Speaking ill of Life Insurance

[LGilmore]

Permanent cash value insurance has a place in a portfolio. It works as it is supposed to. Safe and conservative. It simulates A level bond returns and basically offers the same risk/reward features.

There seems to be a basic misunderstanding of RISK by several posters here. Risk tolerance determines where an individual investor defines best use of monies. You really can't spend all your time putting down a choice just because it's not yours or your risk profile. Our jobs center around being knowledgable about all types of insurance and a basic understanding of risk and more importantly a client's tolerance of risk.

There will always be "racier" choices than permanent insurance. Insurance is not a race horse, it's a plow horse. Doesn't mean it's bad, it means it serves a purpose for some clients who Value the slow steady power of a plow horse. The racier investments come with their own share of risk, just look at the horse that broke both ankles coming in second. It can happen when you push risk.

Permanent insurance always seem to have distactors who site better returns in the market... to which the real answer is yes and no... because while it is easy to point out microsoft is a better investment than permanent. It is not so easy to point out why Worldcom or Enron is better than permanent. Two different levels of risk. All one has to do is look at a insurance companies portfolio to get a good idea of what their return will be.

Permanent life is part of my portfolio, it replaces my need to buy bond funds in my qualified investments. I do not intend to become rich from my permanent insurance.. However...I DO expect my permanent insurance and it's values to be there when ever I need them to be. I do not have the worry over my perm life, that I do over my capital appreciation funds, foriegn investments or my real estate holdings.

My arguement would be theres a place for permanent in a person's portfolio, in the same way you would suggest a bond fund or muncipal fund in someone's portfolio, or do you just suggest straight stock across the board?



I will always ask my clients to consider at any age at least a quarter of the their investment money going into a conservative vessel. It could be permanent life, it could be a corp bond fund or government. It's going to depend on the client, as the three are pretty much in the same ballpark.

Is permanent for everybody? no. Does permanent work? yes. Just as it's supposed to. WE should all understand that. Do I sell term? yup. Do I sell permanent? yup? Do I put either down? nope.

 

[SportsNut]

Permanent life is part of my portfolio, it replaces my need to buy bond funds in my qualified investments.

Huh...? Don't tell me that you would make this statement to a client... Not one that bears repeating in public, IMO.

Just plain nonsense.

 

[policy doctor]

Am I the only one confused by Post #51 ?

 

[LGilmore]

"Just plain nonsense."

If you say so. It works for me. I own it, it works. Sorry if you don't or if you don't see the value in it. That just means you have one less thing to fit a person's need.

Again, If you would think for a minute, isn't the world of investment and insurance filled with different products that fill different purposes? Or are you a one trick pony?

Perm does what it's supposed to. We disagree and that's fine. You could always send those folks who prefer a permanent product to me. As for some reason, permanent products are still purchased constantly and consistantly around the world. I guess we could exchange although I have no one to send you as I sell both types of coverage to fit a person's needs.

There will always be people who believe your message and there will always be people who listen to mine. No worries from my end as I understand how the stuff works and the fact that people want and need different things. Better to have a stable of horses to fit a variety of purposes.

 

[LGilmore]

"Am I the only one confused by Post #51 ?"

probably not, but that's Ok.

Is it talking about risk? Is it comparing investment to permanent for return?

Is it asking if permanent was a better choice than worldcom?
Or do we only cite good returns for comparison?

Or will we always compare apples to oranges?

Here's the basic question if you're still confused..

What if you're wrong, where have you left the client?

 

[SportsNut]

"Just plain nonsense."

If you say so. It works for me. I own it, it works. Sorry if you don't or if you don't see the value in it. That just means you have one less thing to fit a person's need.

Again, If you would think for a minute, isn't the world of investment and insurance filled with different products that fill different purposes? Or are you a one trick pony?

Perm does what it's supposed to. We disagree and that's fine. You could always send those folks who prefer a permanent product to me. As for some reason, permanent products are still purchased constantly and consistantly around the world. I guess we could exchange although I have no one to send you as I sell both types of coverage to fit a person's needs.

There will always be people who believe your message and there will always be people who listen to mine. No worries from my end as I understand how the stuff works and the fact that people want and need different things. Better to have a stable of horses to fit a variety of purposes.

ONE TRICK PONY... Yep, that is me... been in investments for nearly 30 yrs... Securities, both debt and equity, fixed investments and real property investments.

Here is the meat and potatoes of the matter... You state that a whole life policy fills the need, or substitues that of a bond investment... Never, never, ever make that statement in front of someone who is capable of taking you to task for such a comment. You will quickly find out how misapplied that rationale is...

Whole life insurance has its place; albeit in the exact opposite spot that most agents attempt to use it... It belongs in a portfolio when maximum liquidity exists, not on the front end when folks are struggling to educate the kids, buy the house, paying for car payments, and other consumer weighted issues... that is when they need maximum insurance db for minimum premium... The point has been argued here about what happens when the don't invest the difference...? For Gawd sake, the avg consumr so many places for that same dollar that investments with monetary yields aren't what they are investing into... it is things like college educations, braces, and other intangibles that can't be equated with a stock, bond or cash value from life insurance.... It is all abot what happen if Mom or Dad aren't here next week to complete their life's wrok of education and the other efforts that they are toiling toward... TERM INS is the vehicle for that application.

When Mom and Dad get to become Grandma and Grandpa, and the other obligations are met... and disposable income results, and things like ESTATE TAXES become a concern... (estates in excess of 3.5 mil), meaning that they have been far more successful than the avg American, then larger perm policies can make some sense... The insurance (and accomplished with WL) provides leverage against the estate taxes at hand.

So what is there to confuse with this scenario...? The avg agent will have the client poor on WL ins when they may be getting only a fraction of the ins db that they need. why...? Because they are taught to sell the permanent policy... oh, because it pays better... to the agent and lots better to the company.

This approach should be labled malpractice, IMO.

 

[bobson]

I've heard fifth graders argue better than this conversation.

In a perfect world we'd only need....

We don't live in a perfect world. Our world is filled with all sorts of problems. I will give everyone on here that rallies against permanent life insurance the benefit of the doubt that someone worrying about credit card debt, braces, and other intangibles should not be putting money into whole life. But you also have to concur someone that is worried about credit card debt, braces, and other intagibles should not be putting money into equities, bonds, mutual funds or any other risky investment either.

 

[LGilmore]

We disagree. WL works best when bought early and held long, time is the best ally. Not really the way you espouse it, unless you're talking second to die policies. Are you talking about SWL or are you talking about buying two separate WL policies for estate purposes?

And you really haven't taken me to task at all.. I've understood for decades that every client is a separate case and every client can be successful with different product(s). Could you not create a policy (or policies) that create a compromise that allow a little bit of both worlds? Or is it A followed by B? Does AB muck up the works conceptually?

"albeit in the exact opposite spot that most agents attempt to use it"

Well, I can't speak for them and really neither can you. I own WL, I use WL when called for with clients and their situations. I use term when called for. WE basically disagree on when WL could, should or can be used.

Is it really only a product for the wealthy as you've said?

What would happen if you took the divs of a whole life and used them to reduce premium every year? (it's an option) Would that mean the day you bought it was it's most expensive? And as the years went by wouldn't the cost go down while the death benefit stays stable or slightly increases (because of the guaranteed values)? hmmmm....
could you call that reverse premium term?

Ahhh the world is full of absolutes.. isn't it?

 

[slushhhpuppie]

Permanent cash value insurance has a place in a portfolio. It works as it is supposed to. Safe and conservative. It simulates A level bond returns and basically offers the same risk/reward features.

Oh no he didn't

For the public's sake, I hope you aren't stupid enough to actually believe what you just said.

I agree with SportsNut.... malpractice.

 

[LGilmore]