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Personal Finance Advice and Education!

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17 hours ago, -OZ- said:

Synovus, since sold to citizen one. 

I haven't seen better than 3.25 on a 30, accounting for costs (I do have a VA rating but there are still some costs). 

At 3.25, you are good for now. 

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Yeah, property taxes are crazy high in Portland. I paid about 6,700 this year, and the home is valued at about 525k. No sales tax helps overall, but it still stings every time I'm writing the check. Oh, and the roads still suck.

The rate goes up every year, more and more bonds that seem to get rubber stamped.

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11 minutes ago, skycriesmary said:

Yeah, property taxes are crazy high in Portland. I paid about 6,700 this year, and the home is valued at about 525k. No sales tax helps overall, but it still stings every time I'm writing the check. Oh, and the roads still suck.

The rate goes up every year, more and more bonds that seem to get rubber stamped.

A 525k house in my area would be well over 10 grand property taxes.  Maybe closer to 15.  Northeast Ohio.

150k house here has taxes over 3 grand.

Probably pays for the non stop road construction.

 

Edited by ghostguy123
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Insurance question:

My wife's parents had a Whole Life insurance policy. In the case of her death, it would pay them (I believe $50k). It's got a surrender value of ~$7k and a large portion is taxable. They offered to give it to us since we're now married and she will be calling soon to change the beneficiaries from her parents to me.

Since a good chunk of that $7k is taxable, I was looking into a 1035 exchange. I don't have any desire to keep paying into a Whole Life policy, as I want to keep our insurance and our investments completely separated and switch to Term insurance.

Either way, I'm getting away from the Whole Life policy. Would a 1035 exchange into a Term policy be possible? Or am I stuck with cashing out of the policy, paying a large chunk of taxes, and then just purchasing a new Term policy?

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1 minute ago, Warrior said:

Insurance question:

My wife's parents had a Whole Life insurance policy. In the case of her death, it would pay them (I believe $50k). It's got a surrender value of ~$7k and a large portion is taxable. They offered to give it to us since we're now married and she will be calling soon to change the beneficiaries from her parents to me.

Since a good chunk of that $7k is taxable, I was looking into a 1035 exchange. I don't have any desire to keep paying into a Whole Life policy, as I want to keep our insurance and our investments completely separated and switch to Term insurance.

Either way, I'm getting away from the Whole Life policy. Would a 1035 exchange into a Term policy be possible? Or am I stuck with cashing out of the policy, paying a large chunk of taxes, and then just purchasing a new Term policy?

Why would you change it to your wife? Sorry to be morbid but your wife’s parents are closer to passing than your wife. I’d keep the insurance on them and inherit the $50k. I mean that’s got to be an insurance company’s wet dream to have older people pay into a policy and before they pass, move it to a 25-30 year younger person without ever paying out the death benefit.

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15 minutes ago, stbugs said:

Why would you change it to your wife? Sorry to be morbid but your wife’s parents are closer to passing than your wife. I’d keep the insurance on them and inherit the $50k. I mean that’s got to be an insurance company’s wet dream to have older people pay into a policy and before they pass, move it to a 25-30 year younger person without ever paying out the death benefit.

Sorry if I didn't clarify. The parents had the policy on my wife from the beginning. They had a previous child pass when they were very young and the policy helped to pay for the expenses including funeral, etc. So they took out a small insurance policy on my wife when she was born just in case.

Basically, they were talked into it by an insurance salesman who wanted to pad his own bank account with Whole Life premiums. At this point, I just want to get out, but if there's a way to swap the current Whole policy for something more useful like Term insurance without taking a big tax hit, I thought it might be worthwhile.

I don't have the policy in front of me, but I think the basis was something like $2k leaving $5k taxable at income tax rates. Wondering if I'm eventually going to purchase Term insurance for us anyways, if it's possible to bridge the gap between this Whole policy and a new Term policy via 1035 exchange to avoid the tax hit.

Edited by Warrior

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20 minutes ago, Warrior said:

Sorry if I didn't clarify. The parents had the policy on my wife from the beginning. They had a previous child pass when they were very young and the policy helped to pay for the expenses including funeral, etc. So they took out a small insurance policy on my wife when she was born just in case.

Basically, they were talked into it by an insurance salesman who wanted to pad his own bank account with Whole Life premiums. At this point, I just want to get out, but if there's a way to swap the current Whole policy for something more useful like Term insurance without taking a big tax hit, I thought it might be worthwhile.

I don't have the policy in front of me, but I think the basis was something like $2k leaving $5k taxable at income tax rates. Wondering if I'm eventually going to purchase Term insurance for us anyways, if it's possible to bridge the gap between this Whole policy and a new Term policy via 1035 exchange to avoid the tax hit.

Ah, that makes sense now. I’m confused about the taxable amount. Is that growth that wasn’t from premiums paid? I don’t know much about whole life policies.

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7 minutes ago, stbugs said:

Ah, that makes sense now. I’m confused about the taxable amount. Is that growth that wasn’t from premiums paid? I don’t know much about whole life policies.

Yeah, essentially it's marketed as insurance that is also an investment account, albeit a horrible one

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Just now, Warrior said:

Yeah, essentially it's marketed as insurance that is also an investment account, albeit a horrible one

Got it. Sounds like fun. 

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5 hours ago, Warrior said:

Yeah, essentially it's marketed as insurance that is also an investment account, albeit a horrible one

One where $2k in premiums have grown to $7k in cash value - and provided a $50k insurance benefit this entire time?  Yeah, sounds horrible to me 🙄.  Sorry, couldn't help myself, and yes I'm an insurance agent.

No, you can't 1035 into a term policy.  You may be able to make the policy a "reduced paid up", or turn it into an "extended term" policy - talk that carrier (you'll likely need one of your inlaws to ask).  Or, they can give it to her (no real transfer for value if they gift it to the insured, your wife), then she can make that call.  Reduced paid up might just turn it into a $40k policy that never needs another premium (depending on her age, $7k might do just that).  Extended term pretty much just means the policy would pay for itself out of it's own cash value for as long as it can.

Is the policy from a "mutual" company (one that pays dividends)?

Edited by matttyl

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18 minutes ago, matttyl said:

One where $2k in premiums have grown to $7k in cash value - and provided a $50k insurance benefit this entire time?  Yeah, sounds horrible to me 🙄.  Sorry, couldn't help myself, and yes I'm an insurance agent.

No, you can't 1035 into a term policy.  You may be able to make the policy a "reduced paid up", or turn it into an "extended term" policy - talk that carrier (you'll likely need one of your inlaws to ask).  Or, they can give it to her (no real transfer for value if they gift it to the insured, your wife), then she can make that call.  Reduced paid up might just turn it into a $40k policy that never needs another premium (depending on her age, $7k might do just that).  Extended term pretty much just means the policy would pay for itself out of it's own cash value for as long as it can.

Is the policy from a "mutual" company (one that pays dividends)?

Bah. As you probably suspected, I had the #'s flipped. Just over $5k paid for premiums over 30 years and it's now worth just over $7k. So total gain of about $2k versus approx. $10k gain if it had been invested in an S&P index (without the coverage). Giant fail on my part.

Thank you for the info - I suspected that a 1035 wasn't possible in this situation and it sounds like that's the case.

 

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1 hour ago, Warrior said:

Bah. As you probably suspected, I had the #'s flipped. Just over $5k paid for premiums over 30 years and it's now worth just over $7k. So total gain of about $2k versus approx. $10k gain if it had been invested in an S&P index (without the coverage). Giant fail on my part.

Thank you for the info - I suspected that a 1035 wasn't possible in this situation and it sounds like that's the case.

 

Yes, while life policies for children aren’t the best vehicle, at least if viewing them as a pure “investment”.  Mainly because the child is given “standard” or guaranteed rates.  Generally the only child policies I do are where the parents purchase future insurability options where the “child” can buy additional coverage in their 20s and 30s without going through any medical underwriting.  If the child had some serious medical condition later in life, those options would be their only chance to get reasonable life coverage.

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15 hours ago, Warrior said:

Bah. As you probably suspected, I had the #'s flipped. Just over $5k paid for premiums over 30 years and it's now worth just over $7k. So total gain of about $2k versus approx. $10k gain if it had been invested in an S&P index (without the coverage). Giant fail on my part.

Thank you for the info - I suspected that a 1035 wasn't possible in this situation and it sounds like that's the case.

 

Your part?  I thought this was your in laws doing?  Also, wouldn't have been a fail at all if something had happened to her insurability, or God forbid if something happened to her. 

Just from the numbers you provided (30 years of premiums, $5k total in premiums, $7k in cash), the ROR on just the premiums is just over 2%.  Obviously not great.  If you were to remove the premium amounts that a term policy would have cost (and only look at the "investment" portion as the difference, it would be a bit better).  Generally, what I find is about 3-5% (net after tax, as there isn't any), depending on the policy, for the ROR of the premium difference between term and WL.  No, that generally won't beat any equity market over a period of a few decades, but I'm not sure that's the fair comparison.  As it's safe and liquid, compare it against CDs or regular bank accounts and it looks pretty good.  Personally, I view mine as my emergency fund - and I'll never have to worry about outliving my term policy. 

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Since we're talking life insurance, I have a term policy that ends in 7 years. I probably want it for about 15-20 more years. Are there general advantages to trying to extend it now, or should I just wait the 7 years and get a new 10-12 year term policy?

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26 minutes ago, ConstruxBoy said:

Since we're talking life insurance, I have a term policy that ends in 7 years. I probably want it for about 15-20 more years. Are there general advantages to trying to extend it now, or should I just wait the 7 years and get a new 10-12 year term policy?

As is anything dealing with finance, timing is key.  You could buy a new 20 year policy now and be done with it (replacing your current term policy, unless it's so cheap it just makes sense to keep both).  Or you could wait till the end of it and get a new 15 year (terms usually come in 5 year increments, and with some carriers only 10 year).  Really what you want to do it buy the longest possible term policy just before your insurability gets worse (you get standard or below rather than preferred or above rating). 

If you wait a few years, your health could change and make whatever you buy more expensive when you do get something new.

Or you could have purchased a whole life policy years ago and not have to worry about any of this.  I had to say it.

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1 minute ago, ConstruxBoy said:

LOL on the Whole life. Thanks for the thoughts. 

Hey, I'm a big advocate - and not just because I'm an agent.  If I weren't, I still likely would never own any term coverage on myself.  Only about 2% of term policies ever end in a claim - 98% of the time it's money thrown down the drain. 

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11 minutes ago, matttyl said:

Hey, I'm a big advocate - and not just because I'm an agent.  If I weren't, I still likely would never own any term coverage on myself.  Only about 2% of term policies ever end in a claim - 98% of the time it's money thrown down the drain. 

Yeah, but I just want insurance if I die while I'm working. If I die after I retire, she doesn't need it. IMO of course. 

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6 hours ago, ConstruxBoy said:

Yeah, but I just want insurance if I die while I'm working. If I die after I retire, she doesn't need it. IMO of course. 

So cash it in (or more likely start generating an income stream from that cash). 

Also, ask her about that one.  Also, do you have any pension from your work?  If so, they'll ask if you want a "survivorship option" (your spouse can continue to get a portion of your pension if you pre-desease).  All that is really, is a life insurance policy.  There are other examples of why you might want to keep some coverage as long as possible. 

Edited by matttyl

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1 hour ago, ConstruxBoy said:

Since we're talking life insurance, I have a term policy that ends in 7 years. I probably want it for about 15-20 more years. Are there general advantages to trying to extend it now, or should I just wait the 7 years and get a new 10-12 year term policy?

what was your reasoning for choosing your original term duration?  What's changed?

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2 minutes ago, wilked said:

what was your reasoning for choosing your original term duration?  What's changed?

It may have been a 20 year term purchased 13 years ago.  Many carriers didn't have a 30 year term then (my primary carrier didn't have a 30 year then).  When you start "stacking" term policies like this, it really does make a permanent policy look that much better.

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1 hour ago, matttyl said:

It may have been a 20 year term purchased 13 years ago.  Many carriers didn't have a 30 year term then (my primary carrier didn't have a 30 year then).  When you start "stacking" term policies like this, it really does make a permanent policy look that much better.

Correct. Longest term we could go at the time. 

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2 minutes ago, ConstruxBoy said:

Correct. Longest term we could go at the time. 

How old are you?

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2 hours ago, matttyl said:

So cash it in (or more likely start generating an increase stream from that cash). 

Also, ask her about that one.  Also, do you have any pension from your work?  If so, they'll ask if you want a "survivorship option" (your spouse can continue to get a portion of your pension if you pre-desease).  All that is really, is a life insurance policy.  There are other examples of why you might want to keep some coverage as long as possible. 

Yes, there are some examples. Just for me and us, it doesn't make as much sense. Her family has quite a bit of money so she would be fine without me, at least financially. 

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1 minute ago, ConstruxBoy said:

47

Ok, so you were ~34 when you bought the first 20 year term policy?  Just to put some numbers out there, lets say it was $500k.  Fair?

At "select preferred" (one step down from the best health classification) a 34 year old could buy a $500k 20 year term policy for $370/yr.  I just monkeyed around a built a whole life policy  with a $5k a year premium and the same $500k of coverage (you can do that with some more flexible policies).  I get it, it's much, much more.  13 years in, which is where you are now, the term could be continued for another 7 if you wanted for the same 370 a year, or a new 20 year term could be purchased for $930/yr assuming the same health classification. 

But if you had purchased the whole life you'd have ~$71k of cash, for a net additional premium (5,000-370) 4,630 for 13 years.  I get it, that ROR of 2.71 net after tax sucks (mainly because of how low interest rates are today).  But if you were to now go out and buy another term policy for 930 a year, your additional net cost to just continue with the whole life policy would be 4,070, and because of how I built the whole life policy the premium drops from $5k to 2,883 after 20 years (so the additional net cost would be only 1,953).  20 years from now, though, at your "retirement age" of 67 you'd have just a shade over $313k of cash value, and $632k of life insurance.  I ran the ROR of your additional premiums in the WL over that entire 33 years - 4.53%. 

And I also understand that's not amazing either (with interest rates where they are, and thus dividends from insurance companies also being so low), when you compare it to equities over 20-30 years.  But I haven't seen a CD paying that (maybe a better comparison, when factoring in liquidity) since 9/11. 

If you make it to 67 - "term you" walks away with zero cash and zero death benefit.  "WL you" walks away with $313 in cash value if you wanted/needed it, and $632k of a death benefit, which could really open up some other assets for you. 

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4 hours ago, matttyl said:

Hey, I'm a big advocate - and not just because I'm an agent.  If I weren't, I still likely would never own any term coverage on myself.  Only about 2% of term policies ever end in a claim - 98% of the time it's money thrown down the drain. 

I'll take the complete loss on the money I paid for term, along with the investments I made by not buying whole life.  If I outlive my term, I'll be past 70. We'll be self insured long before 70. 

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1 minute ago, -OZ- said:

I'll take the complete loss on the money I paid for term, along with the investments I made by not buying whole life.  If I outlive my term, I'll be past 70. We'll be self insured long before 70. 

So long as your investments do that, it will work out.  But if you'd planned to retire right at the start of 2009 when all of your equities dropped ~40% in the past year, you might not be as self insured as you think.  Are you going to wait 3+ years to let your 401k and IRAs rebound, while you continue to work for income?  Look at the WL as the money market / bond part of your total portfolio. 

Everyone's situation is different.  I'd like to have life insurance in force when I die, which could be today, 20 years from now, or 60 years from now.  I'd also like to have a bucket of money I can access at retirement that's tax free to me (unlike my 401k or IRAs).  I'd like to be able to leverage other assets because of the knowledge that I have a few hundred grand in paid up life insurance in retirement.  Maybe some people don't value those things like I do, and that's fine. 

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Just read an interesting article that got me thinking...the topic was really to never take money out of your HSA (unless it's a last resort).  As it's pretty much the only account that you get a tax break on when you put money in, it grows tax free and you can take money out tax free - you should leave as much money in the account as possible.  So if you have medical claims, pay those out of pocket if you can, maybe with a rewards CC. 

Keep your records, though, of what you spent out of pocket, as you can reimburse yourself at any point in the future, even years down the road.  So if you do ever get into a cash flow bind, reimburse yourself at that time for medical expenses you had years ago. 

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4 minutes ago, matttyl said:

So long as your investments do that, it will work out.  But if you'd planned to retire right at the start of 2009 when all of your equities dropped ~40% in the past year, you might not be as self insured as you think.  Are you going to wait 3+ years to let your 401k and IRAs rebound, while you continue to work for income?  Look at the WL as the money market / bond part of your total portfolio. 

Everyone's situation is different.  I'd like to have life insurance in force when I die, which could be today, 20 years from now, or 60 years from now.  I'd also like to have a bucket of money I can access at retirement that's tax free to me (unlike my 401k or IRAs).  I'd like to be able to leverage other assets because of the knowledge that I have a few hundred grand in paid up life insurance in retirement.  Maybe some people don't value those things like I do, and that's fine. 

honest question - why would someone need life insurance in their 70s, with ~$3 million (assuming 5% average returns for the next 20, and no gain after retirement), over half in Roth accounts, with paid off houses? (Unless all parts of your portfolio crash - in which case you made a huge mistake by keeping it all in equities).  (I don't intend to be argumentative, I've just never heard a satisfactory answer)

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10 minutes ago, -OZ- said:

honest question - why would someone need life insurance in their 70s, with ~$3 million (assuming 5% average returns for the next 20, and no gain after retirement), over half in Roth accounts, with paid off houses? (Unless all parts of your portfolio crash - in which case you made a huge mistake by keeping it all in equities).  (I don't intend to be argumentative, I've just never heard a satisfactory answer)

All depends on their situation.  Curious, why did you say "no gain after retirement" - are you saying you're going to be so safe in retirement that you won't take any risk, and you're $3M is just cash in hand that you'll live off of as you want to?

I can set up a WL policy to be completely "paid up" (no more premiums needed) at age 65, or 70 if you want - and growing, cash on cash, tax free at between 5-6%.  And it's contractually obligated to do so as cash value must equal death benefit at age ~100.  As an example, I just ran a quote for a 45 year old male buying a $500k WL policy that's guaranteed to be "paid up" at 65 - so 20 years of premium.  It's a monster premium of 13,790/yr, I get that.  After 20 years it's got ~375k of cash value.  Bad ROR on that (before taking out what a term premium would have been) of only 3.12%, I get it.  But from year 20 to 21 it grew by over $20 up to 395k - that's 5.4% cash on cash, tax free. 

So to go back to your example, you have a married couple, both age 70 with $3M and no longer invested (so as not to lose money).  So as to not run out of money too soon, they say they'll need it for 25 years, and if either lives past 95, F it.  That's an income of $120k a year (120k x 25 years = 3m).  Good so far?

Now lets say the couple only has $2.4M instead of $3, but also has $485 in cash value in the WL policy I illustrated above at their age 70.  I'm using $2.4M as I want the total (now $2.885M) to be less than your $3M as we're assuming the WL didn't grow by as much as the equity portfolio would have.  Cool?  I'm going to let you take $125k a year from the $2.4M and have a ever so slightly better retirement, and you're still not investing/gaining on the $2.4M as was your example.  You run out in 19.2 years, we'll round down to 19.  The couple is now 89 - but that life policy that they haven't paid a dime into in 24 years is now worth $1.156M in cash value ($1.36M in death benefit - both are growing as it's a mutual policy that pays dividends).  I then asked my illustration system if they could start an income stream of the same $125k a year at that time, and you could till age 99.  So with the use of the life policy the couple was actually able to have a slight bump in income from their portfolio for the first 19 years of retirement, and then continue that same higher income stream for longer than they would have been able to (age 99 rather than 95).

Now consider this - what would have happened to the wife if the husband had passed away at age 85?  She's still have over half a million in her equity portfolio (they spent it down from $2.4M to $525k in those 15 years).....AND she'd have the death benefit from his policy of $1.23M, putting her at over $1.75M, at age 85. 

My wife and I are doing something similar.  We both have whole life policies that we'll likely stop funding at our retirement.  I understand this means we'll have less in our 401ks or IRAs than we otherwise would have had (assuming we had invested that money and so forth).  We'll live off of our investments from ~65 to lets say age 85.  The cash value amounts in our whole life policies at that time will be massive - and we can just live off of that for the rest of our lives.  And if one of us doesn't make it to 85, the other (as beneficiary of the policy) will have more than enough for the rest of their lives with the remainder of the investments that were earmarked for both of us, and the tax free death benefit, AND the cash value from their own policy which is no longer really needed.  Think about that - THREE different buckets to get income from, two of which are very heavily tax favored. 

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Please stop. I sure hope no one is listening to this guy.

If anyone is somehow buying any of this, please do yourself a favor and google things like, "Is a whole life policy a good idea?" and "Are whole life policies a scam?" And "Does it make sense to get a whole life policy?"

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1 hour ago, matttyl said:

Just read an interesting article that got me thinking...the topic was really to never take money out of your HSA (unless it's a last resort).  As it's pretty much the only account that you get a tax break on when you put money in, it grows tax free and you can take money out tax free - you should leave as much money in the account as possible.  So if you have medical claims, pay those out of pocket if you can, maybe with a rewards CC. 

Keep your records, though, of what you spent out of pocket, as you can reimburse yourself at any point in the future, even years down the road.  So if you do ever get into a cash flow bind, reimburse yourself at that time for medical expenses you had years ago. 

Make sure to scan and save receipts, ink fades over time. Some HSA providers will allow you to upload them and store them without redeeming/reimbursement.

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12 minutes ago, BeTheMatch said:

Please stop. I sure hope no one is listening to this guy.

If anyone is somehow buying any of this, please do yourself a favor and google things like, "Is a whole life policy a good idea?" and "Are whole life policies a scam?" And "Does it make sense to get a whole life policy?"

Googling anything will find you results if you look.  I'm providing actual numbers above - go ahead and dig into them if you want.  If you're going to compare it to getting 10%+ in the market for 20-30 years, it won't compete and I won't pretend it does.

ETA - I just googled "why whole life make sense" and got these hitsLike I said, you can find anything you want if you look on google hard enough. 

Edited by matttyl

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8 minutes ago, matttyl said:

Googling anything will find you results if you look.  I'm providing actual numbers above - go ahead and dig into them if you want.  If you're going to compare it to getting 10%+ in the market for 20-30 years, it won't compete and I won't pretend it does.

ETA - I just googled "why whole life make sense" and got these hitsLike I said, you can find anything you want if you look on google hard enough. 

This has been pinned to the top of the Bogleheads message board for 10 years:

BE WARY OF WHOLE LIFE THREADS

The moderators have discovered that three recent threads devoted to Whole Life Insurance were posted by sock puppets (people claiming to be something they are not to push a product or service).

This is not the first time this has happened here. It appears that the popularity of this forum in terms of google search results for those researching whole life has made us a target of insurance agents who wish to muddy the waters of the general advice posted here on whole life - i.e., it is only appropriate for unusual and specific specific situations, such as estate planning for those whose assets are tied up in a family business. Otherwise, the preferred solution is to use term life for your insurance needs and invest the difference.

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3 minutes ago, BeTheMatch said:

This has been pinned to the top of the Bogleheads message board for 10 years:

BE WARY OF WHOLE LIFE THREADS

The moderators have discovered that three recent threads devoted to Whole Life Insurance were posted by sock puppets (people claiming to be something they are not to push a product or service).

This is not the first time this has happened here. It appears that the popularity of this forum in terms of google search results for those researching whole life has made us a target of insurance agents who wish to muddy the waters of the general advice posted here on whole life - i.e., it is only appropriate for unusual and specific specific situations, such as estate planning for those whose assets are tied up in a family business. Otherwise, the preferred solution is to use term life for your insurance needs and invest the difference.

Not sure what bogleheads is.  I've been here for years posting in various things my man, mainly actually in the health insurance threads (as that's more of my typical day to day).  People above asked questions, so I answered them - isn't that what this forum is for?

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36 minutes ago, matttyl said:

All depends on their situation.  Curious, why did you say "no gain after retirement" - are you saying you're going to be so safe in retirement that you won't take any risk, and you're $3M is just cash in hand that you'll live off of as you want to?

 

 

So to go back to your example, you have a married couple, both age 70 with $3M and no longer invested (so as not to lose money).  So as to not run out of money too soon, they say they'll need it for 25 years, and if either lives past 95, F it.  That's an income of $120k a year (120k x 25 years = 3m).  Good so far?

.

Now consider this - what would have happened to the wife if the husband had passed away at age 85?  She's still have over half a million in her equity portfolio (they spent it down from $2.4M to $525k in those 15 years).....AND she'd have the death benefit from his policy of $1.23M, putting her at over $1.75M, at age 85. 

 

I used "no gains" just to keep it easy. We'll maintain a 60/40 portfolio as Paul Merriman recommends. 

The 60/40 portfolio should last at least 30 years with a 4% withdrawal rate. (I'll ignore my pensions for now but those help). Firecalc has the funds lasting much longer. 

 

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3 minutes ago, matttyl said:

Not sure what bogleheads is.  

Seriously? And you seem to be in the business.

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3 minutes ago, matttyl said:

Not sure what bogleheads is.  I've been here for years posting in various things my man, mainly actually in the health insurance threads (as that's more of my typical day to day).  People above asked questions, so I answered them - isn't that what this forum is for?

This thread is to help educate and inform people on all things personal finance. You're in here trying to sell snake oil. Just stop.

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1 minute ago, BeTheMatch said:

This thread is to help educate and inform people on all things personal finance. You're in here trying to sell snake oil. Just stop.

I agree with your take but confused why you think he’s trying to “sell” anything in here.  

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2 minutes ago, -OZ- said:

I used "no gains" just to keep it easy. We'll maintain a 60/40 portfolio as Paul Merriman recommends. 

The 60/40 portfolio should last at least 30 years with a 4% withdrawal rate. (I'll ignore my pensions for now but those help). Firecalc has the funds lasting much longer. 

 

Ok, and sure if you're still getting a return on that $3M, and only a 4% withdrawal rate you'll likely never outlive the money.  The "no gains" thing kinda threw me, but I thought I'd go with it for the example. 

If you have a pension, a permanent life policy can really help there, too.  I do some work with Virginia employees, who have a pension.  When they get to retirement they have to decide if they want their full monthly amount for their lifetime (which could be one month, or could be 30 years) - or take a reduced amount and leave a percentage of that income for their spouse (which many do, especially couples where the second one doesn't have a pension).  So for instance if you have a $3k a month full pension at 65, and want to leave as much as you can (called a 100% survivorship) to your 62 year old spouse - you'll only get 75.5% of the $3k - $2,265 a month.  What you're doing is spending $735 a month on a life insurance policy, in retirement, to give your spouse 2,265 a month for as long as they outlive you, which could be 30 years, and could be nothing if they pass before you.  You can also leave lesser percentages of the pension, for lesser amounts, but you get the idea. 

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10 minutes ago, -OZ- said:

Seriously? And you seem to be in the business.

I'm in the insurance business, not the investment business.  Looking over it now.

ETA - came across an article that talks about the basics of what Bogle preaches.  Minimize risk, diversify, minimize taxes....

Edited by matttyl
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3 minutes ago, matttyl said:

Ok, and sure if you're still getting a return on that $3M, and only a 4% withdrawal rate you'll likely never outlive the money.  The "no gains" thing kinda threw me, but I thought I'd go with it for the example. 

If you have a pension, a permanent life policy can really help there, too.  I do some work with Virginia employees, who have a pension.  When they get to retirement they have to decide if they want their full monthly amount for their lifetime (which could be one month, or could be 30 years) - or take a reduced amount and leave a percentage of that income for their spouse (which many do, especially couples where the second one doesn't have a pension).  So for instance if you have a $3k a month full pension at 65, and want to leave as much as you can (called a 100% survivorship) to your 62 year old spouse - you'll only get 75.5% of the $3k - $2,265 a month.  What you're doing is spending $735 a month on a life insurance policy, in retirement, to give your spouse 2,265 a month for as long as they outlive you, which could be 30 years, and could be nothing if they pass before you.  You can also leave lesser percentages of the pension, for lesser amounts, but you get the idea. 

I do get the concept. There's a certain safety to it. Just not what I'm doing.

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21 minutes ago, BeTheMatch said:

This thread is to help educate and inform people on all things personal finance. You're in here trying to sell snake oil. Just stop.

I think that is harsh.  He has a different opinion than most of us and he is entitled to that. I never get the sense @matttyl is being disingenuous.

Personally I like hearing a contrarian point of view to make me consider things in a different light.

 

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3 hours ago, BeTheMatch said:

This thread is to help educate and inform people on all things personal finance. You're in here trying to sell snake oil. Just stop.

You're aiming a torpedo the wrong way here.  Mattyl is showing numbers behind what he's doing.  He's giving up some upside for a backstop of sorts.  Different perspectives are valuable and his is purely intellectual considering the audience in here (i.e. way above average acumen in finance).  There is no selling.

Wait until you see my next crazy idea...

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1 hour ago, Sand said:

You're aiming a torpedo the wrong way here.  Mattyl is showing numbers behind what he's doing.  He's giving up some upside for a backstop of sorts.  Different perspectives are valuable and his is purely intellectual considering the audience in here (i.e. way above average acumen in finance).  There is no selling.

Wait until you see my next crazy idea...

Well don't keep us in suspense :popcorn:

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11 hours ago, matttyl said:

Hey, I'm a big advocate - and not just because I'm an agent.  If I weren't, I still likely would never own any term coverage on myself.  Only about 2% of term policies ever end in a claim - 98% of the time it's money thrown down the drain. 

I'm other words, it works like insurance is supposed to work? ;)

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1 hour ago, Sand said:

You're aiming a torpedo the wrong way here.  Mattyl is showing numbers behind what he's doing.  He's giving up some upside for a backstop of sorts.  Different perspectives are valuable and his is purely intellectual considering the audience in here (i.e. way above average acumen in finance).  There is no selling.

Wait until you see my next crazy idea...

It’s not execute all FAs, is it? 😳

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16 minutes ago, Psychopav said:

I'm other words, it works like insurance is supposed to work? ;)

Yep. "Dammit, that policy was a waste of money" probably isn't something I'll say when I'm 70.5

Edited by -OZ-

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58 minutes ago, ConstruxBoy said:

It’s not execute all FAs, is it? 😳

Ummm...  Are you writing in from the Hoover Building?

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