Re: Re: Retirement Vehicle

Subject: Re: Re: Re: Retirement Vehicle

Comments:
: I'm not apt to giving out the company on the internet. I simply advise checking out companies with long histories, such as NY Life, Mass Mutual and Northwestern, some of the few mutuals left. These companies, due to their experience and financial stability can generally offer up to 8% or so. I know of higher rates. Now, that's the current dividend rate; it can be higher or lower depending on investment experience, so as I should say or may have said, it is roughly or projected to be that. It's not guaranteed. But historically they have been higher, which is why life insurance companies actively and aggressively selling life insurance stress financial strength, because it results in a lower net cost to you, the client, and also better rates of returns. : It is true other whole policies offer lower rates, but traditionally, stronger companies have offered rates competitive with bonds. : While it is true the L/T average has been about 11%, consider where many peoples' 401k's are right now, or even IRA's? I know many they have lost most if not all of their gain, and still consider whole life to be a waste. It's sad, but I try my best to show them what else is other. I believe it bad practice to use only one tool in your toolbox to do everything. : Money does go in after tax, but the power of tax deferral helps quite a bit. On the flip side, though it may seen tax-deferred, the money manager or fund manager of whom ever controls the 401k tend to buy and sell stock quite a few times a year, resulting in an income tax for that year. So though you didn't trade those stocks, the fund manager did, and it would result in ordinary income that is taxable. Consider that the avergae turnover rate of stocks in funds in this country is 109; quite high wouldn't you say? Since all funds are based on performance, getting rid of laggards and slow-movers tends to be habit. : People certainly should max out 401k's and employer contributions. I'm not stating whole life is better, just that it's not bad, and it certainly has its upsides. But sometimes what happens, as is the case with my parents, they ignore that fact and don't bother. At least if they had had the discipline of forced savings they'd have something built up for retirement had they started earlier and not wholly accepted BTID. : Yet, whole life isn't for everyone, I'd simply like, though, that they have some portion of CV in their term so that all the premiums are not just lost when the contract ends. But wouldn't you agree if you have a family, or any obligations similar to, you should have life insurance. For an extra charge, wouldn't it be great if there was a way to recoup most if not all of those premiums in the long-run and then some? Well, as my belief stands, CV does that. : Yeah it starts out high, but you can purchase in any amount and add term. Later on, you can convert, but at least you protected your insurability. Moreover, you have a small nest egg for unusual expenses or college, or whatever happens. : At death your beneficiary would receive all of the CV plus the face amount. She could then annuitize the CV into a series of equal payments for her life or accept it as a lump sum, and of course it all passes to her income tax free. If it is accepted as payments, then some income tax will have to be paid as capital gains will begin to accrue as the company reinvests that lump sum to earn some ROR. But the combination of the payments would result in a higher amount, since it is gaining interest at which point a portion would be taxable. : The max loan rate is 8%, at least in my state, as I assume it is in others. Withdrawing decreases the death benefit while a loan is simply a loan against the CV in which you pay interest, or don't, but it simply means that you will have to pay it back at your death. You can take the CV if need be for whatever you want, but you must still pay the premiums so as not to have surrendered the policy, which would result in taxable income. This is how many people can accumulate college funds and still have insurance. : Yes, if a policy self-destructs, all money with drawn will be taxable. However, I'd never allow that to happen, but it has happened to people promised higher payments at retirement for life. Companies would project a shorter life span and come to find out the policy may self-destruct at year 85 and the would live to 100. All of a sudden they owe taxes on ALL distributions from that policy, not a nice thing to do or have to owe. : Other combinations of life insurance exist, but because of the forced savings element and the plethora of uses afforded life insurance it must sit at the bottom. I realize the difference between term and perm can be quite high initially, but if people knew all that respectable, well-educated agents did, they'd all have some amount. It seems a waste to pay premiums on something for so many years when there's a better alternative. Even policies containing a smidgen of perm aren't that expensive and you get the element of savings and everything else I talked about. : Personally, with the ups and downs of a stock market, I want something I know will exist no matter what and that will have constant growth. I belive in getting what a person needs and then worrying about what it is, and if possible throwing perm in, because it just seems like a waste to have paid so much for so long and not see any benefit from that down the road when it is possible. : I hope that helps. This is simply a cut and dry situation or example, I don't guarantee anything, but as the past tends to be indicative of the future, I do believe strongly in what I have said. Thanks for your time and comments.

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