Life Insurance?

you're talking in absolute terms. its very important when comparing products and in relative terms.

That is a fair point.

If I invest in a Roth IRA for 30 years, I am pretty sure I will be able to beat 6% APY. That is a like comparison.

I compared the extra premium payments I would have to make for the premium paid back and subtracted it from the standard 30 year term. I made the calculation that the extra premium payment would earn just under 6% apy that I could take out tax free. That isn't really that bad but I am pretty confident I could do better over that time period. In addition, I worry (there is a risk) that we have high inflation during this period and the 6% return will suck or that people get behind a sales tax or consumption tax. If that happens the benefits of it coming out tax free won't be that great.

I am married and so my limits to the Roth are higher.

Unless I see a smaller margin in monthly premiums, I am going with a 30 year term over a 30 year term with premiums returned.

I will talk to my insurance person and see if UL makes any sense. It doesn't seem to make sense for my situation since I can still max out the Roth IRA, wife's 403(b) and my 401(k) before I need another tax shelter, but I'll keep an open mind and look at the numbers.

Sweet Lou wrote:

you're talking in absolute terms. its very important when comparing products and in relative terms.

It depends on how you figure things brother. I always figure out my ending amount at age 59 1/2 based on my current annual income with never an increase and the most conservative generally acceptable annual return. If I were to go the relative route and account for inflation, then I would also put in increases in my income...not only my income by that of my wife who will be going back work in a couple years after what will be about a 12 year absence. I've taken the most conservative route possible in predicting what I will have, and that most assuredly will be even more when I'm done.

Besides, even when just dealing in absolute terms, $75,000 a year at age 60 is still better than nothing at age 60 (just using $75,000 a year as an example; my plan is to have an annual income far exceeding that when I retire).

I haven't paid too close attention to what you will have when you retire.

If you think you will have 1.4 million, you won't be able to safely withdraw $75,000 each year without having a good chance you will run out of assets before you die.

About a 4% withdrawal rate would be more appropriate with your assets balanced into fixed income securities and equities. If you go this you will be able to have a cost of living adjustment each year and have pretty good odds your money will not run out.

That would be a withdrawal of about$56,000 your first year of retirement.

Here's my retirement plan: Retire with 500k, spend 75k/year, move in with my kids when I run out of money.

Financial Professional wrote:

Hmmm. The top insurance salesmen in North America sell millions and millions of dollars in whole life premium every year to rich CEOs and other multi-millionaires/billionaires. Guess whole life must suck.

Now, do you think if you're going to spend say $50,000,000 or more per year on a whole life insurance policy you aren't going to have your accountants and other professionals pick it apart? Do you think rich people just thrown millions away because some slick salesman drove up to their door in a Cadillac and put a pen in their hand. You are an idiot.

Whole life when sold to young poor people is mostly a bad option. Whole life for very wealthy older folks who want to tax shelter investments and leave a lasting legacy to families and charities makes perfect sense.

Is it really realistic that ANYONE would pay $ 50,000,000 a year for ANYTHING?

Even the most lavish homes in the world don't cost $50M a year. Most do not cost $50M complete.

Is this really true that someone is paying $50M for insurance?

Also, if anyone is paying this much A YEAR, it has to be just 1-5 people out of 300 million in America. What does that have to do with us?

Financial Professional wrote:

Hmmm. The top insurance salesmen in North America sell millions and millions of dollars in whole life premium every year to rich CEOs and other multi-millionaires/billionaires. Guess whole life must suck.

Now, do you think if you're going to spend say $50,000,000 or more per year on a whole life insurance policy you aren't going to have your accountants and other professionals pick it apart? Do you think rich people just thrown millions away because some slick salesman drove up to their door in a Cadillac and put a pen in their hand. You are an idiot.

Whole life when sold to young poor people is mostly a bad option. Whole life for very wealthy older folks who want to tax shelter investments and leave a lasting legacy to families and charities makes perfect sense.

Rich people are not necessarily the smartest. Powerful people are also not the smartest. A study done years ago revealed that 6 out of 10 bank mamagers did not know how to calculate compound interest. I'll bet the other 4 didn't know much more. I'll bet all 10 could quote some general rules of thumb, such as the rule of 72, but couldn't begin to explain when such a rule is accurate, ann when it is not. I have met many business professionals. My general sense is that they are barely competent when it comes to math. They are rarely the type that aced calculus, and then took more math because they enjoyed it. More often than not, they barely survived business calculus with a lot of help, and usually complained when their professor made them think, and grumbled because they "would never have to use calculus in the real world."

So I spoke with a insurance salesperson. UL does not make any sense to me as it was presented.

I don't think the salesperson even understood the product. The salesperson tried to sell a product that would guarantee 2% return and then earn 135% of the S&P500 when the S&P500 had positive returns. When I asked how the insurance company could offer this product, I was told that the insurance company doesn't invest in the market. They invest with options.

Okay, that doesn't make much sense to me at all. My guess is that most people who are told that will go along since they might not understand the options market. I'd love to buy an investment that guarantees 2% returns when the S&P is negative and could earn 135% above the S&P when it is up, but I know that this is not realistic.

Since the salesperson either doesn't understand the product or wasn't honest about it, I am not interested in trying to figure it out. I'll stick with term life and invest the extra premiums payments I'll be saving and invest within my 401(k) and Roth 401(k) and Roth IRA.

Odds are you will run out of money and have to move in with your kids during your lifetime if that really is your plan.