All Forum Posts by: Antuan C.

@Antuan C.

That policy is designed very well. The ration of cash value to premium is very high. Your expenses and fees are minimized.

You are making a mistake trying to calculate a return on the life insurance premium. You need to consider the real estate investing you are doing at the same time with the same money. Policy dividends represent the return on the cash value portion of the policy. And the guaranteed cash value portion at that. So a 6% dividend, for example, is credited toward the guaranteed cash value. So by maximizing the cash value to premium, you are insuring the highest possible return for the entire policy.

There shouldn't be any reason why you can't use a policy loan to make a down payment. Life insurance cash value is a valid source of funds for a loan. 

Whatever returns you earn by investing with your policy loan is gravy over and above what the policy's cash value is earning at the very same time. The sum of those two components will exceed the return you'll achieve by simply sticking your $30K directly into real estate.

Keep the policy. Just use it properly.

Also, there is no reason you need to have a $500K net worth. Its all relative.

You also don't want to wait 3 years before borrowing against the policy. That's just foolish. You want your money working in two places at one time from day 1. There is no reason to forego returns.

I disagree with Zachary. You should have insurance on yourself for the benefit of your children. You want their college paid for in case something happens to you, for example.

A few notes on this. 

1) The fees on this policy is low, it looks like it was set up the right way. You can know this because of the cash value the first year. Many things happen to the money that doesn’t end up as cash value. Part of it is payment of commissions. The agent that write this policy is doing fine, but it looks like they structured it to minimize their commissions and maximize your cash value. 

2) Whole Life is not an "investment vehicle". It is a stable, secure, insured place to park your money. If you invest in the market, IRA, 401k... there is no death benefit. The market has no "guaranteed interest" or guarantee your principal won't go down. This is about security of your money. Also, you can't borrow against stock growth.

3) You can’t guarantee the market will do better than your Whole Life policy, especially considering the tax benefits. 

4) Your Whole Life policy should be part of your strategy. It’s not stocks or WL, it can be both. You’re smarter to get this established first since the costs of the policy are lower at your age. 

5) you should be able to borrow your money, but I always recommend you wait 3 years minimum before you do so. Most carriers let you borrow current cash value less a premium payment or two.

6) you don’t have to pay on this policy forever  once you stop your done, but the cash value will continue to grow (including dividend) just not as quick as with the money. Your death benefit will drop a bit, but to be understood  your agent can illustrate what that looks like.

7) This is even more powerful for children. This is highly debated in circles, but I highly recommend designing these policies for children and funding them while they’re young. As an agent I don’t make as much off of them that way, but it’s what I do for my kids. 

Good luck!