All Forum Posts by: Anique Akhtar

Wouldn't an interest only loan make more sense if you know you are going to put a lot of money? Meaning if I get a place for $700k interest only loan and put in about $150k on the place to remodeling it over two years while living at that home and then refinancing it after two years. 

Doesn't the interest only loan make more sense? 

So after reading a bit more, I think I might be able to answer the first question I asked.

1) IUL premiums might get higher or the death benefits might decrease if the policy is underfunded. But we shouldn't run into this problem on an over-funded IUL. Especially, since we are at low-interest rates at the moment so the projections should be conservative.

@Thomas Rutkowski

Thank you once again for answering all my questions. It has helped me a lot in understanding how all of this works.

I apologize for taking your time, but I still have a few more questions after reading more stuff online. It seems like everyone tells a different story on how it works and I don't understand who to believe at this moment.

So regarding IUL and WL, I had a few questions.

1) About IUL. I have been told that IUL usually doesn't last throughout one's life because the premiums go off the roof as you age. So most people have to resort to cash it out. I don't really understand how the premiums could get so high. Wouldn't the premiums actually stop increasing once the cash value reaches the death benefits? Is IUL really bad in the long term compared to WL, while considering my age (32)?

2) Then there is the question of fees. I have been told IUL usually charges 6% in fees on the premiums while WL would have a flat yearly fee of less than $100 year. This would mean that IUL would grow at a slower rate. However, I recall from reading on forums elsewhere that IUL grows more because it doesn't have hidden fees and should have lower fees. But at this moment, I am not sure who to believe. Could you elaborate on that?

3) Is it possible to look at the IUL vs WL returns for the past 10 years or so. Maybe not include returns from 30 years ago or something. I would be interested in knowing how IUL and WL performed in the past decade or so.

4) Then there is someone claiming IUL should have the same returns as WL. Since in IUL they take away the dividends from the Indexes. so making S&P returns like 4% or so.

5) Then there is the question of how much money can you borrow against your cash value. So if 85% of the premiums+interests go into the cash value, then you can only take out 90% in loan from that 85% cash value. Is that true? so the actual loan would be like 76.5% of the premium+interests?

6) I am reading that the 90% loan you take on the cash value needs to be paid back properly. Otherwise, if the compounding interest reaches your cash value, the policy will lapse. I'll assume if the cash value is growing at a higher rate than the loan interest rates and is also increasing due to the premiums, then there shouldn't be a danger of the policy lapsing. But apparently, people are saying it is very common.

Thank you once again for answering my previous queries.

@Thomas Rutkowski

Thank you for the reply. Yes. I believe I understand that we are burrowing against our cash value rather than taking money out of WL.

I have been reading a lot into WL and IUL and I still have a few questions, if you don't mind me asking.

1) The first question is regarding WL and IUL. I understand that it really comes down to how much risk I want to take. I was more comfortable with WL but if the guaranteed rate has dropped to 2%, IUL seems a lot more convincing. So the first question is, why has the guaranteed rate in WL decreased? At my age (32) wouldn't the "more risky" IUL make more sense?

2) Would taking the loan out directly from the insurance company be a better idea or getting a CVLOC from a third-party lender at a prime rate a better idea? I am reading that the interest you pay on the policy loan goes back into the insurance's cash value. Is that true? If it is true, wouldn't taking a loan against your policy through insurance be a better idea rather than getting a lower APR loan from third-party lenders?

3) Can the dividends pay for the premiums or do I have to regularly pay $1k every month for the rest of my life?

4) I am also a bit concerned about flexible payments and the MEC limit. I don't fully understand the MEC limits yet and what that entails. So trying to understand that. Please correct me if I am wrong in my calculations. In my case, if I am putting in $1k per month into the policy and I want to get maximum cash value. I believe my MEC limit should be $12k per year. Does that mean I cannot put more than $12k into my insurance? Also is it possible to do flexible payments? How would each of these scenarios work assuming my premiums are $12k which is the same as the MEC limit:

• A) If I pay $14k during a year.
• B) If I pay $10k during a year.
• C) If I pay $12k in the first month and don't pay anything the rest of the year.
• D) If I pay $6k the first month and pay $6k on the 9th month of the year.

Thank you once again for your response.

Hello,

I don't want this thread to become another WLI vs REI. I have gone through the previous post and I understand why some people like WLI and why some people despise it. My question was whether it is specifically worth it for me during current times.

I am 32 years old. Starting a bit late in life. Just moved and settled in the US, and getting a steady income. Don't have much savings or investments at the moment. I could personally save up to $3k per month after filling out the retirement plans. I was thinking of putting $1k in WLI, $1k in emergency savings, and $1k in other investments. I want WLI with maximum cash value and probably minimum death benefits. So when there is time for me to buy my first property (1-3 years down the line). I can take money out of WLI and make my downpayment. Then use it again years later for other investments. However, I am not sure how inflation and Covid are going to affect WLI.

So I have two questions:

1) Would putting the amount I am trying to put in WLI be a good idea, or is that too much?

2) How do Inflation and Covid affect WLI? I get it that my premiums would stay the same even with inflation, but probably my returns/dividends would remain the same at 4%. Is it a good idea to open a WLI during these times?

Thank you for your help.

Does an FHA loan provide you better APR than a conventional loan?