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Old 07-19-2012, 08:18 AM
 
Location: Wouldn't you like to know?
9,116 posts, read 17,649,808 times
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Quote:
Originally Posted by MUTGR View Post
I ended up buying some whole life 10 years ago because my brother in law became an insurance agent and my wife wanted to help out her little brother. .
So, you let your wife (who wears the pants) bully/sucker you into a decision that wasn't the smartest financial decision to make, just to help out her brother?? And you try to meekly justify your decision when you know its the wrong one???



That's a great story....food for thought. Most people here did not just fall off the turnip truck.....we know whole life is no good....

Piece of finacial advice next time (if you are allowed to make the decision), let your brother in law find another sibling to sucker.....
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Old 07-19-2012, 10:35 AM
 
Location: St. Louis
7,442 posts, read 6,962,866 times
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Quote:
Originally Posted by CouponJack View Post
So, you let your wife (who wears the pants) bully/sucker you into a decision that wasn't the smartest financial decision to make, just to help out her brother?? And you try to meekly justify your decision when you know its the wrong one???



That's a great story....food for thought. Most people here did not just fall off the turnip truck.....we know whole life is no good....

Piece of finacial advice next time (if you are allowed to make the decision), let your brother in law find another sibling to sucker.....
No, actually with the benefit of time I am very pleased with the purchase although admittedly I knew little about it at the time. In fact, my only regret is I didn't purchase more when I was younger. As I've learned more about the product over time. I'm glad I own some and will be able to use it to fund some major expenses in the coming years.

Like I said, I appreciate that component of my overall plan showing slow but steady growth on a tax advantaged basis compared to the gyrations in the values of my 401(k) and IRA, not to mention the non-qualified mutual funds I also own. Obviously, the 401(k) and IRA are for retirement and I'd rather not sell mutual funds to fund college expenses.

Perhaps I did fall of the turnip truck. I live very well but simply and I am largely debt free (except for a very managable mortgage at a very attractive 30 year fixed on a home with a lot of equity even in this market) so I'll just keep bumbling along. Ignorance is bliss I guess.

Last edited by MUTGR; 07-19-2012 at 11:04 AM..
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Old 07-19-2012, 10:48 AM
 
Location: Keosauqua, Iowa
9,611 posts, read 21,149,007 times
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Quote:
Originally Posted by mathjak107 View Post
good point. i have seen kids have to spend quite a bit for funerals from parents who had nothing.my son has a wife but no kids. since he is a lawyer and my daughter inlaw a cpa they make a nice living but my advice was carry enough insurance to cover their student loans.
Are you talking about the surviving spouse's student loans? When doing estate planning it's important to keep in mind that Federal student loans are discharged when someone passes away. Private loans would still need to be repaid by the estate, though.
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Old 07-19-2012, 12:44 PM
 
Location: Palo Alto
12,149 posts, read 8,377,683 times
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Only if you want to help your friend out financially... :grin:
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Old 07-19-2012, 02:33 PM
 
105,747 posts, read 107,736,740 times
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Quote:
Originally Posted by duster1979 View Post
are you talking about the surviving spouse's student loans? When doing estate planning it's important to keep in mind that federal student loans are discharged when someone passes away. Private loans would still need to be repaid by the estate, though.
private loans
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Old 07-20-2012, 03:27 AM
 
105,747 posts, read 107,736,740 times
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Quote:
Originally Posted by MUTGR View Post
No, actually with the benefit of time I am very pleased with the purchase although admittedly I knew little about it at the time. In fact, my only regret is I didn't purchase more when I was younger. As I've learned more about the product over time. I'm glad I own some and will be able to use it to fund some major expenses in the coming years.

Like I said, I appreciate that component of my overall plan showing slow but steady growth on a tax advantaged basis compared to the gyrations in the values of my 401(k) and IRA, not to mention the non-qualified mutual funds I also own. Obviously, the 401(k) and IRA are for retirement and I'd rather not sell mutual funds to fund college expenses.

Perhaps I did fall of the turnip truck. I live very well but simply and I am largely debt free (except for a very managable mortgage at a very attractive 30 year fixed on a home with a lot of equity even in this market) so I'll just keep bumbling along. Ignorance is bliss I guess.
talking about how nice ignorance could be ,if you fell asleep the last 3 years and just woke up you wouldnt even have known much happened to the markets over those years. everything would look quite boring . in fact if you fell asleep for the last 15 years you would be sooooooo happy looking at your portfolio value.

getting back to life insurance there are very definate uses for life insurance other than dying. but none of those uses act as investments of any sort.

the expenses of using whole life as a saving vehicle are very very high . most expenses are not apparent either. you can see all the time how folks look at the premium as their only cost.

the real costs are that premium and decades of expenses and dividends and interest you got.

the re-investment of all the interest and dividends back into the policy can out weigh the premiums over time. figure in the effect of them now confiscating the cash value of all that extra dough you sent in and all that interest and dividends you got over decades and handing your heirs a death benefit only and you begin to see the real cost structure.

your actual premium for that death benefit is all the premiums you payed in, all the extra cash you sent in for the saving aspect and all the dividends and interest you got for decades .


still sound like a good deal because they are paying you 5 or 6% on that cash value they will take anyway?

sure you can borrow some out and they will be happy to charge you interest for borrowing your own money back that you handed them. they then subtract off the death benefit what you didnt pay back so in effect they are still confiscating your cash value.

if you borrow money out and not pay it back it can leave the accruing interest terminating your policy and a tax bill depending on the loan size..


they will be happy to sell you a rider too that passes on some of that cash value however what they really are doing is just selling you more insurance increasing the death benefit.

i love the financial markets ,always did even as a kid and although i never worked a day in my life at it i spend alot of time learning to plan for my upcoming retirement from the smartest people i can find and i enjoy helping others learn to think for themselves and develop good plans.

i have been featured in money magazine, fidelity investment magazine and the wall street journal a few times as i dispute many of the myths that keep folks from doing well financially themselves.
my intention when i retire is to do some selling of insurance products but i intend to market them to baby boomers who are in situations where they do the most good.

none of those uses i have would be as any form of saving or investment as even selling those products i couldnt live with myself and pass them off as good deals.

annuities and life insurance have tremendous uses in wealth passing, in making taxable ira money un-taxable to a spouse ever, in 2nd marriages , for boosting success rates in retiree portfolios and pensionizing an income stream are all valid good solid reasons for these products .

the ironic part is that these products are usually all sold for the very wrong reasons to the very wrong people.

Last edited by mathjak107; 07-20-2012 at 04:50 AM..
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Old 07-21-2012, 05:25 AM
 
105,747 posts, read 107,736,740 times
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i think its important everyone understands how many whole life policies work. there are many spins to them but basically they all revolve around the same idea.

your premium consists of 3 parts, the cost of insurance, fees,commissions and expenses, and a saving vehicle for anything left over.

the premium stays the same but how its split between the 3 components changes as you age.

the idea of whole life is in the early years of your policy the cost of insurance is very very high.

if you die you have little cash value so the insurance company has to foot the bill out of their pocket.

odds are you will live during your younger years.

as you go on in time the interest and dividends grow your cash value as well as any of the money left over from your premiums.

as the cash value grows the insurance company starts to subtract from your death benefit the cash value of the policy so if you die they will give you back your cash value and pay any shortfall from the policy value out of their pocket.

eventually if you hold your policy long enough your cash value equals the death benefit.

at that point your basically self insured and if you die the insurance company merely pays your heirs with all your own money and little or none of theirs..

keep in mind even after your policy is paid up and your self insuring they are still pulling money out for insurance and fees and expenses from any interest you still get.

but again all that cash value is only payed out to the limit of the policy.


think about that. the insurance company charges you the most just when your least likely to die on their dime. they charge you less as time goes on but their dime gets smaller and smaller just when your more likely to die.

hmmmm charge them the most when the insurance company risk that you will die is the smallest and then decrease the company risk from that point as they move more and more on to their own money as its more likely they will die. brilliant!


the insurance company really has to expect to pay off a whole life policy if you keep it until old age so the early year premiums can be 5 to 20x that of term insurance.

basically the policies are front loaded so if you terminate the policy at any point you already payed high premiums for the use of that insurance into old age or when you arent insurable.

thats a load of dough thrown away for 98% of the folks who dont hold whole life policies until the end.

there is a very high price of admission for insurance that covers you from the womb to the tomb and most times it just goes un-used.

but even if you do hold it long term your still self insuring after a while on your own money anyway and thats after years of paying those high rates of insurance before you had much cash value.

in reality even whole life is like auto insurance. if you didnt use it while on their dime it vanishes once your on your dime and have cash value..

if you decide to take the cash there are 2 ways.

terminate the policy ,in which case you paid very very high rates for insurance coverage when cheap term would have been fine , you paid them commissions and management fees on the extra money they are baby sitting for you in the savings part and you have a tax bill on any gains.

you can borrow out the money but then you have to pay them interest on your own money. that interest just accrues if you dont pay back the loan and is subtracted from your dividends and interest.

if there isnt enough they take it from your cash value. eventually the cash value may be gone and the policy self terminates.

becareful with whole life ,it sounds good when pitched but if you really understand it then its not such a great deal for most of us.

Last edited by mathjak107; 07-21-2012 at 05:47 AM..
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