How to properly structure a whole life policy | with the numbers
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- Опубліковано 7 вер 2024
- Learn if a properly structured Whole Life is right for you?
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How to properly structure a whole life policy | with the numbers
In today's BetterWealth episode, Dom and I address how to properly structure a whole life policy. While most financial influencers, such as Dave Ramsey, think life insurance is a horrible place to put your money, I share with you why I agree but why I also know that a properly structured policy is night and day difference. Listen as Dom and I talk about the power of a properly structured whole life insurance policy. Be sure to join us on UA-cam as we demonstrate with numbers three different policies structures. Listen as we describe the difference between a poorly structured policy and a properly structured policy.
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Well done y'all! Anyone reading this, watch this video. These dudes are teaching you HOW to think about the concept in the way that creates the best outcome for their clients. They are even being transparent about how most agents/advisors don't know what they dont know. As you can see from the numbers in this example, THAT IS HUGE! If you don't like them for some reason, learn and find someone you do. But I gotta tell ya, they are giving the recipe to the secret sauce. I think they would do a good job for you and not waste your time if you are not a good fit. (My 2 cents worth with 20 years experience and we have never met)
Appreciate you and this comment!
You guys are good !!explain everything in a simple easy way
Glad you think so!
Very clear and straightforward. Thanks for the informative information.
Great video. You're definitely working with a good carrier.
What are your thoughts on single premium whole life? Can you use an example with 50K into the policy up front and held for 20 years. What are some of the living benefits? Would love a video on this.
What an awesome podcast! Such invaluable information.
Thank you!
Why not consider a 10/90 split? That would be most efficient from a cash value perspective. It would be helpful if you included IRRs with your examples. Thank you for the video.
I don’t think 10/90 would be possible, because of the IRS Tax code the policy would be deemed a modified indownment contract and lose its tax free nature. Basically the IRS would say hey this isn’t really an insurance policy it’s just a tax shelter, hence we want our money 😂
@@brockrickard1704 10/90 splits are absolutely possible without violating 7702, from the large mutual life insurance companies. You need to include an adequate term rider to do it, but it is available and many people are structuring policies this way. /Warren E. Barnes, CPA, (licensed in MA and VT) (former CFO of the life insurance division of a multi-line carrier.)
@@warrenbarnes9653 what type of term rider?
@@christopherw9150 For example, the LISR rider offered by Mass Mutual.
Can a 10/90 policy be set up for monthly premiums (1000 base/ 9000 PUA). I’d like to have 1000 req mo Prem with option to put in up to 10,000 per mo
How do I find the right Life Insurance advisor in my country? What are the specific traits I should look for in that person?😊
Buy Term invest the difference in mutual funds.
That statement has nothing to do with permanent life insurance.
Thank you for this in the 3 examples. I know everyone is different in terms of where they are in life and their goals, but in your opinion, would you say the 25/75 is the sweet spot generally speaking, compared to 10/90, 40/60 and anything in between?
Hi
I am new in this bussines to sell life insurance and I would like to know how to properly structure a policy to benefit the costumer and witch company recommend for do it right.
Would the 25/75 split mec over the years?
Do you guys ever use the 10/90 split without making it a MEC? What split do you do the most?
Not related to this video but I love your podcast. You do a great job. However please don’t add music to it. It’s very annoying
Thanks for your input! I’ll pass along your comment to the team to take into consideration! Any episode in particular I could reference for my team to review?
Be better off buying a term policy and creating your own savings portfolio with 10%-20% stocks and the rest stable funds like a money market . To properly create a “good” whole life policy the premiums will be so high
The problem with that would be the taxes, provided it's in a non-qualified account.
@@brianmasiello1002 that’s fine with me. It’s 100% liquid. The alternative is you go completely cash broke with a whole life policy
I agree with Anthony, unless one is planning to die within in the first 5-10 years of the policy, this will be a bad investment. Here are couple of points: 1, If the objective is legacy (passing on to the heirs/multi-generation wealth), Taxes are not applicable, because of step-up cost basis. 2, In all 3 scenarios cash value return is 2.7%, 3.81% and 4%, which is pitiful for a 20 year investment.
Im new. If a money market is getting 3% on avg why is it better than a vehicle w death benefit and higher dividends. If taxes go up in 20 yrs the tax free nature would be useful compared to withdrawing from a money market. I’m prolly dumb what’s your thoughts
good video. thanks!
Glad it was valuable for you!
As an agent, id like to know how to input this into a quote. As far as i know, PUA is just a selection as a rider. How would you determine how much specifically go towards PUA?
Great question. We might have to make a video on this. We put anywhere from 70% pua to 90% pua depending on how we design it. I am big fan of frontloading a policy using lump sum cash and to do that we may need to add more base to make that not mec. Overall it comes down to getting the desired result for your clients. Thanks so much for watching Carmen!
Did you figure this out I want to tell my life insurance agent
I want info on this as well because I took out a policy using the IBC with Penn mutual I want to know how can I increase my death benefit over time while also building my cash value in the first year on a $220,000 policy and no I have no interest to put in a big lump sum down. I want a concept where it is doable for even a low income person to change their financial habits so this example will be used at a $500 monthly increment.
How do I get started and where do I look for a specialist
We specialize in this ourselves! If you’re interested in connecting we’d be happy to answer any questions you have! bttr.ly/aaclarity
Great video! When focusing on the break even I notice we are just looking at total cash value. Is this guaranteed total cash value if dividends for instance are not paid out, or is this total cash value with dividends included? I’m used to seeing on my plan to different columns one guaranteed and one not guaranteed. Thanks!
Thanks for watching and commenting! We are using the non-guaranteed column which includes dividends.
Proper amount of death Benefit FIRST, then the proper design for client specifics - should be the goal.
correct! The proper death benefit should be secured before diving into the policy design. If someone has a DB need/ want and doesn't have the money to overfund and get enough DB I usually look at term that has a convertible option.
This is great information. I had a question. Is something like this available in Canada? I am not aware of any insurance provider who will allow the agent/client to specify the base+PUA split. For example, in the whole life par wealth 20 pay product from Industrial Alliance, the only option is to say how much you want to contribute monthly or annually in terms of premium and check box the option that you want to maximize ADO and the software splits the contribution to pre-set values for base + PUA. Invariably it works to 70% base + 30% PUA. If this is the case, is it still a good strategy to use this product for the IBC? Any feedback is appreciated.
These are great questions! Yes it is available in Canada. If you would like us to connect you with our Canadian partner, email info@betterwealth.com and we'll be sure to connect you with them.
Do you review life insurance proposals? My wife and I want to purchase a whole life policy, but want a professional to review it. Thanks.
Hey Marc, send me an email at caleb@betterwealth.com Dom and I would gladly help and give our feedback. Please reference this comment. Thanks for watching and commenting.
I know the examples deal with 100k a year at age 45 but what is the barrier of entry to structuring a whole life policy in this way? Is there a minimum amount required for the structure to be effective?
great question! for the most part, we say that a good number to start with is 10K a year. The reason we say that is you are able to really start designing a policy that can be good. With saying that though I just saw a 2K policy for a young person and it looked amazing and did not have the inefficiencies I have seen on older individuals. It goes back to really understanding your goal and seeing if overfunding a life policy helps us get closer to that goal.
What about inflation?
Inflation is happening no matter what we do. It’s a factor of our dollars getting less valuable.
$100,000 annual premium? To high for me, Im out. Average US income is around $50,000.
The reality is lots of people can do this with different income levels. There’s a lot of factors that go into it though. I generally don’t believe this is for everyone. But we definitely have clients that make the national average.
If someone starts with a 20% 75% blend, could they later change to 50% 50%?
In most cases, the PUA can be flexible meaning you can go up and down based on what that year brings. It's really important to us that we create flexibility. Some companies do allow you to add extra money in the future through riders. Overall though to answer your question you can't change the policy itself after you start. The way to "change" is to do an internal exchange or 1035 exchange into another product. I have to note for caution that you should really make sure it's in your best interest before 1031 policies.
Thank you so much for watching and asking this question
What about a 10% base?
Hi Sam, In some cases, it can make a lot of sense to do. The key is to compare and see the difference. You want to make sure also comparing death benefits and making sure you're also giving yourself options for the future. Today we looked at a case where a front-load wasn't the most efficient for a client who had upfront money. It all comes down to the situation and the result. Thank you so much for watching!