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  • How much life insurance do you have?

    Posted by Unknown Member on July 14, 2023 at 11:35 am

    I have 3 million (2 million term and 1 million whole life policy). I plan to keep it all until kid is thru college. How much do you have and how long will you keep it for? My rates are locked in so the premiums don’t go up as I age.

    midwestrad2 replied 9 months, 3 weeks ago 19 Members · 70 Replies
  • 70 Replies
  • Unknown Member

    Deleted User
    July 14, 2023 at 12:07 pm

    5 mil term, 2 mil ROP. I view the ROP as forced savings/protected money with benefits, even though it costs more. Could probably drop some of the term now that kids are older and savings have grown, but I’ve had it so long might as well keep it just in case.

    • btomba_77

      Member
      July 14, 2023 at 12:26 pm

      2x salary as a benefit through my employer.
       
      no other outside policies  (we have no children and my assets are enough to take care of mrs_dergon should I pass)

      • Unknown Member

        Deleted User
        July 14, 2023 at 12:42 pm

        Isn’t whole life insurance a scam?

        • Unknown Member

          Deleted User
          July 14, 2023 at 12:44 pm

          I have had mine for 15 years. It is not worth it unless you hold on to it for a while.

          • Robbro524_990

            Member
            July 14, 2023 at 2:03 pm

            According to Dave Ramsey, it’s a scam (whole life).

            But, he also says that the stock market goes up 12%every year, so I’d take that advice with reluctance.

            If structured correctly, whole life can be a nice asset.

            But, most wealth advisors structure whole life insurance to pad their own pockets instead of yours, unfortunately.

            • nasosmunfc_332

              Member
              July 14, 2023 at 2:05 pm

              Whole life is a borderline scam relative to sp500 returns but no federal or state tax to beneficiary, which is huge (but can also change)

              • seb_arrosa_904

                Member
                July 14, 2023 at 2:29 pm

                do you even need life insurance if you are single and have no dependents?

                • btomba_77

                  Member
                  July 14, 2023 at 2:32 pm

                  Quote from ntesla

                  do you even need life insurance if you are single and have no dependents?

                  No.
                   
                  Life insurance is for the people you leave behind, not you.
                   
                   

        • cchandc

          Member
          July 14, 2023 at 3:28 pm

          Quote from 9000tesla

          Isn’t whole life insurance a scam?

          Yes, you can invest the money yourself for lower fees and make more/keep more of what you make.
           
          I have $3 million term. Generally if you have dependents you should term life and then plan to self insure by the time that policy runs out.

          • Robbro524_990

            Member
            July 14, 2023 at 3:31 pm

            This is always entertaining when one asks physicians for financial advice. No wonder people take advantage of us, financially. We kind of deserve it, to be honest.

            Carry on with your term life and S & P index funds then, etc!

            • cchandc

              Member
              July 14, 2023 at 3:49 pm

              It’s a google search away. Tons of docs (and others) have been duped into buying whole life. 
               
              It’s pretty well known that whole life isn’t worth it for most financial savvy people. You will make more by investing the cash yourself (by a lot).
               
              [link=https://www.forbes.com/advisor/life-insurance/is-whole-life-insurance-a-good-investment/]https://www.forbes.com/ad…nce-a-good-investment/[/link]
               
              [link=https://www.whitecoatinvestor.com/debunking-the-myths-of-whole-life-insurance/]https://www.whitecoatinve…-whole-life-insurance/[/link]
               
              [h2]When Is Whole Life Insurance Not a Good Investment?[/h2] While there are benefits associated with whole life insurance, its likely not the right choice if you fit any of these descriptions:
              [ul][*]You only need life insurance for a specific length of time. If you only need life insurance for 10, 20 or 30 years, then paying higher premiums for whole life insurance probably doesnt make sense. A [link=https://www.forbes.com/advisor/life-insurance/best-term-life-insurance-companies/]term life insurance[/link] policy is the better choice for pure life insurance at a good price.[*]You have a high risk tolerance for investments. Whole life insurance tends to appeal to people who have a low risk tolerance or want a safe, guaranteed way to build cash value.[*]You want control over your investments. Whole life insurance offers a fixed rate of return on cash value, with no investment choices. You wont benefit from the potential highs of the stock market.[*]Youre looking for a higher rate of return. The interest and dividends earned with a whole life policy can lag far behind the returns you can likely get elsewhere. [/ul]  
              hell just google it.
              [link=https://www.google.com/search?q=is+whole+life+insurance+a+good+investment+white+coat+investor&sxsrf=AB5stBjjhfi4DHPuWQqyN4j864yXS_RUTw%3A1689374480241&ei=EM-xZJWuDtOF0PEP26m40AI&oq=is+whole+life+insurance+a+good+investment+white+coat+in&gs_lp=Egxnd3Mtd2l6LXNlcnAiN2lzIHdob2xlIGxpZmUgaW5zdXJhbmNlIGEgZ29vZCBpbnZlc3RtZW50IHdoaXRlIGNvYXQgaW4qAggAMgUQIRigAUjpGlDzB1jBE3ABeAGQAQCYAYoBoAG5CqoBBDEwLjS4AQPIAQD4AQHCAgoQABhHGNYEGLADwgIQEC4YigUYxwEY0QMYsAMYQ8ICChAAGIoFGLADGEPCAgUQABiABMICBhAAGBYYHsICCBAAGBYYHhgPwgIIEAAYigUYhgPCAgUQIRirAsICCBAhGBYYHhgdwgIKECEYFhgeGA8YHeIDBBgAIEGIBgGQBgo&sclient=gws-wiz-serp]https://www.google.com/se…p;sclient=gws-wiz-serp[/link]

               

              • Unknown Member

                Deleted User
                July 14, 2023 at 4:30 pm

                Well I am 15 years into my policy and have a nice cash value accumulated. I think I can take that money out as a loan and not repay it and then it gets deducted from the death benefit. Otherwise I can surrender the policy but then I think I may have to pay taxes on the amount I took out lol. Someone even offered to buy my policy bc I am far enough into the amortization table or whatever its called…
                It is very confusing and I can’t ever get a straight answer about what the best thing is i should do with it. Premium is hella expensive!

                • satyanar

                  Member
                  July 14, 2023 at 5:29 pm

                  Whatever you do dont surrender the policy. Thats how the insurance company wins. With a whole life policy the premium is typically paid out in the beginning for several years and then the cash value generates enough income to pay the life insurance portion itself. If you dont have someone (broker) who is there to explain all of this to you, you may have been duped. Still, you should be able to use cash value to generate tax free income in retirement. Think of it as a Roth equivalent. 
                   
                  One can certainly argue that it would have been wiser to just invest the difference above the premium on a term life policy but what you do now is very important not to waste that cash value. Talk to an expert, hopefully the person that sold you the policy is someone you can trust. If not there are independent brokers that would be happy to share their knowledge. 
                   
                   

                  • Unknown Member

                    Deleted User
                    July 14, 2023 at 6:07 pm

                    Had 4 million level premium  term,  no longer insured since divorced and children self sufficient

                    • Robbro524_990

                      Member
                      July 14, 2023 at 6:23 pm

                      Thread enhancer is on to something.

                      Look, there are ways that you can structure a policy to maximize the cash value so that the dividends will pay for the premium (eventually) and then you can use the cash value to both finance (and pay back) things you buy in the future AND use the cash value as a tax free income source in the future, while still having several million dollars in death benefit to leave to your family.

                      The insurance companies make most of their money on term policies that simply expire, so for those of you who love term, please, please keep on buying term insurance so that my insurance company stays solvent. For those of you who are curious, just Google the benefits of high cash value whole life insurance products with mutual insurance companies.

                      Don’t buy or believe everything others tell you about financial products. Most of these people don’t know $hit, unfortunately.

                    • satyanar

                      Member
                      July 14, 2023 at 6:34 pm

                      True they make a lot of money on term policies that expire without paying a benefit. However, those policies are cheap and there is good competition to keep them that way. Where they really make a home run is if someone has a large cash value established and they want to stop paying the expensive premium and they surrender the policy.

                      Before diving in read some. If you got in without good advice then be careful not to make things worse.

                    • Unknown Member

                      Deleted User
                      July 14, 2023 at 7:24 pm

                      OK I appreciate the feedback! Wish I could do something now with the cash value. Retirement is a long way away!

                    • talia784

                      Member
                      July 14, 2023 at 7:29 pm

                      I did a $10M term policy. It wasn’t too much more than the smaller policies. I’m single-income married, young attending, lots of debt so I wanted to be really sure my wife and future children were cared for.
                       
                      I’d like to have enough net worth to self-insure by the time the policy ends and is up for renewal.

                    • Robbro524_990

                      Member
                      July 14, 2023 at 7:32 pm

                      That’s fine for now – your term policy.

                      You can also buy convertible term to whole policies that you can convert at future dates. Might be worth looking into.

                      Another benefit of whole life is that it’s protected from creditors and hence lawsuits in multiple states (but not all).

                    • abd.fawzi_217

                      Member
                      July 14, 2023 at 11:23 pm

                      Sorry to hear you were duped into a whole life policy. You shouldn’t have bought it in the first place but you’re right that it is a different whether you should buy it in the first place vs. if you should keep it now. You need to ask them for an in-force illustration so you can do the math on whether it’s worth keeping or not. I’d post on WCI or bogleheads to get more help, if the premiums are high it’s def worth checking out and not simply assuming that you’re stuck with it.

                    • Unknown Member

                      Deleted User
                      July 15, 2023 at 7:56 pm

                      Still, you should be able to use cash value to generate tax free income in retirement
                      No! The only  way to avoid income taxes on the [i]earnings[/i] of a whole life or universal life policy is to take out loans from your policy, never pay them back, and keep the policy active by paying premiums out of the policy cash value until you die. Your heirs get the death benefit amount minus the policy loan amount.

                    • Unknown Member

                      Deleted User
                      July 15, 2023 at 8:00 pm

                       
                      Still, you should be able to use cash value to generate tax free income in retirement 
                       
                      No! The only  way to avoid paying income taxes on the [i]earnings[/i] of a whole life or universal life policy is to take out policy loans, never pay them back, and keep the policy active until you die. Your heirs get the death benefit amount minus the policy loan amount.
                      Any earnings on a partial withdrawal of the cash value of a whole life policy are taxed as ordinary income.

                    • satyanar

                      Member
                      July 15, 2023 at 8:12 pm

                      Call it what you want. You take it out text free and dont pay it back. It decreases the death benefit in return so your heirs get less. Keeping the policy active could require no additional premiums since the earnings from the cash value pay for them. If you take money out of a Roth it comes out tax free and your heirs get less.

                      But again all of this depends on how the policy was set up and whether or not the OP was just duped.

                      Im not suggesting it was a good idea to buy this policy and many here have given good advice on what to do next. If the policy was written well there should be an opportunity to use the cash value in a tax advantaged way. It grew tax free and can be used tax free. If this was not an advantage the IRS wound not have placed limits on them when they realized how they were originally being used.

                    • Robbro524_990

                      Member
                      July 14, 2023 at 7:26 pm

                      Yea, that’s true. I’d offer another option too.

                      If you have a good whole life policy that you’re tired of paying premiums on then consider a sale to a life settlement group that will pay you cash for a percentage of the death benefit.

                      Personally, I’d just modify the policy or exchange the policy into a better one with higher cash value. But, if you want the cash, then selling your policy to a reputable life settlement company would be a good idea to maximize your return. Check it out for yourself.

  • bzarambo435

    Member
    July 15, 2023 at 9:04 pm

    I have 5, evenly split between term and whole.

    I dont think whole life is a scam, but to each their own. I view it as part of the estate and also the fixed income portion of my portfolio (everything else is stock). Tough to beat the guaranteed death benefit which would most likely happen sometime after your term policy ends.

    • Robbro524_990

      Member
      July 15, 2023 at 9:17 pm

      It is kind of a ‘scam,’ if not set up to maximize cash value and use dividends to eventually fund the premium while utilizing PUAs to further maximize cash value and let the death benefit grow.

      As was said before, most policies are constructed to maximize the life insurance agent’s own cash reward. Trust no one and learn the basics of how it can work in your advantage. It’s really not that hard. It’s a better financial product than most realize.

      • smfst7_929

        Member
        July 15, 2023 at 9:20 pm

        Wife makes more than me. I keep minimal insurance. If you are the breadwinner or if wife is homemaker, then five million life is the minimum in my opinion.

        • Unknown Member

          Deleted User
          July 17, 2023 at 5:08 am

          Yes, i bought the whole life policy 15 years ago as a new associate when sold to me by the “money guy” the group used…
          Now I am 15 years in and the cash value is actually worth something. Going to leave it alone until kid goes to college and may use the $ for that unless she gets a full ride then it’s Lambo time…
          JK !

          • 6541165

            Member
            July 17, 2023 at 7:02 am

            I bought 2.3 mil/30 year term as a resident when my baby was born. May or may not up it as an attending. Wife makes good money too. 

            • kstepanovs_485

              Member
              July 18, 2023 at 8:39 am

              5 mil/30 year term

              • smfst7_929

                Member
                July 18, 2023 at 8:43 am

                Enough so your wife can bang the pool boy without fretting about finances

                • Unknown Member

                  Deleted User
                  July 18, 2023 at 8:51 am

                  At best whole life functions like a Roth IRA for those who can’t or don’t want to backdoor (though I believe it still is possible currently, may change in future). 
                   
                  My understanding on withdrawing cash from whole life policies was that it would be taxed twice (even though the earnings while in the account are tax free) ie you pay premiums with post-tax income and if you want to withdraw cash from it, it gets taxed again as regular income.  But while the money stays in your account compounding capital gains, it is not taxed.  Is this correct?
                   
                  Overall it seems like a good financial tool if backdoor Roth is not an option

                  • Radscatter

                    Member
                    July 18, 2023 at 5:56 pm

                    1 mil term life.
                    Im still young with a family/kids, but the wife is a doc also. I figure 1 mil is enough to help take the sting out of my death…maybe get a mommy makeover/implants to help her get back out on the market…jk
                     

                    • Robbro524_990

                      Member
                      July 18, 2023 at 8:04 pm

                      Whole life is NOT taxed if you take your cash value as a loan. Yes, this will reduce your cash value balance and death benefit, but who cares if it’s tax free (which IT IS). You can then pay it back at your leisure and wash, rinse, and repeat. Actually, it’s a great tool to use to self finance items and/or get out of debt, if you know what you are doing and have the right kind of policy.

                      It’d be better to just sell the policy than withdraw the cash value.

                    • pankajkaira1982_700

                      Member
                      July 22, 2023 at 6:56 pm

                      1 million term . Worked enough now that family will not be on the streets if they spend wisely . Whole life is a scam. Wci already outlined this topic so you can find all the information there.

                    • mwakamiya

                      Member
                      July 23, 2023 at 3:25 pm

                      1 million these days will not go very far. 
                      Would say at least 2-3 term works best. 

                    • pankajkaira1982_700

                      Member
                      July 27, 2023 at 10:26 am

                      I have worked long enough that I don’t need life insurance anymore for the family. The 1 million is just icing on the cake in case something catastrophic happens. Disability insurance is a different beast. 
                       
                      I live like a resident/fellow and continue to live like a resident while making attending bucks. That’s the fastest way to wealth imo.

                    • Robbro524_990

                      Member
                      July 27, 2023 at 1:37 pm

                      The white coat investor isn’t the sharpest tool I’ve seen in the shed, but people are welcome to follow whomever they wish.

                      Look, the information on these products is out there. Most people on this board are as smart, if not smarter, than the white coat investor. Why would you trust him?

                      Do the intellectual work on your own. It’s not that hard. Beware of salesmen too, for sure. Good luck.

                    • Unknown Member

                      Deleted User
                      July 27, 2023 at 5:38 pm

                      I suggest you do a little homework.

                      The premiums of VUL do not change. They do become optional.
                      In whole life insurance, the premiums typically do not change over the life of the policy, as long as you continue to pay them as scheduled. The premiums are determined based on your age, health, and other factors at the time you purchase the policy. Once the policy is in force, the premium amount remains fixed.

                      However, while the premiums remain constant, the cost of insurance does change over time. The cost of insurance refers to the portion of your premium that covers the actual insurance risk, providing the death benefit to your beneficiaries when you pass away. This cost is calculated based on actuarial tables that consider mortality rates and other factors.

                      In the early years of a whole life insurance policy, the cost of insurance is relatively low because the policyholder is typically younger and less likely to die. As the policyholder ages, the cost of insurance increases because the risk of death naturally rises with age. Additionally, the insurance company may invest a portion of your premiums to help cover future costs, which can also affect the overall cost of providing coverage.

                      To compensate for the increasing cost of insurance, the premium remains level over time. The excess premium payments made in the earlier years help to cover the higher cost of insurance in the later years, creating a level average cost over the life of the policy.

                    • Unknown Member

                      Deleted User
                      July 27, 2023 at 5:47 pm

                      Additionally,

                      The premiums in whole life remain fixed throughout your life and the cash value of the policies have a guaranteed internal growth rate (between 3-5%). So once, the cash value hits a certain value, the premiums can be paid from the growth of the cash value.

                      Since, the premium in whole life is fixed, the cost of insurance in that specific whole life policy does not vary. It can vary or change in variable life, based on what you chose to invest in. Plus, in variable life, from my understanding at least (I don’t own any), both the fees and premium are NOT FIXED. That’s a big, fundamental difference between the two products.

                      Also, if you choose, you can purchase PUA (paid up additions) which can add to the cash value AND the death benefit over time.

                      The whole life company, if well run and a mutual company, also pays out dividends over time (which are essentially return of premium but are also tax free). These dividends can also be used to purchase more PUAs or cashed out for personal use.

                      The premiums in this product do not go up.

                      Since there is a guaranteed rate of return on the cash value, the premiums can be paid from this.

                      Variable relies on other investments to pay the premiums, which can fluctuate as you age.

                      They are NOT THE SAME PRODUCTS.

                      This is why I don’t listen to other MDs on financial services these days, sadly. Most of them dont even understand what they have bought, and then act like they do. Cheers.

                      Thats not quite correct.

                      In whole life insurance, the premiums typically do not change over the life of the policy, as long as you continue to pay them as scheduled. (Premiums on VULs do not go up either). The COI on both go up.
                      The premiums are determined based on your age, health, and other factors at the time you purchase the policy. Once the policy is in force, the premium amount remains fixed.

                      However, while the premiums remain constant, the cost of insurance does change over time in whole life insurance.The cost of insurance refers to the portion of your premium that covers the actual insurance risk, providing the death benefit to your beneficiaries when you pass away. This cost is calculated based on actuarial tables that consider mortality rates and other factors.

                      In the early years of a whole life insurance policy, the cost of insurance is relatively low because the policyholder is typically younger and less likely to die. As the policyholder ages, the cost of insurance increases because the risk of death naturally rises with age. Additionally, the insurance company may invest a portion of your premiums to help cover future costs, which can also affect the overall cost of providing coverage.

                      To compensate for the increasing cost of insurance, the premium remains level over time. The excess premium payments made in the earlier years help to cover the higher cost of insurance in the later years, creating a level average cost over the life of the policy.

                      One thing that can be done with a VUL or whole life policy if one does not need life insurance anymore is do a 1035 exchange into an income annnuity.

                    • Unknown Member

                      Deleted User
                      July 24, 2023 at 4:26 am

                      Anyone have a good fiduciary financial person i can consult with re: my situation? Plz pm me

                    • Unknown Member

                      Deleted User
                      July 24, 2023 at 2:04 pm

                      Quote from DOCDAWG

                      Whole life is NOT taxed if you take your cash value as a loan. Yes, this will reduce your cash value balance and death benefit, but who cares if it’s tax free (which IT IS). You can then pay it back at your leisure and wash, rinse, and repeat. Actually, it’s a great tool to use to self finance items and/or get out of debt, if you know what you are doing and have the right kind of policy.

                      It’d be better to just sell the policy than withdraw the cash value.

                      I have looked at the numbers because I had a no load low cost survivorship variable universal life policy with Ameritas. I had it for 24 years and the premiums were paid by the investments within the policy. Policy simulations show that the premiums become HUGE if one lives to be over age 75, and the policy would default at age 80 with a 100k loan now (figuring at a conservative return rate). People dont realize that the premiums become so large with age. The best option is to surrender the policy once the premiums get large.
                      One reason I got it years ago was that the cash value is protected from creditors in the state and the investments were low cost through Vanguard.

                    • Robbro524_990

                      Member
                      July 24, 2023 at 5:19 pm

                      Sounds like you got screwed by an agent or agency. Variable insurance policies were sold a lot many years ago but most fell apart with time for issues like you have. If your death benefit is high enough, I would seriously consider selling my policy to a life settlements company – at least you would recover something for it, based on a percentage of the death benefit.

                      What I’m referring to is high cash value permanent whole life with paid up additions whereby the premium is paid yearly after year 5 or 7 by the dividends so that you don’t have to come out of pocket any more for premiums, and then you can just buy paid up additions to balloon the cash value for investments and in order to pay down personal debts, ie. self finance your life style, etc.

                    • Unknown Member

                      Deleted User
                      July 25, 2023 at 9:18 am

                      Thats what a variable universal life insurance policy is. Its the same as the whole life policy you refer to, except one has the option of investing in mutual funds or the company account that pays interest like whole life.
                      Premiums on whole life policies also become huge at older ages. One can taken out a loan on the policy cash value that , if large enough, can result in a policy default in later years if the loan is not repaid. If the policy defaults, one pays taxes on the loan amount.
                      Bottom line is whole life and variable universal life policies are complicated. One needs to learn about such things as A and B options of the policy as well as when to decrease the specified amount to decrease the cost of insurance. Not really worth the complexification of your finances, unless asset protection plus life insurance are goals. If one buys one, then buying a no load, no surrender fees, low cost policy, directly through company like Ameritas direct this is the way to go.

                    • Robbro524_990

                      Member
                      July 25, 2023 at 5:33 pm

                      That’s just not true, but you are free to believe whatever you wish or whatever your agent told you. Like I said, it sounds like you got screwed, but aren’t either willing to admit it or do the mental work to understand the product better. I have had my whole life policies for about 6 years now (I have 7) and don’t pay a dime in premiums on my personal policy and my significant other’s policy.

                      The dividends pay for our premiums every year from here on out until we both die; then our children get nice checks.

                      It’s all in how you structure the product. Promise.

                    • Unknown Member

                      Deleted User
                      July 26, 2023 at 4:51 am

                      Our life insurance has paid its own premiums for 20+ years too. Thats not the point. Your comments are a good example of the common misunderstandings of whole life or variable universal life insurance policies. Insurance agents are good at obfuscation when selling these policies.
                      Suggest you have your insurance agent  (who you probably paid a commission to when you bought the policy unless you used Ameritas) run hypothetical  simulations on taking as large a loan out now as permissible and not paying it back. And dont let the agent figure the calculations with their usual rosey and unrealistic rate of return of the cash value.
                      When elderly, you will be paying huge premiums [i]out of your cash value.[/i] If you let the policy default, you pay taxes. If you surrender the policy, you pay taxes. So you will need to keep paying the huge premiums out of the cash value of your life insurance that you probably wont even need when elderly.
                      Whole life insurance is not necessarily bad, unless the agent takes a commission or it has a bad surrender penalties. VUL policies are necessarily bad if one can invest in low cost mutual funds (not funds with high expense ratios and 12b-1 fees). And the protection of the cash value from creditors in some states is a plus.

                    • Unknown Member

                      Deleted User
                      July 26, 2023 at 4:53 am

                      Our life insurance has paid its own premiums for 20+ years too. Thats not the point. Your comments are a good example of the common misunderstandings of whole life or variable universal life insurance policies. Insurance agents are good at obfuscation when selling these policies. 
                      Suggest you have your insurance agent  (who you probably paid a commission to when you bought the policy unless you used Ameritas) run hypothetical  simulations on taking as large a loan out now as permissible and not paying it back. And dont let the agent figure the calculations with their usual rosey and unrealistic rate of return of the cash value. 
                      When elderly, you will be paying huge premiums [i]out of your cash value.[/i] If you let the policy default, you pay taxes. If you surrender the policy, you pay taxes. So you will need to keep paying the huge premiums out of the cash value of your life insurance that you probably wont even need when elderly. 
                      Whole life insurance is not necessarily bad, unless the agent takes a commission or it has a bad surrender penalties. VUL policies are not  necessarily bad if one can invest in low cost mutual funds (not funds with high expense ratios and 12b-1 fees). And the protection of the cash value from creditors in some states is a plus. 

                    • Unknown Member

                      Deleted User
                      July 26, 2023 at 5:06 am

                      Our life insurance has paid its own premiums for 20+ years too. Thats not the point. Your comments are a good example of the common misunderstandings of whole life or variable universal life insurance policies. Insurance agents are good at obfuscation when selling these policies.  
                      Suggest you have your insurance agent  (who you probably paid a commission to when you bought the policy unless you used Ameritas) run hypothetical  simulations on taking as large a loan out now (as large as permissible so it does not become a modified endowment contract to the IRS) and not paying it back. And dont let the agent figure the calculations with their usual rosey and unrealistic rate of return of the cash value.  
                      When elderly, you will be paying huge premiums [i]out of your cash value.[/i] If you let the policy default, you pay taxes. If you surrender the policy, you pay taxes. So you will need to keep paying the huge premiums out of the cash value of your life insurance that you probably wont even need when elderly. Suggest you look into changing from option B to option A, and into when a good time is to decrease the specified value (death benefit) of your policy to mitigate the cost of insurance drain on your cash value.
                      Whole life insurance is not necessarily bad, unless the agent takes a commission, it has a load fee, high expenses, or it has a bad surrender penalties. VUL policies are not necessarily bad if one can invest in low cost mutual funds (not funds with high expense ratios and 12b-1 fees). And the protection of the cash value from creditors in some states is a plus. The tax free growth is also a plus.  
                      Hope that helps. Peace out. 
                       

                    • Robbro524_990

                      Member
                      July 27, 2023 at 8:51 am

                      Whole life Insurance vs. Variable Life Insurance: Takeaway
                      The two insurance options we analyzed today widely differ: whole life offers steady growth with guaranteed death benefits, while variable life is for risk-takers who want to explore different investment options and try to earn more money.

                      Overall, whole life insurance is a better option because it provides you stability and a secure death benefit, and you run no risk of losing your money. There are ways to make the most out of your policy, even though it offers no investment options directly.

                      You are comparing apples to oranges with these two insurance products. I have no problem paying a commission to an insurance agent who sets up a product that benefits me in the long term.

                      There are a myriad of ways to set up these products and by using high cash value whole life you can protect your assets from creditors and provide liquidity for current and future investments.

                      Plus, why would I not just pay back the loan now so that I’d have more money to invest or purchase items with in the future?

                      And, also, you can take loans from the policy in retirement and never pay them back AND never pay taxes on that cash, if done correctly. Anyone who has a basic knowledge of whole life knows this to be true.

                    • Robbro524_990

                      Member
                      July 27, 2023 at 9:15 am

                      Additionally,

                      The premiums in whole life remain fixed throughout your life and the cash value of the policies have a guaranteed internal growth rate (between 3-5%). So once, the cash value hits a certain value, the premiums can be paid from the growth of the cash value.

                      Since, the premium in whole life is fixed, the cost of insurance in that specific whole life policy does not vary. It can vary or change in variable life, based on what you chose to invest in. Plus, in variable life, from my understanding at least (I don’t own any), both the fees and premium are NOT FIXED. That’s a big, fundamental difference between the two products.

                      Also, if you choose, you can purchase PUA (paid up additions) which can add to the cash value AND the death benefit over time.

                      The whole life company, if well run and a mutual company, also pays out dividends over time (which are essentially return of premium but are also tax free). These dividends can also be used to purchase more PUAs or cashed out for personal use.

                      The premiums in this product do not go up.

                      Since there is a guaranteed rate of return on the cash value, the premiums can be paid from this.

                      Variable relies on other investments to pay the premiums, which can fluctuate as you age.

                      They are NOT THE SAME PRODUCTS.

                      This is why I don’t listen to other MDs on financial services these days, sadly. Most of them dont even understand what they have bought, and then act like they do. Cheers.

                    • pankajkaira1982_700

                      Member
                      July 27, 2023 at 10:18 am

                      For those interested in whole life insurance, Dr. Dahle from WCI has a great article. 
                       
                      [link=https://www.whitecoatinvestor.com/what-you-need-to-know-about-whole-life-insurance/]https://www.whitecoatinve…-whole-life-insurance/[/link]

                    • Unknown Member

                      Deleted User
                      July 27, 2023 at 5:44 pm

                      Additionally,

                      The premiums in whole life remain fixed throughout your life and the cash value of the policies have a guaranteed internal growth rate (between 3-5%). So once, the cash value hits a certain value, the premiums can be paid from the growth of the cash value.

                      Since, the premium in whole life is fixed, the cost of insurance in that specific whole life policy does not vary. It can vary or change in variable life, based on what you chose to invest in. Plus, in variable life, from my understanding at least (I don’t own any), both the fees and premium are NOT FIXED. That’s a big, fundamental difference between the two products.

                      Also, if you choose, you can purchase PUA (paid up additions) which can add to the cash value AND the death benefit over time.

                      The whole life company, if well run and a mutual company, also pays out dividends over time (which are essentially return of premium but are also tax free). These dividends can also be used to purchase more PUAs or cashed out for personal use.

                      The premiums in this product do not go up.

                      Since there is a guaranteed rate of return on the cash value, the premiums can be paid from this.

                      Variable relies on other investments to pay the premiums, which can fluctuate as you age.

                      They are NOT THE SAME PRODUCTS.

                      This is why I don’t listen to other MDs on financial services these days, sadly. Most of them dont even understand what they have bought, and then act like they do. Cheers.

                      Thats not quite correct.

                      In whole life insurance, the premiums typically do not change over the life of the policy, as long as you continue to pay them as scheduled. (Premiums on VULs do not go up either). The COI on both go up.
                      The premiums are determined based on your age, health, and other factors at the time you purchase the policy. Once the policy is in force, the premium amount remains fixed.

                      However, while the premiums remain constant, the cost of insurance does change over time. The cost of insurance refers to the portion of your premium that covers the actual insurance risk, providing the death benefit to your beneficiaries when you pass away. This cost is calculated based on actuarial tables that consider mortality rates and other factors.

                      In the early years of a whole life insurance policy, the cost of insurance is relatively low because the policyholder is typically younger and less likely to die. As the policyholder ages, the cost of insurance increases because the risk of death naturally rises with age. Additionally, the insurance company may invest a portion of your premiums to help cover future costs, which can also affect the overall cost of providing coverage.

                      To compensate for the increasing cost of insurance, the premium remains level over time. The excess premium payments made in the earlier years help to cover the higher cost of insurance in the later years, creating a level average cost over the life of the policy.

                    • Unknown Member

                      Deleted User
                      July 27, 2023 at 6:07 pm

                      Quote from DOCDAWG

                      Additionally,

                      The premiums in whole life remain fixed throughout your life and the cash value of the policies have a guaranteed internal growth rate (between 3-5%). So once, the cash value hits a certain value, the premiums can be paid from the growth of the cash value.

                      Since, the premium in whole life is fixed, the cost of insurance in that specific whole life policy does not vary. It can vary or change in variable life, based on what you chose to invest in. Plus, in variable life, from my understanding at least (I don’t own any), both the fees and premium are NOT FIXED. That’s a big, fundamental difference between the two products.

                      Also, if you choose, you can purchase PUA (paid up additions) which can add to the cash value AND the death benefit over time.

                      The whole life company, if well run and a mutual company, also pays out dividends over time (which are essentially return of premium but are also tax free). These dividends can also be used to purchase more PUAs or cashed out for personal use.

                      The premiums in this product do not go up.

                      Since there is a guaranteed rate of return on the cash value, the premiums can be paid from this.

                      Variable relies on other investments to pay the premiums, which can fluctuate as you age.

                      They are NOT THE SAME PRODUCTS.

                      This is why I don’t listen to other MDs on financial services these days, sadly. Most of them dont even understand what they have bought, and then act like they do. Cheers.

                       

                      Thats not quite correct.  
                      In whole life insurance, the premiums typically do not change over the life of the policy, as long as you continue to pay them as scheduled. (Premiums on VULs do not go up either). [i]The COI on both go up.  [/i]
                      The premiums are determined based on your age, health, and other factors at the time you purchase the policy. Once the policy is in force, the premium amount remains fixed.  

                      However, while the premiums remain constant, the cost of insurance does change over time in whole life insurance.The cost of insurance refers to the portion of your premium that covers the actual insurance risk, providing the death benefit to your beneficiaries when you pass away. This cost is calculated based on actuarial tables that consider mortality rates and other factors.  

                      In the early years of a whole life insurance policy, the cost of insurance is relatively low because the policyholder is typically younger and less likely to die. As the policyholder ages, the cost of insurance increases because the risk of death naturally rises with age. Additionally, the insurance company may invest a portion of your premiums to help cover future costs, which can also affect the overall cost of providing coverage.  

                      To compensate for the increasing cost of insurance, the premium remains level over time. The excess premium payments made in the earlier years help to cover the higher cost of insurance in the later years, creating a level average cost over the life of the policy.  
                       
                      Often, insurance agents, who  collect  a commission to sell a policy, obscure the fact that the COI goes up even though premiums are unchanged.
                      One thing that can be done with a VUL or whole life policy if one does not need life insurance anymore is do a 1035 exchange into an income annnuity. That way taxes can be  deferred longer.
                       
                       

                    • Unknown Member

                      Deleted User
                      July 27, 2023 at 6:21 pm

                      Quote from DOCDAWG

                      Additionally,

                      The premiums in whole life remain fixed throughout your life and the cash value of the policies have a guaranteed internal growth rate (between 3-5%). So once, the cash value hits a certain value, the premiums can be paid from the growth of the cash value.

                      Since, the premium in whole life is fixed, the cost of insurance in that specific whole life policy does not vary. It can vary or change in variable life, based on what you chose to invest in. Plus, in variable life, from my understanding at least (I don’t own any), both the fees and premium are NOT FIXED. That’s a big, fundamental difference between the two products.

                      Also, if you choose, you can purchase PUA (paid up additions) which can add to the cash value AND the death benefit over time.

                      The whole life company, if well run and a mutual company, also pays out dividends over time (which are essentially return of premium but are also tax free). These dividends can also be used to purchase more PUAs or cashed out for personal use.

                      The premiums in this product do not go up.

                      Since there is a guaranteed rate of return on the cash value, the premiums can be paid from this.

                      Variable relies on other investments to pay the premiums, which can fluctuate as you age.

                      They are NOT THE SAME PRODUCTS.

                      This is why I don’t listen to other MDs on financial services these days, sadly. Most of them dont even understand what they have bought, and then act like they do. Cheers.

                       
                      Thats not quite correct.   
                      In whole life insurance, the premiums typically do not change over the life of the policy, as long as you continue to pay them as scheduled. (Premiums on VULs do not go up either. The premium in a VUL is fixed and later is optional). [i]The COI on both go up.  [/i]

                      While the premiums remain constant, the cost of insurance [i]does[/i] change over time in whole life insurance.The cost of insurance refers to the portion of your premium that covers the actual insurance risk, providing the death benefit to your beneficiaries when you pass away. This cost is calculated based on actuarial tables that consider mortality rates and other factors.   

                      In the early years of a whole life insurance policy, the cost of insurance is relatively low because the policyholder is typically younger and less likely to die. As the policyholder ages, the cost of insurance increases because the risk of death naturally rises with age. Additionally, the insurance company may invest a portion of your premiums to help cover future costs, which can also affect the overall cost of providing coverage.   

                      To compensate for the increasing cost of insurance, the premium remains level over time. The excess premium payments made in the earlier years help to cover the higher cost of insurance in the later years, creating a level average cost over the life of the policy.   
                        
                       In VULs, instead of investing In stocks and bonds, one can put the money into the companys fixed account, which pays an intersect rate, similar to a whole life policy. Often, insurance agents, who often collect a hefty commission to sell a policy, obscure important facts about whole life or VULs – that the COI on pays for the death benefit goes up even though premiums are unchanged. 
                      One interesting thing that can be done with a VUL or whole life policy if one does not need life insurance anymore is do a 1035 exchange into an income annnuity. That way taxes can be deferred longer. 

                        

                    • Unknown Member

                      Deleted User
                      July 27, 2023 at 6:23 pm

                      Quote from DOCDAWG

                      Additionally,

                      The premiums in whole life remain fixed throughout your life and the cash value of the policies have a guaranteed internal growth rate (between 3-5%). So once, the cash value hits a certain value, the premiums can be paid from the growth of the cash value.

                      Since, the premium in whole life is fixed, the cost of insurance in that specific whole life policy does not vary. It can vary or change in variable life, based on what you chose to invest in. Plus, in variable life, from my understanding at least (I don’t own any), both the fees and premium are NOT FIXED. That’s a big, fundamental difference between the two products.

                      Also, if you choose, you can purchase PUA (paid up additions) which can add to the cash value AND the death benefit over time.

                      The whole life company, if well run and a mutual company, also pays out dividends over time (which are essentially return of premium but are also tax free). These dividends can also be used to purchase more PUAs or cashed out for personal use.

                      The premiums in this product do not go up.

                      Since there is a guaranteed rate of return on the cash value, the premiums can be paid from this.

                      Variable relies on other investments to pay the premiums, which can fluctuate as you age.

                      They are NOT THE SAME PRODUCTS.

                      This is why I don’t listen to other MDs on financial services these days, sadly. Most of them dont even understand what they have bought, and then act like they do. Cheers.

                       
                      Thats not quite correct.    
                      In whole life insurance, the premiums typically do not change over the life of the policy, as long as you continue to pay them as scheduled. (Premiums on VULs do not go up either. The premium in a VUL is fixed and later is optional). [i]The COI on both go up.  [/i] 

                      While the premiums remain constant, the cost of insurance [i]does[/i] change over time in whole life insurance.The cost of insurance refers to the portion of your premium that covers the actual insurance risk, providing the death benefit to your beneficiaries when you pass away. This cost is calculated based on actuarial tables that consider mortality rates and other factors.    

                      In the early years of a whole life insurance policy, the cost of insurance is relatively low because the policyholder is typically younger and less likely to die. As the policyholder ages, the cost of insurance increases because the risk of death naturally rises with age. Additionally, the insurance company may invest a portion of your premiums to help cover future costs, which can also affect the overall cost of providing coverage.    

                      To compensate for the increasing cost of insurance, the premium remains level over time. The excess premium payments made in the earlier years help to cover the higher cost of insurance in the later years, creating a level average cost over the life of the policy.    
                         
                       In VULs, instead of investing In stocks and bonds, one can put the money into the companys fixed account, which pays an interest rate, similar to a whole life policy. Often, insurance agents, who often collect a hefty commission to sell a policy, obscure important facts about whole life or VULs – that the COI on pays for the death benefit goes up even though premiums are unchanged.  
                      One interesting thing that can be done with a VUL or whole life policy if one does not need life insurance anymore is do a 1035 exchange into an income annnuity. That way taxes can be deferred longer.  

                    • 22002469

                      Member
                      July 27, 2023 at 7:34 pm

                      Removing the sketchy whole life policies with salesman getting big commissions

                      Assuming a good policy, is there still reason to get one over term life insurance + appropriate low risk investing?

                      I dont understand the appeal.

                    • Robbro524_990

                      Member
                      July 27, 2023 at 10:02 pm

                      Are you really now arguing that because younger people have less of a risk of death (as do older people) that I should really care what the cost to the insurance company is for the death benefit coverage, as long as my premiums and death benefits are set in stone over time?

                      Yea, I personally couldn’t care less if it costs the insurance company more for my death benefit over time, as long as they stay solvent and my death benefit is locked in. I mean, anyone who has ever bought term knows that the cost of term life insurance goes up over time for the same reasons.

                      So, why would you not lock in whole life insurance with fixed premiums while you are younger?

                      And, yes, 1035 exchanges can be done between whole life policies as well. I’ve done that too. No big deal.

                      The bottom line is that one’s personal cost of insurance (premiums) do not change in whole life over time.

                      And, no, I don’t care at all if the costs to the insurance companies change. That’s up for them to manage, as they are HEAVILY regulated by states to ensure that they can pay out death benefits. Plus, I don’t own any VUL and never will.

                      But, to each their own.

                    • abd.fawzi_217

                      Member
                      July 27, 2023 at 10:46 pm

                      Uh, you wouldn’t want whole life insurance because you spend way too much on a death benefit compared to term and the investment returns that go with it are atrocious. And it’s stupid to insure against things that aren’t catastrophes – like dying when you’re 95 years old.
                       
                      I’m curious what you mean when you talk about WCI’s intelligence. Seems pretty smart to me and is probably more financially successful than 99% of docs.

                    • Unknown Member

                      Deleted User
                      July 28, 2023 at 2:12 pm

                      Quote from Radsoxfan

                      Removing the sketchy whole life policies with salesman getting big commissions

                      Assuming a good policy, is there still reason to get one over term life insurance + appropriate low risk investing?

                      I dont understand the appeal.

                      Not great reasons, mostly personal preference.
                      Maybe for:
                      For people who have difficulty saving money and also need life insurance.
                      To have asset protection of the cash value of the policy (if your state law allows it).
                      For super savers who have maxed out all pension or IRA contributions, want more tax deferred savings, and need life insurance.

                      To get the best deal out of whole life or universal life insurance, buy no load, low fee, commission free policies.
                      Also be aware that states guarantee the cash value of life insurance and annuities through state guarantee associations. This coverage is in case the insurance company holding your policy goes bankrupt. The coverage has dollar limitations, varying by state.
                       
                       

                    • Robbro524_990

                      Member
                      July 28, 2023 at 4:04 pm

                      That’s good advice in my opinion.

                      Look, maybe the WCI is a swell guy, but his advice seems pretty cookie cutter / vanilla to me. Perhaps, he can keep you from making a huge financial mistake. Maybe.

                      If so, that might be worth paying some attention to.

                      But, I’ll just say this – how do you expect to get a great result in financial matters (or anything for that matter) by just following herd type behavior and advice? Especially if the advice is free, or at least, without difficulty in acquiring said knowledge.

                      I don’t buy that his approach will work well for everyone.

                      Everyone is different. What works for me may not necessarily work for you. Do your own research. Do the work.

                    • abd.fawzi_217

                      Member
                      July 28, 2023 at 11:52 pm

                      Why would you expect that great results must necessarily be complicated?
                      Eat less and work out, you’ll look better. Pretty simple and also true.
                       
                      Similarly, save a good chunk of money and chuck it into the greatest passive wealth-building machine created… the stock market. And do it in retirement accounts to save money and protect your assets. You will get an excellent financial result far above most people by doing that, despite how simple it is, no questions asked.
                       
                      Avoiding index funds and searching for some complicated strategy in hopes to outperform the market is a bad plan imo

                    • Unknown Member

                      Deleted User
                      July 29, 2023 at 10:24 am

                      What funds do you suggest sir

                    • abd.fawzi_217

                      Member
                      July 29, 2023 at 12:00 pm

                      For stocks you just need some combo of international and us stock index funds, so something like VTIAX and VTSAX. You can debate the exact allocation until the cows come home but something like 100% VTSAX to 100% VTWAX (simple one fund solution exposure to entire world at market cap) are easily reasonable.
                       
                      Bonds are a little trickier since they’re affected so much by interest rates and if you want that money safe in the short term but you buy long-term bonds, and you get an environment like now with rapidly rising interest rates you’re gonna get hammered. Important to match your duration with the bond’s duration since EVENTUALLY bonds will recover due to being invested at these new increased interest rates but you want that to match your timeline so you can hold out.
                       
                      Good discussion on bonds by a smart guy here: [link]https://www.whitecoatinvestor.com/bond-funds/[/link]
                       
                      And of course you should preferentially be investing in retirement accounts over taxable investment accounts, because deferring taxes at 37%+ and then paying them when you take them out instead at 0, 10, 12, 22, 24% etc is essentially free money. You should be able to get 66k in your 401k, 13k for you/wife in backdoor roth ira, plus if you’re 1099 look into a cash balance plan where you can get another 100-200+ per year deferred depending on your age.
                       

                    • Robbro524_990

                      Member
                      July 29, 2023 at 1:19 pm

                      The advice should depend on the financial goals and age of the individual in question. Not that I take everything Dave Ramsey says to heart, but if you want to really get ahead financially, you’d probably be better off in this environment paying off any and all high interest debt that you have rather than investing in over-priced assets. I bet some of these over-priced assets might be cheap or at least cheaper in a few years.

                      Plus, since the average American household pays 30% of their net income to debt related interest, it makes sense to pay down debt in this market first (especially if you can assume the debt yourself and pay yourself back like you would a bank). I don’t like giving advice, though, because things change so quickly these days.

                    • Robbro524_990

                      Member
                      July 29, 2023 at 1:21 pm

                      I’ll check back with these people in 5 or 10 years on the index fund idea too. Something tells me that they might be have a different tune if capital flows reverse in these funds due to Boomers being net sellers for once in 40 years.

                    • abd.fawzi_217

                      Member
                      July 29, 2023 at 2:24 pm

                      I mean I seriously hope radiologists dont have high interest debt, yes other than the match that should be paid down before investing.

                      Trying to figure out when assets are overvalued or undervalued and either buying them or paying down debt based on what you think is going to happen is a losers game. Timing the market is alluring but doesnt work. You should come up with a plan that you can stick to no matter what is going on in the world.

                      5-10 years isnt super long for equities, more like 20-30 years, but I bet in 5-10 years the market will be higher than it is today.

    • midwestrad2

      Member
      August 2, 2023 at 7:36 am

      Quote from BoneAge

      I have 5, evenly split between term and whole.

      I dont think whole life is a scam, but to each their own. I view it as part of the estate and also the fixed income portion of my portfolio (everything else is stock). Tough to beat the guaranteed death benefit which would most likely happen sometime after your term policy ends.

       
      I agree. I love my whole life policy. I have 3 mill term, 1 mill whole. The 1 mill whole I got very early on and it was essentially forced savings. I wouldn’t have put an equal amount into any other investment that early on in my career most likely. Now, it has a large cash value of around 400k. The yearly dividend is nice and the policy grows in cash value by a much larger amount than what I put into it every month. It’s a fixed income investment. I still put more every month into my other investments, stocks, etc, now that I’m older and make more and have paid off my loans etc.
       
      Plus, with the cash value I can borrow against it when I do things like invest in real estate. The loan you have out against your cash value doesn’t show up on your credit score. So, you can use it and be your own banker. 

      • abd.fawzi_217

        Member
        August 2, 2023 at 11:18 am

        What’s the rate of return been on the cash value part of your policy?
         
        You can also borrow against other things like your house or taxable investment account. And is your credit score really a worry?

        • Robbro524_990

          Member
          August 2, 2023 at 12:32 pm

          Of course, it takes someone from the Midwest to explain to all these doubters how good a high cash value whole life policy can really be. People in my region would probably just blow their cash value on liquor and prostitutes anyway (and let the policy lapse as well).

          As stated above, these policies can be very good, if structured correctly. But, most people aren’t disciplined enough (or know enough) to take full advantage of their utility, unfortunately.

          • midwestrad2

            Member
            August 2, 2023 at 1:13 pm

            Ha. Thanks.
            If you can start one young I think it’s worth it as a small part of your overall portfolio. I wouldn’t advise to do it instead of other investments. Do it in addition to other investments.  In my early 30’s when I got the whole life policy I wouldn’t have been disciplined to invest an equal amount into the market and never touch the cash that would build up in that account.
             
            The whole life policy is a fixed income part of my portfolio. It grows tax deferred. I can borrow against the cash value if I need cash for a sudden good real estate investment for example. It is also creditor protected, including from malpractice lawsuits.
             
            Also, term life insurance is cheap when you are young, but rises in cost as you age. So, if you want a cheap life insurance policy in your 50’s and 60’s, your whole life policy would be free by that point, but the term would be very expensive. So as I start stripping away the term insurance I’ll always have the whole life policy that will have the death benefit plus the increasing cash value.