Whole Life Insurance

[Speedling]

I have a laughable amount that my wife would get if I die from my Union.
I bought smaller amounts for each of us in my family, doubled up for myself.
Cash policy or whatever you call it. It earns interest, which compounds and pays for the plan. So, a 50k policy gets paid off with the interest paying into it. Then, at that point, it will buy another 50k policy (if i choose) at today's rates and the interest on that 50k pays towards the payment, etc. So, Depending on when death is, what interest is, and what the amount is, it can just have interest paying the premium.
I have smaller policies for my kids as well that will be paid off by the time I near retirement (they all "mature" when I hit 50ish I believe) and then I can transfer to them the policy, or they can opt for a cash out.
I also have it written in there that they can have it when they get married.
So, It's there in case they die and I need to cover costs (which it will more than do) and then if they live and move out and get married, the spouse will have something to fall back on if they keep the policy, OR, they can use the cash out to put down on a house or whatever. Also, if they take the policy, it will remain at my rate that I have locked in.
I use State Farm, but my family has used a paticular agent from before my father could drive. My grandmother I believe worked with his predecessor.

 

[B0at1n]

So, ive always heard and believed buy term and invest the difference.

Today a friend of mine presented a cash value policy’s with the Infinite banking concept.

The way he made it sound, it’s a no brainer. I tried to figure out what the catch or downside is and so far have come up with none.

Is anyone on here familiar with these policies that can help me understand how the policies work and what cons their are to these?

This is a policy through New York life.

 

[Speedling]

So, ive always heard and believed buy term and invest the difference.

Today a friend of mine presented a cash value policy’s with the Infinite banking concept.

The way he made it sound, it’s a no brainer. I tried to figure out what the catch or downside is and so far have come up with none.

Is anyone on here familiar with these policies that can help me understand how the policies work and what cons their are to these?

This is a policy through New York life.

I guess i don't understand the infinite banking term? Google came up with some term rider stuff which is essentially what i have. If i die before it reaches value x then the term rider pays x anyways. Once at value the term is dropped and the cash policy(whole life) continues to grow. I can take from it, borrow etc. It earns interest as well.
New york life is or used to be decent. Back when i was born i believe my dad worked for them

 

[OCMD]

Do not read if you do not want to hear a rant. But this hit home this morning, lol, so here I go.......You have been forewarned.

When in my 20's, I was snookered by a sharp talking salesman into a whole life policy. When in my late 40's, I realized how bad I was taken to the cleaners on the whole life policy. Pissed money away and little return after ten years so I jettisoned the product. What a waste. Of course, once the policy was sold to me I never heard back from the guy again. I was young and dumb. Remember, an insurance entity is out for one thing only. Profit. And, of course, to delay delay delay in paying claims. The insurance companies make a substantial profit on their "float." That is, when you pay your premiums, there's usually a time difference between when premiums are taken in and losses are paid out. So in between that time, insurers sit on billions of dollars, probably trillions globally, where they can invest that money and keep the return they earn on it. This money that they have taken in, but not yet paid out, is the float. Insurance companies make billions of dollars a year just sitting on their customers' money until it gets paid back out. Hence the delay in 1) investigating a claim and 2) accepting a claim and 3) finally paying out the claim which in most but not all cases, should have and could have been paid out within weeks of the claim arising. As example, I settled a case that was set for trial September 19, about a month ago. For $60,000.00. Because it did NOT go to trial and there was NOT a judgment entered (it was a settlement) my state's 30 day requirement for payment of a judgment before post-judgment interest starts running did not commence. In fact it will never commence, as it was a settlement. Yes, I will get the check, but have to go through hoops to get it. Short of filing another suit to enforce the settlement agreement (which never happens) we must sit and wait for the insurance company to cut the check. I now am bugging the defense attorney "where the f is my client's check?"

I am laughing out loud because just before I read this post, I had the following exchange with defense counsel in that case:

*********************************
From: XXX
Sent: Thursday, October 18, 2018 7:32 AM
To:XXX
Subject: RE: 09XXXXX Brown vs XXX

Check has been requested and is in the mail.

From: XXXX
Sent: Wednesday, October 17, 2018 1:36 PM
To:
Subject: 09XXXX Brown vs XXXXXX

Eric-
See email from plaintiff counsel below, he wants to know status of the check.

From: XXXXX
Sent: Monday, October 15, 2018 12:22 PM
To:
Subject: 09XXXX Brown vs XXXXXXX

Robert: Can you check on our check, lol?

******************************************

This will be another week before this claim is paid. Now, mind you, this case could have been settled for $35,000 2 years ago within 6 months of the claim arising. But no......the "float" had to occur. And even when the insurance company agreed to pay this claim about a month ago, it still has not been paid. Another 60 grand in the insurance company's portfolio, invested and earning money. Multiply this by millions of lawful but yet unpaid or delayed paid claims, and you come to understand the billions in profits the insurance companies make in selling you their product, which unfortunately we must have. But I digress.

Stay away from the whole life. It is a big instrumentality of profit for the insurance company from which you most likely will not benefit, god-willing. A whole life policy include many fees that are never laid out for you. There is the commission to the salesman. Admin costs. Cost of the insurance. I bet you won't find an a salesman that lays out these costs for you, the way you can when you buy into a mutual fund, where all this info must be provided up front. (expense ratio, sales commissions, and other fees) Plus, whole life costs can change over time, again without you knowing, and those changes can affect any return you receive which I bet if you run the numbers, you could do much better putting these funds in a simple CD at 1.5%.

Now, if you are in a situation where you need a permanent death benefit, such as having a disabled kid, whole may be the way to go. If you are maxed out with all of your tax-deferred savings, and you can front-load your policy with large payments in the first several years, whole life might provide a decent return for you. But most of us do not fall into this category. Most of us do not have a ton of cash on hand to make whole life a reasonable investment. There are too many other good investment options out there to let yourself get screwed with this expensive and poorly performing product. Just buy a term policy for 30 years. I bet you can get one for 20 bucks a month for a half million benefit at your ripe young age. And this will get you through the child raising years should your maker decide to put a recall out on you. When I retired from copping at 55, I bought a 30 year term policy for 100 bucks a month, which will pay out to my 2 kids $250,000. Do I need the insurance? Not really. But if I croak before 85, my kid's get a bonus. I wish my deadbeat dad did that for me. Wait..he was a deadbeat. Okay, never mind. (This would be a different rant for another day) Just shop for a term policy, 25-30 years to get you through the kids growing up. It is cheap insurance, which we hope you will never need. Just like all insurance. We gotta' have it; but hope we don't have to use it.

 

[mike holdenrid]

My thoughts on this as a financial advisor and someone who has over 800 life insurance policies within my agency. We wrote about 500 of them and inherited the rest.
~ No 1 plan is right for everyone, find someone you trust and ask for references. Get ideas from multiple representatives.
~ Whole life is an antiquated product in my opinion. The rate of return is too low and they lack flexibility. If you want a permanent life insurance policy compare the whole life to an Index Universal Life policy or, if you love risk, variable universal life
~ I prefer term policies for the majority of my clients. The policies I utilize are convertible to a permanent policy in the future without additional underwriting.
~ The main value of a permanent life insurance policy is tax free withdrawals in the future if the policy is properly overfunded. I only recommend this for young people who are healthy (low cost of insurance) who have a lot of excess cash flow and are maxing out their other tax advantaged accounts and have a properly funded brokerage.
Permanent policies certainly aren't for everyone and a lot of unethical insurance sales people love them for the high commissions so buyer beware.