Argument against Permanent Life Insurance: High Commissions Paid to Agent

It seems one of the biggest reasons you should not buy whole life or universal life insurance is because the agent or broker who sold it to you will get paid to do so. At least this is a claim made in almost all of the articles ever written in an attempt to steer you away from these insurance products.

In what has to be the most ad hominem of all the arguments against permanent life insurance, the amount of money I make (or don’t make) takes center stage—I wonder how many of those folks wrote their article for free like I am this one right now.

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Top Five Arguments against Permanent Life Insurance…Debunked

Over the next month or so, we’re going to address the top five most common arguments against permanent life insurance. These are the arguments made by journalists and other hobbyists who spent that one weekend reading a book that had a chapter on whole life insurance and suddenly dubbed themselves supreme commander of life insurance knowledge. …

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An Indexed Universal Life Insurance Success Story

I was recently reviewing an indexed universal life policy issued seven years ago. We do a lot of reviews for life insurance policies (especially the ones we ourselves put in force for people) and such reviews look at performance to date as well as a comparison to the original policy projection to review how things have unfolded.

For a lot of policies, there’s little variance from the original projection. This is especially true on the whole life insurance side of things since dividends don’t tend to vary all that much (a few exceptions exist for policies we’ve been asked to review we didn’t have a hand in putting in force).

Not all that surprisingly the indexed universal life insurance policies have tended to do better than the original projections.

For the policies we’ve put in force, this is commonly due largely to our insistence on assuming a 6 to 6.5% annual index credit (a lot of less honest agents/brokers like to use numbers in the mid 7 to 8% range, though recent legislation is changing that).

The market has enjoyed a pretty good run since 2008 and indexed insurance products have certainly benefited. As a result, I often get asked what happens if the policy performs better than the 6% number I assume, to which I always point out, you’ll simply have more money.

This is great in theory, but a lot of people have a hard time grasping what that means in a more concrete sense. So today we’ll review publicly a policy that has been in existence for almost a decade and see how it has performed.

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Do Life Insurance Guarantees Matter?

Do Life Insurance Guarantees Matter

Life insurance guarantees are sometimes heralded as a key benefit. Many whole life insurance contracts are sold with a focus on the fact that the policy boasts various guarantees that—while admittedly impressive in a relative sense to all other financial products—are often overplayed.

But do these guarantees actually matter? And what does the guarantee represent—I mean in a practical application—for life insurance contracts as they relate to cash accumulation strategies? Today we’ll explore this consideration.

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Proper Assumptions about Indexed Universal Life Insurance Income

Proper Assumptions

Using indexed universal life insurance for retirement income comes with a certain degree of skill and responsibility that shouldn't be overlooked. The liberty an agent or broker can exercise over assumed interest rates means that we need to seriously test our design and proposed ideas to ensure proper expectations as it relates to policy performance.

Unfortunately, this responsibility sometimes goes unchecked and a few bad eggs have presented and sold policies with lofty expectations that may one day become serious disappointments as it relates to the income producing capabilities of these products.

Remember–many people are looking to use indexed universal life insurance to create tax-free income at some point in the future by making use of policy loans.

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Indexed Universal Life Insurance: Another Weird Trick to get more Cash out of your Policy

Another Weird Trick to get more Cash out of your Policy

Indexed Universal Life Insurance is the dominate form of fixed (i.e. not involving any direct investment in mutual funds) universal life insurance for cash accumulation, and just like whole life insurance can be manipulated by agents and brokers to maximize cash value produced by the policy.

Just like last weeks discussion, the change that we make to optimize cash value does not require that the policy owner place any more money into the policy than he or she was planning, it simply comes down to properly designing the policy to focus it on cash accumulation.

It should also be noted that with universal life insurance, there tends to be a greater divergence in terms of cash value development between policies that are designed to provide cash accumulation and policies that are designed to focus more on sustained death benefit—and this goes beyond the simply distinction between universal life insurance policies that are designed to have an indefinite secondary guarantee. If you don’t know what that last statement means, don’t worry too much about it.

Just know that correct policy selection for universal life insurance is just as critical as it is with whole life insurance.

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Why Cash Value Life Insurance is So Awesome

Why Cash Value Life Insurance is So Awesome

We like life insurance and more specifically we like cash value life insurance. Doesn’t really matter which type of cash value life insurance it is, whole life insurance universal life insurance truth is both accomplish some magnificently great things.

But neither Brantley nor I started our careers with the appreciation we now have for life insurance. No, instead we were both very excited to be working in the “securities” industry and were much happier to hold investment licenses than we were to hold insurance licenses.

What caused us to make the shift away from practices that were securities focused and instead more insurance focused?

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