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  • #16
    Originally posted by Tim View Post
    “I am a financial accountant, my wife is a doctor..”
    With all due respect, this analysis is probably not in your wheelhouse. The does not mean you can’t figure it out.
    Contract issues
    Financial performance
    Flexibilty
    Know what you are buying. This is probably a poor use of your money. Typically these are products to be sold, not to be purchased. The agent and insurance company actuarially extract a pound of flesh for an insurance wrapper on your perceived investment. Odds are against you unless you die early.
    •term life insurance in amounts you need
    •invest the excess
    Hopefully you don’t collect early on the term insurance. Try that and you will be best served.
    I would argue that the odds are shaking him if he dies early or late. If he dies early, he could have bought way more of a benefit for the same amount if he buys term-life.

    And if he dies late, he’d still be better if he invest the rest of the money, even if his term-life expires.

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    • #17
      Originally posted by Romberg45 View Post

      I would argue that the odds are shaking him if he dies early or late. If he dies early, he could have bought way more of a benefit for the same amount if he buys term-life.

      And if he dies late, he’d still be better if he invest the rest of the money, even if his term-life expires.
      If he was betting on an early death. I was suggesting buying the death benefit need. Same under both policies. He would have some invested too, even after the first premium.

      Comment


      • #18
        OP, you might want to read this: https://www.whitecoatinvestor.com/an...-illustration/

        Comment


        • #19
          Originally posted by Scott at MD Financial Services View Post
          With buying $700k and putting in $15k you are at least buying the minimum death benefit for the cash you are putting in so that is good to get max leverage, now just make sure the rep puts in a very low or no surrender charge so that you maintain more flexibility. Most carriers have that feature, just not many reps will use it because it cuts the commission down and allows for commission charge backs to the rep in the first few years if you do cancel.
          it took me 5 times reading thus to understand your point. I will ask! Very helpful. Everyone has been extremely helpful, I’m still mulling my options, which are

          1. Explore IUL (low risk low return which is what I’m looking for, u clear on fees and expenses)
          2. Explore term life insurance which I’m not really liking because it ends (I want something that passes on to future kids)
          3. Invest in a money market account at 1.6% which is laughable but I want safe!
          4. Keep exploring and maybe just fund s&p funds like warren buffet says (post pandemic is scary, but I trust American innovation over pandemic risk)

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          • #20
            What’s your asset allocation for your retirement savings? Surely not all in a money market fund?

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            • #21
              If you want safe then you definitely do not want IUL. Conventional UL is safe but makes sense only uf you need life insurance in old age. A common use for conventional cash value life insurance was inside irrevocable life insurance trusts. Back when the estate tax exclusion amount was much lower, one would use the trusts to pay estate and inheritance taxes. Since one was likely to be old at death, there was a reason to have life insurance at that age.

              Today the exclusion is so high, plus portability, that few people need insurance in old age.
              Some people use it to replace their contributions to a small business. Not sure they need it for life but they could need it into their 50's or 60's.

              If you invest those premiums in the stock market or a balanced portfolio your kids will inherit that money. There will be no income taxes on this inheritance and there will be a stepped up basis.

              VUL is such a terrible deal that it is barely interesting to bother going into details. Remember that the values you are seeing are illustrations of what might happen under an ideal set of circumstances. Even under those conditions you would do better with term insurance and investing the difference.

              These indexed policies cut off the high returns. If the market goes up modestly for a year you get credited that increase, minus fees. If the market goes up a lot, then you are credited only a small portion of that increase, minus fees. If the markets were to go up the same moderate amount every year with no variance then the indexed product would do as well as it can. But markets do not behave like that. A very large share of the long term returns come from a small number of great years. With an indexed product you miss out on those great years.

              As an accountant it should be easy to model the results you would have recieved under a real life sequence of returns. This exercise will also force you to read through the prospectus to uncover all the fees and details of how the cash value is calculated. You can check your work by inputting the same assumptions they use and making sure you get the same numbers.

              Then repeat this exercise with buying term and investing the difference.

              If you have kids, your first step should be getting the right amount of term insurance.

              You should not deplete your retirement assets in n your 90's. Not unless you grossly overspend throughout retirement. You will move money from your tax favored accounts to taxable accounts but it will still be there to support you.

              Comment


              • #22
                Originally posted by Nolpol View Post

                it took me 5 times reading thus to understand your point. I will ask! Very helpful. Everyone has been extremely helpful, I’m still mulling my options, which are

                1. Explore IUL (low risk low return which is what I’m looking for, u clear on fees and expenses)
                2. Explore term life insurance which I’m not really liking because it ends (I want something that passes on to future kids)
                3. Invest in a money market account at 1.6% which is laughable but I want safe!
                4. Keep exploring and maybe just fund s&p funds like warren buffet says (post pandemic is scary, but I trust American innovation over pandemic risk)
                You insure the period of your life that you need insurance. In 20 years you should have quite the nest egg that if you die right before retirement there will be plenty of money to spread around. Even if you live and spend through your retirement you will likely still have a large amount.

                If 20 years is too soon get a 30 year policy.

                Comment


                • #23
                  Originally posted by Nolpol View Post

                  it took me 5 times reading thus to understand your point. I will ask! Very helpful. Everyone has been extremely helpful, I’m still mulling my options, which are

                  1. Explore IUL (low risk low return which is what I’m looking for, u clear on fees and expenses)
                  2. Explore term life insurance which I’m not really liking because it ends (I want something that passes on to future kids)
                  3. Invest in a money market account at 1.6% which is laughable but I want safe!
                  4. Keep exploring and maybe just fund s&p funds like warren buffet says (post pandemic is scary, but I trust American innovation over pandemic risk)
                  Buy term-life and do #4.

                  If you’re doing this purely for your heirs and not your own retirement, then why go low-risk super low returns? Just buy index funds.

                  Comment


                  • #24
                    Originally posted by Nolpol View Post
                    2. Explore term life insurance which I’m not really liking because it ends (I want something that passes on to future kids)
                    Instead of paying $15k a year for VUL, you could spend $2k on term and invest the other $13k in a low cost index (aka buy term and invest the rest). All the earnings can go to your kids when you die. I'm sure sure won't be penniless at your death if you choose not to buy VUL. I don't think an inheritance is a good reason to buy VUL.

                    Comment


                    • #25
                      Have you done any investigation into what coverage you need? One of the first things I do is provide access to a free self-registration tool we have that covers everything from life insurance needs to inflation calculations, retirement spot-checks etc. I personally love it because its not an insurance company's tool, its purely for financial planning and I've seen plenty of times where it gives the reality check to people that they do not need the policy they thought they did/were told they did or potentially that they don't need one at all based off of other savings etc.

                      Check what you need, and consider other options as previously mentioned. Good luck!

                      PS: WCI just recently put a spotlight on a very similar situation here: https://www.whitecoatinvestor.com/fo...cy-of-the-week
                      Founder, Coastal Wealth Planners- Fiduciary Tax-Sensitive Retirement Planning & Wealth Management www.coastal-wp.com email: [email protected]

                      Comment


                      • #26
                        Originally posted by Nolpol View Post

                        it took me 5 times reading thus to understand your point. I will ask! Very helpful. Everyone has been extremely helpful, I’m still mulling my options, which are

                        1. Explore IUL (low risk low return which is what I’m looking for, u clear on fees and expenses)
                        2. Explore term life insurance which I’m not really liking because it ends (I want something that passes on to future kids)
                        3. Invest in a money market account at 1.6% which is laughable but I want safe!
                        4. Keep exploring and maybe just fund s&p funds like warren buffet says (post pandemic is scary, but I trust American innovation over pandemic risk)
                        If you want to pass something onto your kids, get a term life policy for 25 years for $1,500,000, double what you're currently thinking. That'll run you about $1k/year each.

                        Invest the other $14k per year. That will be many millions of dollars for your children when you're 90.

                        Also, go read horror stories about whole and universal life. Almost nobody is happy with the purchase, except the agents.

                        Comment


                        • #27
                          Originally posted by jacoavlu View Post
                          Why?
                          who is selling you this?
                          What are the benefits?
                          have you priced term life insurance?
                          Also curious about the agency? I'd hazard a guess they are North of West

                          Comment


                          • #28
                            Originally posted by Nolpol View Post
                            Explore term life insurance which I’m not really liking because it ends (I want something that passes on to future kids)
                            The biggest risk to your children is you and/or your wife unexpectedly dying young or becoming disabled. Your projected income suddenly disappears along with the returns compounded over decades.

                            If you live 30 years without collecting on a term life policy I would call that a win.

                            Comment


                            • #29
                              What did you end up doing OP?

                              Comment


                              • #30
                                Please message me. I have some other crappy stuff I want to sell you.

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