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Old 09-04-2010, 03:54 PM   #1
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I can see someone that only had $250K being concerned about illness (healthcare expenses?), but that divorce item at the end of the quote is the real killer of a retirement plan IMHO.

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Even though more than one-third of affluent Americans have seen their finances take a hit from unexpected life events, still 70% don't think their retirement plan takes into account the potential for such emergencies, according to Merrill Lynch's Affluent Insights Quarterly study.

The study, which surveyed 1,000 individuals with at least $250,000 in investable assets, showed investors are most worried about a serious illness. Second to that, they fear another downturn, and that was followed by job loss and divorce.
Affluent Investors Feel Unprepared For Life Emergencies
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Old 09-04-2010, 04:57 PM   #2
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Wait.....so $250,000 in investable assets puts you in the category of affluent investor!?! Wow.
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Old 09-04-2010, 04:59 PM   #3
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No, that's just the minimum level to make you a target of low-end financial advisors.
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Old 09-04-2010, 08:16 PM   #4
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Wait.....so $250,000 in investable assets puts you in the category of affluent investor!?! Wow.
If you also have a paid for home and a pension (COLA'd or not) and SS then you are considerably more affluent than the average retiree.

As LOL pointed out, these surveys are primarily used to assist asset managers and financial advisers to market their services and (being charitable) to better understand what the affluent are looking for in terms of financial advice. The Merrill Lynch Cap Gemini World Wealth report makes interesting reading: Capgemini U.S. | World Wealth Report
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Old 09-04-2010, 08:57 PM   #5
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I can see someone that only had $250K being concerned about illness (healthcare expenses?), but that divorce item at the end of the quote is the real killer of a retirement plan IMHO.
And also the biggest reason that buy-term-invest-the-difference doesn't work.
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Old 09-05-2010, 12:36 AM   #6
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I don't understand this survey. No matter how affluent or not, I would be concerned about a prolonged illness, significant economic problems or divorce. If I have $250,000 invested, or $2 Million or $200 Million, these are all bad things that will affect me if they happen to me. Do the advisers claim to prevent such problems? This sounds like marketing masquerading as news in survey form.
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Old 10-19-2010, 02:57 PM   #7
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Wait.....so $250,000 in investable assets puts you in the category of affluent investor!?! Wow.
According to Federal Reserve Board data, the median networth of U.S. households in 2007 was $120K. And that $120K includes the value of your primary residence. So $250K in investable assets would make someone relatively, if not wildly, affluent.
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Old 10-19-2010, 03:05 PM   #8
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And also the biggest reason that buy-term-invest-the-difference doesn't work.

I am probably just slow on this and I certainly am not making any kind of political statement. I am also not questioning your statements validity. Could you provide a little more info so that I might could understand it better as the debate about term and whole life has always been of interest. again I am not trying to start anything just looking for the pros and cons of each.

Thank you,
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Old 10-19-2010, 03:30 PM   #9
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I don't understand this survey. No matter how affluent or not, I would be concerned about a prolonged illness, significant economic problems or divorce. If I have $250,000 invested, or $2 Million or $200 Million, these are all bad things that will affect me if they happen to me. Do the advisers claim to prevent such problems? This sounds like marketing masquerading as news in survey form.
You could say they are fishing, and the article is the bait. The question is, are you the fish?
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Old 10-19-2010, 03:33 PM   #10
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I am probably just slow on this and I certainly am not making any kind of political statement. I am also not questioning your statements validity. Could you provide a little more info so that I might could understand it better as the debate about term and whole life has always been of interest. again I am not trying to start anything just looking for the pros and cons of each.

Thank you,
Hopefully the reply was in jest - "whole life" will never give you one!
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Old 10-19-2010, 03:57 PM   #11
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Fisherman, I'm going to teach you everything you need to know about Whole Life Ins.
"Don't but it" Class dismissed!
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Old 10-19-2010, 07:49 PM   #12
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I am probably just slow on this and I certainly am not making any kind of political statement. I am also not questioning your statements validity. Could you provide a little more info so that I might could understand it better as the debate about term and whole life has always been of interest. again I am not trying to start anything just looking for the pros and cons of each.

Thank you,

This is from a blog post I wrote a few months ago:

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Many people believe in the old adage that you buy term life insurance and invest the difference. TV talk show hosts rave about it. Theoretically, if permanent life insurance (whole life or universal life) were to be purchased, it would cost you “x” number of dollars. If you bought term insurance for the same benefit, it would cost you a lost less. If you took the difference in cost between the two, invested it, and looked at the numbers at the end of the period selected for the purchase of a term insurance policy (such as 20 or 30 years), you would have accumulated a lot of money with the principle plus interest earned.

That process, however, does not allow any margin for error. Life also has a strange way of throwing a few curveballs that can drastically change your plans. For example:

Many people just plain don’t “invest the difference”. The money is available in the bank, so they spend it. At the end of the term period selected, there is no “investment” available to provide the dollars originally intended.

Many people have other needs that pop up and have to be addressed - braces for the children, vacations, car repairs, college education, etc. The money that was going to be set aside for “investment” has again been spent.

People get sick – heart attacks, cancer treatments, etc. When you stop working, your income suffers. If your income stops, you starting spending money from other resources, including the monies set aside for “investment”.

In today’s society, many people get divorced. After running along with the term insurance program for a certain number of years, the money that was set aside while “investing the difference” is now with the former spouse or greatly reduced.

The “investment” side went completely south or didn't perform as expected. As we have seen over the past couple of years, many investments have suffered serious declines due to economic issues. Even though much has been recovered in value recently, the reality is that these losses can happen again.

If you have lost value in your “investment” down the road, and you don’t have the dollars available as originally expected, how will your family survive? You will be much older when you come to the realization that the money saved is gone, and you have far less time to replace what you thought you were going to have as a resource. By that time, it may be too late to buy more life insurance.

The permanent insurance therefore serves as a safety net for family protection purposes. The proceeds upon death remain income tax free. If you happen to be more successful in your endeavors and hit the target accumulation of funds at retirement, you can always terminate the policy for whatever cash value might be available. If you have missed your target, the safety net serves as a replacement of the savings you weren’t able to secure on your own. The cost is minimal – the price you pay if you don’t have the safety net in place will be huge.
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Old 10-19-2010, 08:12 PM   #13
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The permanent insurance therefore serves as a safety net for family protection purposes.
So if you use the money for a simple investment, if you should get cancer, e.g., you can divert the money for your treatment. But if you buy insurance, you don't have that option. So you die for lack of treatment, and your family is better off. Am I following your argument?
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Old 10-19-2010, 08:14 PM   #14
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I think you could cash in the policy if it were absolutely necessary for treatment, but I'll let dgoldenz expand on precisely what he meant.
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Old 10-19-2010, 08:22 PM   #15
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So if you use the money for a simple investment, if you should get cancer, e.g., you can divert the money for your treatment. But if you buy insurance, you don't have that option. So you die for lack of treatment, and your family is better off. Am I following your argument?
The "safety net" referenced is the death benefit that replaces money spent on things just like that (cancer, chronic illness, long term care expenses, loss of investment value, ex-wife taking half your assets, etc). The point is that the buy-term-invest-the-difference strategy can work if everything in your life works out perfectly and nothing goes off track. I don't know of too many people who can say everything worked out as planned and never had any surprises or unexpected major expenses. I'm sure most people who post here are pretty different from your average person, but they aren't immune to life's curveballs either, probably just more well-prepared for them.

If your policy had a cash value, you could take a loan against the policy or cash out too. Most policies include an "accelerated benefit rider" that lets you take up to 25-50% of the death benefit while still living if you are diagnosed with a terminal illness. Critical illness policies that pay a lump sum in the event of cancer/heart attack/stroke/etc. are also becoming more popular.
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Old 10-19-2010, 08:34 PM   #16
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This is all Bologna! There is no need for anything but Term. The only bennefit if not buying Term is to the person selling it.

Taking loans against the policy. Stop it!
Investments falling in Value. Get a CD
Forget to invest the diff., What an idiotic statement. Right, lets pay too much money to an agent to support his/her family in case we forget to save.

These arguments turn my stomach. I was stupid enough to buy a few of these policies and they all ended in court paying me settlements.
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Old 10-19-2010, 08:43 PM   #17
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I don't even have term insurance anymore.
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Old 10-19-2010, 08:47 PM   #18
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This is all Bologna! There is no need for anything but Term. The only bennefit if not buying Term is to the person selling it.

Taking loans against the policy. Stop it!
Investments falling in Value. Get a CD
Forget to invest the diff., What an idiotic statement. Right, lets pay too much money to an agent to support his/her family in case we forget to save.

These arguments turn my stomach. I was stupid enough to buy a few of these policies and they all ended in court paying me settlements.

Sounds like you had a bad experience with a bad agent selling you "vanishing premium" whole life policies, if I had to guess....FYI I don't sell much whole life, mostly term and guaranteed universal life, which is basically term insurance guaranteed to age 121 and doesn't build cash value. It's also about half the price of a whole life policy with the same death benefit.

Easy for you to say there's no need for anything but term. Tell that to anyone's family who bought term, outlived the term or their conversion period, and became uninsurable or died. There's a reason we get quote requests for life insurance every day from people in their 60's and 70's (and some in their 80's).
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Old 10-19-2010, 08:57 PM   #19
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You are wrong, I wasn't sold a Whole Life Policy I was sold 3 of them. All 3 went to court and were with different agents. This all happened during a time when I had no idea what I was doing and trusted the agents. Whats the chances of getting 3 bad agents, could it be a trend?

All a bunch of BS, there is nothing you can say that will change my mind. Don't try to bring up some hypothetical situation and say what if. I feel sorry for anyone getting sucked into this scam and will always voice my opinion that it's nothing but a scam.
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Old 10-19-2010, 09:05 PM   #20
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This is from a blog post I wrote a few months ago:

Thank you for posting this. I wanted to here a thoughtful post from the otherside of the term life argument and this is a good one.
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