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tng4003 | Limit time payment whole life VS VUL? |
I would like to know limite year payment whole life (5years, 10yearss or 15years) VS VUL insurance, which one is better down the load and why? I don't consider term life in this point. the insuer age was 20 years old male. have 401k and roth IRA already.
Additional Details
male age was 30 year old, not 20 years, it type wrong.thanks. |
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apt p
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Of cause you will go with limit year payment whole life, I tell you why? whole lifre have a option that let you set it up for limite year, may be 10s or 15 years, after you finish contract years, your finish with you premium payment, you will enjoy the rest of your life for dividend cash flow and life coverage, but here is the point, you much buy from mutual life company and have a good paid dividend history on it, you don't want to buy from stock tread life insurance company because most dividend will pass to stock holder, not to your policy, you can loan your dividend cash value to do what you needed.
After you loan money out from policy, you will containue receive dividend from company because your dividend is come from mutual life company income, not from your cash value investment, that why, you buy only pay limite year and receive dividend for life time of the policy years, that is good.
Cash value can be use for any thing, you don't see any other insurance with cash value, like car or home owner insurance, if they do, you will save a lot of money down the load.
You don't want to buy term life along, you can have a both term and whole life togather, if you only have term life along, when you get old, you still need life insurance that time, you may not get insurance form insurance company, even you get it those, you have to pay high permium any way.
If you only buy term life and investment the different, song is good, but most people just spend it, beleive me, ask your self, if you have some money sit on the bank, you will come out something to spend one way or another.
VUL, forget about it, the cash value from VUL can not touch, if you loan out money from VUL cash value, you much pay back, other wise , your policy will die and cost of VUL insurance will keep increase until you die, so don't even think about that.
Hope that help you. |
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Doing the Right Thing
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A limited pay whole life is where the client pays lots of premiums now so that in the future, he doesn't pay anymore.
A VUL policy is where the portion of the premiums is invested in the market and the rest is paid toward the term insurance. The problem with all universal life policies is that the the cost of the term insurance goes up every year. That means less and less of the premiums goes toward the cash value and more goes toward the insurance. Later on, all the premiums are going toward insurance and the cash value starts to go down.
In the long run, whole life will be better than VUL if the client can afford it.
But personally, I would sell a 30 year term insurance so that the client can afford the right amount of coverage for a very low cost and have the client decide where he wants to save his money. I would also look at his Roth IRA and see if I can offer better investments. I would teach him about the Dollar Cost Averaging concept. Most of my clients invest using the DCA concept. That's what I would do anyway.
It makes no sense to bundle savings and life insurance together in one policy. Why? While he lives, he can borrow the cash value anytime and pay loan interest on it OR he can surrender the policy in the future and pay surrender charges on it. If he dies, the beneficiary only gets the death benefit and the insurance company keeps all the cash value (unless he choose the death benefit option that includes the cash value). Why is it that only life insurance has a savings plan in it and no other types of insurance such as car or homeowner insurance don't? |
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Quixotic
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Far better off with term insurance, and investing the difference between what you would have paid for whole life and term in mutual funds. |
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aaron p
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Let's see, the whole life hinges on the performance and experience of one company whereas the VUL will allow them to diversify according to their risk tolerance....
Seriously though, make sure that if they are absolutely sold on doing this instead of just holding a regular non-qual account, they understand the importance of the annual review. Sometimes, the impact on performance with the mortality and admin costs are higher than the subaccounts. |
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Zarnev
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Given the history of the market the rate of return should be better over time with the VUL. As a plus, should he ever have the need, he could vary his premium. |
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Mark S
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I just have to ask why term life would not be considered? At the age you specify, 30, term should be the only consideration. Why? Because, for less money that limit year pay whole life AND VUL, you can get more coverage and pay less with term. The difference between term and the other two you invest in well managed mutual funds, on your own. What you are told in the presentation for whole lifwe and vul are POSSIBILITIES.
Very few whole life policies will pay out any more than one to four percent interest. Thateven takes into account that you have NO money in the cash value for the first two years. Oh yeah, even though the cash value is YOURS, the company will charge you between 6-8% to borrow your own money AND they DO NOT have to give you your money for up to six months, their discretion. And for the piece de resistance, when you die your survivors will receive the face valu or the cash value, NOT both. Oh, unless you pay for that right up front, but then it costs you more in premiums if you want BOTH your cash value and face value paid out.
Just thought I would lay out why I don't like cash value. |
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