Insurance FAQ?
damon
interested in the pro's/con's of using insurance products as an investment
vehicle.
thanks.
db.
Cal_Lester
but I do have a comment on your second portion.
If you are considering the purchase of Insurance company STOCK,
then I am certain that diligent research will produce potential
investment opportunities for you.
If however, you are contemplating the purchase of a Life
Insurance product (any of them) for the actual INVESTMENT, then
I do believe that you should look elsewhere. All Life Insurance
products are designed with one purpose in mind, that being to
provide a specific number of dollars at a specific point in
time, normally at death. They ALL have cost factors incorporated
within them to compensate the carrier for the RISK involved.
Therefore, they are NOT considered to be a good INVESTMENT Risk
for the policy owner.
However, most carrier also offer a contract called an ANNUITY,
which has a nominal death RISK, and does promise to pay either a
stipulated interest, or a combination of Guaranteed & Projected
Interest rates. These types of contracts COULD be considered as
a CONSERVATIVE Investment Vehicle. Some carriers also offer
another type of ANNUITY contract, wherein the monies involved
are INVESTED in one or more Mutual Funds offered through the
company. They carry some Guarantee's, but you also participate
in the market, with the opportunity to earn more or LESS.
Cal Lester CLU
"damon" <dam...@europa.com> wrote in message
news:3891...@news.nwlink.com...
Randy Wright
the pro's. Microsoft's Money and Intuit both have good elementary
explanations of life insurance products.
Randy Wright, CPCU
LarryStiver
Everthing has its place in a portfolio. That being said, insurance as an
investment is usually best done as part of a portfolio not as the portfolio.
And insurance as an investment has such a high cost to it that you want to
ensure that all other comparable alternatives have been investigated before
deciding if this is the best route. Points of consideration may be risk,
liquidity, tax issues, opportunity costs, aquisition costs, time line on the
needs of the assets, potential use of the assets, etc. I feel that insurance
as an investment is not a great idea. Insurance is insurance....one hell of a
great way to manage risk and warehouse money for the long term. Bottom
line...should you put investment money into a ins. program....that depends on
your financial make-up.
As for the FAQ...no you will not find that, but you will find many biased
opinions. You may check into the "Roaring 2000's" by Harry S. Dent. And
another is "Complete Guide to Money Hapiness" by Henry Brock. Great books that
give a great look at insurance in the investment world.
Larry
damon
Just as a note, I'm being pitched a "financial engineering" solution, which
is suppose to analyze all of my financial tools (401K, IRAs, investment
accounts) and see where there are "leaks", to reduce expenses, etc. The
first solution that has been presented was a WL product that can help
shelter me from the tax burden I'll experience from dividends, LTCG, STCG
from one my mutual fund investments. They are not advising that I sell the
mutual fund, but to divert these income streams into an insurance policy
that will grow tax deferred and provide a death benefit.
Admittedly, they are just starting to give me some indications of their
overall solution as they have only analyzed what could be done with this one
mutual fund account. So, I'll be getting a clearer picture of their as we
have more meetings. Suffice it to say, I would not use life insurance as my
only vehicle for retirement planning. But I also don't know much about
insurance products and am trying to learn as much as I can before committing
to a product. This is my third time dealing with an insurance company, and I
would prefer it to be the last. In this I mean that I want to make the right
decision and stick with it.
I also know that there isn't enough information here to give recommendations
on. I'm just trying to find some comments on this type of strategy. I
mean, if it is sound, why isn't everyone rushing into it (given the right
mix of insurance, investments, etc.)?
On another note (and I don't want to diverge much from the posted topic),
but what about UL/UVL? I haven't found much information about these types
of policies, but from what I have heard, they offer the control an invester
likes with the cash value/tax benefits that WL gives. Any comments there?
Thanks again for coaching this newbie!
db.
LarryStiver wrote in message
<20000130151218...@ng-fr1.aol.com>...
Cal_Lester
> Thanks all for the info.
>
>
posted topic),
> but what about UL/UVL? I haven't found much information about
these types
> of policies, but from what I have heard, they offer the
control an invester
> likes with the cash value/tax benefits that WL gives. Any
comments there?
>
> Thanks again for coaching this newbie!
>
> db.
UL / - VU/L. One could ( and I have to a degree) write a book
about these two.
First, they are IDENTICAL in almost every respect but one. That
one being the repository for the " Cash Value Accumulation
Account".
U/L differs from Whole Life primarily in it's flexibility, and
it's ability to "excess interest" on that C/V account. Generally
speaking, the Carrier pays a "guaranteed" interest rate ( 3 to 4
% ), and then pays an additional excess interest, based upon
it's earnings & expenses. The FLEXIBILITY refers to the fact
that the Insured has more control over a) premium payment, b)
changes in face value & c) the ability to "withdraw" funds from
the C/V account, as well as using it for collateral for loans.
V/U/L differs from U/L, primarily in the fact that "THE INSURED"
is given the opportunity to "invest" that C/V account in one or
more of a group of mutual funds offered by or through the
carrier. By doing so, the INSURED then assumes a much larger
portion of the RISK, since that C/V account will rise (and
possibly FALL) based on those investment decisions.
I hope that I have provided some insight to your question. If
you would like to learn more, contact me.
Cal Lester CLU
Cal_L...@msn.com