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D.H.K. View Drop Down
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Post Options Post Options   Thanks (0) Thanks(0)   Quote D.H.K. Quote  Post ReplyReply Direct Link To This Post Posted: Feb/27/2018 at 10:48pm
Originally posted by bc2051 bc2051 wrote:

Originally posted by D.H.K. D.H.K. wrote:

Originally posted by bc2051 bc2051 wrote:

Originally posted by D.H.K. D.H.K. wrote:

Originally posted by financiallyfitNES financiallyfitNES wrote:

Ok here is a more serious question I am legitimately curious of outside opinion. What are your thoughts of whole life insurance as an investment vehicle. To offer a market volatility buffer, tax free bucket of money, good dividend and interest earnings (growth) etc.. the firm I am at right now uses it for everything from retirement to college planning (as well as all the other standard investment options). I'm not sold on WL as "better than sliced bread" as it is taught to me... thoughts on Whole Life?


It's great... if you have a LONG term perspective on it (far greater than 10+ years) compared to... well, it depends on what you want to compare it to.

But, if you really want some people's perspectives, there's an entire thread in the insurance forum regarding BTID specifically for me.  You can draw your own conclusions.

http://www.advisorheads.com/btid-vs-whole-life-for-dhk-and-others_topic12157.html


Thing is- the longer the term, the more investments come out ahead


"Savings and investments are similar words.  But as Mark Twain said - 'The difference between a similar word and the right word is the difference between lightning and the lightning bug.'." - John Savage, CLU


If my savings acct had a negative next to it for the first 17 yrs.....sorry DHK, you set that right up for me

That's okay.  I'm sure death benefit has no value to you.  Just like for Suze.

Below is a copy of an article I wrote for LinkedIn regarding this YouTube clip:



Facts as we know them:

This clip was uploaded to YouTube on June 4th, 2013.
  • 12 years prior, she and husband bought a (Variable) Universal Life insurance policy for the purpose of paying for college for her son in two years from the date of the call.
  • Now, we know it is a VARIABLE universal life policy because of the banner signs at the bottom, so we’ll take that assumption.
  • Caller is concerned about the amount being paid into the policy and if it’ll be enough.
  • Was it a good investment “since it was not an insured account”?
Suze’s (Predictable) Response:
  • 0:53 – How much did you put in per month? $463 per month; $4800 per year x 10 years = $48,000. For about 12 years = $60,000 (Suze’s rough conservative estimate).
  • 1:25 – What is the Cash Value Today – NOT the accumulated value, but the CASH value? About $40,000.
  • “Is THAT a good investment? You put in $60,000 and you go to pull it out and you have $40,000. You have “LOST” $20,000. And you put in $60,000 with no interest so to speak.”
  • 1:56 – Suze concludes: “It was a HORRIFIC investment.”
  • And now she says to just take the money out of the policy and to stop the policy and put the same money “towards his college education”. “But that could’ve been at least $100,000 “if we had done it correctly”.”
Let me first say what Suze did RIGHT:
  1. Suze asked about the numbers.
  2. Suze knew the difference between accumulated values and surrender values.

    I want to talk about that for a quick minute because it can be confusing.​

For a Universal Life policy, there is a difference between Accumulated Values and Cash Surrender Values. Why? Because if death were to occur in the first few years of the policy, you would want a payment of proceeds, not a return of your premiums.

Most often this difference lasts about 10 years, but can be 15 years or longer depending on the company and policy.

Let’s look at the problems:
  1. Is this policy “out of surrender” period? Will she get most of her money back? If it has a 10 year surrender period, then she’d be able to get everything out. If it has a 15 year surrender period, IF SHE WOULD WAIT IT OUT… she could get all the ACCUMULATED values out! It's based on the LENGTH OF TIME the contract is in force, not the money paid in. All she needs to do is wait it out a couple of years, if she can. At least she'd be able to reduce the amount she loses by cancelling the contract. A real advisor would ask this question. Suze did not.

  2. Life insurance for a single “investment” purpose… is a bad idea. This caller said she bought life insurance specifically for saving for college. What we don’t know, is if the policy was on HER life or her SON’S life (the younger son would have lower costs of insurance and perform much better). A real advisor would ask that question. Suze did not.

    Note: I prefer to look at permanent life insurance as part of a total family economic picture, not just for a single investment purpose. They should be long-term contracts leveraged at appropriate times and various ways to enhance one’s financial picture.

  3. No consideration for market performance when evaluating the performance of the policy. The video was uploaded in June 4th, 2013 to YouTube. Let’s assume that was the actual date of the call. If she was contributing to that policy for 12 or so years, she was investing in the down side of the 2000-2002 period, but also suffered losses in 2008. Perhaps up to 50% losses. A real advisor would ask and compare returns to the market to determine policy performance. Suze did not.

    Note: Variable life insurance policies do NOT have principal protections on their cash values. Cash values are invested in sub-accounts that are essentially mutual funds, but without cost-saving break points. So they are EXPENSIVE mutual funds within a life insurance contract.

  4. How much was the death benefit? She didn’t necessarily lose $20,000. Some of that was paying for a life insurance death benefit. Do we know how much that was? No. While the policy may not have performed to expectation, I wouldn’t necessarily say that she “lost” $20,000. A real advisor would ask those questions. Suze did not.

  5. Suze did NOT recommend any replacement life insurance, did not account for the increased cost of term insurance 12 years later, and did not recommend that she get new insurance in place before cancelling her Variable Universal Life policy. A real advisor would do that. Suze did not.

  6. Suze must believe that all investments must go UP in value all the time to NOT be considered “a HORRIBLE investment”. Where was she for the last decade or so? Yes, we’ve had some good upside, but there’s a reason why it has been called “the LOST decade”… but Suze just went to say “if you just got 4%, you would’ve had much more money”. Suze… where could you get that 4% consistent each year for the last 12 years? A real advisor would ask those questions. Suze… does not.

  7. Suze must not understand that College FAFSAs do NOT include cash value life insurance as an includable asset in the financial aid calculations. While having this money in a CD or money market might not make much of a difference, it does get included and may reduce eligibility for other types of financial aid. A real advisor would be familiar with the FAFSA rules and may even do a FAFSA calculation simulation. Suze did not.
Suze is NOT a regulated advisor. Suze is reckless at best in giving financial advice. You may consider her for her basic advice - such as eliminating debt and saving for the future. However, I would still meet with well qualified advisors who are licensed and TRAINED to give advice (or at least to ask more questions).

Suze is an entertainer. She has built up a celebrity-like status and lends her name to whatever will pay her. 

Follow Suze Orman's "advice" carefully. Remember: She is an entertainer, so following her "advice" is legally on you. You have no recourse if you mess up. But she can earn millions on her celebrity fame AND denigrate other licensed, trained, and credentialed advisors while doing so. She benefits, but her listeners... may not ever know the damage she may have caused them.
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Macduff View Drop Down
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Post Options Post Options   Thanks (0) Thanks(0)   Quote Macduff Quote  Post ReplyReply Direct Link To This Post Posted: Feb/28/2018 at 9:20am
Originally posted by D.H.K. D.H.K. wrote:

Suze is NOT a regulated advisor. Suze is reckless at best in giving financial advice. You may consider her for her basic advice - such as eliminating debt and saving for the future. However, I would still meet with well qualified advisors who are licensed and TRAINED to give advice (or at least to ask more questions).

Suze is an entertainer. She has built up a celebrity-like status and lends her name to whatever will pay her. 

I like you and you're knowledgeable about insurance...but you're not a licensed advisor either. Isn't this a bit hypocritical?
“I was born for the storm, and a calm does not suit me.”

― Andrew Jackson
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D.H.K. View Drop Down
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Post Options Post Options   Thanks (0) Thanks(0)   Quote D.H.K. Quote  Post ReplyReply Direct Link To This Post Posted: Feb/28/2018 at 9:49am
Not in the least.  I have licensing - life & health licensing and E&O for such activities.

What is the purpose of being licensed - in ANY capacity?  Licensing is not about competency.  

Licensing is about being held liable and accountable for your actions by and through a regulator.  Insurance licensing is held liable through state DOIs, while FINRA regulates broker/dealers, and the SEC/states regulate RIAs.

Read the disclaimers for any entertainment show and it absolves them of any legal liability.  We also learn all about that as part of Series 65 licensing.  They don't have to file as RIA/IARs because they are in entertainment, rather than actually giving advice one-on-one.

Suze USED to have licensing (unlike Dave Ramsey and others).  I don't know why she kept it up for so long, because she wasn't giving individual advice in any capacity.
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