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In Reply to: Re: Re: Re: Re: Re: whole life posted by hindi on August 17, 2001 at 11:21:41:
: John --
: I hope you're not in the whole life business, as what you're saying is incorrect!
: : excuse me for interrupting this lovefest -- with respect to WL -- you can withdraw to basis as well.
: No you cannot. Whole life cash value is an asset of the company. They own it, technically. The only way to get the money is through a loan. With a UL, the company is the holder of YOUR money just like a bank is the holder of your savings or checking account money. You can always withdraw YOUR money (and to basis with UL...above basis is a taxable event, which is why you want to borrow above basis, and also why the loan rate is extremely important.
: AND the biggest advantage WL has over UL -- IT'S GUARANTEED -- WHEN THE DIVIDEND PAYS -- NOTHING NOT GOD HIMSELF CAN TAKE IT AWAY -- not so with UL -- CV is ALWAYS at risk.
: Sorry, John, this is also not true. Cash value is part of the general assets of the company either way -- WL or UL. Neither is safer than the other...but with UL you have more liquidity. Whatever has already been earned, has been earned, and cannot be taken away. In the future, you may never get another dime of excess interest, but you could never get another dividend either. Same! SAFETY is CONTROL...more than the SIZE of the carrier! hindi
Hindi -- yes you can -- I suggest you look to your CLU cirriculumn specifically the life insurance course, and text ( McGill's Life Insurance ). Withdrawl of premiums to basis is allowed in a par WL product. PERIOD.
Additionally, WL is property owned by the insured, as is UL, VUL, and term.
Further, when one borrows froma life insurance policy ( VUL, UL, WL, ISWL et. al. ) one is NOT BORROWING THERE OWN MONEY -- one is using the current cash surrender value as COLLATERAL for a loan FROM THE INSURANCE company -- substantively there is no differnece between a life insurance loan or a home equity loan -- e.g -- one does not TAKE money from one's house -- one uses the house as collateral and the bank gives the borrower someone else's money. The difference between the two is the guaranteed growth of the life insurance, and the flexibiliy of loan repaymants in life insurance.
Another thing -- cash value is not an ACCOUNT. Cah value is the current value of the contract after x-years. The face amount is the value at death, and paid-up additions ( if purchased with dividends ) pay along with the dealth benefit. It is not accurate to refer to CV as an account, or treat it as such. it is not.
Lastly, policyholders are creditors to the insurance company with respect to loans. They are also ( in the case of a mutual company )the people who have the greatest right to the money the insurance company has. Policyloans are an ASSET to an insurance company -- they want you to take policy loans -- it's good business for them, and fiscally responsible for the insured -- just pay them back.
As for UL/WL -- ultimately as a vehicle one is just as good as the other -- if the UL is fully or max funded.
Consult Solomon Huebner, PhD. The Economics of Life Insurance -- 1955 edition.