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Old 06-27-2010, 01:06 PM   #21
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If you're not working, then if you die, your spouse's expenses will go down.
There are few more moving parts here. Maybe expenses will go down, but taxes will be higher due to filing single instead of MFJ. That change in filing status can also increase the amount of SS that is taxable. And finally, speaking of SS, if both spouses were receiving a SS check then the surviving spouse will lose the smaller of the two.

My mom's finances definitely tightened when my dad passed away for these reasons. Her expenses were lower, but not nearly so much lower that losing her SS check and seeing her income taxes nearly double because of single filing status didn't far more than offset the lower expenses.
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Old 06-27-2010, 05:36 PM   #22
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Most companies don't pay trail commissions on term insurance and the ones that do are like 2% and only for the first few policy years. The companies that DO pay trail commissions give you less in year one than other companies that don't pay trails.

So unless you're talking about a policy with a $100,000 annual premium, 2% isn't going to buy more than a lunch since the average premium is about $1000. If you're talking year 15 of a 20 year term policy here, there is no trail commission. Give it a rest with the "all insurance agents are only out for themselves" attitude.
And what are the trail commissions on UL and whole life, pray tell?

Some insurance agents treat their clients as if they had a fiduciary duty them. The rest (most of them) know very well which side their bread is buttered on.
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Old 06-27-2010, 10:38 PM   #23
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And what are the trail commissions on UL and whole life, pray tell?

Some insurance agents treat their clients as if they had a fiduciary duty them. The rest (most of them) know very well which side their bread is buttered on.
Again, if you're talking year 10+ on a policy, there is no trail commission left. Maybe on some whole life products there is a minimal trail commission, but I don't sell much whole life. Mostly UL for people who want to guarantee the death benefit forever. Most people just won't write the check needed to buy a whole life policy.

Years 2-7 on UL are usually around 2-3% of the annual premium, years 8-10 might be 1%. You seem to think agents are getting 25% trail commissions every year or something. Whole life would be more like 5-10%/year on years 2-10, but you also get much less in the first year, usually 50-70% of the annual premium versus 80-110% with term and UL.

If you are an independent agent and don't act in the best interest of your clients, you won't be in business very long.
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Old 06-28-2010, 12:56 AM   #24
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In any case, I always suggest that people in reasonably good health purchase at least a small insurance policy to cover final expenses ($25-100k depending on age). You have a 100% certainty of dying at some point. Are you better off paying for a funeral 100% out of your own pocket or paying for it little by little each year? As an example, $25k guaranteed forever on a 55 year old male in generally good health (preferred rates) would only be $436/year. Even by age 85 you've only spent $13k on the insurance and the benefits are tax-free.
$25K??! You gotta be kidding me. I'll be dead, not turned into a memorial with an endowment.

The point of not paying insurance premiums is to allow the savings to be invested/compounded to self-insure. I doubt I'd use up all my veteran's benefits on my death expenses, anyway, especially if spouse gets away with her plans for dying at home followed by body donation. If not then it'll cremation. Or maybe composting.

I think insurance to pay for funerals is not fiduciary. Even prepaid burial seems like fear marketing.
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Old 06-28-2010, 01:18 AM   #25
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$25K??! You gotta be kidding me. I'll be dead, not turned into a memorial with an endowment.

The point of not paying insurance premiums is to allow the savings to be invested/compounded to self-insure. I doubt I'd use up all my veteran's benefits on my death expenses, anyway, especially if spouse gets away with her plans for dying at home followed by body donation. If not then it'll cremation. Or maybe composting.

I think insurance to pay for funerals is not fiduciary. Even prepaid burial seems like fear marketing.
You have something with a 100% certainty of happening at some point. For anyone that plans on having a funeral, it will have to be paid for one way or another. You can pay for it with 100% of your own money, or pay for it with somebody else's money. $20-25k will probably be the going rate for a basic funeral in 20-30 years. If it's less than that, you left your family with some extra money.

Take the example of a 55 year old. If you actually saved $460/year for 30 years and earned 6% interest every year, you would have about $36k, or about the after-tax equivalent of $25k in life insurance. If you died any time between ages 55-85, you would have been better off with the life insurance. Can you guarantee a 6% return every year for 30 years? Maybe you'd get 8%. Maybe you wouldn't. However, you can guarantee the death benefit at a fixed cost. Everyone can make their own decision on which option they think is a better idea, but you shouldn't just dismiss it as nothing. It's not like we're talking huge sums of money here...believe me, I'm not making a living selling people $25k life insurance policies.
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Old 06-28-2010, 07:03 AM   #26
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OK, everyone who has had no major changes in their financial plans or lifestyle in 30 years, raise your hands...
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Old 06-28-2010, 07:24 AM   #27
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OK, everyone who has had no major changes in their financial plans or lifestyle in 30 years, raise your hands...
Funny, that's the exact reason most people need life insurance...things change that are completely unexpected (like divorce as mentioned earlier). Buy term and invest the difference....unless your ex-wife takes half!

Despite that, you are still 100% guaranteed to die some day and someone will have to pay for your funeral.
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Old 06-28-2010, 08:26 AM   #28
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Funny, that's the exact reason most people need life insurance...things change that are completely unexpected (like divorce as mentioned earlier). Buy term and invest the difference....unless your ex-wife takes half!

Despite that, you are still 100% guaranteed to die some day and someone will have to pay for your funeral.
Cute, but I was intimating that these are lapse supported products. So if you hold the policy for 30 years you do great, but the 95% of those who surrender early do a lot worse to make up the difference and provide a profit to the insurer (and commissions for the agent).
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Old 06-28-2010, 10:43 AM   #29
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Cute, but I was intimating that these are lapse supported products. So if you hold the policy for 30 years you do great, but the 95% of those who surrender early do a lot worse to make up the difference and provide a profit to the insurer (and commissions for the agent).
A guaranteed UL product is guaranteed to have a fixed premium for life. There is very minimal cash value to walk away with if it's ever surrendered (if any). So the only way you are going to lapse that product is to decide you no longer want to keep it or if you try taking loans against the policy, which is not what GUL is designed for.

People don't buy life insurance because they need it, they buy it because they want it. If someone else is going to pay for your expenses and you see no value in the insurance, that's fine, don't buy it. Some of our clients who have an estate tax problem don't care because they feel that the kids will get what they get and if they have to pay a tax, it's the kids' problem. Others want to pass everything to the kids and see the value in buying a policy to pay the estate tax. You can't force people to buy life insurance (unless you're a divorce lawyer, that is). You can only present the options and let them make that choice. I don't cold call people and tell them why they need insurance - the people buying something from us either call or e-mail because they're interested and want to buy it.
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Old 06-28-2010, 10:48 AM   #30
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A guaranteed UL product is guaranteed to have a fixed premium for life. There is very minimal cash value to walk away with if it's ever surrendered (if any). So the only way you are going to lapse that product is to decide you no longer want to keep it or if you try taking loans against the policy, which is not what GUL is designed for.

People don't buy life insurance because they need it, they buy it because they want it. If someone else is going to pay for your expenses and you see no value in the insurance, that's fine, don't buy it. Some of our clients who have an estate tax problem don't care because they feel that the kids will get what they get and if they have to pay a tax, it's the kids' problem. Others want to pass everything to the kids and see the value in buying a policy to pay the estate tax. You can't force people to buy life insurance (unless you're a divorce lawyer, that is). You can only present the options and let them make that choice. I don't cold call people and tell them why they need insurance - the people buying something from us either call or e-mail because they're interested and want to buy it.
It always easier to shear sheep that are docile.
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Old 06-28-2010, 03:11 PM   #31
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I'm with Brewer (and Nords). Cheaper to put away that money for the funeral in something not dogged with fees and hidden charges. Just have some cash set aside for the funeral and drop the LI.
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Old 06-28-2010, 03:20 PM   #32
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Despite that, you are still 100% guaranteed to die some day and someone will have to pay for your funeral.
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Just have some cash set aside for the funeral and drop the LI.
Like Sarah says. And my death expenses will be split between the U.S. taxpayers & UH's medical school.

I'm going to bow out of this thread now because I feel that I'm just feeding the troll...
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