All Forum Posts by: Mike S.

Quote from @John L Daly:

I recently pulled out of 401k and started putting into my whole life insurance and just wondering if that's the right move 

Unless very special circumstances, I would not withdraw from a 401k to put the money into a properly designed permanent life insurance. I may not put anything anymore in a 401k or IRA, or continue to put some in addition to the life insurance. It all depend on each specific situation.

However, what is most of the time discouraged is to surrender or cancel your life insurance policy as you have paid upfront the fee for a life insurance that was supposed to last for your whole life. If you surrender it before that, you have wasted the fee and it was a very bad financial decision.

Permanent life insurance is a great product for long term goal. It is however a complex product and you need to learn how to use it properly to maximize its benefit. The front loaded commission make is usually less appealing in the first few years, but after five to seven years, it should start performing better than some other options. Also, you can easily use the cash value of your life insurance as collateral for a loan that you can reinvest in other investments, basically making your money work at two places at the same time.

While you may get better return with a 401k/IRA stock investment, with a wholelife you will get steady moderate return with no negative years, with an Index Universal Life you with get variable return with a long term IRR in the 7-9% range, and also no negative years. Like a Roth IRA/401k, the life insurance is tax free if used properly. And during retirement you can draw approximately 8% per year for the rest of your life while with a IRA/401k it is recommended not to draw more than 4% to make it last 30 years.

Quote from @William Joel Idleman:

I don't like the fact that most policies keep your cash.  For example, if you die and you have a death benefit of 100k and have paid up to 60k.  They will give you the 100k and keep the 60k.  Generally, a better return on your 60k can be found in the marketplace.  This is why you hear the phrase, "Term insurance and invest the rest."  Advisor will show you what the cash value policy costs vs term life insurance.  Then they would show you market average return on if you invested the difference.  I've yet to see a cash value policy give a better return than the "Term and invest the rest" strategy.

You are an insurance agent and say that the insurance is keeping your cash when you die. I don't know where you learn that, but I would be concerned to be one of your client as you obviously don't understand the product you are licensed to sell.

IUL are great wealth multiplicator. However it is a long term game. Canceling your policy now will make it a waste of money and your will lose all the premium you put in.

The first few years you can expect to have a negative return, but later on you will be way ahead. Especially if you start using loans secured by the cash value, you can make your money work for you at two places at the same time.

My only regret with IUL is not to have started it sooner...

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@Alexandria Long

There are a few companies that are usually recommended for maximum overfunded Whole Life insurance and a few others for Index Universal Life insurance.

The choice will depend on your age, health, amount and duration of premium you want to make, level of flexibility in payment, type of loan expected, return strategy offered, …

You will need to talk to an agent who is well versed in these strategies who can listen to your needs and explain to you the different options so you can make an informed decision.

@Suresh Jersian

The best ressource I have found is the Clint Coons YouTube channel.

@Nathan G.

Do NOT use a quit claim deed. Use a warranty deed instead to avoid voiding your title insurance.

Depending on your state and county, the transfer of the property may result in transfer tax and a reassessment for tax purposes. In some locations you need to contact your tax appraiser to notify them that the final beneficial ownership is not changed to avoid extra taxes.

In some states it may be advantageous to use a land trust first to avoid these problems.

Once your transfer is done, you will need to update all your insurances to make sure that the name insured is now the LLC with you now becoming an additional insured.

@Srinivasa Murthy

Just google it. You will find plenty.

@Aakash Deol

It is a long term strategy as the first four to six years, the upfront cost of the policy will give you a negative yield. Past that initial burden, you can expect an IRR between 3 to 5% with a whole life policy and 4 to 7% with an Index Universal Life policy.

These policies need to be set up properly to be maximum overfunded and only a few insurance agents are knowledgeable and willing to offer them as they are lowering their commissions doing so.