Insurance Pro Blog Podcast | Life Insurance and Annuity Insights

Well, the Department of Labor has finally rolled out their long awaited ruling on retirement accounts and a new “fiduciary rule”.

Rather than re-invent the wheel here in this post, I'm going to refer you to this piece I wrote last summer:

Can the government fix your retirement woes?

Also, if you want to read the opinions from both sides of the argument that were published in the last couple of weeks, here are three pieces that cover the new rule:

* Read the summary written by Kim O'Brien at Americans for Annuity Protection

* Read the summary written by Michael Kitces

* Read the summary written by Jack Marrion of the Advantage Compendium

Our big takeaway…the cheapest/least expensive option is not always the best option. What's best for  clients is entirely subjective.

Today we're talking about one of the less glamorous aspects of our business…customer service. It seems like an obvious thing. Surely a life insurance company that sells a particular product will be able to deliver service requests that are made by their customers. I wish that were always true. It's not. In fact, we have ... Keep Reading

Today we're talking about one of the less glamorous aspects of our business…customer service. It seems like an obvious thing.

Surely a life insurance company that sells a particular product will be able to deliver service requests that are made by their customers. I wish that were always true.

It's not.

In fact, we have found that service levels are widely varied among life insurance companies. And just because a company has a superb product doesn't mean they will have exemplary service.

Obviously if you're buying term insurance, this isn't a really big deal.

But if you're like 99% of the people we deal with on a daily basis that are looking to use the cash value in their whole life insurance or indexed universal life insurance for retirement income, to finance major purchases or as a place to warehouse cash…service matters.

Having customer service representatives that actually understand the products that the company issues matters. And having a company that's dedicated to taking care of their customers matters.

That's what we're discussing today.

In the world of “financial advice” there is certainly no shortage of bad ideas. Today's podcast focuses in on one particular concept that we think is particularly dumb. There are some savvy marketers out there that would suggest if you are not able to obtain life insurance coverage for yourself (for one reason or another) ... Keep Reading

 

In the world of “financial advice” there is certainly no shortage of bad ideas. Today's podcast focuses in on one particular concept that we think is particularly dumb.

There are some savvy marketers out there that would suggest if you are not able to obtain life insurance coverage for yourself (for one reason or another) you can still benefit from all of the awesomeness that is cash value life insurance.

Yes, all you need to do is to use your child as the insured and then you can dump all the premium you would have paid to your policy into the policy for your kid.

Seems like a great idea…in theory.

In fact, we have had the idea pitched to us by so many people in the industry over the years that we now use at as a barometer of sorts to indicate a lack of experience from the person doing the pitching.  Why will it…not work?

Why is buying life insurance on your kid, a bad idea?

We're not saying it's a bad idea to buy life insurance for your children. In fact, it's a great idea to protect them from the risk of having some adverse health event while growing up that may prevent them from securing coverage as an adult.

Additionally many life insurance companies offer some form of an additional purchase rider that allows your child to purchase more insurance without underwriting at prescribed ages in the future. Also, a great idea.

So what am I referring to when I suggest that buying life insurance on your kid is a bad idea?

I'm specifically referring to an instance where you were planning to heavily overfund your life insurance policy (either whole life or universal life) with the intention of boosting your internal rate of return on cash value but you can't do it because you're not insurable.

In those cases, our typical client is putting 20-30k per year into a policy. That would mean that by purchasing a policy on your child, you'd be paying $20,000 per year in premiums into a policy on a 10 year old (as an example).

It doesn't work.

The death benefit (a secondary concern for us in this scenario) is not a secondary concern for the life insurance company. And as you can imagine, a $20,000 premium purchases an incredibly large death benefit on a 10 year old…think something north of $5 million.

Turns out, insurance companies don't think you have any justification to have a $5 million policy on your 10 year old. There's the rub.

Sounds like a good idea but  it doesn't work as some would suggest.

 

 

In today's episode we discuss the ins and outs of using a lump sum of money to fund your cash value life insurance policy (you can use universal life or whole life). With the paltry interest being paid by savings and money market accounts, life insurance can be a great place to warehouse cash that ... Keep Reading

 

In today's episode we discuss the ins and outs of using a lump sum of money to fund your cash value life insurance policy (you can use universal life or whole life). With the paltry interest being paid by savings and money market accounts, life insurance can be a great place to warehouse cash that you don't need right away.

It's not the panacea but if you have time to wait, it is a viable way to do better with a portion of your net worth.

The most common problem we encounter is the strategy being implemented incorrectly. Yes, there is a right way and a wrong way to do this.

We never talk about variable universal life insurance. It's true, the black sheep of the life insurance world isn't something we ever really discuss. And occasionally someone comes along to ask us about it so we figured today was as good a day as any to discuss it. There's not that much to say about ... Keep Reading

 

We never talk about variable universal life insurance. It's true, the black sheep of the life insurance world isn't something we ever really discuss.

And occasionally someone comes along to ask us about it so we figured today was as good a day as any to discuss it.

There's not that much to say about it other than it's not a great idea and we think that it's a mistake to mix the world of traditional “investing” with your life insurance. There are so many wonderful things that life insurance brings to the table that are a fantastic hedge against the world of traditional investing in stocks, bonds, ETFs and mutual funds.

Why mix the two?

Did you know that whole life insurance is just for rich people? Have you ever heard that? Do you agree? It could be argued that all types of permanent life insurance (whole life and universal life) are better suited for those of higher income. But… There's a problem with organizing these sorts of ideas into neat ... Keep Reading