Understanding The Cash Value In A Whole Life Policy | IBC Global
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- Опубліковано 16 вер 2020
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Timestamps:
00:05 Intro For Understanding Cash Value
00:57 Two Polar Opposite Opinions About Whole Life Insurance
01:00 First One: Whole Life Insurance is the Worst Area to Put Your Money
01:16 Second One: Whole Life Insurance is The Best Area to Position Money
01:37 Why are there Two Polar Opposite Opinions Around Whole Life Insurance?
04:49 Core Benefits of Whole Life Insurance - #1 Safety
07:50 Core Benefit #2 Liquid
09:08 Core BEnefit #3 Tax-Free
10:42 Core Benefit #4 Always Compounding
13:06 Outro
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All advice and/or opinions expressed in our videos are the result of our experience in the insurance and financial industries. Any action taken based on the information expressed in our videos is the sole responsibility of the viewer. All content produced by Steve Parisi and IBC Global is made for informational purposes only.
#Finance #Insurance #WholeLife
Just found this on my newsfeed. Subscribed. Liked. Great work. Straight and to the point.
This guy should win an oscar for Best actor of the year.
THE MOST CLEAR EXPLAINATION IVE COME ACROSS
Thank you! Much appreciated!
Excellent explanation, thank you.
I have 1M to invest. After watching your video I’ve decided to invest in the maker of the smart board you’re using. Please share this info because it’s awesome.
LOL!!! The smart board in this video is a OneScreen. Our more recent videos use different smartboards (Vibe & Microsoft Surface Hub)
THANK YOU FOR THIS VIDEO!
THIS GUY is THE best I've ever seen in the last 20 years! (this is not a paid advertisement... I'm just a person who watches this stuff... listen and LEARN guys)
Very interesting stuff, now wondering if this policies work in the same or have similar benefits and products in my country 😒
The only metric to consider is the growth in the DB, as that is what your estate receives. In the best scenario here, growth is 1% p.a., $1.185mm to $1.531mm after 30-years. That is what your money bought, since the insurer keeps the cash value amount. Didn't even keep up with inflation.
Insurance is not an investment. Buy it for what you need it for and only buy the right product.
This was a great video. Thanks for the information. I'm currently living in the Netherlands. When it comes to insurance, does the same rules apply in Europe as well?
Thank you! Different laws apply to different countries. We are only familiar with U.S. rules, unfortunately. I've included a video that provides information on what is needed to obtain a policy in the U.S.
- ua-cam.com/video/tEaNiffJUZ4/v-deo.html
Good
i will like to have more explanation on the reference between the index universal life insurance and fixed life insurance.
i will also like to understand the concept of Rebalancing a life insurance policy to maximize interest rates and cash value tax free access
Thank you for the comment! I've included some videos that may be helpful.
- ua-cam.com/video/15XyMoNlDS4/v-deo.html
- ua-cam.com/video/1qodgDQA7Qg/v-deo.html
I have a Whole Life Insurance Policy.
I put 1 million on my policy, i got my 1 million back after 7 years and I still have 1 million to recieve when my age turns to 60 plus accrued dividends...in my country though...
Great video. what happen to cash value life insurance in a divorce?
Good question. The state that the couple resides in will have an impact on this situation. In many cases, the cash value is split.
Question on the safe section.
Guarantee rate 4% PLUS an additional dividend RATE from 5-6%? Is that’s CORREXT
WE CAN SAY 4+4= 8?
Thank you I’m learning
Good question. Almost. See below.
- Total Dividend Rate: 6.00%
- Guaranteed Rate: 3.00%
- Declared Surplus: 3.00%
The Total Dividend rate includes the Guaranteed rate.
So basically, this in a way, for real estate investing purposes, is another way to continually raise money for deals?
Thanks for the comment! In some ways. The policy functions as a high yield savings asset that can be leveraged for real estate. I've included a video that provides more information using a policy for real estate.
- ua-cam.com/video/yQQCLva7e-Y/v-deo.html
If I put $100k into a WLP with the intent of borrowing it out of that policy, would I not get a reduced value because the insurance company would want to keep some money in the policy. Am I right to say that?Usually, what is the percentage that the insurer want to keep?
Good question. Usually we can loan ~ 95% of our cash value. Some companies will withhold loan interest upfront.
- ua-cam.com/video/7Iu3vjVZ7Vs/v-deo.html - When and how much can you borrow?
When you sell BOLI to a bank how many professionals are usually involved in the decision making process on the bank's side?
Great question. Depends on the size of the bank and familiarity with the BOLI product. The last Bank we worked with originally had three executives involved in the meeting, and the board was involved in the final decision.
Do you have to put the same amount in the policy year after year. If I put 20k in year 1 and 2 do I have do I have to put in 20k every year after? If I don't what happens?
Good question. No, you do not have to keep paying. You can stop payments after two years if needed. I've included a video below that demonstrates this. Please excuse my horrible handwriting in this video. Much older!
- ua-cam.com/video/Lxnn5-KbvwU/v-deo.html
For the DB minus outstanding loan calculation, does that imply that the interest on the outstanding loan balance continues to be paid by the policyholder each year?
Good question. Yes, dividends are still paid on the outstanding loan balance.
@@IBCGlobalInc @d moon
I think they mean, is the interest due on the loan, paid by the policyholder? The answer is a choice. The policyholder could pay the interest out of pocket, or they could elect to have the interest build up the loan
5:35 sflta 7:50liq 9:10 tax free 10:45 always compounding
HCV characteristics
HCV characteristics? Please explain.
Can universal life policies be structured this way? I'm trying to find out if I should close my universal life policy and seek out a whole life policy instead.
They can, but we do not use Universal Life Policies. It is not our strength. Below is a video that provides some differences between whole life & IUL policies.
- ua-cam.com/video/15XyMoNlDS4/v-deo.html
Just to make sure I’m hearing right, if I pull cash value, you should pay it back so it won’t charge your death insurance, correct?
Good question. It makes sense to repay loans during your working years. In retirement, when one is using a policy for income, loans are not always paid back. I've included two videos below that provide more information on loans.
- ua-cam.com/video/muA6mMY2d9E/v-deo.html
- ua-cam.com/video/3-yxIGOVGrQ/v-deo.html
Is the example on the right also known as limited pay whole life?
Good question. It is actually a traditional whole life policy, but with a reduced paid-up option exercised after the funding period. This functions similarly to a limited pay product.
What happens if a policy is fully paid up and you borrow from it? Would it still be alive?
Yes. It will remain in force unless we pulled out the full cash value.
Do you know any actuaries that have yt content explaining mechanics of permanent life insurance?
Scott Witt is the best bet. He does not have a YT channel, but he is an expert in whole life insurance.
For full transparency, we have never had any financial relationship with Scott Witt.
Is this what really is on the policy when i review it or i will still see a cost of insurance and turns my cash value into zero ? , I really wanna see and learn how much is this beneficial and how much it will help me in the long run. But as of now it still doesn't make any sense to me because everytime i buy whole life it always has surrender charge for how many years which my cash value is zero then it will eat up my cash value because of cost of insurance. Every agent that i buy a whole life or IUL , the moment i recieve my policy and review it i cancel it right away when i see this zeroes, thank you so much for understanding i just want my money to grow like everyone does not turn into zeroes. But the way i saw your video it has a different built on it and i wanna learn more about it.
Good questions/points. Nice work reviewing your policies and cancelling them when things appear "off". I've included a short video below about what people often fall into when they are opening a policy for cash value, and the policy is not set up right.
- ua-cam.com/video/HZhUW6sBrVI/v-deo.html
Is it true that there is a 5% charge for every dollar paid in paid up additions? (Guardian).
Guardian's older products have a 5% PUA fee. Newer products have a 10% PUA fee. I'll add that these are gross fees. I've included a video that provides more information on how PUA fees work.
- ua-cam.com/video/-upUfCqzrFU/v-deo.html&ab_channel=InsuranceBusinessConcepts%28IBC%29Global
We have full disclosure PUA videos available to our clients.
What's difference between a ROP UL vs WL vs IUL?
That's a good question. We can work on some content that provides the differences
Do Iul & Whole life cash value work the same way?
Thanks for the comment! Whole Life and IUL's are different products. I've included a video that provides the pros/cons of each below.
- ua-cam.com/video/15XyMoNlDS4/v-deo.html
If I purchase a 100,000 policy, but I do not actually put the 100k in. I just start paying the premium. Would I be able to borrow, lets say 10k quickly? or do i have to wait sometime for it to accrue.
Good question. You can access whatever you have in cash value. If you only paid the minimum premium, you would likely have little cash value. I've included a videso that provides information on how mucvideoh can be loaned from a policy.
- ua-cam.com/video/7Iu3vjVZ7Vs/v-deo.html&ab_channel=InsuranceBusinessConcepts%28IBC%29Global
@@IBCGlobalInc Thank you so much...
How does the insurance agent get paid on a policy that is structured for max cash value??
Good question. The commission will be minimized. The below video will provide some additional details.
- ua-cam.com/video/y0KkfOZ815E/v-deo.html
Can I use a WLP as a “bank” or savings account, I don’t plan on buying a house for another 10 years(I’m 22), I don’t really take any loans from the bank is it possible to just let it sit there? And if I want to ever take money out is it borrowing my own money? Or is it just liquidating it?
Good question. I've included a video that addresses that exact question.
- ua-cam.com/video/J8NpXTg3vCU/v-deo.html
So does that mean based on the example that you are paying $20k a year for the premium?
Good question. I'm assuming you are referring to the spreadsheet at the 13:17 mark of the video?
- Example on the left side of the spreadsheet has a $20,000 base premium. The answer to your question is YES; 20k is the yearly premium for the LEFT side of the spreadsheet.
- Example on the right side of the spreadsheet has $20,000/yr but approximately a $2,000 base premium. The policyholder can pay the minimum premium and make additional payments up to 20k at his discretion.
cash value returns are kept by the insurance company upon the death of the insured.
does this work the same way for term life insurance?
Good question. It does not. Term insurance does not generate cash value. However, it does provide the highest death benefit at the lowest cost.
Dividends are an overpayment of premiums. Not true dividends that companies pay to the stockholders when they have positive returns.
Oh wonderful my death benefit is collateralized dollar for dollar when CV loan is taken . So my needs are now compromised.
If I take out a loan against my policy, am I paying 5% interest monthly or yearly, and does the interest im earning offset the interest I am paying?
Good question Alonso. The 5% loan interest accrues daily at simple interest. If it is not paid on the policy anniversary date, it will be added to the balance and compound. The interest earned on the policy does not offset the cost to borrow in the present interest rate environment we are in. With that said, alternatives exist. I've included some content below.
- ua-cam.com/video/nNolstUt-g4/v-deo.html - Breaking down loan interest.
- ua-cam.com/video/8TL0NEqg9Vw/v-deo.html - Borrowing From Your Policy: When It DOES & DOESN'T Make Sense
What will happen to my cash value life policy if the stock market, economy, Central Banks Tank and the we fall into a depression like in 1929? Today is July 31, 2022.
Great question! Your cash value will continue to grow. I've included two videos that provide information on this below.
- ua-cam.com/video/NCo3Q5dwoQA/v-deo.html
ua-cam.com/video/yWhelowiEWs/v-deo.html
@@IBCGlobalInc thank you for your help. I'll watch them today👍🏼
Been in the industry since 1997. Never heard of anyone retiring because of their whole life insurance policy, why because you can't.
Thanks for the comment. Most that use whole life in retirement are using it in addition to other assets. I've included some content below that demonstrates this.
- ua-cam.com/video/-cX30KT5gis/v-deo.html
- ua-cam.com/video/pX3BJiB145w/v-deo.html
- ua-cam.com/video/t1spxTP5xWI/v-deo.html
- ua-cam.com/video/auUK1yMab9o/v-deo.html
What are good companies to start a whole life policy?
We prefer the 4 Major Mutual Companies.
- ua-cam.com/video/gbWIA65eMJ4/v-deo.html
I have a question … My mother had a $25,000 whole
life policy and just passed away at 102. There was an almost $17,000 withdrawal that my sister told everyone was cash value used to pay the premium but at her death the benefit left was a little more than $9,000. I think the death benefit should have been the entire $25,000 since the premiums had been paid by the cash value. I would appreciate your thoughts on this. Thanks so much.
Hi Elizabeth! Thank you for the comment. In a case like this, I would review the most recent annual statement. This should provide information on any withdrawal/loan history, and the net cash value/death benefit figures.
If an annual statement does not exist, then I would request transaction history, along with a history of annual statements from the insurance company. This will provide the information you need.
Thank you for your reply. I tried to get more information but Mass Mutual wouldn’t give me any because I am not the POA for my mother’s estate. My sister had the run of her money and affairs and I’m surprised that she left anything to be divided between the rest of us. This policy was only a small part of it but I questioned the withdrawal/loan taken against it “to pay the premium” and then the reduced death benefit left in it. It seems to me that the death benefit should have been the full face amount of the policy because why pay almost $17,000 to only gain about $9,000. I think my sister is lying about this so that is why I reached out to you because you might be able to set this straight for me one way or the other. Again, thanks so much.
@@nancscloset That makes sense. Thank you for the info on the situation. In a case like this, your sister would need to request the information.
@@IBCGlobalInc My sister and I are estranged so that’s not an option. I’ll likely never know but I’m pretty sure I already know. Thanks again for your thoughts.
You got scammed. Cash value insurance is a rip off. Any deductions you take out of cash value gets deducted from the death benefit.
The 100 dollar bills in the thumbnail were fake. Content was real though. Thanks for sharing.
You can't keep the cash value when you die, though. The cash value is kept by the insurance company.
Does the Insurance Company keep my Cash Value When I Die?
Problem is when I call Metlife I get someone in India and JUST TRY to get anyone knowledgeable to provide interest rate/dividend rate. They purposely make it impossible. Good news is my 1989 bought policy started paying for itself 9 years later but now I'm questioning its worth as I'm older and no longer need the death benefit
Thanks for the comment! I understand your frustration regarding customer service representatives. Unfortunately, this is common in the insurance industry.
In my opinion, the solution is working with an agent who is competent and always willing to offer assistance.
Great news on your Policy from 1989. I would review the cash value & death benefit performance to see what the growth looks like each year and then make a decision.
Not to mention that if you have any heirs, the insurance company keeps your cash value when you die. They only receive the death benefit. Maybe I missed this, but it’s interesting that he didn’t mention it (from what I heard) in this video.
💕Why would I have to borrow from my own money. You hold it 6months while YOU TRY to figure out IF you want to loan me my money and deny me if it doesn’t benefit your company.
Thanks for the comment! I've included two videos that provide information on policy loans.
- ua-cam.com/video/a41ErK_aGHQ/v-deo.html
- ua-cam.com/video/-E1faF4BNn8/v-deo.html
- ua-cam.com/video/gSPr0lpqsZY/v-deo.html
Insurance carriers typically process loan requests in 3-5 business days. We've seen delays in loan requests if the paperwork is not in good order or if someone is attempting to have funds sent to a bank account the insurance carrier does not recognize. In such a case, the insurance carrier will request verification before sending funds.
Hope this helps! Thanks again for the comment :)
Ok how ever where my cash value goes if I I die because he talk about just a face amount because he explained of if I 14:22 made any loans agains my cash value my is gona be reduced to my face amount
5min in and I still don’t know what Cash Value is…
But your policy premium goes higher every year!
Thanks for the comment. The premium is guaranteed to remain level and does not increase with a whole life policy. A policyholder has the option to make additional PUA payments, which is adding more money, but is not forced to add more.
Could you be thinking of an Indexed Universal Life Policy or Renewable term policy? Premiums in those products can increase when we grow older.
Looked like you only have access to what you’ve put in
Correct, and the interest generated over time.
@@astroman30 depends on the rate of growth of new money and the stipulations on it imo; if the new money > bank loans
@@IBCGlobalInc what is the rate of growth and stipulations on the new money?
@@astroman30 have fun staying poor.
Cash it all out after 65age!!!!!
You could do that but would want to account for the tax. It might make more sense to withdraw and loan 80-90% to keep the tax benefits. We'd review both options in a case like this.
@@IBCGlobalInc the fee charge and insurance cost not to good after age 70-80-90up
So the client is under the impression that the monies in the cash value belongs to them. But in order to access it they have to take a LOAN ON THEIR OWN MONEY WITH AN iNTEREST RATE OF 4%-8%....HMMMMMMM. Whenever I take money out of my bank savings IT'S MINE!!!!
I would not call cash value money that you must borrow to access "liquid". I would call it magic however because upon your death it dissappears.
Thanks for the feedback, much appreciated. Loans do not need to be repaid, although it will impact your death benefit. I've included some videos below that provide more information on this.
- ua-cam.com/video/a41ErK_aGHQ/v-deo.html
- ua-cam.com/video/-E1faF4BNn8/v-deo.html
- ua-cam.com/video/_IfdpDRsBog/v-deo.html
- ua-cam.com/video/rHRQfSyz9rg/v-deo.html
I have no idea what this means and I'm not going to spend too much effort into understanding what it takes to wear suits and get pleasure out of percentages.
It has to do with Whole Life Insurance and how the cash value works. Not a fit for everyone. Thanks for the comment!
@@IBCGlobalInc thank you for your kind answer for a rather low comment. I really appreciate it!
Total con
Big commission for the agent
Thanks for the comment! Below are videos that provide details on commissions. Commissions are small if the cash value is maximized on day 1.
- ua-cam.com/video/feqEJlHYwLw/v-deo.html
- ua-cam.com/video/I7E5XyKFXYE/v-deo.html
- ua-cam.com/video/nC4iduAn6R4/v-deo.html
If you die before you take out the cash value, the insurance company keeps all of that money. Big scam.
Thanks for the comment. Doesn't quite work like that. The below video may provide value.
- ua-cam.com/video/NaUVV5g9mmw/v-deo.html
No your beneficiary gets the he death benefit. Tax free and put it in a trust
I have destroyed more of these garbage policies because people like him explain things like a sales opportiunity
Still a shit product. I have to wait 5 years to "finally" turn my $100k positive? I could be 1.5x the capital in same timespan and don't need to be worry about the insurance company go bankrupt on me. And thr death benefit? I could pay less than $2K annually for a much greater payout in term life. Oh, you are probably gonna say something like "The tax burden on your beneficiary is gonna be huge"? I'd rather use my legacy to fund public healthcare, military, infrastructure than pocketing your greedy evil corporate executives.
That's the number one drawback. Not a fit if you're uncomfortable with the upfront hit. We mention that in the below video.
- ua-cam.com/video/dp-YqFm63jE/v-deo.html - The drawbacks to Whole Life Insurance: Cash Value.
I can see why your name is Last Empire. This comment was one of the most idiotic things I've ever read. Everyone here is now dumber for having read that. I award you no points, and may God have mercy on your soul.
Well go do it who gives af dude.
But the whole point is to be your own bank. Those are the real evil corporations
Whole Life Insurance is a rip off. Dave Ramsey explains it well.
ua-cam.com/video/qJYdJ0yrbWc/v-deo.html