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  #37  
Old 02-23-2010, 10:27 AM
bdunklau bdunklau is offline
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cutting through all the hype...

There's a lot of hype about this strategy, but it all boils down to this question:

Where do you want to put your savings?

You have to save money somewhere.

All things being equal, do you want that savings to support a death benefit or not?


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  #38  
Old 02-23-2010, 11:42 AM
ihatescams61 ihatescams61 is offline
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Re: Bank on Yourself?

What was the face amount of this policy? And if it is too much of an infringement of personal info, what is your approximate age?

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  #39  
Old 02-23-2010, 12:15 PM
bdunklau bdunklau is offline
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Re: Bank on Yourself?

Quote:
Originally Posted by ihatescams61 View Post
What was the face amount of this policy? And if it is too much of an infringement of personal info, what is your approximate age?
The face amount was just under $400,000.

I got the policy when I was 34 in perfect health.

I'm now 39, health not as good. I probably wouldn't qualify for the super-terrific-ultimate-preferred rate.

They'd probably ding me for high cholesterol.

Your health will have on impact on the time it takes for the policy to become self-sustaining. I believe 5 years is the minimum amount of time.

But even before that, you have access to some of your money. I say some because you will be upside down in the policy up until the 7th year or so.



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  #40  
Old 02-23-2010, 04:56 PM
ihatescams61 ihatescams61 is offline
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Re: Bank on Yourself?

Thanks for the info. I have prided myself on being an objective person. This strategy does make sense for a certain income and discipline level. For most of America who would rather drive nice cars and have hefty payments, have Iphone's and HD televisions, their mind and money is elsewhere. They do not live within their means. I lost my job and am lucky to have a reserve fund and UE benefits for now. For those who have the limited budget and need insurance, term is the way to go. Hopefully they also fully fund the 401K or IRA.

This Bank on Yourself is not bad at all for those who have a decent amount of extra money to save each month. My two cents worth.

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  #41  
Old 07-26-2010, 01:15 PM
AmandaHoney AmandaHoney is offline
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Re: Bank on Yourself?

I am surprised you only pay $60,000 and get a $400,000 insurence and get such high cash value and never need pay after this? somebody quote to a 39 years women for 250,000 death benifit has to pay 15 years same amount as yours per year. how come your police so cheap? which company your are with?

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  #42  
Old 09-02-2010, 02:47 PM
CWILSON.CFA CWILSON.CFA is offline
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Re: Bank on Yourself?

This whole BOY thing is a complete scam; it is always advertised as a way to avoid "wall street risk", which is to say, a way for your money to not be lost in the stock market. The BOY point is to tap into the risk aversion that is natural to most unsophisticated people. Their goal is to get you scared, or thinking that somehow you can avoid risk- well guess what?- it's all a scam to sell you life insurance! Yes, the kind of insurance that is going to make someone a fat commission check. This is not a post about the pros/cons of life insurance; its about how these BOY people are scamming the public.

So you think your money is out of the hands of wall street in these guaranteed & insured strategies? Guess again! Where do you think these life insurance companies put your money? In a safe box wrapped in tape with your name on it? Nope; they put it in their general account, which is an insurance companies "bank account". Their general account is then invested in a mixture of various assets, generally bonds (mortgage, treasuries, high yield etc) stocks and even derivatives.

Based on various actuarial & statistical measures and assumptions, they make money on the spread between the cost of ******* their operations & paying out benefits (claims, loans etc). Well these bonds have various degrees of risk: credit, duration, liquidity etc, which they generally manage in a prudent manner due to regulations. However, there are cases where they can get caught by market forces, this is what happened to Lincoln Financial & The Hartford, their general accounts got whacked and they needed bailout cash. Without that cash they could have put their policy holders at risk. They got caught holding tons of Lehman Brothers' bonds!!

And who do you think is issuing the bonds these insurance companies lend their general account monies to? Corporate America, the same corporate America these salespeople want you to be afraid of!. We'll if a company sucks, it won't pay its debt, and it's bonds will default. So their is a correlation between good corporate balance sheets and their ability to pay their obligations (bonds).


The reason why the snake oil sales people pitching BOY, say your money is "safe & insured" is because in return for your cash, you receive a promise, a policy, which is backed by the claims paying ability of the issuer. But this concept is misrepresented when these salespeople make clients believe that their putting their money in "risk-less" strategies and that someone how they can stick it to the man by avoiding taxes on loans etc. While loans from insurance contracts are generally not considered income, they can however, create traps where the costs of insurance can trigger additional premium needs & if you're using this as a bank account, then think of it as a run on your checking. If you can't plug the whole, then the policy can lapse & create tax traps.

Furthermore, the salespeople never really tell you about the built in cost of insurance, and how this affects cash values etc. Instead the make you believe that you're getting these fat dividends, well guess what- it's your own money- generally you're overpaying and hoping to receive the overpayment as dividends. Don't fall for the "mutual company" pitch either, this is just superficial attempt to make their products more credible. Mutual companies, while owned by their policy holders, are exposed to the same risk as stock companies; i would even argue that a stock company due to its disclosure requirements has to act more prudent than a mutual one that doesn't have to report as much.

Listen people, you're getting ripped off- stay away from this garbage. The purpose of insurance is to transfer pure risks to a carrier for a premium; it's not a tax efficient savings or investment vehicle for you- it may be for the salespeople, to whom you represent the investment- you're ******* their wealth! You are their savings account!!! And to the author of these books, who are making money on selling you to the salespeople.

The best thing you can do, is work with a credible financial professional with the knowledge & expertise to help you. Look for someone who is a CERTIFIED FINANCIAL PLANNER or a CHARTERED FINANCIAL ANALYST; a planner or advisor should use a holistic methodology that addresses your concerns, not focuses on pitching products.

CAVEAT EMPTOR!!

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  #43  
Old 09-02-2010, 02:53 PM
CWILSON.CFA CWILSON.CFA is offline
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Re: Bank on Yourself?

oh and more thing, stay away from the people pitching around 3 letter diploma mill acronyms to make themselves sound credible.

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  #44  
Old 09-03-2010, 04:09 AM
bdunklau bdunklau is offline
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Re: Bank on Yourself?

Quote:
Originally Posted by AmandaHoney View Post
I am surprised you only pay $60,000 and get a $400,000 insurence and get such high cash value and never need pay after this? somebody quote to a 39 years women for 250,000 death benifit has to pay 15 years same amount as yours per year. how come your police so cheap? which company your are with?
Lafayette Life

And my death benefit is up around $560,000 now

I don't know why I'm paying less than you were quoted, but I'll guess that it's because you were pricing straight whole life with no riders.


Last edited by bdunklau : 09-03-2010 at 04:25 AM.
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  #45  
Old 09-03-2010, 04:24 AM
bdunklau bdunklau is offline
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Re: Bank on Yourself?

Quote:
Originally Posted by CWILSON.CFA View Post
This whole BOY thing is a complete scam...

CAVEAT EMPTOR!!
You fail to realize something which is surprising given the 3 letter acronym in your signature:

Most financial advisors would agree that it is wise to establish an emergency fund of about 3-6 months worth of expenses. If you did that, where would you put that money?

Some people would say just put it in the bank. Savvier people might say a money market mutual fund. Not bad ideas, your money is safe. But if you're establishing this emergency fund anyway, why not make that money do double-duty and support a death benefit of 250K/500K/whatever ?

If your emergency fund is just sitting the bank, you are leaving hundreds of thousands of dollars on the table when you die. You may not care, but your heirs will.

Beyond the emergency fund idea, it's also a good idea to delay gratification (heresy!) and save up and pay cash for things like cars and vacations. If a good par WL policy is a good place to put your emergency money, it's also a good place to put your short-term savings (the money you use to buy cars every 5 years). And generally, the more money you have in the policy, the higher the payout when you get hit by that bus.

Savings that isn't in one of these policies represents roughly 10 times that amount left on the table when you die.

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  #46  
Old 09-07-2010, 04:08 PM
CWILSON.CFA CWILSON.CFA is offline
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Re: Bank on Yourself?

I haven't failed to realize anything in regards to what life insurance does: the purpose of insurance (of any kind) is to transfer risk from the insured to the insurer (for a premium)- that's it -simple.

You are correct; it is common to establish an emergency fund that could support 3-6 month's worth of expenses. However, this does not mean that additional savings belong in a life insurance policy, or that this is an efficient method of saving. Nor is there something wrong with saving and paying for things in cash; however, that accumulation is hardly a justification for ******* life policies that have large death benefits and promise tax free loans. These are characteristics of life policies that are misrepresented to get you to buy life insurance policies- remember YOU ARE THE SALESPERSON'S INVESTMENT. Furthermore, the insurance costs built into these policies are in most cases outrageous, and often the sales pitches r*****e around non-guaranteed cash values in order to make it seem worthwhile.

Your beneficiaries may not always be thrilled with a large death benefit; in many cases, overinsurance can create estate tax issues (not income tax). Like I said before, you should have a financial plan that is developed with a professional who understands your complete situation, goals, resources, etc.

Buying life insurance from salespeople pitching BOY strategies, hardly qualifies as any plan. And regurgitating flawed ideals about financial planning is an even crummier attempt to defend a fundamentally flawed position.

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  #47  
Old 09-08-2010, 05:00 AM
bdunklau bdunklau is offline
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Re: Bank on Yourself?

So then, where would an emergency fund be better placed?



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  #48  
Old 09-08-2010, 03:18 PM
CWILSON.CFA CWILSON.CFA is offline
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Re: Bank on Yourself?

I don't know your entire financial situation, so I can't comment; I suggest that you consult your financial advisor (hopefully a CFP/CFA) for advise.

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  #49  
Old 09-09-2010, 04:27 AM
bdunklau bdunklau is offline
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Re: Bank on Yourself?

I didn't ask where my money would be better placed.

My exact question was "where would an emergency fund be better placed?"

CD's? Money Mkt Mutual Funds?

What?

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  #50  
Old 09-09-2010, 08:13 AM
CWILSON.CFA CWILSON.CFA is offline
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Re: Bank on Yourself?

The answer stands- seems like you missed the point about getting advice.

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  #51  
Old 09-09-2010, 11:49 AM
CWILSON.CFA CWILSON.CFA is offline
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Re: Bank on Yourself?

Oh and one more thing; Lafayette Life is a small STOCK company with 6 percent of it's bonds in non-performing status, that means they are in or near default!!

Riskless right? Some plan you have lol. Go ask the BOY bankers to explain this....

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  #52  
Old 09-09-2010, 11:56 AM
bdunklau bdunklau is offline
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Re: Bank on Yourself?

Quote:
Originally Posted by CWILSON.CFA View Post
The answer stands
What answer?

The "I can't comment" comment?

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  #53  
Old 09-09-2010, 12:03 PM
bdunklau bdunklau is offline
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Re: Bank on Yourself?

Quote:
Originally Posted by CWILSON.CFA View Post
Lafayette Life is a small STOCK company with 6 percent of it's bonds in non-performing status
Care to back up either of those claims?

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  #54  
Old 09-09-2010, 12:19 PM
bdunklau bdunklau is offline
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Re: Bank on Yourself?

Quote:
Originally Posted by CWILSON.CFA View Post
that means they are in or near default!!
Dude - you should be stripped of your your 3-letter diploma-mill acronym...

http://www3.ambest.com/ratings/fullp...D=1741822&C=UC

Outlook: Stable
Financial Strength Rating: A+ (Superior)
Affirmed on 5/18/2010

Unless those bonds all of a sudden went non-performing in just the last 90 days

LOL!



Last edited by bdunklau : 09-09-2010 at 12:25 PM.
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