How To Design A Whole Life Policy for Maximum Cash Value Liquidity
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- Опубліковано 10 лип 2024
- In this video, we're going to discuss how to design a whole life insurance policy for maximum cash value liquidity.
Whole life insurance is a type of insurance that gives you the ability to access your money any time you want, as long as you meet the policy's guidelines. We'll discuss the different types of whole life insurance policies and help you choose the one that's best for you. After watching this video, you'll be ready to create a whole life policy that will give you the peace of mind you need!
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📖 Chapter Timestamps Here ⏰
0:00 Intro to How to Design A Whole Life Insurance Policy
1:30 10/90 vs 40/60 whole life insurance policies
3:00 A Look At A 10/90 Whole Life Policy Design
8:30 40/60 Whole Life Policy Design Overview
12:25 Think About Your Long Term Objectives
13:16 A Front Loaded Whole Life Insurance Policy For Maximum Cash Value Liquidity
18:00 How To Decide How Much Whole Life Insurance Premium You Should Pay
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VALUABLE CONTENT TO CONTINUE THE EDUCATIONAL JOURNEY:
How To Properly Structure A Whole Life Policy
• How to Properly Struct...
Indexed Universal Life vs Whole Life - Which is Better
• Indexed Universal Life...
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Chris Kirkpatrick launched LIFE180 as a solution to a problem. As the director of business development for a Fortune 1000 life insurance / broker dealer, he became disenchanted with the financial industry because of the lack of education provided to clients and how "financial advisors" were really just glorified sales people.
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You can also design an IUL to be way more flexible and cost effective for families. You can also pay in larger amounts of money for more years than what you showed on the third illustration in a IUL.
IUL being more cost effective is a myth perpetuated by uneducated IUL agents....
You didn't answer my questions. You are proving you really don't understand whole life by evading.
@@LIFE180 the myth is that WL is cheaper. You can't even see the WL cost. WL is not transparent. The careers hide the cost.
Show us the cost of WL from your best CV Design!!!!! Prove that it is cheaper!!!!
WL is not transparent. The carriers hide the cost!!!
Great video Chris. Thanks
Thanks for the positive feedback!
Could you explain what the MEC limit is for each type of policy? Especially how/if a MEC limit is affected by a front load.
Thanks for the informative video!
The MEC limit is impacted greatly by a front load. The only way to load money into a policy in year 1 is to use a term rider (because you need more life insurance to avoid the MEC).
The calculation for MEC is very complicated, based on age, health rating, policy structure and health rating. They don't give you the exact calculation. Each company has software that you plug information into. You just need to keep playing with it and trying different levels to optimize.
Great Illustration 👏 BUT 🤔 That DROPOFF When The Rider Left The Building 😬 YIKES 😬 Almost TWO MILLION Left The Building 🏢🤦
Now Please Should Me Something Even BETTER THAN That Last Slide That YOU Loved So Much❓❓❓⁉️⁉️⁉️ 🧐
🗣️ Thanks Again 💐
I'm Very VERY Grateful 4-The Knowledge❣️
Yep. If you wanted to keep it going on the DB, you could. This was just about max CV. Keeping more DB would come at a cost. That cost is worth it for most, but that wasn't the purpose of this specific video
Hello Chris, thank you for the educational videos!! They are extremely helpful. One question I have is, can you add large amounts of cash into a policy at any time? For example, if you borrow against the cash value and make money, can you reinvest those profits back into the policy for added growth?
There are limitations to the amount you can add to the policy. It varies based on how large your loans are, how fast you pay them back, how the policy is designed, etc... but when you maximize 1 policy, you can absolutely stack another policy on top. Always optimize the first policy, then add another one later, rather than building a policy for future potential.
Awesome explanation on basic policy design. Do all mutually owned insurance companies allow for front loaded policies?
Most major mutuals will allow a front load into the policy. However, they all vary as to the amount they allow to dump in relative to base premium.
There are also term blends that can be done with certain companies, but those have drawbacks as well. I'll do a video on that soon.
The Debate is settled buy Term INVEST the Difference
No....it's not. BTID is horrible
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I understand all you are saying with the different methods. I am usualy writing WL policies for people in their 50s and early 60s so there is only about 10 yrs mabye 15 of funding time so I have been using 80% illistrations is hard to get 90% at this age....I do also if they have the avaialble liquidy try and front load the policy and see how that comes out but I do try and keep the base policy premium as low as I can as they head into retirement. DO you feel thats a good approach or is there something I can change?
That's a great approach. Anytime you can front load, especially with older people, try to keep the base as low as possible and the term rider as low as possible to reduce costs....
Thanks for your informative videos, i am trying to find out what the rate of interest and dividend they pay. I am not able to
No agent is going to get into specific company details and all companies are different. It's a compliance thing... if you want to learn, set up a clarity call and my team can give you whatever info you want.
Life180.com/clarity-call
I replicated this similar scenario (Client age, male, premium commitment and schedule in an IUL chassis at 6% and get better results, by alot.(Company illustrates 7% by default) Ran at 6% even though the 10yr history is actually over 8% return. So the upside is stronger on the IUL, for sure. It could also underperform further than 6% and be closer to wholelife results. I get theres a alot of IUL getting sold for premium solves at high rates that may run into issues in the future. But the IUL chassis is still vastly superior to whole life, in most scenarios but specially long term cash value accumulation.
The illustrated upside is a joke. Regulators are changing regulation because they never perform as illustrated. I am not going to debate IUL vs Whole Life on a comment thread as it would be impossible for things to not get lost in translation, but I will say that anyone with common sense can quickly come to the realization that IUL doesn't make sense.
It pays higher commission rates
It supposedly provides more upside
They can conservatively give you 6% when the life insurance company is having a hard time getting 4.5% in their own general fund.
IUL is simply a UL product with an options strategy attached to it. It's like putting lipstick on a pig. The actual performance of the index has little to do with the performance of the product. It all boils down to options budget (created by the general fund), and option costs (created by the market and supply & demand).
If IUL is far superior, why did virtually NOBODY (less than 1%) actually EARN upside on the illustrations that were sold during the greatest bull run of all time? Check out the #IULchallenge
Stop funding that IUL at age 60 and look at the guaranteed page…Pull income and look at that page
…Uh OH!!! It WILL NOT earn 6%-7% EVERY year!
I am not an insurance agent but I did take a look at an IUL and Indexed Variable Life policy illustration lately just out of curiosity. Even at 6% or 7%, both IUL and Indexed Variable Life lapses when the insured is past retirement.
I'm not sure who in the right mind would want to buy a policy that eventually lapses. Millions paid into the policy over 30 years that eventually is worth zero. Worse, because CV is $0.00, the DB, which are supposed to benefit the beneficiaries, becomes $0.00 too.
How can agents who sell such policies sleep at night?
Hey Chris, thank you for this amazing video, I have a question, if I do a front load policy, should I do 40-60 or 10-90 ?
Depending on the size of the front load....feel free to reach out and we're happy to do a deeper dive for your situation.
Calendly.com/_life180/claritycall
I would like to start with 40k up front then 10k per year, what would you recommend?
@miguelpc3314 still many variables....email Chris@life180.com and we can go back and forth there or hop on a quick call
Hi Chris , great explanation for beginner like me, if the client does not have money for front load, what would you recommend , 40-60 is what I'm assuming, Also what exactly is the name of that product ??
Let me know please
Cheers
Me and my team don't provide specific advice on comments. It's a compliance thing. If you want specific guidance, we are happy to help. Just email Chris@life180.com or schedule a call calendly.com/_life180/claritycall
These are great instruments if designed properly. The average person needs to really think about what your needs are BEFORE you buy one.
--These are really pre-engineered trust agreements. Do you need one to pile money into it for protection against people who want to take your money it? Perfect if you can’t set up an irrevocable trust!
--Do you need a way to pass your money on to your airs non taxable because of gifting limitations or perhaps a handicap child you want to provide for?
--Do you have a need to borrow lots of money on a revolving basis?
--How many pay periods are you comfortable with and can you really fund them and do you really want to fund them long term?
--Depending on your age and pay periods and company chosen, when you hit 75 years old you won’t be allowed to put money into the PUA portions except for dividends generated.
--Remember these are NOT investments.
In the front load example after the term rider drops off, the premium drops from $10000 to 8572$. What is the breakdown of premium dollars (pua/base/term).
The reduction of premium is the fact that the term rider dropped off
I like that front load method however based on your illustration from what I heard from another agent, at age 51 when the DB drops from 2mm to 700k - that's puts it as a MEC violation. Is that true?
No, that's not true....
So basically, I've got a couple of questions as a new life insurance agent. Looks to me by your illustration that if a client has a short-term because of age to fund the policy, the 1090 might be better, whereas the client has more years younger. The 4060 plan looks better, and then if the client happens to have bucket of cash to front load, then your front load version works?
Also, I'm wondering if you compared the guaranteed rates on both your whole life and the guaranteed rates. If there is such a thing on the IUL's if the whole life would still win?
It's not quite so simple as that. The 10/90 vs 40/60 or any other blend conversation is much more involved. You have to take short term liquidity needs along with long term goals and objectives and come up with a plan that meets both to the best of our ability.
IUL will never win this battle vs whole life.
On a 10/90 policy can the $10000 base be paid annually with the $90,000 PUAs being paid in on a monthly basis?
If you set up the premium as a monthly payment, you can do it, yes.
For 10/90 policy first year dividend is 483 and 40/60 policy first year dividend is 1110, while 10/90 has 2k more cash value than 40/60. Same with the other years 10/90 has more cash value but much low dividend, how dividend is calculated? If it’s the same dividend scale for those two plans, suppose higher cash value gets more dividend?
Dividend is calculated on base. PUA year 1 will be more liquid but the dividend isn't the same. That's why doing a front load with a higher base is a win win whenever possible. High short term liquidity with SPUA rider & higher base = more dividends long term.
There is consistent admonishment in previous videos to not trust the non-guaranteed portion of illustrations but most of this video spends time on the non-guaranteed portion of these illustrations. Why is that section now approximately trustworthy on these illustrations?
Thats okay bcz this video is just comparing the policy structure
Well, mostly because I say that for IUL. It's important to understand all the moving parts of the policy. The non-guaranteed column in a whole life policy will also not be exact over a period of time. It's important to understand the variables that go into producing the illustrated result. We have been in a declining interest rate environment...therefore, illustrations have underperformed as dividends decreased.
We are now in an increasing interest rate environment. I expect dividend rates to increase (like they did in the 80's - although likely not as drastically). I could make a strong argument why I believe whole life will outperform their current assumptions over the next decade while they have underperformed over the past 30-40 years. It's all rate environment dependent.
@@LIFE180 Saying whole life has underperformerd for 30-40 years is a hell of a statement to make from a wholelife guy.
Thanks for the information. I’m a new agent trying to help educate myself and others and I appreciate your content
@@fredobills8133 glad it was helpful. Lmk if there are any specific videos you would like to see
On your front load policy design whats the split did i miss this
It varies based on the amount of front load relative to the annual premium
Do you put PAR cash value policies together for Canadians in Ontario? If so, how can you be contacted?
Email Chris@LIFE180.com and I can connect you with people I know up there!
@@LIFE180 can you send me their email address and contact please
@@marcin7570 I will when you email me. I'm not putting on in this string.
When you borrow from your policy, is it coming from the insurance company or a bank
The insurance company
And you are never borrowing from the policy....you are borrowing against the policy using it as collateral. If you borrowed from it, that means the money would come out of the policy and stop growing. Borrowing against it allows the cash inside the policy to continue growing even after you leverage it
U borrow from ur own money and they charge u interest on ur own money. Great deal huh
@@cyclops9125 spoken like someone who doesn't understand money...
So, are we front loading the 10-90 or are we front loading the 40-60?
Depending on how much the front load is. 10/90 policies aren't always an option
I have my whole life insurance with a major insurance company. Why they never told me I can do this? It took me 8 years to break even. How can I talk to my life insurance agent about this?
Which major insurance company? Not all companies will do this
I was just looking at an IUL policy and there is a difference and it’s not apples to apples but I did an initial 54,975 and followed it up with 10,905 a month and was able to keep that up until age 65. I started with a 36 year old male. It puts your front load illustration to shame. In part because with the one I ran you can keep up the 10k/ year premium payment. At year 30 the policy illustrates the following.
Death benefit 1856998
Policy values 956998
Looks better to me. Remember I only started with 54k for the initial lump sum. Then continued with 10 annually.
Things are not all the same. It’s about what your clients want.
This is also the non-Guaranteed side just like your non-Guaranteed.
My example is better than what you call your best.
@@shawnmcintier6110 probably
Can you show a video that shows how it has better tax advantages. Than doing a term police and investing in a Roth (vanguard voo). Using 500 a month.
What’s the Roth going to do in the next 10 years, 15 years?? NOBODY knows.,.. We DO know what the whole life will have. AT that point the term is gone and all you have is “X” maybe. The BEST insurance plan is the one that’s in-force the day you die and the whole life will be there.
No he can't. Term and invest always wins. If you have taxable income it's because you had real growth. You don't pay taxes on whole life cash value growth because you are not likely to take out more than you put in. You can take out loans, but those are not taxable anywhere because they must be paid back. If you die with a cash value loan, it will be paid back with proceeds from the death benefit. Also, if you die, the insurance company keeps all of your cash value.
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@@markf.2050 ua-cam.com/video/uK_g5JHzj-g/v-deo.html
What if you dont have 100k? Is front load still the best to do?
Anytime you have cash you can front load, it always makes sense. Front loads are limited based on annual premium amounts. Feel free to email Chris@life180.com and I can help you run illustrations if you are looking for some ideas
If someone wants to have 2m in Death Benefit coverage but also have a good amount of savings?
Then do a blend of term and whole life. Focus on the DB first, then do a 2nd policy to optimize for CV
I watched this video last night and commented very respectful and now my comment is gone! Not sure why.
What did you say? Haven’t deleted anything
@@LIFE180 Commented on the clarification of the policies and that I have scheduled a call for Friday with an agent in you company due to this video. Thank you.
Term Ryder cost keeps going up, relies too much on dividends…not good for me at 51yo
Term rider cost keeps going up? No. I did a level term. And you can restrict the term expense to 7 years. Not saying whole life is right for you, but make sure you understand it before making that assumption based on a lack of understanding.
Where are these clients?
What you’re saying makes sense. But how do you get these people that can make 10k premiums, especially in the fluctuating economy we live in today..
$10k per year is not that much for the average household earning 100k per year... it can be tough, for sure, especially if you have debt. But we have a program that helps people eliminate debt to help you get there. If a household can't save 10% of their income, you need to take a serious look at your spending.
If 10k/year is too much and your household income is 60k, simply save 6k per year to start.
Tax benefits of death value?
All tax free
The goal is to never distribute the cash but access via policy loans, correct?
Depends on use case. If you are talking retirement income, sometimes doing a withdrawal to cost basis makes more sense than a loan.
So, basically.... Do a front-loaded 40/60 with a $100k savings injection?
Front load can typically be 10-15x base coverage.
If only I had $100,000 to front load!
Is this whole life or iul?
Whole life. Never buy IUL - it's the most misrepresented product in financial history
They look almost identical. Illustrations and all. So does a whole life have increasing death benefit?
Do I any left for retirement 66 age tax free !!!
I don't know your situation so I can't say :-)
So the Best CV Whole Life design requires a 100K lump sum up front payment....LoL. All this time I thought WL was so much better....etc
A policy with no front load can still be better than IUL....
@@LIFE180 not based on the examples you shared.
The way you present it, it's like the life insurance company and the salesman are doing the buyer a favor. Flip it and show us why they and you sell this product. It's not free.
I have done plenty of videos on commissions, product structure, etc...
Nothing is free...that is true. Including your investments that you make. Every financial product has a fee associated with it, period.
When you stop looking at cost and begin looking at VALUE, it makes sense. I sell it now, but I have been promoting this strategy since before I was licensed to sell it. I am a real estate investor. For entrepreneurs and RE investors, it's a no brainer. But it makes sense for most people...unless you have a ton of debt....if so, clear that up first, but buy term insurance in the mean time.
All I heard was blah blah blah
Really? How so? Are your ears not working?
There is consistent admonishment in previous videos to not trust the non-guaranteed portion of illustrations but most of this video spends time on the non-guaranteed portion of these illustrations. Why is that section now approximately trustworthy on these illustrations?
It depends on which previous videos you are speaking to. The non guaranteed column in an IUL will not happen 99% of the time because of the internal workings of the policy.
With whole life, the non-guaranteed column is based on the current dividend scale being paid (in this case, 5.2%). Since dividend rates are near the lowest in history at the moment, and since whole life companies we work with have NEVER missed a dividend payment over the past 180 years, the current is safer.
That said, I would also say that it is important that you learn and understand how these work before putting money into one. Even if it is a little less than current assumptions (which in today's market is unlikely for whole life), i am a big believer of thinking about "what's the upside, what's the downside, can I live with the downside?"
I could also make a STRONG argument that whole life will out perform illustrated rates over the next 10-20 years as the interest rate market increases. I just don't do that a lot in videos because I don't want to get people buying for the wrong reasons