows away any savings vehicle.

[/quote]

It blows away an investment vehicle if you die--but it sucks if you live.

There are far too many life insurance guys who sell the cash value build up as if it were an investment that just happened to have a death benefit too--that's misleading.

There's a lot of truth to AL Williams old line, "Buy term and invest the rest."  It's just that it should be done with a brokerage house rather than an insurance agent because a broker can sell term insurance AND the entire spectrum of investments where you insurance guys always end up at, "You need more life insurance and a mutual fund."

The number of things you do not have available to you is awe inspiring.

NASD, I'm going to break my rule and respond to you.  I'm also about to stop posting altogether because I've come to the conclusion that the fighting to learning ratio on this board is way out of whack.

Life insurance does not make a good investment.  Investments make terrible life insurance.  It does not matter that life insurance does not make a good investment because, it is "saving" dollars that should go into life insurance, not "investment" dollars.   Permanent insurance needs to be purchased by people who have permanent insurance needs.

Life insurance with brokerage houses doesn't work as a general rule.  Wirehouse B/Ds are greedy when it comes to insurance.  They keep all of the overrides AND make the sales go through the grid.  This means that reps can't make money selling insurance, thus they remain relatively ignorant on the subject.  Nobody should be investing any money before they have adequate health insurance and disability insurance.  What % of wirehouse reps talk to their clients about these subjects?

I know that you think that life insurance is bought and not sold.  If this was the case, wirehouse reps would be selling tons of it because the client would bring up the subject.  Property and casualty insurance is bought and not sold because people legally must own it.  Health insurance is the same to some extent because people know the importance.  Life insurance and DI is almost always sold and not bought.  I get calls and e-mails every day from people wanting investment advice, but almost never about insurance.  I don't think that I'm the exception to this.

There is certainly a problem with someone who sells any product in a misleading manner.

The vast majority of people do need more life insurance which is why we usually recommend more coverage.  A typical client of mine might have an income of $150,000, but only have $500,000 of insurance when we first meet.  The usual goal of the client is to allow their family to maintain their standard of living.  It often takes 15-20 times their income to be able to do this.

Let's also not forget that the wirehouses tend to not want to work with anyone with less than $100,000 in investable assets.  This leaves out the vast majority of families with young children.

I'm curious.  What's not available to me to sell?  How many of these things are appropriate for the majority of people. 

Buy term and invest the difference is not a terrible idea and there are many people who should just be buying term insurance, but the wirehouses aren't willing to service most of these people.  I often see people who own WL insurance when it is inappropriate.  I also often see people who own term and UL and really need WL.

WL insurance is a tremendous product when used appropriately.  It blows when used inappropriately.

[quote=anonymous]

NASD, I'm going to break my rule and respond to you.  I'm also about to stop posting altogether because I've come to the conclusion that the fighting to learning ratio on this board is way out of whack.

[/quote]

Defending your points of view is not fighting.  Much of the enjoyment of this type of forum is the attempt to make a point that cannot be refuted--that you think it's fighting is too bad for you.

[quote=an]

Life insurance does not make a good investment.  Investments make terrible life insurance.  It does not matter that life insurance does not make a good investment because, it is "saving" dollars that should go into life insurance, not "investment" dollars.   Permanent insurance needs to be purchased by people who have permanent insurance needs.

Life insurance with brokerage houses doesn't work as a general rule.  Wirehouse B/Ds are greedy when it comes to insurance.  They keep all of the overrides AND make the sales go through the grid.  This means that reps can't make money selling insurance, thus they remain relatively ignorant on the subject.  Nobody should be investing any money before they have adequate health insurance and disability insurance.  What % of wirehouse reps talk to their clients about these subjects?

[/quote]

Do you realize that what you're saying is insurance salesmen are motivated by the commission?  I understand that everybody is to one degree or anohter but to conclude that wirehouse brokers don't sell life insurance because they can't make much money is specious.

I suggest that the reason wirehouse brokers don't spend a lot of time on life insurance is they do not want to be considered a life insurance agent--the caste system that those of you in the lower caste sneer about while being willing to give your right nut if you had what it takes to join a firm like Smith Barney.

[quote=an]

I know that you think that life insurance is bought and not sold.  If this was the case, wirehouse reps would be selling tons of it because the client would bring up the subject.  Property and casualty insurance is bought and not sold because people legally must own it.  Health insurance is the same to some extent because people know the importance.  Life insurance and DI is almost always sold and not bought.  I get calls and e-mails every day from people wanting investment advice, but almost never about insurance.  I don't think that I'm the exception to this.

There is certainly a problem with someone who sells any product in a misleading manner.

The vast majority of people do need more life insurance which is why we usually recommend more coverage.  A typical client of mine might have an income of $150,000, but only have $500,000 of insurance when we first meet.  The usual goal of the client is to allow their family to maintain their standard of living.  It often takes 15-20 times their income to be able to do this.

[/quote]

That reeks of fear mongering.  Mrs Smith, if Mr Smith dies you will need a lump sum equal to twenty times his annual income.....or, well you know.

Nonsense.  You would only need that much if you were going to use investment income to replace earned income and didn't want to deplete any of the principal.

How much would a widow with two or thee kids really need if her home was paid for and there was a lump sum sitting in a college fund for the kids?

[quote=an]

Let's also not forget that the wirehouses tend to not want to work with anyone with less than $100,000 in investable assets.  This leaves out the vast majority of families with young children.

[/quote]

I agree with that, which is why I think a young person is better off starting at a major insurance carrier than with a brokerage firm.

[quote=an]

I'm curious.  What's not available to me to sell?  How many of these things are appropriate for the majority of people.

[/quote]

When you establish your career with the intention of being able to service most of the people instead of all of the people you have accepted that you'll never soar like an eagle from the very get go.

That's a shame, but we need insurance agents along with the eagles.

[quote=an]

Buy term and invest the difference is not a terrible idea and there are many people who should just be buying term insurance, but the wirehouses aren't willing to service most of these people.  I often see people who own WL insurance when it is inappropriate.  I also often see people who own term and UL and really need WL.

WL insurance is a tremendous product when used appropriately.  It blows when used inappropriately.

[/quote]

I am not informed enough to discuss the relative value of the various forms of cash value life insurance.

I simply state that the point of life insurance is to care for your heirs in the event you die and the point of investments is to care for you until you die and your heirs after you die.

Killing two birds with one stone seems like a better idea to me.

NASD, you don't have the knowledge to have an intelligent conversation on this subject.  Best of luck to you.

There’s a lot of truth to AL Williams old line, “Buy term and invest the rest.” 

That's all well and good until your 30 year term policy is about to expire and you are turning 60 years old and realize you still need life insurance.  Your options are to convert to a not very attractive permanent policy at your current age or try to qualify for a new policy at your now advanced age and uncertain health quality.  It would have been a much much smarter move to buy a permanent policy when you were in your 30's.  The premiums would be low and you would still be able to invest.

I agree with anon.  Life insurance is not an investment and the cash value of policies is not the motivating factor for buying and is not a major factor in selling.

I don't sell much life insurance except in conjunction with overall financial planning and frankly find the process a big pain. It is time consuming and frustrating as often the client is rated differently than they think they should be. 

[quote=anonymous]

NASD, you don't have the knowledge to have an intelligent conversation on this subject.  Best of luck to you.

[/quote]

Can you grasp that when somebody says that it is assumed that they find the arguments to be so compelling that they simply give up?

I know I'm good, but I thought it would take another round to knock you out.

[quote=babbling looney]

There's a lot of truth to AL Williams old line, "Buy term and invest the rest." 

That's all well and good until your 30 year term policy is about to expire and you are turning 60 years old and realize you still need life insurance.  Your options are to convert to a not very attractive permanent policy at your current age or try to qualify for a new policy at your now advanced age and uncertain health quality.  It would have been a much much smarter move to buy a permanent policy when you were in your 30's.  The premiums would be low and you would still be able to invest.

I agree with anon.  Life insurance is not an investment and the cash value of policies is not the motivating factor for buying and is not a major factor in selling.

I don't sell much life insurance except in conjunction with overall financial planning and frankly find the process a big pain. It is time consuming and frustrating as often the client is rated differently than they think they should be. 

[/quote]

I have a NY Life term policy that is guaranteed renewable till I"m in my 90s--the premiums go up a lot but it won't expire.

Plus, as we age we need less and less insurance--kids are gone, the house is paid for and so forth.

When I took it out the woman who came to weigh me, take blood and all that put her scales on the carpet. 

I am 6'5" and 200 and too many pounds--but remarkably good looking.

I stepped on the scales, she looked down and pronounced that I weighed what I weighed in high school.

I just stepped off the scale and said, "That sounds about right."

I've been looking for her at the weight guessing booth at carnivals and fairs ever since.