Total Comments: 431
Posted: Thu May 10, 2012 06:12 am Post Subject:
No kidding. (But what about the 8.5% they talked about?)
Posted: Thu May 10, 2012 06:13 am Post Subject:
With all the talk of "living benefits" associated with IUL's, how can a 42yr old, non-smoking/drinking, male get $60K/yr income-tax free from such a policy ?
Or anyone for that matter ?
Posted: Thu May 10, 2012 06:14 am Post Subject:
I figured he used a high %, like 8.5%.
When I called and asked, he was honest about it right away.
I would use something like 6% for clients.
Posted: Thu May 10, 2012 06:16 am Post Subject:
$60K for 35yrs after retirement, that is.............
Posted: Thu May 10, 2012 08:06 am Post Subject:
Max, I only learned of IUL's 3 weeks ago.Sine then I've read Patrick Kelly's The Retirement Miracle and Douglas R. Andrew's Missed Fortune 101. I also watched 13 YouTube videos, literally, with the most profound being one titled Time To Retire Your 401K. It's from MSNBC in October 2009 where the Managing Editor of Time Magazine, holding the current front cover issue of the same title, is stating 401'sk and certain tax-qualified plans don't work and actually suggests Indexed Universal Life Insurance. I understand you're a veteran in the industry ( since Nov. 1980 ) with state and federal experience, so I respectfully request for you to tell me exactly how to fund such a policy for 25 - 30 years and have it provide tax-free living benefits for 25 - 30 years plus still pass a death benefit. Or is it even possible ?
Posted: Thu May 10, 2012 03:00 pm Post Subject:
Anything is "POSSIBLE" -- that's what they're showing you in the illustration. But that's not really your question You are really asking this:
I respectfully request for you to tell me exactly how to fund such a policy for 25 - 30 years and have it provide tax-free living benefits for 25 - 30 years plus still pass a death benefit.
I worked for a large agency as a policy analyst responsible for monitoring cash values across up to several hundred policies per corporate account and determining how much additional premium needed to be paid into the contract, if any -- mostly VULs, but plenty of "traditional" UL, too (at the time I was there, we did not use IUL at all, and I don't believe they are using any IUL today either because I get a few of their new employees as students in my insurance classes from time to time who tell me they aren't). The VULs we monitored monthly, the ULs once a year unless an unusual circumstance required additional analysis. And none of what we did employed any of these crazy loan schemes. [Notably, the personal policies sold to some of the corporate executives were almost always dividend paying whole life contracts.]
Some of our corporate clients did use policy loans occasionally to pay premiums when cash flow was tight, but then our responsibility was to make sure they never exceeded cost basis in doing so, that they repaid the interest if nothing else, and eventually repaid the loans when practical. Except for one client -- no longer in business -- that listened to another agent who told them there would be no problem taking money out of the policies and seriously exceeded that cost basis threshold. A few years later, they could not understand why they now had to pay over $100,000 per year in new premium to prevent one $300,000 life policy for a 90-year-old retired executive from lapsing (not to mention the tens of thousands of dollars needed annually to keep the other 12 or 15 policies they tinkered with afloat as well). With that kind of mismanagement, it's no wonder they were taken over by a much larger company just a few years ago.
When it comes to ANY form of UL, I can tell you this: no one, including myself, can tell you "EXACTLY" how to fund such a policy with a finite number of dollars from Day One for 2-100+ years and have it do exactly what you (or anyone else) suggests it will do. It is an impossibility.
The only way to come close is to use the annual statement together with an IN FORCE ILLUSTRATION and perform a detailed policy analysis EVERY YEAR to determine whether the policy is on track or not. If it is not, the analysis will only show how much additional money needs to be dumped into the contract that year to try to put it back on track.
And even that is not entirely accurate, because with IUL, it's only a best guess. The LSW interest crediting scheme in particular (not unlike some others), takes money each time a premium is paid and moves it into a separately tracked "segment". You only see the results of that segment once per year, and you only see the precise "snapshot" of ONE segment on ONE DAY once per year. The twelve segments are always "in motion" and cannot be tracked in "real time" without imposing tremendous effort on the insurance company to provide you with a MONTHLY in force illustration. And for that, they would certainly charge you whatever the amount stated in your contract is, typically $25-$30 per illustration. (In fact, each segment is only valued once per year on one day until you start taking money out, and then, read the contract carefully, they take your loan/withdrawal from the segment(s) that will not be credited with interest first. So that money will earn exactly $0 for up to 364 days.)
With this particular class of LSW policies, you can only get "close" to a factual statement of financial position when you rely on the annual statement alone. And by the time you get your annual statement, everything is in motion again.
The question which has not been asked: "Is it at all possible for the policy to do what was illustrated?" the answer is, possibly yes, but probably no. There are just too many "hidden" and variable elements in the illustration, thanks to the software that created it. No one outside the insurance company's home office illustration actuary -- including the agents of the company -- has any idea what the precise "current assumptions" are. The agent, least of all, cannot tell you if the assumptions included any increases in the COI over time to account for changing mortality assumptions (which the actuaries discuss behind closed doors). And even the illustration actuary can't tell you what effect an unexpected change in those assumptions would do down the road.
This is not a "variable" insurance product, but there are so many internal variables that the illustrations are simply a puff of smoke. They cannot be guaranteed . . . except for the GUARANTEED COLUMNS which show a WORST CASE SCENARIO . . . the minimum amount of interest and maximum internal expenses.
That scenario is also not very likely to occur, but it could. So if the illustration can be run in a way that the GUARANTEED COLUMNS show the outcome you have been discussing, then you would have an assurance of at that outcome as the minimum, and probably significantly more than that.
To make that happen, you would probably not like the numbers you see in the PREMIUM space. And I'm not even sure the illustration software can do that. Which is why the GUARANTEED COLUMNS in a UL illustration will eventually show $0 cash accumulation and $0 death benefit (with the exception of a secondary DB guarantee, which still requires payment of premium in all months of all years in most policies -- miss one payment and you could lose that guarantee).
Posted: Thu May 10, 2012 03:04 pm Post Subject:
Yes, the projection shows her paying $2400/yr from ages 29 to 66, then $0 for the remainder of her life until age 119.
I missed this last night. If your wife applied for the insurance, we need to talk outside this forum. Soon.
Posted: Mon Jul 23, 2012 06:45 am Post Subject: WFG
WFG is a legitimate company under transamerica--under Aegon. If it was pyramding--it would have been closed ages ago and all the licenses taken away. That being said, like any other company having brokers---there's the good-the bad and the ugly. Having known good brokers (which introduced me to good financial products) and hideous ones-- I caution people to get educated and choose the best products. Making an absolute judgement about a company based on a stupid agent is not fair to all the well meaning ones. That also goes for other ones like prudential, primerica, ING, Meryll , Goldman, Bear etc...
Posted: Mon Jul 23, 2012 06:57 pm Post Subject:
WFG is a legitimate company under transamerica--under Aegon. If it was pyramding--it would have been closed ages ago and all the licenses taken away.
WFG is not "under Transamerica". As for the rest of the statement, some newer WFG reps may not know the real history of the company, and how its predecessor organization, WMG, did start to lose its licensing in many states before they were acquired by Aegon about 6-7 years ago.
Posted: Mon Aug 06, 2012 03:07 am Post Subject: Thank you Max
Recently my life insurance agent/advisor, an otherwise honest guy whom I've worked with for almost a decade now, started pushing EIUL on me. I'm glad I found this forum through Bing and I think Max's written a lot of useful info! It'll take me a few more hours to digest everything, but already I know I should avoid this product - especially after my agent (an otherwise honest guy...) has not given me a clear answer on exactly how much I would be paying out in fees and insurance costs!