So every once in a while (much more frequently than we'd like) an a-ha moment comes along at the Insurance Pro Blog where we sit and think “why did it takes us this long to think about doing that,” and a handy guide on buying life insurance happens to be just one of those a-ha moments.
We didn't need the help of Mutual of Omaha for our a-ha moment, instead something I read in a report from LIMRA that made me realize this would probably be a good idea.
There has been some speculation for a little while the Aviva Life would sell it's U.S. life insurance business and stories are starting to ramp up. Aviva, one of Britain's largest life insurers, has been a major player in the indexed insurance market for a little while now. They are a well known indexed and indexed universal life player. So, are they on the bidding block, and who is buying?
To follow up Brandon's post from yesterday regarding employer owned life insurance (EOLI) and so called Dead Peasant Insurance as it's been described in the media, I thought I'd share a piece recently written over at Forbes.
We think this sort of reporting is pretty typical of the insider media mantra, “if it bleeds it leads”.
You should really take a few minutes to read the piece and form your own opinions, however, it quickly became apparent to me that the journalist is really huffing and puffing about nothing in this case.
Employer Owned Life Insurance is a funny topic. Funny in the way religion divides the masses and causes all kinds of fun (and not very amicable) discussion. And, a lot like religion, there's a fair deal of mis-interpretation that leads to further distrust and hatred (ok no more religion on the Insurance Pro Blog, ever).
Today, I'm not really interested in discussing the moral ramifications of EOLI (as it's known). Just the applicability and why this term “Employer Owned Life Insurance” exists.
There’s a funny sounding phrase in the life insurance world that relates to a lethal tax trap called the “Goodman Triangle”. Sounds deadly doesn’t it?
Well, it actually refers to a court case Goodman v. Commissioner that dates back to 1946 believe it or not. And it is the “unholy trinity” of life insurance planning.
Today the most fascinating experiment on the human condition took place on (of all places) Facebook. When I took my somewhat usual stroll into check Facebook this morning I happened upon a post with a very simply math equation: 9-5+5*0+3=?
We've been hammering the alternative investments point pretty hard lately, and this is because the financial services industry is abuzz about what to do with its tarnished image for cuddling up with the main stream stock market for so long and and now being accountable for it's general lack of reliability to the average investor.
So, what are money managers and general financial planners (the certified kind) doing to restore faith and peace of mind among their clientèle? The answer is quite interesting.
Alternative Investments? You say…hear us out.
I'll admit it, I have a certain penchant for the unusual and I have a huge tendency to buck the trend. According to certain personality tests circulating the internet, I share personality traits with only roughly 5% of the U.S. population. Bad for social gatherings, great for dissecting conventional wisdom and avoiding common pitfalls.
I've been a finance geek for a long time (I like numbers). I was an online investor back when stock quotes were delayed more by my dial-up internet connection then by the speed of the ticker tape. And I've always been amazed at the crazy ideals we dogmatically hold onto in the personal finance world.
So imagine how I attacked the notion of using cash value life insurance as an asset class when the idea was first presented to me.
Let's start with a brief discussion of modern portfolio theory (MPT) just to make sure we're all on the same page. To avoid a less than exciting academic foray into MPT, I'll provide a basic definition.
Basically, the theory is that individual investment (a particular asset i.e. stock or bond) selection should not be chosen on their own merits. What's more important is how each asset's price moves relative to all the other investments in a portfolio. Harry Markowitz was the first to articulate this concept back in 1952.
We recently received the following email from a fellow reader about the 7702 Plan post:
Dear Brandon,
Why so much hate for 7702 Plans? I've been following your blog for a few months now, and for the most part I love what you do. However I think your recent post about 7702 Plans was unfair. For starters, the plan is nothing like a 401k or IRA. Those plans can and HAVE declined in value. The 7702 Plan was created by Federal Tax Code and has served a lot of people very well. I was surprised to see someone like you attack a solid plan like 7702's.
Rich
