Insurance Pro Blog Podcast | Life Insurance and Annuity Insights

No Need To Buy Whole Life Insurance, Skip The Middleman...

Today, we’re talking about the “scam” that has been perpetuated by life insurance companies for over a hundred years. I know, I can hear you saying to yourself, “which scam is that, there are so many to choose from”?

Am I right? I'm talking about the supposed scam to sucker you out of the gains that you could be making. if you skipped life insurance and bought the investments that they put their money in—yourself.

As you know, when you give a life insurance company your money (aka paying your premium), they're just investing your money in something you could do for yourself. And it’s a question we get a lot. Various articles and blog posts have been written on this argument, suggesting that you could skip that, avoid paying those fees and invest your cash in those things they are going to buy yourself.

But something as seemingly boring as bonds is quite complex. And if you think you can replicate that in the same way an institutional investor is, you’re kidding yourself. And the bigger point that people miss is that the insurance company is wrapping up those bonds so that you don’t have the principal loss. You’re not going to achieve the same result that an insurance company does. _____________________________ If you'd like to look at how a whole policy might work for you. Please click right here to contact us and grab some time on our calendar to discuss your specific situation.

When you read or hear the words tax shelter it probably doesn’t conjure images of using whole life insurance. But whether or not whole life insurance is actually a tax shelter depends on how you define it more than anything.

It’s not a tax shelter in any sort of the more shady ways that people discuss tax shelters. But it certainly does fit alongside something similar to a TSA (tax-sheltered annuity) in a more general sense.

If you spend more than a few minutes cruising around ye olde world wide web, you can find all sorts of interesting “information” about various tax shelters. Since we focus on the use of life insurance, in particular, a great deal of time and words are written about whole life insurance, we’ll take a look at how whole life works as a tax shelter. ___________________________ If you'd like to find out how whole life insurance could work for you, please click here to talk directly to us!

Universal life insurance is characterized by its flexibility and transparency of expenses.  Unlike whole life insurance, where expenses operate under the cloak of proprietary information, we can easily call up the expense breakdown of universal life insurance policies and see exactly where the money goes.

For universal life insurance policies, expenses fall into four main categories:

1. Premium load
2. Policy Fee
3. Per 1,000 Charge
4. Cost of Insurance

Variable universal life insurance policies will also have an asset fee associated with the investment account(s) chosen.

Listen to the full episode to hear an explanation of all the expenses AND why you need not be afraid of them! __________________________________________

If you'd like to look at a policy for yourself, please click here to get in touch with us!

Whole Life Insurance Rate of Return...It's Not What You Think

Many of us in the financial planning industry like to argue the rate of return.  Not necessarily us specifically.  We learned years ago that it's mostly a colossal waste of time. 

But many of our colleagues enjoy gloating when their investment ideas produce impressive returns.  When things turn in the other direction they tend to be a bit silent on the matter--perhaps they are busy searching for the next big idea?

When two savings/investment ideas come head-to-head, we often race to a rate of return discussion.   We think it's because most of us believe that if the rate of return is greater it will automatically be the case that what we can get out of such an investment will be greater. 

But that's not always true. Remember you can only spend money that you have, dollars in your bank account. Nobody accepts a higher rate of return as a means of exchange.  _______________________

If you'd like to explore your options with what whole life insurance can do for you and how it may give you more spendable cash in the future than your other options, please click here to contact us. 

Lately, we've seen a few people touting the whiz bangery of Infinite Banking used to combat high inflation. At first, we scratched our heads with genuine curiosity.

As we explored the "supposed" benefits, we decided it was something we needed to address here in our podcast.

Here are our thoughts... ------------------

If you'd like help with a cash value life insurance policy of your own, please reach out to us by clicking right here. 

Many contend that whole life insurance is safer than indexed universal life insurance because, with IUL, there is market exposure.  We understand why many might believe that but we also believe it's false.

Just because the interest earnings credited to an IUL policy are correlated to the movement in the market, doesn't mean that you are exposed to the market. In fact, we set out in today's episode to prove that because of the chance to achieve outsized returns with certain indexing options within IUL, you have the real opportunity to crush a comparable whole life policy. 

If you'd like to see how it could work for you please get in touch with us by clicking the link here. 

Dividend recognition dictates the policy a life insurance company has regarding what it does if a policyholder takes a loan out against their whole life policy.  If the company practices non-direct recognition then it does not adjust the dividend in the event there is a loan against the policy.  The company pays the exact same dividend rate to all policies regardless of the outstanding loan.  If the company practices direct recognition, then the company makes an adjustment to the policy due to the outstanding loan.

------------------------------------------- Want help with your whole life policy or looking to buy a new one? Click this link to contact us and get the conversation started today! -------------------------------------------

For years, certain marketers claimed that non-direct recognition was the superior policy because it ensured that a particular arbitrage greatly benefited policyholders.  A sort of magic so special that it served as the underpinnings of such fantastical ideas as Bank on Yourself® and other self-financing-through-life insurance schemes.

From experience, I can tell you it's a heck of a lot easier to explain--so long as you don't have someone who wants to dive into how a company can afford to continue to pay a dividend on money it doesn't technically have anymore.  But we've long held the position that dividend recognition is tertiary at best when selecting the right whole life policy for one's specific needs.

Listen to find out more and... ------------------------------------------- Want help with your whole life policy or looking to buy a new one? Click this link to contact us and get the conversation started today! -------------------------------------------

Interest rates are on the rise.  Mortgage rates are up. Treasuries are at levels we haven't seen in a while.  Inflation is top of mind, and the Fed will likely continue raising rates until lofty inflation rates cool down--inflation levels we haven't seen in a very long time.

So with rising interest rates comes potentially rising loan interest rates on some whole life and universal life insurance policies.  Will those rising loan rates spell trouble for policyholders? 

If you'd like to talk about your policy or you'd like to consider purchasing one, please reach out to us by clicking right here. 

There are life insurance agents, motivated by various marketing organizations, telling people that their taxes are going up.  Way up.