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Cash Value Life Insurance #4078289
02/06/24 07:03 AM
02/06/24 07:03 AM
Joined: Jan 2014
Posts: 10,472
Scottsboro, Al
J
jbatey1 Offline OP
Lucky Bastage
jbatey1  Offline OP
Lucky Bastage
J
Joined: Jan 2014
Posts: 10,472
Scottsboro, Al
I know it’s always been around, but all of a sudden it seems like everyone is pushing it.

I’ve got a group trying to sell it on me as a form of financial planning/wealth building. I’ll be honest, I don’t know much about it and every time I read about it or study it, I can’t find anything decisive to sway my mind away from what I was always told about it growing up. (Just buy term and invest the extra). I also don’t like dabbling in things that I have no knowledge in.

What do the Aldeer experts say about it?


The fool tells me his reasons; the wise man persuades me with my own.
Re: Cash Value Life Insurance [Re: jbatey1] #4078292
02/06/24 07:24 AM
02/06/24 07:24 AM
Joined: Aug 2018
Posts: 5,788
Georgia and Missouri
Semo Online content
12 point
Semo  Online Content
12 point
Joined: Aug 2018
Posts: 5,788
Georgia and Missouri
A form or portion of permanent life is usually a good thing. But, unless you have a high net worth or really high income using insurance as an investment is a bad idea.

Re: Cash Value Life Insurance [Re: Semo] #4078299
02/06/24 07:37 AM
02/06/24 07:37 AM
Joined: Jan 2014
Posts: 10,472
Scottsboro, Al
J
jbatey1 Offline OP
Lucky Bastage
jbatey1  Offline OP
Lucky Bastage
J
Joined: Jan 2014
Posts: 10,472
Scottsboro, Al
Originally Posted by Semo
A form or portion of permanent life is usually a good thing. But, unless you have a high net worth or really high income using insurance as an investment is a bad idea.




Define “form or portion of”. At what net worth or income level does it make sense? Or is that dependent on so many individual things?


The fool tells me his reasons; the wise man persuades me with my own.
Re: Cash Value Life Insurance [Re: jbatey1] #4078301
02/06/24 07:39 AM
02/06/24 07:39 AM
Joined: Dec 2013
Posts: 22,743
Lickskillet, AL
Irishguy Offline
a.k.a. Dingle Johnson
Irishguy  Offline
a.k.a. Dingle Johnson
Joined: Dec 2013
Posts: 22,743
Lickskillet, AL
As a person who's about to retire early at 62 years old with a larger income than when I was working...

I would say:

1. Save up an emergency fund.
2, Pay off debt.
3. Work up to maxing out your 401k contributions.
4. Start putting what extra money you have after that into high yield savings and CD's.

The only life insurance you need is when you are young and have kids and that needs to be a term life policy. It is to make sure your family will be financially secure if something unexpected should happen to you. Once you get older and your kids are grown and all of the above savings are held jointly with your wife, then all you need is a term policy big enough to pay for your funeral should you go first.

Re: Cash Value Life Insurance [Re: jbatey1] #4078308
02/06/24 07:48 AM
02/06/24 07:48 AM
Joined: Nov 2013
Posts: 2,750
Prattville Al.
C
capehorn24 Offline
10 point
capehorn24  Offline
10 point
C
Joined: Nov 2013
Posts: 2,750
Prattville Al.
^^^^This^^^^

Close down the thread

Last edited by capehorn24; 02/06/24 07:50 AM.
Re: Cash Value Life Insurance [Re: jbatey1] #4078328
02/06/24 08:22 AM
02/06/24 08:22 AM
Joined: Jan 2020
Posts: 1,819
Marshall County
Wapiti55 Online content
8 point
Wapiti55  Online Content
8 point
Joined: Jan 2020
Posts: 1,819
Marshall County
Those that push them are the ones benefiting from the sale.

Re: Cash Value Life Insurance [Re: jbatey1] #4078335
02/06/24 08:33 AM
02/06/24 08:33 AM
Joined: Sep 2007
Posts: 7,753
Hartselle, AL
trlrdrdave Offline
14 point
trlrdrdave  Offline
14 point
Joined: Sep 2007
Posts: 7,753
Hartselle, AL
It's what they make the most money on. Term and invest the rest is always the answer. Except for maybe 1% of people. Spend 100 a month on whole life you die you get the benefit. You live you get the cash value. Buy term and invest the rest and you keep both if you die. If you live you make multiples of the cash benefit. Don't do it.


"In time of war, send me all the Alabamians you can get, but in time of peace, for Lord's sake, send them to somebody else." General Edward H. Plummer

"Blessed are those who, in the face of death, think only about the front sight." Jeff Cooper
Re: Cash Value Life Insurance [Re: jbatey1] #4078338
02/06/24 08:37 AM
02/06/24 08:37 AM
Joined: Nov 2011
Posts: 2,258
Alabama
B
bama_earl Offline
8 point
bama_earl  Offline
8 point
B
Joined: Nov 2011
Posts: 2,258
Alabama
Basically what Irish said but I made some changes:

I would say:

1. Save up an emergency fund.
2, Pay off debt.
3. Work up to maxing out your 401k contributions.
4. Start putting what extra money you have in an ETF that tracks the S&P 500.

Re: Cash Value Life Insurance [Re: jbatey1] #4078342
02/06/24 08:43 AM
02/06/24 08:43 AM
Joined: Oct 2000
Posts: 7,739
Lee County
R
RCHRR Offline
14 point
RCHRR  Offline
14 point
R
Joined: Oct 2000
Posts: 7,739
Lee County
Whole life insurance is a waste. Life insurance is not an investment. Follow Irish’s suggestions. Pretty much parallels Dave Ramsey.

Re: Cash Value Life Insurance [Re: jbatey1] #4078344
02/06/24 08:50 AM
02/06/24 08:50 AM
Joined: Oct 2009
Posts: 6,122
Henry county
coldtrail Online content
12 point
coldtrail  Online Content
12 point
Joined: Oct 2009
Posts: 6,122
Henry county
If I end up in extended care I want enough life insurance for my family Is able to recoup those expenses when I die.


"And the days that I keep my gratitude
Higher than my expectations
Well, I have really good days" Ray Wylie Hubbard
Re: Cash Value Life Insurance [Re: bama_earl] #4078355
02/06/24 09:03 AM
02/06/24 09:03 AM
Joined: Dec 2013
Posts: 22,743
Lickskillet, AL
Irishguy Offline
a.k.a. Dingle Johnson
Irishguy  Offline
a.k.a. Dingle Johnson
Joined: Dec 2013
Posts: 22,743
Lickskillet, AL
Originally Posted by bama_earl
Basically what Irish said but I made some changes:

I would say:

1. Save up an emergency fund.
2, Pay off debt.
3. Work up to maxing out your 401k contributions.
4. Start putting what extra money you have in an ETF that tracks the S&P 500.


That is a good plan too, but all our 401k money is in investments that mirror the S&P 500 and I wanted cash that was more liquid in case a real estate investment opportunity appears that we want to invest in and renovate, but currently the real estate market is not contusive to investment so I parked all that money in 3 large CD's and those are stair stepped with one maturing every 6 months. One 6 month, one 12 month and one 18 month and all of those are earing over 5% each. We're puling in about $1500 a month just off of those 3 CD's and all of them are FDIC insured. So it's a safe place to park some cash. I'm only 2 months from retirement.

We will probably use those CD's and the savings as extra income until we are forced to start taking money from our 401k plans due to the RMD's.

Re: Cash Value Life Insurance [Re: Irishguy] #4078358
02/06/24 09:06 AM
02/06/24 09:06 AM
Joined: Dec 2004
Posts: 19,031
.
ford150man Offline
Old Mossy Horns
ford150man  Offline
Old Mossy Horns
Joined: Dec 2004
Posts: 19,031
.
Originally Posted by Irishguy
As a person who's about to retire early at 62 years old with a larger income than when I was working...

I would say:

1. Save up an emergency fund.
2, Pay off debt.
3. Work up to maxing out your 401k contributions.
4. Start putting what extra money you have after that into high yield savings and CD's.

The only life insurance you need is when you are young and have kids and that needs to be a term life policy. It is to make sure your family will be financially secure if something unexpected should happen to you. Once you get older and your kids are grown and all of the above savings are held jointly with your wife, then all you need is a term policy big enough to pay for your funeral should you go first.


Great advice here. ^^


If voting made any difference, they wouldn’t let us do it.-Mark Twain
Re: Cash Value Life Insurance [Re: Irishguy] #4078363
02/06/24 09:14 AM
02/06/24 09:14 AM
Joined: Nov 2015
Posts: 21,456
HSV AL
jmudler Offline
Freak of Nature
jmudler  Offline
Freak of Nature
Joined: Nov 2015
Posts: 21,456
HSV AL
Originally Posted by Irishguy
As a person who's about to retire early at 62 years old with a larger income than when I was working...

I would say:

1. Save up an emergency fund.
2, Pay off debt.
3. Work up to maxing out your 401k contributions.
4. Start putting what extra money you have after that into high yield savings and CD's.

The only life insurance you need is when you are young and have kids and that needs to be a term life policy. It is to make sure your family will be financially secure if something unexpected should happen to you. Once you get older and your kids are grown and all of the above savings are held jointly with your wife, then all you need is a term policy big enough to pay for your funeral should you go first.


Sound advice. I would get emergency fund to at least 3 months pay. American Express is doing ~4.5% and a nice place to park the emergency fund. Can access money in 48 hrs. I am 52 and 3 years ago stopped paying life insurance.

Last edited by jmudler; 02/06/24 09:14 AM.

Isaiah 5:20 Woe to those who call evil good and good evil, who put darkness for light and light for darkness, who put bitter for sweet and sweet for bitter.
Re: Cash Value Life Insurance [Re: Irishguy] #4078377
02/06/24 09:43 AM
02/06/24 09:43 AM
Joined: Nov 2011
Posts: 2,258
Alabama
B
bama_earl Offline
8 point
bama_earl  Offline
8 point
B
Joined: Nov 2011
Posts: 2,258
Alabama
Originally Posted by Irishguy
Originally Posted by bama_earl
Basically what Irish said but I made some changes:

I would say:

1. Save up an emergency fund.
2, Pay off debt.
3. Work up to maxing out your 401k contributions.
4. Start putting what extra money you have in an ETF that tracks the S&P 500.


That is a good plan too, but all our 401k money is in investments that mirror the S&P 500 and I wanted cash that was more liquid in case a real estate investment opportunity appears that we want to invest in and renovate, but currently the real estate market is not contusive to investment so I parked all that money in 3 large CD's and those are stair stepped with one maturing every 6 months. One 6 month, one 12 month and one 18 month and all of those are earing over 5% each. We're puling in about $1500 a month just off of those 3 CD's and all of them are FDIC insured. So it's a safe place to park some cash. I'm only 2 months from retirement.

We will probably use those CD's and the savings as extra income until we are forced to start taking money from our 401k plans due to the RMD's.



I got you. I have been a consultant for the past 7 years and just now rejoined a company 401k. Currently I am maxing out the company 401k and investing in my Fidelity accounts. It includes a Roth 401k and a Personal Investment Account. In the Roth 401k the Vanguard VOO and VTG funds have been really good to me. Been using them for about 15 years now. Personally only 25% of my funds are in the ETFs and the other in individual stocks. But I am 15+ years from retirement.

I do feel young couples should max out your company 401k and setup a personal investment account with someone like Fidelity. Even if you only put in $25 a month its a good way to start "thinking" about investments. I missed the real estate market before 2020 and had the money to invest. Too late now.

Re: Cash Value Life Insurance [Re: jbatey1] #4078382
02/06/24 09:50 AM
02/06/24 09:50 AM
Joined: Oct 2009
Posts: 6,122
Henry county
coldtrail Online content
12 point
coldtrail  Online Content
12 point
Joined: Oct 2009
Posts: 6,122
Henry county
Would it be better tax wise to draw the amount equal to your standard personal deduction out of tax deffered accounts then supplement out of taxable accounts as needed?


"And the days that I keep my gratitude
Higher than my expectations
Well, I have really good days" Ray Wylie Hubbard
Re: Cash Value Life Insurance [Re: jbatey1] #4078383
02/06/24 09:50 AM
02/06/24 09:50 AM
Joined: Jul 2011
Posts: 36,316
Boxes Cove
2Dogs Offline
Freak of Nature
2Dogs  Offline
Freak of Nature
Joined: Jul 2011
Posts: 36,316
Boxes Cove
Some of the old policies were good about building value. But I don't think anyone offers any really good ones now. We bought term life and when we had fat sums in our 401 , house paid off , kids gone we dropped them. You need something when you're young to secure your family . Later in life , if you've planned and saved correctly , not so much.



"Why do you ask"?

Always vote the slowest path to socialism.







Re: Cash Value Life Insurance [Re: 2Dogs] #4078409
02/06/24 10:24 AM
02/06/24 10:24 AM
Joined: Nov 2011
Posts: 2,258
Alabama
B
bama_earl Offline
8 point
bama_earl  Offline
8 point
B
Joined: Nov 2011
Posts: 2,258
Alabama
Originally Posted by 2Dogs
Some of the old policies were good about building value. But I don't think anyone offers any really good ones now. We bought term life and when we had fat sums in our 401 , house paid off , kids gone we dropped them. You need something when you're young to secure your family . Later in life , if you've planned and saved correctly , not so much.


My 20yr term-life runs out in 2026 and it costs me $24 a month and its $250,000. I bet that same policy is $75 a month now.

Re: Cash Value Life Insurance [Re: bama_earl] #4078412
02/06/24 10:32 AM
02/06/24 10:32 AM
Joined: Jul 2011
Posts: 36,316
Boxes Cove
2Dogs Offline
Freak of Nature
2Dogs  Offline
Freak of Nature
Joined: Jul 2011
Posts: 36,316
Boxes Cove
Originally Posted by bama_earl
Originally Posted by 2Dogs
Some of the old policies were good about building value. But I don't think anyone offers any really good ones now. We bought term life and when we had fat sums in our 401 , house paid off , kids gone we dropped them. You need something when you're young to secure your family . Later in life , if you've planned and saved correctly , not so much.


My 20yr term-life runs out in 2026 and it costs me $24 a month and its $250,000. I bet that same policy is $75 a month now.


My father in law had one from State Farm . When he died and my wife cashed it in the agent said they hadn't sold that kind for many years and it was the best life policy ever. At some point , it began paying it's own premium and still built a lot of value . It was really a good investment as what it paid off versus what he had actually paid was pretty good. I was really surprised how much $ it made. Of course those turned into a good thing and State Farm stopped selling them.



"Why do you ask"?

Always vote the slowest path to socialism.







Re: Cash Value Life Insurance [Re: jbatey1] #4078417
02/06/24 10:39 AM
02/06/24 10:39 AM
Joined: Aug 2018
Posts: 5,788
Georgia and Missouri
Semo Online content
12 point
Semo  Online Content
12 point
Joined: Aug 2018
Posts: 5,788
Georgia and Missouri
Why do you guys think term is so cheap?


Hint, hint.... it rarely pays out. Term is for protection. Permenant insurance is for wealth building and estate planning. Both are important, but the latter is rarely used outside of those that are focused on the next generations or very savvy tax planners.

Everyone with at least 1/2 million in assets should have 1 whole life policy even if it is very small. You never know if/when your estate might need the creation of a modified endowment contract or a lump of tax free money at death.

Plus, there are charitible trusts where you can really take advantage of giving and using life policies as vehicles to transfer wealth.

Life policies arent good. by themselves, but the tax law is what makes them benefitial.

For the average joe they are not good investment vehicles, but Ive never met anyone that was nearing death that said they wish they would have not purchased that life insurance.

Re: Cash Value Life Insurance [Re: 2Dogs] #4078421
02/06/24 10:45 AM
02/06/24 10:45 AM
Joined: Aug 2018
Posts: 5,788
Georgia and Missouri
Semo Online content
12 point
Semo  Online Content
12 point
Joined: Aug 2018
Posts: 5,788
Georgia and Missouri
Originally Posted by 2Dogs
Originally Posted by bama_earl
Originally Posted by 2Dogs
Some of the old policies were good about building value. But I don't think anyone offers any really good ones now. We bought term life and when we had fat sums in our 401 , house paid off , kids gone we dropped them. You need something when you're young to secure your family . Later in life , if you've planned and saved correctly , not so much.


My 20yr term-life runs out in 2026 and it costs me $24 a month and its $250,000. I bet that same policy is $75 a month now.


My father in law had one from State Farm . When he died and my wife cashed it in the agent said they hadn't sold that kind for many years and it was the best life policy ever. At some point , it began paying it's own premium and still built a lot of value . It was really a good investment as what it paid off versus what he had actually paid was pretty good. I was really surprised how much $ it made. Of course those turned into a good thing and State Farm stopped selling them.


It was probably a whole ife policy that he used the duvidend to pay premium and then to add death benifit. I have one that my parents bought me when I was a baby and I havent paid a premium since high school. It keeps growing though. I had a number of clients back when I was a financial. planner that hadnt paid for the last 30-40 years of their lives because of that feature. I had other clients that dumped in cash to these old policies to increase the death benefit.

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