All Forum Posts by: Zachary Paschke

Oh, and about recent deposits- depends on the bank, but if they pick up on the big deposit you can get a letter from your parents saying it was a gift to pay towards the house (which sounds like the truth in your situation if they’re not requiring payment). If I remember correctly banks wanted like 2 months of statements in my case. 

I would ask around for a local mortgage broker. The rule for most lenders isn’t the rule for all lenders and a good broker will help point out companies that can help. You haven’t said which state your in so I can’t make any recommendations. Real estate agents should know some decent ones. 

Be prepared for the fact that if your DTI ratio is high they may insist on issuing out some of your money directly to the credit card companies. Mine did this. I bought our rental with credit cards (not saying that's a good or bad thing, but it worked for me - I simply used it as a short term loan). The mortgage company wrote checks to the credit card companies as a requirement of the loan. We didn't care, because that's what we planned on doing.

As far as your parents life insurance- you’re right you don’t have to repay the loans. If you at least pay the interest the policies should stay open. If the policies never paid a dividend (or if they haven’t had much time to mature), you may not have tax ramifications, but if you pull more cash out of the policy than you put in and let the policy surrender there could be some tax ramifications. Just be aware of that (not an issue for loans by themselves- just if the policy surrenders). 

Hope that helps. 

Hey there neighbor. I don't know much about the ins and outs, but PS Bank and FNCB are both portfolio lenders in the area. You might find some more conducive solutions.

It might be worth touching base with them to see if they can help. Good luck!

I think inside the industry we’re having some of the concerns people outside the industry are. Financial professionals can be hard to vet. I am a specialist and people think I offer the same kind of service as a typical call center rep. There is this very fast food version of financial advice popping up. In an effort to “save money” people are getting questionable advice. Many of my clients come to me because they’ve been told by local agents or call center reps that they can’t get the coverage they want. 

It can be hard for investors to get life insurance (especially large amounts of term) if they don’t have W2 jobs or assets (10 mortgages isn’t an asset 😉). Many companies view investment income as uninsurable as it continues to earn even as the insured passes. It’s not impossible, just can be a little more difficult. I’ve had clients that were unable to get what they needed from a large call center that got the coverage they needed with me (sometimes the solutions are a little more creative than they expected).

With that said, people are terrified of being sold. I get it. I would love to be able to charge someone for the advice of putting a policy together for them. I do a lot of high-risk work, meaning I write policies for people with more complex health problems. I’d love to charge a consultation fee. Unfortunately, people have been conditioned into believing that financial advice should be “free” (the advisor collects a commission to sell products). 

Although there are some fee-based planners, that has little influence on the larger industry runs. Obviously, the only industry you listed that runs completely fee-based is accounts. 

The biggest struggle on my side is that because of the fear of being sold, people often fight the advising process. 

The funniest example was the time I got a call from a Primerica agent (for those that don’t know Primerica is like the Pampered Chef of life insurance and they only sell term products- they are single handedly the biggest source of failed insurance exams across the county). She called me, because she wanted to verify that Primerica was the only company that offers guaranteed renewals after the level term period ends (if you take out a 20 year policy, will they renew for a higher price at the end of the 20 years). Well, almost every company offers that - and in writing. She didn’t want to hear that. I recommended if that was a large concern that she get a Guaranteed Universal Life policy and lock her low rate in now and keep it. She was young it would have been cheap.  She got so angry at that she started screaming at me over the phone, “I told you I don’t want a whole life policy. Not whole life or universal life. I listen to Dave Ramsey you’re not taking advantage of me.” I tried explaining that the policy I was recommending was basically like a long-term term insurance product where the price doesn’t go up, but there’s no real cash value being built up (Dave Ramsey’s point of contention with whole life). Either way, she her self was an “agent.” She couldn’t speak the industry lingo and didn’t understand any policy structure outside a 10,15,20,30 year term policy. And she lost it. She screamed at me for a sold 5 minutes straight. 

That to be said, from the outside there’s little to know about the success of the person you’re working with. It makes it hard to vet a good advisor from a poor one and when you’re looking for “free” advice it is often worth what you paid. There’s so much really good advice and so much shady advice on the inter webs (including here). 

@Daniel Chun the reason for not being able to make a lump some payment is because the IRS has regulations on how much of the total premium can be paid in any one year. If the policy is funded past that limit you’ll loose pre-death tax benefits (if you borrow against the policy it can be taxable). 

The goal is to fund up to that limit and pay as much in as possible. 

There are single premium products and people do use them if they’re not interested in accessing the cash value before death. This is most often used to simply transfer money post death. If all you want to do is buy a death benefit and have no plans to touch the money before - then it can make sense to get a single pay product. 

You will know if your product crosses the threshold as it will be labeled a “Modified Endowment Contract” on the illustration and post illustration the company will often warn you if a payment will put you over that limit. Companies have no incentive to allow you to accidentally create an MEC. 

@Anthony Dooley I do primarily sell term products. As you stated. I’m just an insurance agent. I’m a sales person that sells insurance. Stockbrokers are sales people that sell stocks. Unless you pay a fee-based financial advisor, your financial advisor is a sales person who makes a commission. I’ve made professional decisions to not get a securities license because I don’t like the business. 

I’m not trying to tell people the stock market is bad. I have stock investments. I don’t pretend like I don’t need to protect against the future with insurance products. I use the same products and eat my own cooking. 

Commissions in whole life are not necessarily “better” than term especially for the amount of work involved. 

I’m not here to argue with you, but I do need to point out your ill-formed advice. You may never know the impact of your comments. I do. I have clients that call for coverage after they get sick. I have families that call after a death to find out why their loved one didn’t buy the coverage they needed. I hear those calls. You get to make dumb comments and continue living in the ignorance of the wake you leave. I don’t have that luxury. 

You may not need life insurance. That’s fine, but if you talk someone out of it that does need it you can be responsible for the heartache death can cause their families. Just because it may or may not be right for you doesn’t mean it’s wrong for everyone. Just because you’re not the one who gets the phone call doesn’t mean you’re not responsible. Your words have weight. You owe a responsibility to other people to consider what you say before you say it. 

When family members of insureds call me to place a death claim they don’t complain about my “crap product.” They’re grateful that their loved one considered the financial devastation death causes. 

This my surprise you, but the product I recommend to clients are based around needs, not commissions. If a client doesn’t need a product I offer, I recommend they not buy. I’ve refused to sell clients because the product they wanted was not in their best interest. I sell products other agents don’t (they don’t sell them because commissions are low) because if someone trusts me I owe it to them to offer the right line of products. 

So, you can take your professional attacks somewhere else. I don’t care if you choose to be ignorant about a specific type of product, but don’t attack the morality of a person you don’t know over your own ignorance. That’s completely classless. 

I see you still don’t understand death benefits. That’s ok bud. I love ya and wish you the best! Again, I hope you find better things to do with your time. 

I’m not usually here to defend someone else’s sales pitch, but @Anthony Dooley, your obviously outside your wheelhouse here. I don’t expect you to be knowledgeable about investing- unless you pretend to be knowledgeable. Since you’ve done this (I am assuming without any kind of licensing) I’ll treat you like someone who should know better. 

A few issues here:

1) every financial product has fees and commissions- even stock brokers 😳. If @Joseph Neri is doing his job the right way the structure of these policies actually reduces commissions. 

The biggest part of what you consider fees is the cost of insurance. Is there no benefit to knowing that your family will still be paid even if you only make one payment towards the policy? That’s completely worthless?  Stocks will never pay your family a death benefit. 

From the looks of your picture you’ve made it to 46 without issue  you probably feel invincible and think you’ll live and love forever. You might. The home might roll you out in front of the cameras at age 100 where you can lecture the masses about how good Johnson & Johnson stock has been to you. Chances are you won’t. If you’re lucky you have 30-40 years left. And you’re using that time to make angry rants online about a product you know nothing about. If you’re unlucky you family could have to figure out their own way to financial harmony without you. Stocks you intended to invest in and returns you intend to realize in the future won’t help them if they need the money now.

2) No one is making an average of 11% in the stock market (especially if they’re trying to conserve on fees). If they were there’d be no reason for investing hard money if you can make the same money in the market. I know Dave Ramsay told you that you would, and maybe 50 years ago you would have had 10% before fees, but not today. 

This begs a question as well. Even if the stock market returns could touch the kind of returns you get from IBC, post taxes that’s hard to do, if you die before the largest chunk of your investing is done - stocks offer no practical relief to your family and at its base this is obviously an insurance product. See my note before about insurance. 

3) Let’s look at taxes as well. You’re right all of your investments are post tax. When you invest in the stock market - will you have to pay taxes on the earnings? When you put money in your savings account and make .15% interest - do you have to pay taxes on it? Yes. I don’t know how you don’t understand this. 

When you take a loan out against your policy (which is not borrowing your own money because your money is still growing at a higher interest rate) you can be borrowing  more than you invested. Anywhere else you’re looking at a taxable event. 

Again, if Joseph is doing his job right (I’m sure he does, but I don’t know him) then you’ll make considerable amounts of money from the policy and tax savings here is one of the reasons your 11% from the stock market argument doesn’t hold up. 

No RMDs (which can lead to even more taxes on your family if they’re required to pull when you die), generally tax free... I’ll stop so I don’t steal all of Joseph’s thunder. Suffice it enough to say there’s decent benefit. 

4) Face Value vs Cash Value. This is probably the dumbest silliest  argument of all. Let’s look at what gets paid out when you die: death benefit (what you call face value, but for dividend paying policies death benefit is a better term as it changes over time) less indebtedness to the policy. 

At its most basic level Whole Life insurance is a combination of saved cash with insurance. If you die before the policy matures the insurance kicks in to pay the difference in price between your cash value and death benefit. Unless you plan on living until age 121, the insurance will pay something. As the need for insurance goes down, so does the cost of insurance. 

Cash value simply tells you how much of the policy is paid off. 

5) if your policy is only returning 4% you have the wrong policy  this is why some of the big mutuals are not the companies to use for this stuff  you should be looking at a guaranteed interest rate of 4% before dividends.

Your interest rate return numbers for WL are not “wrong” they’re just not the product being advertised. No one should buy a WL policy without a dividend if they can qualify for one with a dividend.

Why did I get involved? Because, poor Joseph here is simply trying to help people with a financial product that has been accepted by the mainstream for over 100 years and you decide you need to make ignorant comments. If you don’t like the idea, that’s fine. Keep trucking. Don’t pretend like you’re knowledgeable about the products when you are not. 

Have a good day. Like I said before, find something more productive to do with your next 30-40 years. I wish the best for you. This kind of behavior just isn’t it. 

Disclaimer: I’m not an attorney, CPA or half as smart as Anthony pretends to be. I’m not offering any personal financial advice here as you’re all internet strangers. Always discuss your personal situation with a qualified advisor (or if you want to save in the fees just PM Anthony 😉). 

@Thomas Rutkowski - Premium Financing? Are you serious? Oh my. Love ya brother. God bless you. Agree to disagree. 

@Stoney Pitzer I will say to Thomas’ point you do need to vet the person writing the policy. The average advisor  can go an entire career without writing a policy like this. Unfortunately, people with the knowledge @Thomas Rutkowski Has are rare. I work with a large brokerage network where a lot of agents will bring these cases to me because they’re really not even interested in learning how to write these cases. 

I personally really like whole life for this. I look for Fraternal companies. After that I look for the following:

1) Healthy guaranteed interest. You should be seeing around 4%. 

2) Healthy dividend. Dividend calculations can vary company to company, you really need to review the historical numbers For consistency and the illustration for future numbers. 

3) Companies mode of income. This is a point that is distinctive for whole life. Obviously, income for an IUL (Indexed Universal Life) policy will be tied to the market. Where as the success of a dividend for a whole life company comes from one of three places: a) over charging clients on whole life policies b) outside investing c) more profitable insurance products 

I look for a company operating in area c. 

3) A competitive borrowing interest rate. The interest rate varies company to company. You should be looking for something in the ballpark of guaranteed interest + 1%. 

4) Be prepared to properly fund the account. If you can’t overfund it properly the first few years, don’t take the policy out. Have the money to fund it. Borrowing money to pay premiums early on is a bad sign, any advisor that recommends it you should be suspicious of.