Whole Life Insurance
Gift Tax Sale – 2011 and 2012 Only…
August 17, 2011 | Author dragonfly
Gift Tax Sale…
Gifting has always been a very effective estate planning tool. Not only does a completed gift generally remove the gifted asset from the donor’s estate, it also removes any future appreciation from the estate and may offer income-shifting advantages.
Important changes for 2011 and 2012:
- The lifetime gift tax/estate tax exclusion is increased to $5 million per person ($10 million per couple) with a top tax rate of 35 percent. This increase is unprecedented and creates a rare opportunity for large gift-tax-free wealth transfers.
- The generation-skipping transfer-tax exemption is increased to $5 million.
- The gift and estate tax is reunified. Simply put, to the extent the exclusion is used for gifts during the donor’s lifetime, it is unavailable for bequests upon death.
- Beginning in 2012: The exclusion amount is subject to indexing
- As the law stands today, these limits will be reduced beginning in 2013
Rare Opportunity to Transfer Wealth!
A case study…
- Ron and his wife are both in their middle-50s and have one son. Their net worth is over $8 million. Ron wants to provide a safety net for his wife and leave a legacy for their son and any future grandchildren, all the while minimizing transfer taxes.
- Ron establishes an irrevocable life insurance trust (ILIT), with spousal lifetime access provisions to the cash value. He gifts $1 million to the ILIT, using a portion of his lifetime gift tax exclusion and generation skipping transfer tax exemption.
- The trustee then uses the $1 million to purchase a 10-year certain immediate annuity. The annual after-tax guaranteed income payment is slightly more than $103,000.
- The trustee then uses $102,000 of the annual payment to purchase a universal life policy with a death benefit of approximately $4,400,000.
- Upon Ron’s death, the proceeds of the life insurance policy are to be held by the trustee, with income to be paid to his wife for life.
- Upon her death, income is to be paid to his son for life, and then to his son’s children for life, etc.
- The funds in the trust will escape estate taxation at each death.
- Also, any transfers out of the trust to skip persons (generally persons two or more generations younger than the grantor) will be exempt from any generation skipping taxes.
Discussion…
Gifts may be transferred outright or in trust. An outright gift gives the donee unrestricted control of the property. This may not be suitable if the donee is a minor or a spendthrift. Gifts in trust offer the donor the ability to control the distribution of income and principal, while providing asset management and creditor protection for the trust’s beneficiaries.
Properly structured gifts of life insurance policies and/or premiums offer the donor the ability to leverage the value of the gift by removing the death proceeds from the donor’s estate.
The unlimited marital deduction for gifts and bequests to spouses remains unchanged, as does the annual gift tax exclusion permitting donors to give up to $13,000 ($26,000 for a married couple) worth of gifts to any number of persons each year without incurring a gift tax.
The annual gift-tax exclusion amount is indexed for inflation and is available for certain present-interest gifts to trusts requiring the use of a special notice each time a gift is made to the trust. However, use of the gift tax lifetime exclusion, instead of using the annual gift tax exclusion, means no special notices are required.
Gifting strategies for 2011 and 2012…
Using a cash value life insurance policy to fund the trust provides flexibility in uncertain economic times and amid changing tax laws. Flexibility in drafting trust documents, such as spousal lifetime access or trust protector provisions, can also be beneficial. Taking advantage of the two-year gift tax sale by making gifts in 2011 and 2012 up to the maximum amount of your available gift tax exclusion may result in your heirs receiving significantly more wealth.
Personal Finance Relies On Four Pillars
July 16, 2011 | Author jr
Posted in Money, Personal Financial Management, The Four Pillars, Whole Life Insurance | 
Tags: debt, EUREKONOMICS, financial, financial advice, financial plan, financial planning, jeffrey reeves, legacy, Money, personal finance, Personal Financial Management, personal financial plans, ready cash, Retirement, The Four Pillars, Whole Life Insurance | 
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“It’s Only Money.” Makes No Sense in Family Finances
June 2, 2011 | Author Dr Agon Fly
“It’s only money…” has no place in decisions about family finances
How many times have you heard someone say, “Let’s buy it! It’s only fifty bucks. We’ll save twenty-five dollars!”
Good Grief! There is no “only” when you are dealing with your personal finances. The automobile salesperson might want you to believe that the car you are considering is only $15,000 and, since the sticker price is $20,000, you are saving $5,000.
Savings are only savings when you put them into an account that you control.
If, instead of spending it, you put your $15,000 in your family bank–regardless of the form that bank takes–it would compound to nearly $65,000.00 in 30 years at 5%. If you add the $5,000 you saved, you’d have improved your family finances by almost $90,000 from a single decision to not save-by-buying.
Americans make those kinds of savings decisions frequently but on a smaller scale – say $50 twelve times a year. Compound those dollars over 30 years and your family finances will be a lot closer to fifty grand than fifty bucks.
Every penny counts.
“Only” fifty bucks? It’s self-deception. The old adage “every penny counts” is still in common use because it’s true.
We all tend to convince ourselves that our buying decisions are wise regardless of the reality those decisions impose on us when it comes to our family finances. It’s one of the oldest tricks in the world to tell ourselves “It’s only…”.
The next time you think you are saving money by buying a product on sale, ask yourself if the product you are buying and the amount you are “saving” is really worth it. (Often it will be. Americans have the most enviable lifestyle in the world and EUREKONOMICS™ does not espouse a life of deprivation.)
EUREKONOMICS™
EUREKONOMICS™ espouses the economic principles and financial practices that the Founders and Builders of America paid forward to us. These principles and practices have been twisted and manipulated by the Behemoths–big government, unions, banks, investment firms, etc.–to serve their aims and not those of the American people.
Remember – only money is money. For everything else–your 401(k), IRA, mutual funds, investments, and so on–you have to spend your money, and worse, relinquish control of your family finances to strangers.
When you’re closer to pushing up daises than doing fifty push-ups, having cash and income instead of the stuff you bought will be a blessing. Tennessee Williams expressed it best over half a century ago:
“You can be young without money but you can’t be old without it.”
PS – There is one purchase that Americans can make to assure…
- the safety of their family finances
- tax-free growth every year
- they never incur a loss
- their cash is accessible at all times without penalties or restriction:
participating whole life insurance from a mutual company.
This Agent Is Not A EUREKONOMIST™
April 15, 2011 | Author jr
Inaccurate Is Not OK…
A client recently sent me a copy of an email received from an insurance agent promoting whole life insurance policies from a specific life insurance company. The primary goal of the original email seemed to be to demonstrate that one form of dividend calculation on whole life insurance policies is better than another.
The email from the agent was inaccurate and therefore misleading. I have no doubt the agent was convinced that the information in the email was correct or that s/he was operating in good faith. However, my client asked me to confirm or deny the claims in the email and I felt compelled to clarify the inaccuracies as much as possible.
The exercise of clarifying the issues raised in the email are meaningful so I am repeating my response here and expanding on it as needed.
The original email content is in standard type. My responses are indented, bold, in italics, and preceded by my initials in brackets thus [JR].
Two Types of Mutual Insurance Companies…
There are two types of Mutual Insurance companies . They are called direct recognition and non-direct recognition. I have policies in both these types of companies.
[JR] Actually there are direct recognition mutual companies and mutual holding companies and non-direct recognition mutual companies and mutual holding companies.
If a company is structured as a mutual company or a mutual holding company is as significant as whether it pays dividends on a direct recognition or non-direct recognition basis.
Direct Recognition VS Indirect Recognition
Non-Direct Recognition…
Non-Direct means the policy owner receives the same dividend rate no matter how many dollars he has borrowed from the insurance company using his death benefit as collateral.
[JR] Well, that’s not exactly correct. Actually, the policy’s cash value is the primary collateral used when a policy loan option is exercised by a policy owner. One cannot borrow more than a whole life policy’s currently unencumbered cash value.
Death benefit only comes into play in the event of death.
So you may have borrowed $10,000 whereas another policy owner borrowed $100,000 but you both earn the same dividend rate.
[JR] The statement is true as far as it goes. However, it ignores the fact that the policy owner that borrowed $100,000 would pay a lot more interest to the insurer than the policy owner that borrowed only $10,000.
In both cases, the interest paid by the policy owners–one to a greater extent than the other–would add to the surplus of the insurer; and the company pays dividends from its’ surplus is where dividends come from
Or you may not have borrowed anything but you would still earn the same dividend as someone else who has borrowed and is using that borrowed money to earn even more profit somewhere else.
[JR] The unasked question is, “Why is that a bad deal for anyone?” Some indirect recognition companies have followed this pattern for over a century.
(As an aside, what the devil difference does it make what the policy owner is doing with the money s/he borrowed from the policy that s/he owns? Sorta sounding like a Robin Hood argument.)
Direct Recognition…
Direct means the company determines the dividend rate according to policy holders fair share
[JR] This statement is irresponsible. It assumes the indirect companies dividend paying practices are unfair to their policy owners.
Should indirect recognition companies like Mass Mutual be ashamed after over 100 uninterrupted years paying top dividends? How unfair!
according to how many dollars he has borrowed from the insurance company’s general fund using his death benefit as collateral.
[JR] There you go again Mr/Ms Agent…it’s cash value not death benefit that is the primary collateral used to back a policy loan.
The higher the amount of dollars on loan to you does mean you will receive a lower dividend rate.
[JR] Ah! A moment of clarity. It’s true. Direct recognition companies apply a lower dividend rate to those policies that have loans outstanding.
The obvious conclusion according to this agent is that a policy owner that plans to exercise the right to take policy loans granted by his or her policy–a binding contract–an indirect recognition company may not be the best option.
Now, why does this matter? Well, it doesn’t really matter a whole lot
[JR] Another brief moment of clarity. Often the difference between the performance of non-direct recognition policies and direct recognition policies is not significant enough to make it a deciding factor on a buying decision.
But…if it doesn’t matter, why the epistle?
but some insurance agents use the fact that a company is a non-direct company as a selling point when trying to sell someone a policy.
[JR] OK…now i know why. Mr/MS Agent in this epistle uses the direct recognition dividend practices to promote the sale of policies for their direct recognition companies.
The Banking Concept
But it is good to understand that an insurance company makes money using the velocity of cash flow,
[JR] If a policy owner-borrower is being what R. Nelson Nash, formulator of the Infinite Banking Concept™, calls “an honest banker,” the insurer has very good cash flow.
If the policy owner fails to repay the loan and the interest, the insurer uses the policy’s cash value, which was used as collateral, to repay the interest and protect the other policy owners/borrowers. If the policy cash value is all used to pay premiums and/or interest, the policy lapses.
just like a bank does.
[JR] Insurance companies, like banks, use the money that policy owners pay in premiums and interest to make loans and enter safe and conservative joint ventures. That much is accurate.
However, insurance companies do not act “just like banks.” Banks work for shareholders not depositors. Mutual insurance companies and a holding company’s mutual insurance company work exclusively for the benefit of policy owners.
If you have your money sitting in a 5 or 10 year CD at the bank, the bank knows that it has a set amount of money that it can lend over and over and over again during that set period of time. An insurance company does the same thing
[JR] Banks operate on a completely different set of principles and rules than insurance companies. Insurers do not do “exactly” the same thing.
Banks operate on money that they derive from depositors . In addition, they have access to a form of ”matching funds” from the Federal Reserve Bank. Therefore, the banks can actually lend up to ten time the amount of money they have received from depositors!
Insurance companies limit themselves to using only the money they have on hand.
The Velocity of Money – Sorta…
You pay your premium and it can lend an amount of money over and over and over again for a lifetime. However, if YOU borrow money from your life insurance company, now they can no longer velocitize that money.
[JR] An insurance company can only lend up to the limit of its cash available excluding reserves. Insurance companies cannot leverage FED funds to increase the amount they can lend. That’s not at all the same as a bank.
In fact, if the insurer lends money to Home Depot they cannot “velocitize” (not a recognized word in any dictionary) the money either, nor can they leverage through fractional banking like a commercial bank.
Instead, you are now in control to velocitize your own money.
[JR] The insurance company is in fact “velocitizing” the money by charging the policy owner a competitive interest rate and—again—by contract, the policy owner is always in control of the cash value in a whole life insurance policy.
Moreover, because a whole life policy is a contract with borrowing provisions decided by the insurer, the burden is contractually on the insurer to make sure it makes money for all of its policy owners and not one more than others—and that’s true for both direct and indirect recognition companies.
The Attempted Deception Falls apart
However, one must consider this fact. How long will an insurance company be able to stay in business if a large portion of their policy owners are receiving an unfair share of the profits?
[JR] Hmmm – how is it possible for a policy owner to receive an “unfair share of the profits” by being charged a fair interest rate under contract terms determined by the insurer. Robin Hood again?
Again, does that put Mass Mutual—100+ years old—and never missing a dividend at more risk than a direct recognition company like Northwestern Mutual—also over a century old with a great dividend record?
Who actually owns the insurance company again? The policy owners. That would be YOU.
[JR] This is accurate when description of mutual companies. Although mutual holding companies “operate” as mutuals, the holding company–not just policy owners–holds significant interests in the mutual insurance company.
That is not an indictment of the mutual holding companies. It’s merely an attempt to bring clarity where none exists.
Some of the non-direct recognition companies restrict the number of loans, or the amount one can take as a loan or the number of policies one can own etc.
[JR] I’ve not experienced that in 40 years of dealing with a wide variety of insurance companies of both types except when the insurance company was in receivership–and that happened only twice that I know of.
(Tell me who you are talking about so I can avoid them.)
Do you want to have a policy that restricts your capital availability?
[JR] This is a cheap shot and poor salesmanship. I know of no direct or non-direct company that issues a contract that says the owner of a whole life policy cannot access to all of their cash value on demand.
Some non-direct recognition companies fire the agents that tell their clients about banking
[JR] This too is uncalled for. If an insurance company were to take this action, it would be grounds for a significant law suit by both the agents and the insureds. The insurer cannot deny rights granted by the insurer in a recognized contract.
and also some have been bought by stock companies and are in the process of converting from mutual to stock because too many of their customers were borrowing from their policies.
[JR] I’d like to know the names of those companies so I can confirm the claim, avoid doing business with them, and make sure the agents and advisors I deal with all across the US know about it.
The company I recommend is a direct recognition company.
[JR] Well – who woulda guessed! This agent is surely operating in good faith, but is in dire need of information, knowledge, and wisdom.
by Jeffrey Reeves MA, EUREKONOMIST™
The Social Function of Insurance
April 11, 2011 | Author jr
Web Site of Extreme Value…
I have frequently quoted or referred to Mises.org
The Ludwig von Mises Institute was founded in 1982 as the research and educational center of classical liberalism, libertarian political theory, and the Austrian School of economics
I am especially interested in the economics aspects of the institute. The following article by Robert P. Murphy is one of the clearest explanations of the insurance function that I have personally ever read…and I’ve read many.
The Social Function of Insurance
Legal requirements and prudence require most adults to carry various insurance policies. Although we may often take insurance for granted, it serves a valuable social function.
Read the article here…
The Social Function of Life and Disability Insurance Products
You and I daily face the risks of our own death and disability. That creates great risk for our families, our co-workers, our social, civic, and religious networks.
You and I are not indispensable, but we are contributors and we are often unaware of the significance of the contributions we make. Our families in particular rely on us in ways that death benefits or disability income checks can never replace.
Not owning adequate life and disability insurance ignores the reality that we support our families spiritually, emotionally, physically, and financially. It also ignores the painful reality that our families would face in every aspect of their lives if we left them with inadequate financial support when we die or–perhaps worse–burdened them with care-giving responsibilities and not enough money to either give care to a disabled family member or take care of the basic needs of the household.
In addition, we often are completely unaware of the value we bring to our social, civic, and religious communities. Have you never found an unexpected vacuum created by the untimely death of one of your colleagues at work or a member of your social circle? Sometimes we don’t recognize contributions until they are no longer made.
Insurance provides us with a simple and inexpensive way to assure that the work we do every day can continue after our death or in the event of our disability. Businesses have realized this for over a century through the use of key person insurance policies that assure the business will continue to thrive if the contributions of its most important contributors is cut short.
I encourage you to make sure you provide the same assurance to your family and the communities that depend on you.
by Jeffrey Reeves MA, EUREKONOMIST™
The IRS Wants To Lend You Some Money
March 17, 2011 | Author jr
You will have to pay tax on that money at some time and you will not have anything to say about the tax rate the IRS lays on you at a later date. Here’s a story to clarify…
A family owned some land and wanted to plant an apple orchard. Their friendly IRS agent showed up one day said, “Have I got a deal for you? You can buy your seeds to start your orchard and I’ll give you a tax deduction for the cost. This will make it easier for you to start your orchard. Then,” the friendly IRS agent continues, ”I won’t bother you till you start harvesting apples in about twenty years. Then I will tax you in the money you earn selling your apples, not just once, but every year until you die or run out of apples.” When the family asked the friendly IRS agent what the tax rate might be in twenty years, he replied, “I don’t know right now, but you can be sure the IRS will take care of that.”
Is that a good deal? You Decide. It’s the same deal you get when you take a tax deduction for a retirement account contribution. You defer the taxes and the tax rate. Like the snickering mechanic in the oil change commercial taught Americans, “You can pay me now, or pay me a whole lot more later.”
You deserve better. You decide.
SECRET NUMBER TWO…
- guarantee annual growth–that’s right–guarantee
- give you an ownership interest in the company selling them
- allow you to take tax-free retirement income
- give you complete access to, use of, and control of the money you save–no government, employer, bank, or investment company involvement in your decisions
For the past forty years Washington and Wall Street have used Madison Avenue advertising to mislead America into believing that such a savings plan doesn’t exist.
However, a Wall Street Journal article recently described this savings vehicle–one of the oldest, most respected, and most reliable financial tools American families can buy–as the Swiss Army Knife of Financial Tools.
“What is that financial tool?” you ask.
The answer is Participating Whole Life Insurance. It delivers on its promises with uncompromising integrity and has done that for the past 150 years.
If you remember only one thing from this article, remember that.
Posted in Retirement, Taxes, Whole Life Insurance | Tags: retirement account, retirement income, saving money, tax deduction, tax rate, Wall Street | No Comments »
EUREKONOMICS™ Principles And Investment Products…
October 22, 2010 | Author Dr Agon Fly
EUREKONOMICSTM is based on investment principles that are as old as money and as current as the 21st century.
Benjamin Graham, the Dean of Wall Street was Warren Buffett’s mentor. Graham stated this principle in one concise sentence in his classic works, Security Analysis (1934) and The Intelligent Investor (1949)…
“An investment operation is one which, upon thorough analysis, promises safety of principal and a satisfactory return. Operations not meeting these requirements are speculative.”
When look at the meaning of this sentence within the framework of EUREKONOMICSTM you discover that…
- EUREKONOMICSTM relies on the promise of safety of principal as the primary consideration when it comes to investing the money that enters your life
- The EUREKONOMICSTM‘ corollaries to the promise of safety of principal are…
- whatever you think of as a satisfactory return has support that basic premise
- an investment that doesn’t is not really an investment; it’s a speculation-in simpler terms it’s a gamble
Graham’s Promise of Safety of Principal…
The the professionals in the insurance and financial services industry that act on your behalf tend to seek out the wealthiest Americans as clients. That has an unintended consequence. It creates a view of personal economics that applies mostly to the small percentage of the population that have already created family wealth.
That perception pervades the part of the industry that creates products as well, especially among financial businesses that create investment products and insurance products that have an investment component. As a result, many products that are called investments actually fall into the group that Benjamin Graham describes as speculative. They offer neither safety of principal nor a satisfactory return.
There’s another issue. You can project a satisfactory return on an insurance or investment product by using higher than realistic interest or growth assumptions. However, for many of the financial products available in the market today the facts surrounding the real returns of actual investments held by everyday Americans do not support a claim to safety of principal and satisfactory returns.
Take mutual funds as an example. No registered representative would dare promise-as Benjamin Graham’s definition suggests-that an individual mutual fund could promise safety of principal and a satisfactory return. If they did, the regulators at FINRA would likely bring the advisor making such a claim before a disciplinary board to be tarred and feathered-figuratively of course.
However, financial advisors often suggest that hypothetically and “over the long term” this fund or that or some combination of funds assure safety and returns. Based on guidelines from the SEC and FINRA, as long as you complete a suitability form and a risk tolerance questionnaire, which protects the advisor and his or her firm from the overreaching arm of regulators in the event an investment fails, the safety of principal and satisfactory return promise requirement has been met.
Take a look at the performance of these types of investments and the losses Americans have suffered over the past decade. The tremendous American families have experienced have led to only a few disciplinary actions-and those mostly for thieves running ponzi schemes.
The Promise Fulfilled…
Insurance and financial advisors are not in any way irresponsible or engaging in deceptive practices. The problem is that most of the insurance and investment products that are available in the marketplace are designed to serve the needs of investors and speculators that can afford to take risks-and losses. These financial products are not designed to help the vast majority of Americans seeking to attain wealth regardless of what the manufacturers of these products would have us think.
It’s easy to recognize the truth of this assertion. Look at your own financial progress. I’ve been practicing for almost forty years and have met only a handful of people that started out with wealth. Most Americans have gained wealth by struggling for years to…
- educate ourselves about saving, investing, risk management, etc.
- build equity in
- our homes
- our businesses
- our insurance policies and savings accounts
Almost every person and every insurance and financial advisor I have met can relate to this idea. Why then would anyone suggest that everyday Americans follow any other path to wealth? I’ll leave that answer up to each individual to discuss with their insurance and investment advisor.
However, I caution you…conventional wisdom-which is not wisdom at all-will rear its ugly head and suggest that advisors are fools if they rely for wealth creation for themselves and their clients on…
- financial education
- building equity in prosaic things like…
- homes
- savings accounts
- whole life insurance policies-especially whole life insurance policies
- a strongly rooted recognition that their clients deserve nothing less
The Final Word
There is no financial product that will make you wealthy.
There is, however, one financial product that guarantees that you will have more money in it at the end of each year than you had at the beginning of the year and that should be the foundation for your successful personal economy.
That product is participating whole life insurance from a mutual insurance company.
Posted in Personal Financial Management, Whole Life Insurance | Tags: benjamin graham, decent return, economics, family wealth, financial, insurance, investing, investment product, investments, Money, personal economics, risk, satisfactory return, saving, savings, security, speculation, warren buffett, wealth | No Comments »
“It’s Only Money…” Has No Place In A EUREKONOMICS™ Practice…
October 1, 2010 | Author Dr Agon Fly
It’s only money…
How many times have you heard someone say, “Let’s buy it! It’s only fifty bucks. We’ll save twenty-five dollars!” Good Grief! There is no “only” when you are dealing with your money. Moreover, savings are only savings when you put them into an account that you control.
If, instead of spending it, you put your fifty bucks in your family bank–regardless of the form that bank takes–it would compound to nearly $300.00 in 30 years at 6%. If you add the 25 bucks you saved, you’d have over $450.00 from a single decision to not save by buying something.
Americans make those kinds of savings decisions frequently – say 12 times a year. Compound those dollars over a few decades and the total is over $5,000.00. Do it every year for 30 years… you’ll be a lot closer to fifty grand than fifty bucks.
“Only” fifty bucks? It’s self-deception. The old adage “every penny counts” is still in common use because it’s true. We all tend to convince ourselves that our buying decisions are wise regardless of the reality those decisions impose on us when it comes to our money. It’s one of the oldest tricks in the world to tell ourselves “It’s only…”.
“Human felicity is produced not so much by great pieces of fortune that seldom happen as by little advantages that occur every day.” Benjamin Franklin
The next time you think you are saving money buying any product–on sale or not–ask yourself if the product you are buying and the money you are “saving” is really worth it. Often it will be. EUREKONOMICS™ does not espouse a life of deprivation. Americans have the most enviable lifestyle in the world and it’s not a sin to maintain and improve that lifestyle.
EUREKONOMICS™ does espouse the economic principles and financial practices that the Founders and Builders of America and its economy paid forward to us. These principles and practices have been twisted and manipulated by the Behemoths–big government, unions, banks, investment firms, etc.–to serve their aims and not those of the American people.
Remember – only money is money. For everything else–your 401(k), IRA, mutual funds, investments, and so on–you have to spend your money, and worse, relinquish control of that money to strangers. When you’re closer to pushing up daises than doing fifty push-ups, having money instead of the stuff you bought will be a blessing.
This isn’t a new idea. Tennessee Williams expressed it over half a century ago:
“You can be young without money but you can’t be old without it.”
PS – There is one purchase that Americans can make to assure their money is safe, grows tax-free every year, never incurs a loss, and is accessible at all times without penalties or restriction: participating whole life insurance from a mutual company.
Posted in Money, Whole Life Insurance | Tags: bank, banking, banks, benjamin franklin, economic principles, economics, economy, financial, financial practices, insurance, investing, investments, Money, saving, saving money, savings | No Comments »
Why America Needs EUREKONOMISTS…
September 14, 2010 | Author Dr Agon Fly
This post is my reply to another Kool Aid drinker that knows nothing about participating whole life insurance but is—regardless—answering the life insurance question: “Which kind of life insurance policy should the questioner buy?” The answer–in bold–is from a mortgage broker. My responses follow.
Purchase Life Insurance: – I call this “Income Protection.” Only (repeat – ONLY) purchase a term life policy.
Hmmm! The mortgage broker states, “I call this….” So the millions of successful Americans that buy whole life insurance policies are wrong and the small “buy term and invest the rest” sect of Williams/Orman devotees like this one are right. No! This advice is akin to suggesting a diet composed only of Twinkies and doughnuts would produce optimum health.
The face-value should be an amount large enough to replace income no longer coming in due to the death, or the additional funding necessary to cover the expense of hiring someone to perform the tasks of the dear departed. If the budget permits, increase the face-value to pay off debts of #1) the mortgage, #2) creditors. The minimum policy should cover expenses to bury or cremate the deceased. The average burial costs are between $6,500 and $10,500. Cremation average: $1,250 to $6,500.
~ WOW! If only the millions of Americans that care enough about their families knew how foolish they have been to buy whole life insurance policies that actually serve the needs of the family both during their life time and after their death. After 40 years helping Americans deal with life and death issues it is apparent that more life insurance is always better than less and whole life insurance serves best. No widow or widower ever complained about receiving too much money from a life insurance claim.
Under no circumstances should you purchase a whole life, universal life, or any other type of policy that accumulates a cash-value.
~ YEAH, Right! More Twinkies…How about following that logic to its ultimate conclusion. Don’t buy a car, lease it. Don’t buy a home, rent an apartment. Why would anyone want to build equity in real property like a home or a life insurance policy? Shucks, why not go for the ultimate; don’t get married…
There are at least five (5) reasons why, as follows:
~ Now, the truth…
a. Although rates are better than a savings account or Certificate of Deposit, they are still low compared to other investments
~ When this argument arises, its proponents pull out hypothetical illustrations of future performance. Facts are different than projections. During the past 100+ years, whole life insurance policies that were issued and maintained produced results comparable to “investments.” (Can’t say the same for universal life policies. That’s why I never sold that kind of life insurance policy.) Looking forward using silly assumptions is a form of dishonesty. Any return over 5% net of taxes and expenses for an “investment” is unrealistic based on the actual performance of actual investments–that’s not my opinion but according to Benjamin Graham and Warren Buffett. One can–of course–use “averages” to “prove” whatever they want. I can show you how an “average return” of 10% per year leads to a total loss of your invested capital.
b. The interest rate to “borrow” the money is much higher (usually 6-9% plus). Unlike borrowing from your 401k plan where interest payments go back into your account, these payments go to the institution. Additionally, it could take up to six months to receive your check
~ These assertions are incomplete, mix unrelated issues with the issue being addressed, and are at best factually inaccurate.
i. Policy loans are, in many cases, the least expensive way to finance purchases. Although it is accurate to say that the policyholder borrows money from the insurer and repays the insurer, that does not take into account that the cash value of a whole life policy continues to grow and dividends continue to be credited to the policy regardless of the loan. Moreover, the value of the GUARANTEED cash value increases and dividends–not guaranteed but consistently paid for over 100 years–often far exceed the interest charged. Even some UL policies have zero cost loan provisions that assure the policy owner/borrower that the interest paid will equal the interest credited to the policy.
ii. It’s unclear where the six months comment comes from. I and many of my clients regularly borrow against the cash value of policies and receive checks in a few days, never weeks or months. (Most policies since the Great Depression have a rarely used provision that allows the insurer to withhold both cash accumulations and death benefit payments for as much as six months under very limited circumstances. To suggest that is the norm is–you put your own name to it.)
iii. Finally, borrowing from a 401(k)–assuming you are following conventional wisdom and actually risking your future by buying into such schemes–is fraught with dangers–too many for this response.
c. Although your premium does not rise, the portion that goes to pay your premium does because as you get older the rate increases. Therefore, the portion of the premium that goes towards your cash value contribution decreases as time goes on. Eventually, you are paying premium from your cash value therefore, you cash value will total zero at some future point in time
~ OK – that’s a relatively accurate description of a universal life insurance policy but does not begin to describe a whole life policy in which the premium, death benefit, and cash values are all GUARANTEED. In addition, the insurance contract–not the insurer–guarantees that any surplus/profit that the insurance company earns is paid to policy owners as a tax-free dividend. There are no outside investors in mutual companies.
d. After the cash value is depleted, the policy could be cancelled (unless you are willing to pay a higher premium)
~ This applies to UL policies – not whole life insurance policies. Whole life insurance policy premiums are guaranteed to remain level, the cash values are guaranteed to increase every year, and surpluses are guaranteed to be paid out as tax-free dividends annually. Moreover, this comment doesn’t address the question of what happens when the term insurance policy the mortgage broker recommends renews and the premium goes up 1,000% or more due to age.
e. Upon the death of the insured, beneficiaries receive either the face-value of the policy or the cash value. In order to receive both, the agent needs to mark both on the application. They generally don’t mark both because the policy premium would be much higher.
~ This refers to UL policies only. (Isn’t it amazing that the author of this response knows how other agents think and even knows their motives for filling out an applications one way or another?)
Whole life policies that are properly structured develop an increasing cash value. Happily, I just reviewed a policy that was issued in 1976. The premium was, of course, the same as it way originally. However, the death benefit was seven times the original face amount and the annual dividend was ten times the guaranteed premium–and rising every year.
“Cash Value” policies should only be used to supplement retirement savings after all other retirements account contributions reach their maximum allowed by Security Exchange Commission (SEC) regulations.
~ I worry about advisors that make assertions that sound like the Ten Commandments.
This is another out of context and meaningless comment. The SEC is the puppet of the Behemoths on Wall Street and in DC. Moreover, the SEC has no authority or purview relative to insurance companies and even less regarding how and where you put your money. They are supposed to regulate and control the behavior of folks like Bernie Madoff, Fannie Mae, Freddie Mac, and the dozens of other financial institutions that the overreaching federal government either put in jail or bailed out because the SEC didn’t do its job.
Here’s my bottom line: After almost 40 years as an insurance and RECOVERING investment advisor, I have not verified from actual performance any insurance/investment strategy that performs as well as EUREKONOMICS[tm]. During my entire 40 year career and for 100 years before that, not a single American that follows this strategy has lost any money, paid or incurred any taxes on their gains, complained that the cost of their whole life policies was too expensive, or expressed regret that the amount on the death benefit check was too high.
GO FIGURE!
Posted in Legal, Ethical, Moral, Money, Retirement, Whole Life Insurance | Tags: behemoth, behemoths, burial costs, debt, insurance, insurance question, insurer, interest, investing, investments, life insurance policies, life insurance policy, Money, mortgage, mortgages, purchase life insurance, Retirement, s, saving, Taxes, universal life, whole, Whole Life Insurance | No Comments »
Question: Got Debt? Answer: Get EUREKONOMICS™
August 17, 2010 | Author Dr Agon Fly
America and the world have received a legacy of wisdom and wealth but have squandered it as pointed out in this post from HubPages.com…
Shakespeare, Franklin, and Stanley Johnson
Neither a borrower nor a lender be;
For loan oft loses both itself and friend,
And borrowing dulls the edge of husbandry.
This above all: to thine own self be true,
And it must follow, as the night the day,
Thou canst not then be false to any man.
William Shakespeare, “Hamlet”, Act 1 scene 3 – Greatest English dramatist & poet (1564 – 1616)
“But, ah! think what you do when, I you run I in debt you give to another power over your Liberty.”
Benjamin Franklin, Poor Richards Almanac, c. 1758
“…How do I do it? I’m in debt up to my eyeballs. I can barely pay the finance charges. Somebody help me.”
Stanly Johnson, Lending Tree commercial, c.2005
Amazing…
It seems Stanley Johnson–and the rest of America, including the Dolts in DC–paid little attention to the wisdom that Shakespeare and Franklin bequeathed to us centuries ago as a legacy.
Instead, Stanley was seduced by the Siren Song composed in the late 20th Century by the Wonks of Wall Street and the Wannabes in Washington. The lyrics go something like this:
Get stuff you don’t own.
Borrow to buy it.
That proves your true worth.
Debt’s a good diet.
“Invest” - do not save.
Give us all your money.
Become our good slave.
Your life will be sunny.
Having stuff you don’t own and “owning” investments you don’t control is a sure road to servitude, poverty, and the loss of liberty. It is devoid of common sense and lacks an economic foundation.
This is conventional wisdom and I call it The Debt Paradigm.
The problem here is that true intelligence–common sense–sees all sides in a debate. On the other hand, pseudo-smarts embrace a theory, elevate it on an ideological altar, and protect it by demonizing anyone that interjects a competing or alternate view.
History abounds with examples…
- The Romans of Caligula’s reign
- Crusaders that ravaged both the Jews of Europe and the Muslims of Arabia
- Nazi Germans
- Modern day Islamic fanatics that demonize Jews and Americans equally
- Crazed religious fanatics of Iran
- Corrupt unions like the SEIU
- Misguided ACORN workers
- The list could be endless and include every religion and government
There is only one way to deal with ideologies that demand absolute adherence–and the Debt Paradigm is such an ideology–and that is to get real , challenge the assumptions, prove the alternatives, wake up the ideologues to the untruths that are leading them where the LEADERS want them to go.
There are strategies that allow you to personally escape The Debt Paradigm and gain control of the money that flows through your life. One source of information about a unique approach to this dilemma of the 21st Century is found in the life-changing book Money for Life. I encourage you to read it.
EUREKONOMICS™ – “Your Special Island…”
July 31, 2010 | Author Dr Agon Fly
Posted in Debt, Personal Financial Management, Retirement, Whole Life Insurance | Tags: bank, banking, banks, creating wealth, credit, economics, economy, EUREKONOMICS, financial, financial advice, financial adviser, financial advisor, financial management, financial plan, financial planning, free enterprise, insurance, invest, investing, investment, investment advice, investment adviser, investment advisor, investment companies, investment management, investment plan, investment planning, life insurance, macro economy, Money, personal finances, saving, savings, security, speculation, term life insurance, universal life insurance, variable life insurance, wealth, Whole Life Insurance | No Comments »
EUREKONOMICS™ Challenges…
July 12, 2010 | Author Dr Agon Fly
Posted in Money, Personal Financial Management, Retirement, Whole Life Insurance | Tags: bank, banking, banks, building wealth, credit, debt, economy, equity investments, financial, insurance, investing, investment brokers, investments, life insurance policies, managing personal finances, Money, money issues, mortgages, policies, Retirement, saving, savings, security, stocks, term life insurance, wealth, Whole Life Insurance | 1 Comment »
EUREKONOMICS™ – Life Insurance Information On-line
March 19, 2010 | Author Dr Agon Fly
It’s 2010. You can find information about every conceivable topic by doing a simple search using any one of a dozen or so search engines: Google, Yahoo, Bing, MSN, etc..
Unfortunately, much of the information you find on any given topic is biased in favor of products you can buy on the listed web sites. Other information is only tangentially relevant and some is just plain silly.
Fortunately, there are sites that provide clear and unbiased information and descriptions of the products they promote. Finding them is not all that easy.
I recently discovered a site that has, in at least one category, done a superlative job of discussing the features and benefits of both whole life insurance and universal life insurance. I heartily recommend this enlightening discussion to you. You can find it at http://www.insurancespecialists.com/life-insurance/whole-universal/
I can’t vouch for the rest of the content on this site, but you may also want to look around to see if it addresses as clearly other topics that interest you . The site deals with a broad spectrum of insurance products and provides links to recognizable providers such as MET, GEICO, and Liberty Mutual. It also links to notable brokerage operations like eHealthInsurance, which represents leading companies such as Anthem BCBS, Aetna, Kaiser, Humana, CIGNA, Celtic, UHC and others.
Posted in Whole Life Insurance | Tags: aetna, anthem bcbs, cigna, ehealthinsurance, geico, insurance, kaiser, liberty mutual, MET, on line insurance information, uhc, universal life, whole life | No Comments »
EUREKONOMICS™ Considers “Financial Planning” An Oxymoron…
November 30, 2009 | Author Dr Agon Fly
The Certified Financial Planner Board of Standards stated mission is “to benefit the public by granting the CFP® certification and upholding it as the recognized standard of excellence for personal financial planning.” The CFP Board’s web site discusses and defines financial planning as “the process of meeting your life goals through the proper management of your finances.”
Here’s the contradiction. Planning is one thing. Management is another thing altogether. Planning may be a prerequisite to managing personal finances but it is not the process itself.
Planning is a map-making process. Map-making is done from an aloof and uninvolved position using esoteric engineering tools to describe real terrain in abstract terms. Managing is what you have to do when you come to the river on the map and discover that there is no way to cross the turbulent waters at that particular point because last week’s flood washed away the bridge on last month’s map.
Financial planning, as described and defined by the CFP® training program, is akin to map-making. The planner is not actively involved in the “the process of meeting [a clients] life goals through the proper management of [their] finances.” The planner’s role is to recommend and sell financial products and advisory services that may or may not actually support the goals of the client during the management phase.
There are, of course, ethical standards to which each CFP® must adhere. There are also practice standards that the Certified Financial Planner Board of Standards, Inc. and other regulatory powers impose and enforce. Add to that the burden of the standards and rules of conduct imposed by bureaucratic regulatory agencies such as FINRA and these collectively impose a set of “established norms of practice” on the planner that often restrict the options the planner may present to the client.
The restrictions may not overtly deny a client the best option, but often direct the options along the “established norms of practice” and thereby deny the possibility of any other better-suited alternatives.
None of what I wrote above intends to demean either the designation or practices of those who legitimately profess themselves to be financial planners. It does intend to clarify that the entire process of planning and managing personal finances is shrouded by an imposing oversight structure and that this structure does not always provide Americans with the most appropriate personal financial advice or products.
Case on Point…
Over the past decade, I have met with and trained hundreds of insurance and financial advisors in life insurance and Series 6 pre-licensing, and a wide variety of continuing education topics including ethics.
- Almost every one of these professionals assumed that investing is an appropriate – perhaps essential – part of every American’s personal financial program – an idea that Behemoths in government and on Wall Street slowly injected into the American psyche over the past 30 years.
- One-hundred percent of them assumed that contributing to a 401(k) or its equivalent was the starting point for every personal financial management program – another idea that slithered into our collective psyche in just the past 20 odd years.
- Fewer than one in ten of these – ahem – professionals (not referring specifically to CFPs®) understood the most basic concepts relating to participating whole life insurance, mutual insurance companies, or even the life insurance products they sold most – universal life insurance.
- Only a handful understood the most elemental economic principles that clearly indicate that participating whole life insurance is the best and safest foundation for virtually every personal financial management plan.
One can more easily grasp the reasons for this strange set of facts when one reviews the history of personal financial management in America since 1974, a history that illustrates the slow erosion of control of personal wealth from the pond of individuals to the oceans of government and Wall Street.
Conclusion…
I am often accused of being “down on” financial planners. Not true. I am down on lemming-like robotic adherence to “established norms of practice” that have misled Americans into a financial swamp that consumes both their money and their liberty while denying the validity of more conservative and viable financial management strategies.
Financial planning is an oxymoron when it denies the use of planning tools and strategies at the expense of individual wealth and liberty.
by Jeffrey Reeves youBEthebank.com
Posted in Legal, Ethical, Moral, Money, Personal Financial Management, Whole Life Insurance | Tags: certified financial planner, economics, ethics, financial, investing, investments, liberties, life goals, managing personal finances, Money, oxymoron, personal financial planning, wealth | 3 Comments »
EUREKONOMICS™ On Whole Life Insurance and Universal Life Insurance Fees
November 25, 2009 | Author Dr Agon Fly
I recently received this question from Christine:
Hi Jeffrey,
I hear those whole life policys have huge fees, what are all the fees?
Here’s my initial answer…
Great question, Christine!
Unfortunately your question implies a common misunderstanding so lets clarify that issue first. Clarifying things may be enough, but if it isn’t feel free to question or comment further.
Whole life insurance policies have no fees associated with them other than a small (usually less than $60) “policy fee” that some insurance companies still charge when an application is submitted. Whole life policies do, however, have three variables that affect their financial performance…
- mortality, which is the guaranteed cost of the insurance, which guarantees the death benefit. If the insurer incurs extraordinary claims activity the non-guaranteed dividends are affected but the guaranteed elements are not
- administration, which are variable costs incurred managing the everyday business of the company
- actuarial, rate making, underwriting, general management
- policy issue, policyholder services, and ongoing accounting
- agency management, marketing, commissions, etc.
- investment returns, which pay for administration and create…
- the guaranteed cash values
- the non-guaranteed dividends
Whole life insurance policies have been manufactured and sold in America for over 150 years. These three variables are well understood and very closely managed. That allows mutual companies like Mass Mutual, New York Life, Ohio National Life and several others to perform consistently and predictably decade after decade, pay consistent dividends even during market crashes like the ones we have experienced this decade, and maintain the highest financial ratings possible for decades on end regardles of the performance of the general economy or the financial sector.
On the other hand, Universal life policies (first introduced into the market by stock brokers in the early ’80s), especially variable UL policies (introduced in the mid to late 90′s), and indexed UL policies (first introduced about 2002), have what you refer to as “huge fees.” While whole life policies guarantee the three major elements of life insurance contracts – premium, death benefit and cash value – UL products do not.
The fees in UL policies consist of…
- annually increasing cost of insurance (guaranteed to be level in whole life policies)
- variable administrative costs, which can increase (whole life policies control these costs so they only affect non-guaranteed dividends)
- cash accounts, in which the insurance company shares none of the risk, that decrease as well as increase (whole life policies guarantee these will increase every year)
Because of these factors, these policies are not recommended by the Eurekonomics’ Money for Life Model. That’s not to say they don’t have a place in the financial lives of some Americans. They may. However, they are not apporpriate as the foundation of one’s personal wealth and finances. Whole life insurance is.
Posted in Money, Whole Life Insurance | Tags: economy, financial, financial performance, financial sector, insurance companies, investing, investment returns, investments, Money, policies, risk, universal life, wealth | 1 Comment »
EUREKONOMICS™, The FDIC, & The Money For Life Model…
November 25, 2009 | Author Dr Agon Fly
Someone recently asked about FDIC insurance for the money in the “banks” suggested by the EUREKONOMICS’ Money for Life Modelfor creating wealth and managing personal finances, which recommends that each American should act as his/her own banker. (Some advisors refer to these as “family banks,” “infinite banks,” or “personal banks.” The use of the term “banks,” “banking,” and “being your own banker” is analogous to how one creates wealth and manages personal finances rather than a direct reference to commercial or chartered banks.)
The answer is…
You can use any savings product – or you can also use your mattress – as your “bank.” So, if you choose an FDIC insured product that’s where the insurance comes from.
However, over the past 100 years participating whole life insurance has proven to best serve those who follow the Eurekonomics’ Money for Life Model for creating wealth and managing personal finances. When your money is in participating whole life insurance, it is in the most secure place possible. All state insurance departments require that insurers maintain reserves adequate to cover the death benefits of the policies they have in force and those death benefits are significantly higher than the cash values. In addition, each state maintains a guarantee fund similar to the FDIC, which guarantees some or all of the cash values in existing policies in the event the insurer fails.
By the way, no American ever lost any of the guaranteed cash value of a participating whole life insurance policy, while many Americans have lost money that was held by commercial banks and especially money that was held in speculativeproducts like mutual funds, ETFs, managed accounts, etc. – aka casinos.
PS – I actually know a man that uses a cigar box hidden under a floor board as his bank. His pit-bull’s bed is over that spot. However, we don’t recommend using your mattress, a tin can in the back yard, or a cigar box and pit-bull as your “Bank.”
EUREKONOMICS™ – How Whole Life Insurance Can Save Social Security
November 19, 2009 | Author Dr Agon Fly
Preamble…
There are hundreds – perhaps thousands – of legitimate uses for participating (par) whole life insurance.
Thoughtful and creative insurance and financial guides recognize par whole life as the most powerful, flexible, and versatile financial tool in the US economy. These enlightened guides use par whole life for applications as simple as fulfilling basic family needs, as complex as the most advanced estate planning and wealth management strategies, and for every imaginable personal and business financial reason.
The most advanced among these professionals follow – and teach their clients to follow the EUREKONOMICS™’ Money for Life Model for creating wealth and managing personal finances. The idea that par whole life could also help solve the financial challenges faced by the Social Security System sprouted from the fertile minds of this group of insurance and financial guides.
The Hypothesis…
The premise is simple; the US Congress would exercise its wisdom (hmmm – is congressional wisdom an oxymoron?) and pass a law that required the Social Security Administration to purchase and maintain…
- a ten million dollar ($10,000,000.00) par whole life insurance policy on each member of the House of Representatives upon election
- a fifty million dollar ($50,000,000.00) par whole life insurance policy on each member of the US Senate upon election
- a one-hundred million dollar ($100,000,000.00) par whole life policy on the President, Vice President, and Speaker of the House of Representatives.
These purchases would create an immediate death benefit pool of one billion two-hundred thirty-five million dollars ($1,235,000,000.00). The death benefit would be payable to the Social Security Trust Fund. The US Congress would not be able to get its greed and power motivated mitts on it, as they would be prohibited from accessing this money for the General Fund.
That’s not a lot of money in the grand scheme of things in Washington DC. However, since…
- the makeup of the US Congress is not static and there tends to be a bi-annual 25% turnover in both the House and the Senate due to retirement, lost elections, and expulsions for criminal or ethical reasons
- and turnover in the White House is guaranteed to occur at least every eight years
one could expect the amount in that pool to grow by about 12.5% each year. That means that the initial one and a quarter billion would become about 5 billion in twelve years, 21 billion in twenty-four years, 86 billion in thirty-six years, and over 350 billion in forty-eight years.
Here’s an even better idea. If every US Senator and US Representative had a term limit of twelve years, there would be 100% turnover at least every twelfth year or about 33% every two years . Then the $1,235,000.00 would grow, based on a conservative estimate, to over two trillion dollars in forty-eight years.
Now, if we inflate the amount of death benefit on new policies issued to the newly elected at the same rate we inflate the compensation and expense accounts of the US Congress, reaching a total of over eight trillion dollars in forty-eight years is a reasonable assumption. In addition, using the dividends from the par whole life policies to purchase additional paid-up insurance would compound the total death benefit even further and achieving death benefits of over twenty trillion dollars or more in forty-eight years is a reasonable expectation.
Moreover, since the actual death benefits that the Social Security Trust Fund receives would not be subject to the whims of the US Congress they could safely be used to purchase secured debt. The SSA would thereby retain the principle. This would create a secure future revenue stream for the SSA.
Finally, if the US Congress would allow the SSA to use just a small percent of the current payroll tax to purchase small par whole life policies on the 51,859,000 current Social Security Beneficiaries, then the Social Security System would begin to receive accelerated death benefits as these beneficiaries die and would become solvent that much quicker.
The Real Possibility
Of course, the possibility that the US Congress would actually act in the best interest of “We the people…” or that a scheme like this that might actually work or could overcome political power brokers is about as realistic as the 7.5% year upon year returns illustrated by some insurance and investment advisors for mutual funds and equity indexed universal life insurance policies.
However, if this scenario ever becomes reality, I want to be the agent that sells the policies.
Jeffrey Reeves, youBEthebank.com
EUREKONOMICS™ – Money Now, Money Later, Money for Life…
August 20, 2009 | Author dragonfly
( Page 2 of 2 )From Kiplinger’s Personal Finance magazine, April 2009MYTH 6. Life insurance is not a good investment. This canard spread as 401(k)s and IRAs supplanted cash-value life insurance as Americans’ most popular ways to build savings while deferring taxes. True, the investment side of an insurance policy has higher built-in expenses than mutual funds do. But two factors point to a revival of insurance as an investment. One is guaranteed-interest credits on cash values, which means that if you pay the premiums, you cannot lose money unless the insurance company fails (see “Savings Guarantees You Can Trust,” on page 55). The other is the boom in life settlements. If you’re older than 65, you can often sell the insurance contract to a third party for several times its cash value — and pay taxes on the difference at low capital-gains rates.Truth: A good investment is one in which you put money away now and have more later. Checked your 401(k) lately?
by Jeffrey Reeves, youBEthebank.com, ltd.
Posted in Personal Financial Management, What Others Say, Whole Life Insurance | Tags: contracts, credit, financial, insurance, insurer, investing, investments, Life, Money, personal, policies, saving, savings, Taxes, undefined, wisdom | No Comments »
Has America Been Listening To The Wrong People About Money?
April 12, 2009 | Author Dr Agon Fly
In 1974 the US Congress passed ERISA and began convincing Americans that saving money was a bad idea. The law they passed convinced us that investing [aka gambling] in an IRA or 401(k) was better than putting our money into guaranteed return savings vehicles. Americans listened. Wall Street and the IRS rejoiced.
In 1977 a high school coach convinced thousands of naive amateurs that they were financial advisors and taught them to strip every penny possible from secure whole life insurance policies and – you guessed it – buy term insurance and invest [aka gamble] everything else in mutual funds. Americans listened. Wall Street and the IRS rejoiced.
A few years later one of the Wall Streeters invented a new kind of life insurance that took the money that whole life insurance saved in guaranteed accounts and moved it into accounts that were not guaranteed but that the Wall Streeter could profit from even if the policy owner didn’t. These kinds of policies destroyed dozens of successful insurance companies and cost billions in lost savings to American families. Americans listened. Wall Street and the IRS rejoiced.
In the ensuing decades Americans listened to advice to invest [aka gamble] in dotcoms, invest [aka gamble] our home equity in all sorts of schemes. Americans were convinced that carrying debt equal to their investments [aka gambles] made some sort of sense. Americans listened. Wall Street, the IRS, and money lenders rejoiced.
BUNK – A THOUSAND TIMES OVER – BUNK!
“THE FACT THAT AN OPINION HAS BEEN WIDELY HELD DOESN’T MEAN THAT IT’S NOT UTTERLY ABSURD.” Bertrand Russell.
America has been listening to the wrong people for almost 40 years. The results are apparent. American families and the American government are bankrupt.
You and I can’t stop the Dolts in DC and the IRS from trying to convince us that they can handle our money better than we can, or the wonks on Wall Street from trying to sell us products that make them wealthy and us poor.
We can stop listening to them. Please, stop listening to the wrong people. Find old ways of creating wealth, preserving assets, and taking care of your families.
By Jeffrey Reeves MA – youBEthebank.com
Why Choose American Insurance Companies…
April 10, 2009 | Author dragonfly
ING To Review “Strategic Options” For U.S. Ops; May Shift Annuity Book
By ALLISON BELL
Published 4/9/2009, National Underwriter“ING Groep N.V. wants to reduce the scope of its U.S. operations ‘over time and as market conditions permit’…”
A Dialogue With Stephen The Stepford Advisor…
April 8, 2009 | Author Dr Agon Fly
This post recounts an email exchange with a credentialed financial advisor. The content has not been modified but the name has been changed and the credentials eliminated to avoid implying that there is any relation between one advisors opinion and the position that might be taken by the credentialing body.
Stephen,
Thanks for your comments.
Although they do not open a discussion but rather, close the door on dialogue, I am responding in detail. [As you will likely recognize, Stephen's mind was made up before there was a chance to respond.]
Stephen The Stepford Advisor wrote:
“YouBeTheBank site recommends that individual purchase life insurance policies to accumulate funds which are then used to fund future activities.”
Specifically we recommend that clients purchase permanent cash value life insurance. We recommend further that they choose dividend paying policies from mutual companies. Please, take the time to read further in the blog and you’ll discover that we justify this approach in some detail. Better yet, order copies of Money for Life! How to Thrive in Good Times and Bad by Jeffrey Reeves [that's me] and Becoming Your Own Banker by R. Nelson Nash. You’ll discover the amazing power of this approach, as many other credentialed advisors have done.
Stephen The Stepford Advisor wrote:
“It fails to mention that the costs of owning the policies will be substantail,(sic)”
There are – of course – costs. Substantial? You might want to define that for yourself first and for your practice second. Many advisors find the approach not only helpful but essential to their practice and do not see the costs as either substantial or burdensome.
There is another aspect of this that you may want to consider. There are many different forms of permanent cash value life insurance available in the marketplace. Some carry a heavy cost burden while others do not. If you don’t know which policy is being used you do not know whether or not the cost is “substantial”. Whole life policies from mutual companies tend to be less costly. Universal lifepolicies tend to be more costly – especially when they are improperly funded. Term insurance policies tend to be the most expensive.
Stephen The Stepford Advisor wrote:
“as will the restrictions on the availablity(sic) of cash.”
Again, Stephen, you may not have all of the information you need. My clients can access all of the cash in their policies whenever they want it. There is a bit of a lag – a day or two for processing and mail time – since the request must be made through the insurer. Immediate needs are satisfied with overnight delivery. This is not uncommon for mutual companies that are responsible only to their policy owners and not to shareholders or other outsiders.
Stephen The Stepford Advisor wrote:
“The accumulation of funds should never be done with life insurance as the primary choice.”
My Grandpa told me to “never say never and always avoid always.” Your statement is a shibboleth – an oft repeated mantra that contains no truth but that has been repeated so many times that people assume it must be true. In 1492 the world was thought to be flat.
To a thinking person who truly explores this approach to creating and managing a personal economy, the opposite is true. Whole ife insurance belongs in the foundation of every personal economy. That was the opinion of most financial planners prior to the advent of EF Hutton creating UL, A. L. Williams brainwashing amateurs, and Wall Street’s merchants of misinformation misleading America into the mutual fund swamp beginning in the 1980’s.
For over 150 years, and still today, dividend paying whole life insurance has been and is the single best place to put the money you use as a foundation for your personal economy and wealth building system.
Stephen The Stepford Advisor wrote:
“Individuals who truly fear banks should buy treasury securities instead. There are no costs as a practical matter.”
Nowhere in our blog or our book do we state or imply that you should fear banks. In fact, the practices of Money for Life are based on the banking model. Treasuries, like all investments, are for the limited few who have already established a foundation. In addition, there are always (sorry Grandpa) costs. Most commonly ignored by Stepford Advisors is lost opportunity cost.
Stephen The Stepford Advisor wrote:
“Yet the fact is, if the bank is insured via FDIC, then for all practical purposes, the initial $100,00 is not at risk.”
True. FDIC insures up to $100,000.00 per account. But, again, we never suggested that money in banks is at risk. Also, are you aware that the 50 state insurance guarantee funds typically insure about $250,000.00 per policy? Are you aware that no whole life policy holder in the history of the insurance industry in the US has ever lost even one dollar of their guaranteed values? Banks can make no such claim. Mutual funds fail this test. Stepford Advisors run and hide.
Stephen The Stepford Advisor wrote:
“Almost no one needs that amount of money to fund future plans.”
Of all your comments, Stephen, this is the one that challenges me the least. I’ve been serving clients for over 35 years. During that time every one of those clients encountered a financial need so great that they had to invade their retirement accounts…every one of them. Here are a few situations that demand even larger amounts of secure money.
-
Fidelity Funds reports annually on the unfunded medical expense needs of a couple that will retire in that year. In 2007 that was $207,000.00. That’s the out-of-pocket after insurance payments have been made.
-
Another fund company (Vanguard, I believe) projects the long term care needs of retiring couples – for 2007 it was $350,000.00.
-
One of my best friends has two Down Syndrome children. I expect they’ll continue to need that $100,000.00 almost every year.
-
Kyle was injured in a skiing accident and after months in a body cast, two years of physical therapy, and $125,000.00 in debt he is back to work. Seems each of these adds up to more than the $100,000.00 that “no one needs”.
Stephen The Stepford Advisor wrote:
“You should reconsider your recommendation as it fails every reasonable test of jusgement.(sic)
Stephen, the recommendation and my judgment are just fine.
Moreover, the processes and practices that we talk about on YouBeTheBank.com and TheMoneyforLifeBook and blog are tried, tested and proven to produce results that are guaranteed – a word that Stepford Advisors are not allowed utter. ”Guaranteed” is entirely legitimate in the context of dividend paying whole life insurance from mutual companies. I can assure you that “every reasonable test” of judgment supports what we teach and practice.
I can further assure you that the advisors who apply these practices in their planning help more people than those who don’t. One of our understudies (a former Sr. VP with a major, well known international brokerage with a large ad budget) proposed his first case last week to a very sophisticated investment client and it passed “every reasonable test” of judgment for all parties – advisor, client, attorney, accountant and family. Imagine that.
Stephen, I want to end with a word of thanks, again. My mission is to educate and inform. Your comments give me that opportunity. I urge you to learn more than you know, earn more than you imagine possible, and begin to question the shibboleths.
Another Wake Up Call For The “Invest The Difference” Crowd…
March 28, 2009 | Author dragonfly
Where do mutual insurance companies keep their money? Bonds are a staple of mutual insurance company investments. Opponents of whole life insurance from mutual companies say returns on bonds simply don’t compete with the equity [aka stock] market.
BUNK – AGAIN!
Below is an amazing chart extracted from John Maulden’s Weekly Letter that should make every “buy term and invest the difference” snake oil sales rep rethink his or her position. The commentary on these raw numbers is extraordinary and I encourage you to read the entire letter.
The commentary does not claim that you should not invest in equities or that your entire portfolio should be in bonds. It does caution - the Prudent Man Rule trumps the Prudent Investor Rule again in this instance – that you should eschew advice from anyone suggesting that equity investments or mutual funds [stock or bond funds] are the only acceptable alternatives for “the long term.”
What does this demonstrate relative to whole life insurance?
During the past ten years, a high early cash value whole life insurance policy from one mutual company outperformed the DJIA by as much as 130% – and even outperformed the DJIA based on guaranteed values. That’s a whole lot [pun intended] better than investment returns from mutual funds.
Whole life insurance policies are reliable financial instruments. Whole life insurance has proven for over 150 years that it belongs in the foundation of every personal economy.
If your financial advisor suggests otherwise, you might want to find a new advisor.
Posted in Personal Financial Management, Whole Life Insurance | Tags: bond funds, buy term and invest the difference, equity investments, insurance company investments, investment returns, life insurance policies, life insurance policy, maulden, mutual funds stock, mutual insurance companies, mutual insurance company, Personal Financial Management, prudent investor rule, prudent man rule, Whole Life Insurance, whole life insurance policies | No Comments »
Buy And Hold? A Sure Loser For Amateur Investors…Like Us.
March 25, 2009 | Author dragonfly
Gary D. Halbert’s Forecasts & Trends…
Ideas are strengthened when they are endorsed by informed experts. Gary Halbert has been proving for a very long time that the buy and hold strategy is flawed. Below is an excerpt from another of his brilliant articles on this topic.
Unspoken by Mr. Halbert but obvious from the article is the corollary that most Americans should not be investing in the first place.
Recognize that investing for the long term is an oxymoron. If you had used the buy and hold strategy starting in 1998 and planned to rely on your investments for income in 2009, you would have less money today than you invested over the past ten years. You would have lost money. Your $200,000.00 investment could be worth less than $90,000.00.
On the flip side, if you had prudently placed you money in a quality whole life insurance policy you could have almost $250,000.00 in cash values growing tax free and readily accessible for income, opportunities, emegencies, or a legacy for those you care most about.
America has been bamboozled by the shennanigans of the chalatans and scallyways of Wall Street for too long. It’s time to return to America’s fundamental financial model – save, build equity in your home, finance only when it’s absolutley essential, invest only form assets and never from earnings or ready reserves.
More Buy-And-Hold Myths Debunked
March 24, 2009
“…Unfortunately, this has not slowed the flood of misinformation being distributed by the usual suspects in an effort to support buy-and-hold investment strategies. It seems that the more I write about skewed articles, studies, etc., the more examples I see of them being generated by Wall Street and the brokerage community to sway unsuspecting investors. [emphasis added]
I recently received an e-mail from a major mutual fund family promoting the buy-and-hold concept. While I am not at all surprised that a mutual fund company would be trying to keep investors in their funds, I was disappointed to see that the argument used was a very old, and thoroughly discredited line of reasoning known as “don’t miss the best days in the market.”
I’m not going to disclose the company that published the e-mail I received, but it really doesn’t matter. You can look in the archives of virtually any major brokerage firm or mutual fund family and likely see similar titles. As I pointed out in the March 3 E-letter, it’s in their best interests for you to stay invested, even though doing so may not be in your best interest. Thus, you need to look out for your own best interest when you deal with them.”
Buy and Hold? Long term? Whom do you want to make wealthy?
I encourage you to follow this link to the full article.
Jeffrey Reeves
Posted in Personal Financial Management, What Others Say, Whole Life Insurance | Tags: financial, halbert, insurer, interest, investing, investments, legacy, Life, Money, saving, savings, Taxes, undefined | No Comments »
How’s Your Insurance Company Doing…
December 18, 2008 | Author dragonfly
Financial advisors that have studied the capabilities and performance of the insurance and investment companies they represent have known for a long time that developing the foundation for a successful personal economy demands the use of the most powerful, flexible, versatile and secure financial tool in the advisors tool belt…participating whole life insurance from a mutual life insurance company. This class of product has been call the “Swiss Army knife of Financial Products.”
It appears the rest of the financial community is awakening to this fact also. see the Forbes Article below…
OutFront
Mutual Respect
12.22.08, 12:00 AM ET
Mutual Life insurers are stuck in the mud. If you’ve pizzazz, you work for a stockholder-owned insurer. That was the refrain from stock insurers a few decades ago.
Without the shareholders’ lash to whip them into shape and stock with which to buy rivals, policyholder-owned insurers were sure to get crushed by publicly traded rivals. So went the argument, and so began a flight from mutual ownership that included such stalwarts as Equitable, Prudential and Metropolitan.
Read the whole article here – Who’s sneering now?
Policy Differences
Economic tumult aside, top mutually owned insurers have increased book values this year. Not so their public rivals.
| COMPANY | BOOK VALUE ($BIL)* | %CHANGE THIS YEAR | A.M. BEST RATING |
| MUTUALS | |||
| MASS MUTUAL | $8.4 | 5% | A++ |
| NEW YORK LIFE | 12.0 | 0 | A++ |
| NORTHWESTERN MUTUAL | 12.4 | 2 | A++ |
| PUBLICS** | |||
| HARTFORD LIFE | 4.7 | -19 | A+ |
| METROPOLITAN LIFE | 12.0 | -9 | A+ |
| PRUDENTIAL LIFE | 3.8 | -46 | A+ |
*Statutory surplus and capital as of Sept. 30. **Surplus and capital at each insurer’s biggest operating subsidiar Source: SNL Financial.
Conventional Wisdom = Bad Ideas: This One About Life Insurance For Children…
November 28, 2008 | Author dragonfly
Bad advice like that which appears below in the excerpt from the article 15 Insurance Policies You Don’t Need by Lisa Smith on Investopedia is painful for those who truly understand the value, power, flexibility and versatility of cash value life insurance. The article claims that life insurance on children is not desirable.
BUNK!
Read R. Nelson Nash’s article Jeanette’s Banking System or The Education of Emily Elizabeth and you will understand that cash value life insurance purchased on children and grandchildren can be more powerful and a lot safer than the typical 529 Plan or Coverdale IRA, which are foolish gambles at best.
___________________________
8. Life Insurance for Children
Life insurance is designed to provide a safety net for your heirs/dependents. Because children don’t have heirs to worry about and, statistically speaking, most kids will grow up safe and healthy, most parents should not purchase life insurance for their kids. Instead, use the money that you would have spent on life insurance to fund an education plan or an individual retirement account (IRA). (To read more on saving money for your kids, see Investing In Your Child’s Education, Teaching Your Child To Be Financially Savvy and Don’t Forget The Kids: Save For Their Education And Retirement.)
Other items in this article make some sense. Discussions of cash value life insurance by pundits and feature article writers, however, generally lack in both accuracy and depth of understanding. Read the entire article here…
http://www.investopedia.com/articles/pf/07/cutpolicies.asp?partner=forbes-am&viewed=1
Compare Two Types Of Whole Life Insurance…
October 23, 2008 | Author Dr Agon Fly
| The following comment was submitted by an advisor in response to a recent article by Dr Agon Fly that appeared on ProducersWeb, a financial industry forum. I believe it could be useful for anyone interested in understanding life insurance policies and – more importantly - in securing their future.
ProducersWeb wrote: |
| What about U.S. Treasury decision 1743 that states that a dividend from a life insurance policy is nothing more than a return of a deliberate overcharge of premium imposed by mutual company? |
I’ve been unable to track down the reference made in your comment. It is true, however, that dividends from a mutual company are considered a return of unneeded premium. Your use of inflamitory terms like “nothing more” and “deliberate overcharge,” and “imposed” are, however, off base [at best].
Let’s add some perspective. If a mutual company and a stock company both offer whole life contracts, have the same or similar mortality charges, administrative costs, reserve requirements and guaranteed cash value commitments, the cost of the policies would be about the same for both insurers.
The stock company with the non-par policy would, however, still charge more than their base costs to make sure they made a profit to propell the business. It would also have to charge some excess premium to pay taxable stock dividends to their shareholders. You, as the policy owner would, therfore be paying “nothing more than a deliberate overcharge imposed by the insurer” and receiving nothing in return for having paid the excess.
The mutual company would also charge extra premium to propell its business for the benefit of its policy owners [as opposed to outside investors] and, unlike the stock company, would return that extra premium to the policy owners as a tax-free dividend.
Which would I prefer? I’d rather the return of the “overcharge” be reinvested in my policy than paid to an outside shareholder.
I hope this adds a bit of perspective. Many advisors across America recognize participating cash value whole life insurance as the most versatile, flexible and powerful financial tool available to Americans who want to…
- gain control of the money that flows through their lives,
become free from debt-to-others,
secure an income protected from inflation and that they cannot outlive,
assure ready cash for life’s surprisingly unsurprising surprises, and
create a legacy of both wisdom and wealth to pay forward to those they care most about.
These advisors study and understand every form of life insurance available in the market today. They do not disparage any of them since each may have a place in an individual client’s personal economy.
These advisors believe that it is every professional advisor’s duty and responsibility to know and fully understand all of the financial products that may be available to their clients. How else could they make honest recommendations?
Posted in Whole Life Insurance | Tags: contracts, economy, financial, insurance policy, insurer, interest, legacy, Life, Money, stock company, stock s, stocks, undefined, wholemortality, wisdom | No Comments »
Why Mutual Insurance Companies and Credit Unions Continue to Thrive…The Prudent Man Rule
October 14, 2008 | Author Dr Agon Fly
The Prudent Man Rule is based on common law stemming from the 1830 Massachusetts court decision – Harvard College v. Armory. (26 Mass.) 446, 461 (1830). The Prudent Man Rule directs trustees “to observe how men of prudence, discretion, and intelligence manage their own affairs, not in regard to speculation, but in regard to the permanent disposition of their funds, considering the probable income, as well as the probable safety of the capital to be invested.”
Benjamin Graham, the “Dean of Wall Street” and Warren Buffet’s mentor, held that an investment has two essential characteristics: “An investment operation is one which, upon thorough analysis, promises safety of principal and a satisfactory return. Operations not meeting these requirements are speculative.”
If we put these two principles together it becomes clear that – regardless of how “diversified” one’s “portfolio” – almost every “investment” that was presented to American consumers during the past thirty years is no investment at all; it is mostly “speculation.” Calling them “investments” is a ploy to justify having uninformed registered reps sell them to uninformed consumers.
Mutual insurance companies and your local credit union are among the most respected financial businesses in America – and with just cause. While the rest of America’s and the world’s financial infrastructure is imploding, mutual insurance companies and credit unions are doing quite well. The reason that is so? They follow the Prudent Man Rule in its purest form.
Insurance policies issued by mutual companies continue to increase in value tax-free, every year at a guarnateed rate and continue to pay tax-free dividends as well. Credit Unions are less at risk than other depositor funded institutions because they continue to serve a small community as non-profits. In both cases, the companies are owned by policy owners or depositors, not by outside investors greedy for profits at any cost.
Mutual fund companies and other investment vehicles do not guarantee or even hint at promising “safety of principal and a satisfactory return.” They claim that “diversification” makes up for that failure. It doesn’t. That is apparent during these days of bank failures, investment company executives being indicted for foisting false financial products and promises on “we the people,” and tumultuous market fluctuations.
The stock markets, mutual funds, and virtually every financial product promoted to Americans represent unwarranted gambles – speculation – dressed up as “investments.” Even the money you pour into your Las Vegas style 401(k) plan is unprotected from the speculative nature of the underlying investments.
Secure savings in credit unions and financial growth in cash value life insurance are today – as they have always been – the surest and safest places for your money; the most solid foundation for your personal economy; the most likely source for secure retirement income, ready cash for life’s surprises and a meaningful legacy for those you care most about…not to mention freedom from debt.
________________________
Posted in Money, Personal Financial Management, Whole Life Insurance | Tags: bank, banking, banks, benjamin graham, credit, credit unions, debt, economy, financial, insurance policies, investing, investments, legacy, Money, mutual insurance companies, prudent man rule, Retirement, saving, savings, stocks, warren buffet | 2 Comments »
The Money for Life Model of Financial Management and The Infinite Banking Concept(TM)
September 28, 2008 | Author dragonfly
I regularly receive questions that reference The Infinite Banking ConceptTM of R. Nelson Nash. The Money for Life Model of Financial Management guides its adherents on a path similar to the one Mr. Nash suggests.
A visitor to our web site recently submitted a series of clear and precise questions about three of the core concepts found in both programs; the Paid Up Additions Rider, guaranteed cash values and policy loan interest. The complexity of each of these makes sense to well-informed agent/advisors, but may befuddle a consumer – or as the questioner puts it a “normal guy.” [Hmmm! Does that mean those of us who call ourselves advisors are "abnormal guys?"?]
The questions and comments of the visitor who wrote to me are indented and in quotes.
“The first thing I am interested in is a “normal guy’s” explanation of a Paid Up Additions [PUA] rider. I cannot believe all the stuff that has been written about Infinite Banking that is lacking a clear explanation of just how it works.”
A reading of Money for Life…How to thrive in good times and bad would help clear up some of the ‘normal guy’s” questions you have.
“There are certain questions I have:
What is a PUA?”
A PUA has a variety of names. Basically, a paid up additions rider is a single premium insurance policy that is purchased with separate premium contributions in excess of the premium required by the base policy to which the PUA rider is attached. A PUA generally has minimal cost associated with it [commissions, policy issue fees, etc.], which makes it a most efficient way to increase both the death benefit and the cash value available for use as your ‘bank.’
There are wide varieties of restrictions and limitations on this rider form by different companies. Some of these riders lapse if they are not exercised, which means that you have to contribute each year or you forfeit the option to contribute in any subsequent year. Others allow partial contributions or include ‘catch-up’ provisions in case you miss a portion or even all of one year’s deposit.
Purchasing paid up additions using the PUA rider may put a policy in jeopardy of becoming a modified endowment contract [MEC]. This would result in the policy losing the benefits that make cash value life insurance so powerful and flexible as a cash accumulation and cash management tool.
“What does it mean that the policy is ‘engineered to increase in value every year.’?”
Whole life contracts are designed to guarantee an increase in the basic cash value each year. In the early years of most policies, the cash value increase is minimal due to the structure of the policy issue process, the long-term cash accumulation strategy, and the commission program.
The policy that I most frequently recommend is specifically designed – or engineered – to create cash value in the first year. This policy guarantees that about 90% of the base premium is credited to the guaranteed cash value in the first year and nearly 100% or more of the base premium in every year thereafter. The annual contribution of the PUA contributes 93% of the annual premium to guaranteed cash value every year it is paid.
“When I take a policy loan, do I or do I not have to pay the insurance company interest? If yes, then does this interest go into my cash value or go somewhere else?”
It depends on the company, but generally it works something like this; interest on policy loans is always assessed. If you fail to pay it, the outstanding interest and the policy loan itself are liabilities against both the cash value and the death benefit. Most policies, however, continue to pay the guaranteed internal interest rate when a loan is outstanding.
In effect this means that the interest you pay the insurer is a refund of the interest the insurer credited your account while the money in your account was on loan to you. The rate the insurance company charges you is generally a bit higher than the internal rate. This is to make sure each policy owner covers the cost of managing the loan and other policy owners are not subsidizing loans in which they have no interest.
Loans and interest are often described using reference to the ‘banking’ process for simplicity. It’s important that each advisor explain how it works with individual policies and loans. It makes a great deal more sense when the policy owner can see the actual results.
Conclusion…
Whole life insurance, used as a fundamental component of your clients’ personal economic structures, is an extraordinarily powerful and flexible tool. It is the Swiss Army Knife of financial products.
Over the past three decades or so the financial community’s understanding of whole life insurance has diminished dramatically. Whole life insurance has been misrepresented by those who can’t or won’t sell it.
The financial mess in America today is the direct result of the failure of the financial community to support the traditional financial values, practices, and products that made America the greatest economy and country in history. The greed on Wall Street jeopardizes our wealth and well-being as a nation and the wealth and well-being of “we the people.”
It’s time to again reclaim those values, reinstitute those practices, and recognize those financial products as essential to every successful personal economy.
If we fail at this we will fail completely.
Home Equity Isn’t Money But A Lot Of Families Think It Is…
July 15, 2008 | Author dragonfly
The Measure of Wealth
A recent ad by the national Association of Realtors states that home equity accounts for about 65% of the average American’s wealth.
WOW!
There’s something wrong with that equation. That means that a family with a $500,000 house and a $300,000 mortgage – $200,000.00 in equity - plus a car loan and a few thousand dollars on a credit card has more debt than they have assets when you exclude the home’s equity.
Do the math. If $200,000.00 is 65% of what the family puts on the balance sheet, the total on the bottom line is about $305,000. Add up the mortgage, a $25,000.00 car loan and $5,000.00 in credit card debt and you get $330,000.00.
The Bottom Line on the Family Balance Sheet
Failure to recognize that the bottom line is not really the bottom line leads to the misconception that a positive “net worth” justifies all kinds of unsound economic behavior – like borrowing the equity to support a lifestyle that the family can’t afford in the first place.
A Solution
Here’s a solution that can help almost everyone, but especially those in their 30′s, 40′s and 50′s with children still at home. Begin building your financial foundation today. Buy a properly funded whole life insurance policy [you can make sure a policy is properly funded when the guaranteed cash value equals the initial death benefit at age 95 or 100] that will accumulate enough cash value to allow you to pay of the mortgage in half the original term; e.g., 15 years for a 30 year mortgage, 10 years for a 20 year mortgage, etc.
During the accumulation period [before you pay off the mortgage] you can use the cash values in the policy to finance things like cars and the kids education. As long as you repay the loans you make to yourself to pay for these items [you'd be foolish not to], you’ll still have the money to pay off the mortgage.
Managing your personal economy isn’t all that difficult once you recognize that there are solutions to every financial challenge and every money need and that the Behemoths want not to solve your problem but to pad their pocketbooks.
BY Jeffrey Reeves MA, EUREKONOMIST
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Posted in Money, Personal Financial Management, Whole Life Insurance, You BE the "Bank" | Tags: annuities, annuity, bank, banker, banking, banks, be the bank, become your own bank, becoming your own banker, books on personal finance, debt, debt elimination, debt management, debt reduction, debt to others, financial, financial advice, financial advisor, financial planner, financial planning, health insurance, housing market, infinite banking, insurance dividends, investing, jeff reeves, jeffrey reeves, life insurance, long term care insurance, Money, money for life, mortgage, mortgage management, mutual insurance, mutual insurance company, nash, nelson nash, Personal Financial Management, r nelson nash, Retirement, retirement income, retirement planning, saving, term life insurance, The Four Pillars, universal life insurance, variable life insurance, Whole Life Insurance, why buy whole life insurance, why whole life insurance, wisdom about money | 1 Comment »
The Scrooge and Marner Bank vs Whole Life Insurance…
July 11, 2008 | Author dragonfly
Scrooge & Marner Bank…
Consider this conversation with Mr. Silas Marner, the not-so-friendly banker at Scrooge & Marner Bank.
You speak:
“Good day Mr. Marner. Thanks for taking time to speak with me today about the purchase of an asset of real property. Mr. Marner, the property I want to purchase is valued at $1,000,000.00. Here are the terms I would like to have for this purchase…
- First, I want to purchase this property with no down payment.
- I also want to purchase the property without any credit check and based solely on my willingness to commit to level monthly payments that your bank guarantees will never increase.
- I want a guarantee from the bank that the property will never decrease in value.
- I want any growth in equity value to be tax free.
- If I decide later that I no longer wish to own this property, I want the bank to guarantee that the equity I have built up will be paid to me in cash or as a lifetime income that I cannot outlive and that the property will revert to the bank.
- If I decide that I don’t wish to make payments for some period of time I want the bank to automatically make those payments for me as a loan against my equity at a guaranteed rate of interest.
- If I want to borrow against my equity for any reason, I want the bank to make the loan without question or qualification.
- If I do borrow, I want the bank to only charge me a guaranteed rate that we agree upon before signing the purchase application – even if the loan is requested years into the future – and I want the bank to accept any payments I make, even if they are less than enough to repay the loan.
- If I die prematurely, before the property is fully paid for, I want the bank to pay my heirs the entire $1,000,000.00, less any loans I have taken, regardless of how many payments I have made – even if I die in the very first month after purchasing the property.
- I want to be able to make extra payments and I want the bank to keep track of them for me.
- Finally, Mr. Marner, I want to pay the bank a few extra dollars each month so that if I get sick or hurt and can’t work the bank will make my payments for me.
So, what do you think Mr. Marner; do we have a deal?”
Silas Marner speaks:
“NO! No to everything. Such foolishness is wasting my time. My bank doesn’t work that way.”
A Mutual Insurance Company…
Hmmm! A conventional banker finds these terms ludicrous. However, if you were to apply those questions to a whole life insurance contract from a mutual company, the answers would all be ‘Yes!”.
It’s true, you can purchase a $1,000,000.00 asset that
- requires only that you qualify medically,
- guarantees a tax free increase in equity each year,
- has a guaranteed level monthly payment,
- allows you to take a loan against its equity at will, at a guaranteed rate and that you can repay on your own terms,
- assures your heirs full value of the asset,
- promises to pay your premium if you are sick or hurt or just can’t make a payment for whatever reason.
Wouldn’t a “bank” like that be valuable to you?
_________________________
_________________________
Posted in Whole Life Insurance | Tags: agon fly, annuities, annuity, bank, banker, banking, banks, be the bank, become your own bank, becoming your own banker, bonds, book on money, books on money, books on personal finance, circle of wealth, debt, debt elimination, debt management, debt reduction, debt to others, disability income insurance, Dr Agon Fly, Dr_Agon_Fly, financial, financial advice, financial advisor, financial planner, financial planning, health insurance, housing market, how to thrive, infinite banking, insurance dividends, investing, jeff reeves, jeffrey reeves, leap system, life insurance, long term care insurance, mass mutual, mass mutual insurance, massachusetts mutual life insurance, millionaire, Money, money book, money books, money for life, money under management, money wisdom, morningstar, morninstar report, mortgage, mortgage management, mutual funds, mutual insurance, mutual insurance company, nash, nelson nash, new york life, new york life insurance company, northwestern mutual life, passive income, personal financial books, pirates of manhattan, r nelson nash, Retirement, retirement income, retirement planning, saving, stock dividends, stock market, stocks, Tags: 401(k) plans, Tags: 801(k) plans, Taxes, term life insurance, The Four Pillars, the guardian life insurance company, thrive, universal life insurance, variable life insurance, Wall Street, Whole Life Insurance, Who’s helping you, why buy whole life insurance, why whole life insurance, wisdom about money | No Comments »
Real Estate and Whole Life Insurance: A Financial Marriage Made In America
July 3, 2008 | Author jr
“Louis, I think this is the beginning of a beautiful friendship.” CASABLANCA, 1942
This is going to be a brief but replete post.
Investment Real Estate
This post outlines a strategy that protects you against unforseen loss and guarantees a profit to your estate if you die owning investment real estate.
Every time you buy an investment property you have to establish a fund to assure that the taxes and insurance get paid, the maintenance gets done and that contingencies don’t derail the investment’s potential.
Whole Life Insurance
These expenses get taken care of If you put that money into a savings vehicle and draw it out as needed. If, however, you use a whole life insurance policy as your repository, there are other advantages that accrue. Here are just few:
- You can borrow the money from your policy to pay for these expenses and the policy will continue to earn interst and be credited with dividends as if you had not borrowed a penny.
- A single policy can support multiple properties’ money needs at once.
- With proper ownership and borrowing arrangements the money that flows through the policy will be entirely tax free.
- You can repay the money you borrow and perpetuate the usefullness of the policy for decades.
- At death your named benficiary will receive the face amount of the policy – less any outstanding loans – as a tax free death benefit.
There are, of course, many other benefits that a real estate investor can derive from the proper use of whole life insurance (not universal life insurance at this time) in support of an investment program. Consult a properly informed financial guide before launching such a program.
Posted in Movie Quotes, Whole Life Insurance, You BE the "Bank" | Tags: bank, banker, banking, banks, be the bank, become your own bank, becoming your own banker, debt, debt elimination, debt management, debt reduction, debt to others, financial, financial advice, financial advisor, financial planner, financial planning, housing market, infinite banking, insurance dividends, investing, jeff reeves, jeffrey reeves, life insurance, mass mutual, Money, mortgage, mortgage management, mutual insurance, mutual insurance company, universal life insurance, Whole Life Insurance, why buy whole life insurance, why whole life insurance, wisdom about money | No Comments »
How To Buy A Car And Make Money Doing It…
June 4, 2008 | Author dragonfly
“I’m king of the world!” Titanic, 1997
Americans have had a love affair with automobiles for over a century. We buy them with abandon; new, used, wrecked and restored. A car inflates our ego, provides useful transport and crystallizes our status. For many reasons it makes us feel like we are royalty; in charge of our world.
Unfortunately the opposite is true. Spending thousands of dollars on a product that is worth less than we paid for it as soon as we take possession deflates our bank accounts and our balance sheets at the same time.
There is a way, however, to profit from your car purchases. Here’s a thumbnail sketch of how it works.
My wife and I just bought our first car since 1993. We borrowed the $24,000 from two of our “banks” - we use participating whole life insurance policies for our banking – to buy the car and will pay ourselves back the same as if we had borrowed from Guido the Loan Shark or the local bank (both having about the same level of interest in our well being.)
If we had borrowed from the bank our payments would have been about $565 for 48 months and the total we repaid would have been just over $27,000. Once the car was paid for we would be free from debt and would own a virtually valueless vehicle.
Instead, we are going to repay our “banks” $600 each month for 48 months – a rate of return of about 9.25%. (Why not higher, since all of the money returns to us?). When those 48 months have passed we will have $28,800 in our “banks” and still have the virtually valueless vehicle. In other words, we will have captured, in our accounts, all of the money that otherwise would have gone to the bank as principal and interest.
Not only that, but our “banks” would have been earning interest on the money that we repaid so the actual internal rate of return would be even higher - approaching 13%. In addition, the earnings would be tax free and virtually guaranteed. Find that in the “markets!”
Granted, there’s a start up period where you have to accumulate money in your “banks”. That is not as hard as it may seem and you can start at any level you choose. Some have started with a few dollars a month and others with ten thousand dollars a month once they discovered how this process works to serve their interests and not those of banks and the other Behemoths.
Learn how The Money for Life Model lets YouBeTheBank and control the money that flows through your life. — www.TheMoneyForLifeBook.com
__________________________
Posted in Money, Movie Quotes, Personal Financial Management, Whole Life Insurance, You BE the "Bank" | Tags: 401(k) plans, agon fly, annuities, annuity, bank, banker, banking, banks, be the bank, become your own bank, becoming your own banker, bonds, book on money, books on money, books on personal finance, circle of wealth, debt, debt elimination, debt management, debt reduction, debt to others, disability income insurance, Dr Agon Fly, Dr_Agon_Fly, financial, financial advice, financial advisor, financial planner, financial planning, health insurance, housing market, how to thrive, infinite banking, insurance dividends, investing, jeff reeves, jeffrey reeves, leap system, life insurance, long term care insurance, mass mutual, mass mutual insurance, massachusetts mutual life insurance, millionaire, Money, money book, money books, money for life, money under management, mortgage, mortgage management, mutual funds, mutual insurance, mutual insurance company, nash, nelson nash, new york life, new york life insurance company, northwestern mutual life, passive income, personal financial books, pirates of manhattan, r nelson nash, Retirement, retirement income, retirement planning, saving, stock dividends, stock market, stocks, Tags: 801(k) plans, Taxes, term life insurance, The Four Pillars, the guardian life insurance company, thrive, universal life insurance, variable life insurance, Whole Life Insurance, Who’s helping you, why buy whole life insurance, why whole life insurance | No Comments »
Family Money For Life…
May 25, 2008 | Author dragonfly
This week my wife and I have been visiting her out of town children and grandchildren. With her permission I’ve been blessed to have been adopted by these wonderful people and her other kids and grandkids who live just a block or two away from us in Denver.
I want to leave the grandchildren a legacy of wisdom and wealth. Since I am not sure I have any wisdom to pay forward, I plan at least to leave them with some money and an intelligent way to handle money – some may call that a form of wisdom.
I’ve set up a perpetual life insurance fund for each of them individually and all of them collectively. It isn’t simple but it’s easy. It works in a way that insures that the grandkids will have money for college, cars, and houses for themselves and for their children and their grandchildren and, if they maintain the trust that funds the legacy, for many generations to come.
This is just one of dozens – perhaps hundreds – of strategies that can only be structured with participating cash value life insurance. We also use life insurance to fund our vacations and our car purchases in a way that allows us to borrow from our life insurance cash value, repay ourselves and return all of the principal and interest to our policies that we would otherwise have paid to some banker.
We call this the Money for Life Model…
Learn more; buy the book –> www.TheMoneyForLifeBook.com
Posted in Money, Whole Life Insurance | Tags: agon fly, annuities, annuity, bank, banker, banking, banks, be the bank, become your own bank, becoming your own banker, bonds, book on money, books on money, books on personal finance, circle of wealth, debt, debt elimination, debt management, debt reduction, debt to others, disability income insurance, Dr Agon Fly, Dr_Agon_Fly, financial, financial advice, financial advisor, financial planner, financial planning, health insurance, housing market, how to thrive, infinite banking, insurance dividends, investing, jeff reeves, jeffrey reeves, leap system, life insurance, long term care insurance, mass mutual, mass mutual insurance, massachusetts mutual life insurance, millionaire, Money, money book, money books, money for life, money under management, mortgage, mortgage management, mutual funds, mutual insurance, mutual insurance company, nash, nelson nash, new york life, new york life insurance company, northwestern mutual life, passive income, personal financial books, pirates of manhattan, r nelson nash, Retirement, retirement income, retirement planning, saving, stock dividends, stock market, stocks, Tags: 401(k) plans, Tags: 801(k) plans, Taxes, term life insurance, The Four Pillars, the guardian life insurance company, thrive, universal life insurance, variable life insurance, Whole Life Insurance, Who’s helping you, why buy whole life insurance, why whole life insurance | No Comments »
Tom And Jerry And Money…
May 15, 2008 | Author dragonfly
Posted in Money, Personal Financial Management, Whole Life Insurance, You BE the "Bank" | Tags: agon fly, annuities, annuity, bank, banker, banking, banks, be the bank, become your own bank, becoming your own banker, bonds, book on money, books on money, books on personal finance, circle of wealth, debt, debt elimination, debt management, debt reduction, debt to others, disability income insurance, Dr Agon Fly, Dr_Agon_Fly, financial, financial advice, financial advisor, financial planner, financial planning, health insurance, housing market, how to thrive, infinite banking, insurance dividends, investing, jeff reeves, jeffrey reeves, leap system, life insurance, long term care insurance, mass mutual, mass mutual insurance, massachusetts mutual life insurance, millionaire, Money, money book, money books, money for life, money under management, mortgage, mortgage management, mutual funds, mutual insurance, mutual insurance company, nash, nelson nash, new york life, new york life insurance company, northwestern mutual life, passive income, personal financial books, pirates of manhattan, r nelson nash, Retirement, retirement income, retirement planning, saving, stock dividends, stock market, stocks, Tags: 401(k) plans, Tags: 801(k) plans, Taxes, term life insurance, The Four Pillars, the guardian life insurance company, thrive, universal life insurance, variable life insurance, Whole Life Insurance, Who’s helping you, why buy whole life insurance, why whole life insurance | No Comments »
Save, Invest, Gamble or Become Your Own Banker…
May 2, 2008 | Author Dr Agon Fly
“Is it safe?” Marathon Man, 1976
SAVE…
When you save money, you’re guaranteed – insofar as that’s possible – to have more money at the end of each year than you had at the beginning. Interest increases the value of your savings and inflation and taxes gnaw at the growth that interest provides. This condition makes choosing a tax advantaged savings product an important part of your decision.
Cash value life insurance and deferred annuities have provided the perfect reservoir for savings for almost 200 years in America. Cash value life insurance – especially dividend paying life policies from mutual companies – have proven more effective than annuities because these policies allow you to access the cash values without penalty or taxes whenever you need to; a benefit not available with annuities.
INVEST…
Investing involves a much greater risk. When you invest in stocks, real estate, precious metals, commodities, etc. you are buying an ownership position. The future value of your investment is contingent upon the performance of your equity in a market over which you have no control. When your investment is debt – bonds, loans, etc. – your investment is safer but still relies on the success or failure of the entity to which the loan is granted.
Investors have to believe that they can see “across the valley;” that the future is reliably predictable by the past; that the ups and downs of the market in which they are investing will repeat themselves in a way that allows the investor to profit. This belief is the initial motivation but is challenged and becomes untenable when the investor needs money and the investment is in the valley.
GAMBLE…
Both saving and investing involve a gamble. The saver is gambling that inflation and taxes will allow some growth. The investor is gambling that the invested money will eventually grow beyond what could be expected in a savings program and will not be in a trough when money is needed and the investment has to be sold.
BECOME YOUR OWN BANKER…
There is a better way. If saving and investing are managed properly, the risk can be diminished and even removed when savings are used to fund purchases of both the things you need and want and the investments you wish to make. The business of becoming your own bank involves radically changing your mind about money, debt, saving and investing.
Americans have been lured into the Debt Paradigm and trapped in a dungeon of debt. The Money for Life Model teaches you how to handle your money in a way that serves both your short and long term financial goals without forcing you into a beans and rice lifestyle.
You owe it to your self to level out the valleys, to learn more and to own more –> www.TheMoneyForLifeBook.com
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Luck And Money…
April 16, 2008 | Author dragonfly
“Today, I consider myself the luckiest man on the face of the earth.” The Pride of the Yankees, 1942
The final proof of Money for Life,,,in good times and bad was sent to the printer today. Now the work of getting this amazing document that recalls the teachings of the world’s wisest financial minds from millennia past into the hands, minds and hearts of Americans begins in earnest
Thanks to all who read this blog for your support and encouragement.
I am exhausted today from the emotional and intellectual effort of proofing so I am ending this blog post early.
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Money for Life…in good times and bad – How to Thrive in the 21st Century will be released on May 1st, 2008. Everyone who buys the e-book version before May 1st will also receive an autographed copy of the paperback when it is release. No special codes are needed. Don’t be an April fool; make the purchase before April 30th. Shipping and handling charges will still apply. –> www.TheMoneyForLifeBook.com
Posted in Debt, Legal, Ethical, Moral, Money, Personal Financial Management, Retirement, Taxes, The Four Pillars, Whole Life Insurance, You BE the "Bank" | Tags: 801(k) plans, Add new tag, agon fly, annuities, annuity, bank, banker, banking, banks, be the bank, become your own bank, becoming your own banker, bonds, book on money, books on money, books on personal finance, circle of wealth, debt, debt elimination, debt management, debt reduction, debt to others, disability income insurance, Dr Agon Fly, Dr_Agon_Fly, financial, financial advice, financial advisor, financial planner, financial planning, health insurance, housing market, how to thrive, infinite banking, insurance dividends, investing, jeff reeves, jeffrey reeves, leap system, life insurance, long term care insurance, mass mutual, mass mutual insurance, massachusetts mutual life insurance, millionaire, Money, money book, money books, money for life, money under management, mortgage, mortgage management, mutual funds, mutual insurance, mutual insurance company, nash, nelson nash, new york life, new york life insurance company, northwestern mutual life, passive income, personal financial books, pirates of manhattan, r nelson nash, Retirement, retirement income, retirement planning, saving, stock dividends, stock market, stocks, Tags: 401(k) plans, Taxes, term life insurance, The Four Pillars, the guardian life insurance company, thrive, universal life insurance, variable life insurance, Whole Life Insurance, Who’s helping you, why buy whole life insurance, why whole life insurance | No Comments »
The Pending Recession and Personal Financial Armor…
April 4, 2008 | Author Dr Agon Fly
“Fasten your seatbelts. It’s going to be a bumpy night.” All About Eve, 1950
John and Marion’s business is just beginning to pay off after two years of struggling to get started. Unfortunately, their business is not recession proof so making sure their personal economy is prepared for the negative effect a major slump might have on it – and them – is critical.
When the economy gets bumpy, there are two of the Four Pillars to which you need to pay close attention; freedom from debt and having ready cash to deal with the surprisingly unsurprising surprises that life sends your way. This is especially true for small business owners who rely on cash flow more than the employed worker.
John and Marion have decided to re-organize a few things to assure liquidity if a down-turn affects their personal economy to a greater extent than they anticipated.
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~ First, they refinanced their home at a significantly lower interest rate, so their monthly payments remained about the same.
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~ They also “harvested” an extra $20,000.00 of equity from the refinancing and used that money to eliminate all of their other debt – mostly credit card debt – freeing up several hundred dollars each month.
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~ That leaves them with just one other debt to repay; a loan they made to themselves from the cash values of their life insurance policies. This loan will be eliminated quickly using the extra cash flow. This will restore the cash values in their policies. These values are guaranteed to grow every year regardless of what happens in the general economy and become the family’s and the business’s first line of defense against life’s surprises.
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~ Their mortgage then becomes their only debt.
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~ They also obtained a $100,000 equity line of credit today that they may not be able to get later. Should the business encounter “a bumpy night,” and their business or their personal economy requires it, John and Marion can tap into their HELOC.
There is one aspect of John’s and Marion’s personal economy that would be troublesome in a severe recession; their investments. Most of the money they have invested is in mutual funds that could lose significant value in a recession. The couple has decided to watch their mutual funds and the market more carefully in the months ahead and to move the money into cash or cash equivalents if the values begin dropping a lot.
Their mutual fund sales rep suggests that they should ride out the “bumpy night” and that the market will rebound – eventually. John and Marion believe that they would rather lose the potential for an eventual gain in return for a smaller guaranteed one today.
Money for Life…in good times and bad taught John and Marion the strategy that armors them against recessions, depressions, inflation, deflation or stagflation. Ask yourself whether or not that strategy makes as much sense for you as it does for them. If so, then take advantage of this…
SPECIAL OFFER! –> The paperback version of Money for Life…in good times and bad – How to Thrive in the 21st Century will be released on May 1st, 2008. Everyone who buys the e-book version before May 1st will also receive an autographed copy of the paperback when it is release. No special codes are needed. Don’t be an April fool; make the purchase before April 30th. Shipping and handling charges will still apply. –> www.TheMoneyForLifeBook.com 
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The Most Versatile Tool In Your Money Tool-Belt……
March 30, 2008 | Author Dr Agon Fly
Insuring Against Recession
Check your life insurance policy to ensure it’s right for today’s troubled economy.
“A whole life insurance policy is the Swiss Army knife of the insurance world.”
Beth PiskoraManaging Editor, U.S. Editorial
The Outlook, Copyright © 2008, The McGraw-Hill Companies.
“Unemployment currently stands at 5%, but David Wyss, the chief economist for Standard & Poor’s, sees it creepingup to 5.5% by the end of this year. That means up to 750,000 Americans could potentially lose their jobs in 2008.
“Are you prepared — financially, if not emotionally — if you lose your job? If not, you might, with a financial advisor, consider buying more insurance. Even if you are retired, or feel very strongly that your income stream is safe, there are some stable long-term savings options in many insurance plans that you might want to consider in these volatile times in the stock and bond markets.
“While term life insurance is overall a more popular product, whole life insurance is enjoying a resurgence of demand. To understand if whole life is right for you, it’s best to know a lot about the product.
“A whole life policy can act as a buffer against estate taxes and probate costs, and provides a death benefit along with a living cash benefit, a feature unique to whole life. In addition, a whole life policy allows someone at the time of retirement to remain insured while spending the other assets they’ve accumulated or pursuing a more aggressive investment strategy for those assets.
“A whole life insurance policy is the Swiss Army knife of the insurance world,”… read the rest here –> http://themoneyforlifebook.wordpress.com/why-whole-life-insurance-works-in-tough-times/
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Money For Life…in good times and bad – How to Thrive in the 21st Century addresses the issues raised in this article in detail.
buy it today at –> www.TheMoneyForLifeBook.com
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Posted in Money, Personal Financial Management, Retirement, Taxes, Whole Life Insurance, You BE the "Bank" | Tags: 401(k) plans, 801(k) plans, agon fly, annuities, annuity, bank, banker, banking, banks, be the bank, become your own bank, becoming your own banker, bonds, book on money, books on money, books on personal finance, circle of wealth, debt, debt elimination, debt reduction, debt to others, disability income insurance, Dr Agon Fly, Dr_Agon_Fly, financial, financial advice, financial advisor, financial planner, financial planning, health insurance, housing market. stocks, how to thrive, infinite banking, insurance dividends, investing, jeff reeves, jeffrey reeves, leap system, life insurance, long term care insurance, mass mutual, mass mutual insurance, massachusetts mutual life insurance, Money, money book, money books, money for life, money under management, mutual funds, mutual insurance, mutual insurance company, nash, nelson nash, new york life insurance company, new your life, northwestern mutual life, passive income, personal financial books, pirates of manhattan, r nelson nash, Retirement, retirement income, retirement planning, saving, stock dividends, stock market, Taxes, term life insurance, The Four Pillars, the guardian life insurance company, thrive, universal life insurance, variable life insurance, Whole Life Insurance, Who’s helping you, why buy whole life insurance, why whole life insurance | No Comments »
Twins, Taxes, Money and “Banks”…
March 28, 2008 | Author Dr Agon Fly
“Mama always said life was like a box of chocolates. You never know what you’re gonna get.” Forrest Gump, 1994
Jeff and Beth are 40 and have a plan. They manage their money wisely, could be the poster kids for prudent mortgage management, steer clear of credit card and consumer debt, promptly pay off any debt they incur out of necessity, put about $21,000 each year into their individual and their children’s “banks” and now, suddenly, are about to become the proud parents of twins.
“You never know what you’re gonna get.” and twins are going to force some changes to the “plan.” The first change is a significant reduction of income because Beth plans to semi-retire from her well paid corporate position to care for the newborns, and Jeff’s burgeoning university teaching career is just burgeoning but not yet in full bloom. This change creates others; funding for the “banks” has to be reduced, relocation is assured, the family home has to be sold in a down market, and, on the up side, two more tax deductions.
Since the “banks” are an essential piece of Jeff’s and Beth’s plan for the future, that’s the piece of chocolate we’ll address in this post. Jeff’s whole life policy is just entering its third year. Almost all of the premium that is paid into the policy this year is credited to the cash value account. This allows Jeff and Beth to pay the annual premium of $13,200 using a loan from Beth’s 401(k).
Once the premium has been paid using the 401(k) loan and credited to the cash value account in the policy, Jeff and Beth can immediately borrow it back from the policy and pay off the 401(k) loan. This leaves them with a debt to themselves that they can repay on their own schedule and with the money they have available.
In fact, they could borrow the premium from the policy every year for the next ten years and not make any payments out of their income and the policy would remain in force and retain some cash value. Jeff and Beth could, of course, pay the interest to themselves and assure that the policy would remain in force for decades and grow in value.
That won’t happen. Jeff and Beth will bite into another piece of chocolate and discover another surprisingly unsurprising surprise that will change their lives and their plans; they could win the lotto or lose an investment. The constant financial fact that allows them to go forward with confidence is the power and flexibility inherent in their personal economy because of their “banking” system.
“You never know what you’re gonna get.” but you can make sure you can handle it. Discover how –> www.TheMoneyForLifeBook.com
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Posted in Money, Movie Quotes, Taxes, Whole Life Insurance, You BE the "Bank" | Tags: 401(k) plans, 801(k) plans, agon fly, annuities, annuity, bank, banker, banking, banks, be the bank, become your own bank, becoming your own banker, bonds, book on money, books on money, books on personal finance, circle of wealth, debt, debt elimination, debt reduction, debt to others, disability income insurance, Dr Agon Fly, Dr_Agon_Fly, financial, financial advice, financial advisor, financial planner, financial planning, health insurance, housing market. stocks, how to thrive, infinite banking, insurance dividends, investing, jeff reeves, jeffrey reeves, leap system, life insurance, long term care insurance, mass mutual, mass mutual insurance, massachusetts mutual life insurance, Money, money book, money books, money for life, money under management, mutual funds, mutual insurance, mutual insurance company, nash, nelson nash, new york life insurance company, new your life, northwestern mutual life, passive income, personal financial books, pirates of manhattan, r nelson nash, Retirement, retirement income, retirement planning, saving, stock dividends, stock market, Taxes, term life insurance, The Four Pillars, the guardian life insurance company, thrive, universal life insurance, variable life insurance, Whole Life Insurance, Who’s helping you, why buy whole life insurance, why whole life insurance | No Comments »
Take Control of the Money That Flows Through Your Life…
March 22, 2008 | Author Dr Agon Fly
“They call me Mister Tibbs.” In the Heat of the Night, 1967
Jack and Theresa relied on the same financial advisor for over ten years. When Jack got a new job in a new city on the other side of the country that relationship became untenable so the couple went looking for a new advisor. After several interviews Jack and Teresa concluded that the advisors they met in their new city did not recognize or understand what their friend and advisor “back home” had taught them. In fact, every one of the advisors they interviewed told them that building their financial foundation using cash value whole life insurance was not just wrong but went against everything the advisor had been taught.
One advisor suggested that Jack and Theresa should replace their cash value policies with term insurance and invest the money they had accumulated in the stocks he recommended; ENRON, Qwest and MCI.
Another advisor wanted Jack and Theresa to exchange their whole life insurance policies for variable universal life insurance policies because she could illustrate greater future value with that type of insurance plan. She did not, of course, make it entirely clear that these policies had no guarantees and that they could lose all of their money with this approach.
A third advisor encouraged Jack and Theresa to refinance their home at 95% and “harvest” the equity from their home and the cash from their whole life insurance policies and put all of that money into a new kind of product called equity indexed life insurance. The premise was that the new product would earn more than the interest charged in the mortgage and the lost guarantees and dividends from their whole life contract. Again, there was no discussion of the fact that taking such action put their real property at greater risk and did not replace the guarantees that were present in their whole life policies.
When Police Chief Gillespie challenged Virgil Tibbs’ self image and deeply held beliefs, the detective defended himself and his beliefs with a simple emphatic statement. Every day we face the same kind of challenge to our common sense about how we handle our money. An onslaught of advertising and misinformation tells us that our conservative financial values are foolish or simplistic or contrary to the conventional wisdom – which is no wisdom at all.
There are many reasonable and sensible ways to handle your money. Universal life insurance, indexed life insurance, investments and home equity can be important pieces of the puzzle that is unique to your situation.
Any approach that suggests, however, that you can build wealth without establishing a foundation of money that you control, is misleading at best and illegal at worst. Suggesting that you can behave the same as people who have already accumulated great wealth, denies the reality that those who have great wealth behaved differently while accumulating their wealth than they do after they have it.
Every reasonable financial “plan” should aim at
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eliminating debt-to-others
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guaranteeing you a secure income
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making sure you have ready money to deal with the ordinary and the extraordinary events that make up your life, and
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creating a legacy of your wisdom and wealth.
Once these goals have been met you can consider the schemes of the merchants of misinformation and the financial snake oil sales reps who want your money in their pockets.
by Jeffrey Reeves MA, www.youBEthebank.com
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Money and Divorce…
March 16, 2008 | Author Dr Agon Fly
“Frankly, my dear, I don’t give a damn.” Gone With The Wind , 1939
Life is full of upheavals resulting from relationships.
When Steve’s and Beth’s marriage broke up, their two young children created a major financial concern for both parents. Beth has defacto custody and has to find new ways to balance her finances, her work schedule, the children’s school and activity schedules as well as coordinating visitation schedules with Steve. Beth and Steve both have to find ways to establish and maintain relationships with old family friends and make new ones as well.
Steve, as the non-custodial parent, encounters similar problems and, in addition, must adjust his budget to accommodate court ordered child support payments. Both Steve and Beth have to individually address their food, housing, transportation, and entertainment expenses that were formerly a family affair. The demands of out of town in-laws for visitation of the children has become a financial drain also.
A powerful tool in Steve’s and Beth’s financial arsenals is cash value whole life insurance. Their family practice attorneys asked the court to order both Steve and Beth to purchase cash value whole life policies on themselves and on their children as part of the child support package.
The advantage of this approach is that these policies protect the children if Beth or Steve dies prematurely and, more importantly, provide ready money for unpredicted family needs and the future educational and support needs of the children. Because the cash values in their whole life policies can be repeatedly borrowed and repaid, the policies become “banks” that grow consistently. They allow Steve and Beth to finance education, unplanned large purchases and emergency needs for the children much more economically than is possible with credit cards, home equity loans or other commercial loans.
There are, of course, technical issues that must be managed with policies used for this application. These require the ongoing advice and guidance of a Money for Life Guide.
Learn more and own more –> www.TheMoneyForLifeBook.com
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Posted in Money, Movie Quotes, Whole Life Insurance | Tags: 401(k) plans, 801(k) plans, agon fly, annuities, annuity, bank, banker, banking, banks, be the bank, become your own bank, becoming your own banker, bonds, book on money, books on money, books on personal finance, circle of wealth, debt, debt elimination, debt reduction, debt to others, disability income insurance, Dr Agon Fly, Dr_Agon_Fly, financial, financial advice, financial advisor, financial planner, financial planning, health insurance, housing market. stocks, how to thrive, infinite banking, insurance dividends, investing, jeff reeves, jeffrey reeves, leap system, life insurance, long term care insurance, mass mutual, mass mutual insurance, massachusetts mutual life insurance, Money, money book, money books, money for life, money under management, mutual funds, mutual insurance, mutual insurance company, nash, nelson nash, new york life insurance company, new your life, northwestern mutual life, passive income, personal financial books, pirates of manhattan, r nelson nash, Retirement, retirement income, retirement planning, saving, stock dividends, stock market, Taxes, term life insurance, The Four Pillars, the guardian life insurance company, thrive, universal life insurance, variable life insurance, Whole Life Insurance, Who’s helping you, why buy whole life insurance, why whole life insurance | No Comments »
Money, Whole Life Insurance & Investments…
February 27, 2008 | Author Dr Agon Fly
Societies throughout history are prone to rely on shibboleths as guides. (Shibboleths are oft repeated statements that are considered true just because they are oft repeated.) The millennia old myth of a “sorcerer’s stone” that can turn lead into gold persisted for centuries and led many great thinkers astray. No European would dare sail westward in the 15th century for fear of falling off the end of the earth until an Italian sailor proved the shibboleth to be what it was – an empty fear carried on the wings of empty words. Winged flight was an impossible dream until two bicycle makers from Dayton, Ohio proved otherwise at the beginning of the 20th century.
Here’s a modern shibboleth that is as untrue as those just listed: Whole life insurance is a bad investment. Let me briefly explain why this shibboleth is false and share a few insights as to why whole life insurance should be the foundation of your personal economy.
First off, whole life insurance is not an investment. This makes the statement that “whole life insurance is a bad investment” untrue from the start. It also makes false the implication that whole life insurance is in some way the same thing as an investment and can, therefore, be fairly compared to an investment. Whole life insurance is whole life insurance.
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~ Whole life insurance (and its cousin, fully funded Universal Life insurance) is unique among financial products. It does what no other financial product can; it lets YouBeTheBank.
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~ Whole life insurance guarantees that you will have more money at the end of each year than you started with at the beginning of that year – guarantees it.
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~ You can use the cash values of whole life insurance to finance major purchases like furniture and appliances, to finance home improvements, to finance your cars, even to finance your mortgage.
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~ Your money grows tax free in a whole life policy and, with the proper guidance, you can get it out tax free when you need an income in the future.
Re-read the Dazzling Dozen page –> and the 14 previous posts on the Dazzling Dozen and you’ll get a more comprehensive, though not complete, understanding of the power and potential of whole life insurance. Better yet – go to www.TheMoneyForLifeBook.com and buy the book Money for Life…in good times and bad. You’ll discover a complete guide that lets you apply the tested and proven capabilities of whole life insurance combined with the power of 21st century financial thinking and advanced financial practices to create a personal economy that lasts – in good times and bad.
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The Financial Satisfaction Survey will be closed this Friday. We’d love to have your anonymous responses – it takes only two minutes –>
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Posted in Debt, Money, Personal Financial Management, Whole Life Insurance | Tags: 401(k) plans, 801(k) plans, agon fly, annuities, annuity, bank, banker, banking, banks, be the bank, become your own bank, becoming your own banker, bonds, book on money, books on money, books on personal finance, circle of wealth, debt, debt elimination, debt reduction, debt to others, disability income insurance, Dr Agon Fly, Dr_Agon_Fly, financial, financial advice, financial advisor, financial planner, financial planning, health insurance, housing market. stocks, how to thrive, infinite banking, insurance dividends, investing, jeff reeves, jeffrey reeves, leap system, life insurance, long term care insurance, mass mutual, mass mutual insurance, massachusetts mutual life insurance, Money, money book, money books, money for life, money under management, mutual funds, mutual insurance, mutual insurance company, nash, nelson nash, new york life insurance company, new your life, northwestern mutual life, passive income, personal financial books, pirates of manhattan, r nelson nash, Retirement, retirement income, retirement planning, saving, stock dividends, stock market, Taxes, term life insurance, The Four Pillars, the guardian life insurance company, thrive, universal life insurance, variable life insurance, Whole Life Insurance, Who’s helping you, why buy whole life insurance, why whole life insurance | No Comments »
Financial Facts, Figures and Falsehoods…
February 16, 2008 | Author Dr Agon Fly
Have you ever been approached (or accosted) by the “financial planner” at the local branch of your bank? If you were, the person you spoke with may have suggested that you buy an annuity, buy some mutual fund shares, open an IRA account, buy some term life insurance or start a SEP retirement plan (if you owned a small business.) What that person most likely wouldn’t have suggested is that you buy cash value life insurance.
That may not seem strange to you until you discover that the bank itself relies on cash value life insurance to provide its own financial foundation. Some banks own so much cash value life insurance that the actual cash value in those policies exceeds 50% of their tier one assets – the assets that determine the bank’s stability in the eyes of investors and regulators. A majority of banks hold substantial amounts of their tier one assets - ranging from $43 million to over $13 billion and growing - in cash value life insurance policies in 2006. Major NYSE and NASDAQ non-banking corporations also rely on cash value life insurance to support their retirement plans, executive compensation and balance sheet.
Why is it, do you think, that the financial businesses – including the Wall Street gang - which themselves rely on cash value life insurance as a significant part of their own financial foundation, do not recommend that you do the same?
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~ Could it be because they believe that you can’t understand the power of this product because you are just a “consumer?”
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~ Could it be because they believe that your assets are just not significant enough?
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~ Could it be because they believe that you don’t have enough income to even start such a plan?
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OR
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~ Could it be that selling cash value life insurance is simply not as profitable for the advising company as selling those other products?
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~ Could it be that the advisors in those companies are not taught and, therefore, do not understand the values and benefits that accrue with the ownership of cash value life insurance?
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~ Could it be that the advisors themselves are disincented to teach you about and sell you cash value life insurance?
Successful businesses, individuals and families own significant amounts of cash value life insurance. They did not acquire their policies all at once. You have to excavate in order to lay the foundation for a building. You also have to prepare to build a financial structure. Just as the banks rely on cash value life insurance as an integral part of their tier one assets, individuals and families need to incorporate cash value life insurance into their tier one assets – those assets that detemine your ability to weather the financial storms that regularly assault your financial structure.
Would you like to know how? Visit www.TheMoneyForLifeBook.com
________________________________
The Financial Satisfaction Survey is still running…why not join in? It takes less than two minutes. Click here to take the survey…
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Posted in Money, Whole Life Insurance, You BE the "Bank" | Tags: 401(k) plans, 801(k) plans, agon fly, annuities, annuity, bank, banker, banking, banks, be the bank, become your own bank, becoming your own banker, bonds, book on money, books on money, books on personal finance, circle of wealth, debt, debt elimination, debt reduction, debt to others, disability income insurance, Dr Agon Fly, Dr_Agon_Fly, financial, financial advice, financial advisor, financial planner, financial planning, health insurance, housing market. stocks, how to thrive, infinite banking, insurance dividends, investing, jeff reeves, jeffrey reeves, leap system, life insurance, long term care insurance, mass mutual, mass mutual insurance, massachusetts mutual life insurance, Money, money book, money books, money for life, money under management, mutual funds, mutual insurance, mutual insurance company, nash, nelson nash, new york life insurance company, new your life, northwestern mutual life, passive income, personal financial books, pirates of manhattan, r nelson nash, Retirement, retirement income, retirement planning, saving, stock dividends, stock market, Taxes, term life insurance, The Four Pillars, the guardian life insurance company, thrive, universal life insurance, variable life insurance, Whole Life Insurance, Who’s helping you, why buy whole life insurance, why whole life insurance | No Comments »
Why Be Your Own Bank – Revisited…
February 13, 2008 | Author Dr Agon Fly
In the first installment on this topic we focused on:
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~ the struggles of the banking industry
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~ the impending failure of both small and large banks
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~ the sub-prime lending debacle
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~ the difficulty individuals without top tier credit ratings face obtaining credit of any kind
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~ the general difficulty that this situation creates for everyone
In this installment, we focus on what is, perhaps, the prime reason for you to consider starting your own “bank” by using cash value life insurance as your foundation. When you own a quality cash value life insurance policy that accumulates money that you – and you alone – control, you have a source of borrowed funds that profits you – and only you.
When you borrow from others you make them wealthy. In a recent post – The True Cost of Financing – we demonstrated how the typical American wastes money by giving it to retailers. The truth is that our entire economic system today is designed to make others wealthy by having you pay them interest. Not only that, the interest is paid on money you have not yet earned. Get your mind around that. It’s important. Credit cards are the biggest offenders. Auto loans, retail store charges and even mortgages follow close behind. You borrow money you have not yet earned and then you have to pay your earnings PLUS interest to a Behemoth that cares not one nit for you. You are a source of wealth for them. Thay are the source of your poverty – now or in the future.
The reason personal economies fail is because they incur debt-to-others. The boomers are headed for disaster because they have bought into the “Debt Paradigm.” They believe they can have everything they need and anything they want as long as they have enough credit.
They have lost sight of the basic truth that debt is bad for them. They listen to the merchants of misinformation and the financial snake oil sales reps who convince them – because the reps themselves are deluded and convinced – that “the market” will take care of them “in the long run”; that mortgages are good things; that debt is the path to wealth. It’s all BUNK!
The only way to have a personal economy that lasts in good times and bad is to have a foundation of ready money that you control and that you can use to support the Four Pillars of your – and every – successful personal economy. (Visit the Four Pillars page.) That’s what we mean when we say you need to manage your money in a way that lets YouBeTheBank.
Please, visit www.TheMoneyForLifeBook.com There are a few people in the country that understand the problem and the solution and this book explains it well.
Posted in Money, Personal Financial Management, Whole Life Insurance, You BE the "Bank" | Tags: 401(k) plans, 801(k) plans, agon fly, annuities, annuity, bank, banker, banking, banks, be the bank, become your own bank, becoming your own banker, bonds, book on money, books on money, books on personal finance, circle of wealth, debt, debt elimination, debt reduction, debt to others, disability income insurance, Dr Agon Fly, Dr_Agon_Fly, financial, financial advice, financial advisor, financial planner, financial planning, health insurance, housing market. stocks, how to thrive, infinite banking, insurance dividends, investing, jeff reeves, jeffrey reeves, leap system, life insurance, long term care insurance, mass mutual, mass mutual insurance, massachusetts mutual life insurance, Money, money book, money books, money for life, money under management, mutual funds, mutual insurance, mutual insurance company, nash, nelson nash, new york life insurance company, new your life, northwestern mutual life, passive income, personal financial books, pirates of manhattan, r nelson nash, Retirement, retirement income, retirement planning, saving, stock dividends, stock market, Taxes, term life insurance, The Four Pillars, the guardian life insurance company, thrive, universal life insurance, variable life insurance, Whole Life Insurance, Who’s helping you, why buy whole life insurance, why whole life insurance | No Comments »
Money and Life Insurance…
February 13, 2008 | Author Dr Agon Fly
Will Rogers said that a person “…who doesn’t believe in life insurance deserves to die once without it.”
Where would America be without Will Rogers, Benjamin Franklin and Mark Twain? They have collectively created a cache of common sense wisdom that Americans rely on every day.
But, more to the point of this blog, where would America be without life insurance? From the time of the Roman Empire, when the first recorded mutual societies were formed to provide life insurance benefits, through the modern era of Benjamin Franklin, Mark Twain and Will Rogers and until today the wisest among us have known and promoted the values of cash value life insurance. Winston Chrchill suggested that the word “insurance” should be engraved above the doors of every family residence.
These sages were not talking about some abberation of the permanent cash value life insurance that they were familiar with. They were talking about cash value permanent life insurance. They would never have recommended that you buy term insurance and invest, putting your money, your family and your future at risk. The idea that you should buy a policy of life insurance that would have you paying premiums for decades only to expire or be cancelled for lack of cash values when you were aged and needed it most would have been abhorrent to them. Even the Greeks of Aristotle’s time recognized the value of money placed in a secure and growing account for the future benefit of the owner and the owner’s family.
Permanent cash value life insurance is the foundation of wealth for thousands of American families. In many cases it is the only money legacy that a parent has to pass on to a child. American businesses buy hundreds of millions of dollars worth of cash value life insurance every year as a secure depository for the money that they control and for which they have fiduciary responsiblity. Banks are among the largest buyers and owners of permanent cash value life insurnace. Professional atheletes, entertainers, and corporate executives put millions of premium dollars into cash value life insurance every year. In other words, the people who really know how money works rely on cash value life insurance as the foundation for their wealth.
You do not have to be a CEO with an outlandish compensation plan to use the strategies that cash value life insurance allows. You just need to start. Joe Sabah, a wise man living in Denver, Colorado fequently quotes one of his students; ”You don’t have to be good to start, but you do have to start to be good.” www.joesabah.com
So it is with cash value life insurance and its amazing potential. You will never be sorry that you know more than you know now or own more than you own now. www.TheMoneyForLifeBook.com
____________________________
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Posted in Money, Personal Financial Management, Whole Life Insurance | Tags: 401(k) plans, 801(k) plans, agon fly, annuities, annuity, bank, banker, banking, banks, be the bank, become your own bank, becoming your own banker, bonds, book on money, books on money, books on personal finance, circle of wealth, debt, debt elimination, debt reduction, debt to others, disability income insurance, Dr Agon Fly, Dr_Agon_Fly, financial, financial advice, financial advisor, financial planner, financial planning, health insurance, housing market. stocks, how to thrive, infinite banking, insurance dividends, investing, jeff reeves, jeffrey reeves, leap system, life insurance, long term care insurance, mass mutual, mass mutual insurance, massachusetts mutual life insurance, Money, money book, money books, money for life, money under management, mutual funds, mutual insurance, mutual insurance company, nash, nelson nash, new york life insurance company, new your life, northwestern mutual life, passive income, personal financial books, pirates of manhattan, r nelson nash, Retirement, retirement income, retirement planning, saving, stock dividends, stock market, Taxes, term life insurance, The Four Pillars, the guardian life insurance company, thrive, universal life insurance, variable life insurance, Whole Life Insurance, Who’s helping you, why buy whole life insurance, why whole life insurance | No Comments »
Money in “801(k)” Plans…
January 31, 2008 | Author Dr Agon Fly
Every now and again the market creates something out of nothing. The “801(k) Plan” sales letter you might receive in your inbox creates nothing out of something.
A sales letter published by Stansberry Research touting the “801(k) Plan” seems to be describing what are commonly called:
Dividend Re-Investment Plans or DRIPs
The claim of Stansberry Research that these plans are somehow “secret” is a stretch at best. So also are their claims that you can make millions with such plans investing only a few dollars a month.
DRIPs have a place and can be a valuable addition to your money plans. Beware, however, that if you were relying on a DRIP from ENRON or MCI your drip became a drop and then evaporated. Investment advisors do not normally recommend this approach because there are no commissions involved so you’ll need to do some research to discover if it is right for some small portion of your savings and investment dollars. DRIPs are designed to be consistently funded and can have fees associated with them that make buying and selling DRIP shares less profitable.
More importantly, you’ll want to have clearly defined set of money practices in place before you ever embark on any investment program. A DRIP, for example, that is funded by tax free dividends from a participating whole life insurance policy can produce very good tax advantaged returns without putting a single dollar of your guaranteed accounts at risk. Advisors who practice and teach Money for Life know of these strategies. Most others don’t.
You’ll never regret knowing more than you do now or owning - without debt-to-others – more than you do now…
Posted in Money, Personal Financial Management, Taxes, Whole Life Insurance | Tags: 401(k) plans, 801(k) plans, agon fly, annuities, annuity, bank, banker, banking, banks, be the bank, become your own bank, becoming your own banker, bonds, book on money, books on money, books on personal finance, circle of wealth, debt, debt elimination, debt reduction, debt to others, disability income insurance, Dr Agon Fly, Dr_Agon_Fly, financial, financial advice, financial advisor, financial planner, financial planning, health insurance, housing market. stocks, how to thrive, infinite banking, insurance dividends, investing, jeff reeves, jeffrey reeves, leap system, life insurance, long term care insurance, mass mutual, mass mutual insurance, massachusetts mutual life insurance, Money, money book, money books, money for life, money under management, mutual funds, mutual insurance, mutual insurance company, nash, nelson nash, new york life insurance company, new your life, northwestern mutual life, passive income, personal financial books, pirates of manhattan, r nelson nash, Retirement, retirement income, retirement planning, saving, stock dividends, stock market, Taxes, term life insurance, The Four Pillars, the guardian life insurance company, thrive, universal life insurance, variable life insurance, Whole Life Insurance, Who’s helping you, why buy whole life insurance, why whole life insurance | No Comments »
Tax Free – Myth or Magic?
January 31, 2008 | Author Dr Agon Fly
Is there any truly tax free money?
Judge Learned Hand, in an opinion written decades ago for the US Tax Court of Appeals wrote, “There are two systems of taxation in the country – one for the informed and one for the uninformed.” The IRS – along with most of the Federal establishment – doesn’t seem to work for us as much as we seem to work for them. There are, however, some pockets of opportunity in the 66,000 page tax code that are available to anyone who is aware of them and this short post is going to tell you about two of them that are available to almost everyone who is informed.
Health Savings Accounts (HSA’s) allow you to put money aside to pay for your health insurance deductibles and co-pays and dozens of other medical, dental and eye care expenses that may not be covered by your health insurance plan. You can deduct whatever you put aside, up to a generous annual limit, from your income each year. More importantly, the tax deductible dollars you deposit in your HSA, and don’t use from year to year, grow tax free. When you reach retirement age the money in your HSA can still be used – tax free – to pay for medical and long term care expenses that are not covered by Medicare, Medicare supplement insurance or other private insurance plans. If you start now – even if you are in your 50′s or early 60′s – you can offset at least some of the estimated $200,000+ medical expense that you can expect to face after you retire but before you die – or kick the bucket, whichever comes first. If you are lucky enough to have money remaining in your account when you die, that money will pass to your spouse tax free and can be used by him/her for medical expense. If you are the second to die the money in your HSA would pass to your named beneficiary. It would be taxable as ordinary income to the beneficiary.
Perhaps the most misunderstood and overlooked tax free benefits allowed by the IRS Code are the ones you get with whole life insurance. The money you deposit in a whole life insurance contract grows tax free, the dividends that are paid on whole life contracts are tax free and the death benefit paid when Uncle Harry kicks the bucket is entirely tax free – no income tax, no capital gains tax, no estate tax…no tax of any kind. Properly structured and managed whole life policies also deliver tax free income whenever you choose – no age restrictions, no waiting a certain period of time, no tax.
These are just two of the tools you will learn to use effectively if you adopt the Money for Life Practices that are thoroughly and clearly described and explained in www.EUREKONOMICS.com
Posted in Money, Taxes, Whole Life Insurance | Tags: agon fly, annuities, annuity, bank, banker, banking, banks, be the bank, become your own bank, becoming your own banker, bonds, book on money, books on money, books on personal finance, circle of wealth, debt, debt elimination, debt reduction, debt to others, disability income insurance, Dr Agon Fly, Dr_Agon_Fly, financial, financial advice, financial advisor, financial planner, financial planning, health insurance, housing market. stocks, how to thrive, infinite banking, insurance dividends, investing, jeff reeves, jeffrey reeves, leap system, life insurance, long term care insurance, mass mutual, mass mutual insurance, massachusetts mutual life insurance, Money, money book, money books, money for life, money under management, mutual funds, mutual insurance, mutual insurance company, nash, nelson nash, new york life insurance company, new your life, northwestern mutual life, passive income, personal financial books, pirates of manhattan, r nelson nash, Retirement, retirement income, retirement planning, saving, stock dividends, stock market, Taxes, term life insurance, The Four Pillars, the guardian life insurance company, thrive, universal life insurance, variable life insurance, Whole Life Insurance, Who’s helping you, why buy whole life insurance, why whole life insurance | No Comments »
More Financial Predictions…
January 28, 2008 | Author Dr Agon Fly
The pundits in the press, radio and TV are unable to come to any agreement about our financial future thru the end of 2008. A good number predict a recession. Another few predict significant growth in the equity markets. Some say the real estate market will rebound by mid-year while others tell us it won’t happen till sometime in 2009.
The presidential candidates use smoke and mirrors to try to convince us that they know what’s needed to assure a great 2008. They claim we are either dumb, oppressed, incompetent or fully capable; then they tell us that they know exactly what we need – regardless of the catagory we represent. The congress – bless their stupid little hearts – and the president are going to give back some money they collected in 2007. Think about that one. I wonder if we’d be in the shape we’re in had the IRS not demanded it in the first place?
Here are Dr Agon Fly’s predictions:
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* if you practice Money for Life…in good times and bad you will thrive in 2008 and have more money in your “banks” at the end of the year than you have when you start;
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* if you make cash value life insurance the foundation of your financial future, you will have a future;
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* if you rely on guarantees instead of “maybe, if everything goes just the way we’ve shown it,” you will be far ahead two, five, ten and twenty years from now;
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* if you change your mind about money and discard the tenets of the current financial model, which is designed to make others wealthy at your expense, you will actually achieve wealth – and wisdom, too.
Wake up America! The pudits and politicians (especially the congress) both rely on popularity for their jobs. The truth is subject to scrutiny based on that alone. I live in a congressional district where the rep has never voted other than the party line and has risen in the ranks because of it. How dumb is that? The TV icons who gain popularity by regurgitating whatever is the latest greatest fantasy of the hottest “guru of whatever,” lead America down rabbit holes, and, when they emerge in the den of the fox the TV advisors lose nothing. They made their money giving bad advice – which they often don’t follow themselves – and now move on to the next “latest-greatest.”
Release of Money for Life…in good times and bad – How to Thrive in the 21st Century e-book is imminent. To order an advance copy and receive a FREE signed copy of the paperback when it is released late in the 1st quarter visit www.TheMoneyForLifeBook.com
Posted in Money, Taxes, The Four Pillars, Whole Life Insurance | Tags: agon fly, annuities, annuity, bank, banker, banking, banks, be the bank, become your own bank, becoming your own banker, bonds, circle of wealth, debt, debt to others, disability income insurance, Dr Agon Fly, Dr_Agon_Fly, financial, financial advice, financial planning, health insurance, housing market. stocks, how to thrive, infinite banking, insurance dividends, investing, jeff reeves, jeffrey reeves, leap system, life insurance, long term care insurance, Money, money for life, money under management, mutual funds, mutual insurance, mutual insurance company, nash, nelson nash, passive income, pirates of manhattan, r nelson nash, saving, stock dividends, stock market, Taxes, term life insurance, The Four Pillars, thrive, universal life insurance, variable life insurance, Whole Life Insurance, Who’s helping you | No Comments »
Enter the Financial Planning Labyrinth…
January 25, 2008 | Author Dr Agon Fly
Yesterday I compared the financial planning process to a labyrinth. Later in the day I taught a class on financail planning for a group of seasoned financial advisors and presented them wth this same analogy. I suggested that they may not be advising their clients properly if they were not advocating the use of cash value life insurance – particularly dividend paying whole life insurance from a mutual company – as an essential component of the clients financial plan.
It was not a surprise when not even one of the advisors knew enough about this product class and this strategy to even present it as an alternative. Remember, a labyrinth does not allow choices. It is a path to nowhere. That is great if you are on a spiritual journey and are traversing a labyrinth to achieve clamness and clarity of mind. It is entirely unproductive if you are mapping out your financial future. These advisors, like most of the advisors, who are informed and trained by companies that do not have dividend paying whole life in their portfolio, were only taught about other forms of life insurance – the types that their companies had for sale.
They were taught that combining term life insurance and investments – either as two separate products or combined in a single product such as universal life insurance - offered a better approach to financial planning. They were shown the entrance to the labyrinth and told to lead their clients on this path as if it were the secret to finding the holy grail.
In fact, when you enter a labyrinth there is only one path and one destination. You relinquish choice. You give your decisions over to a rigidly defined set of strategies and tactics that lead you to a predefined destination. The path offers no options. The rules of the labyrinth are that you must proceed to your desitination without evaluating either the path or the destination.
There’s another troubling aspect of the financial planning labyrinth. It is two dimensional. It is a flat outline, a mere diagram. The only way to invest it with depth is to enter it. When you enter this labyrinth you invest it with meaning. The problem is that the meaning assures the success of the designer of the labyrinth, not necessarily the success of those who traverse it.
The issue is not whether or not you should have a financial plan or engage a financial planner. You should. Your concern should be whether or not the planning process you are undertaking is a two dimensional labyrinth with a single path and a cookie cutter destination or a plan that is designed to help you create a foundation upon which you can erect the Four Pillars that are essential to EVERY successful financial plan but unique to every person:
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Freedom from debt-to-others
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Ready money to deal with life’s surprises
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Income you don’t have to work for and you cannot outlive
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A legacy of wealth and wisdom for those you care about
If you already have a financial plan or are considering one, measure it carefully against the Four Pillars. If it doesn’t measure up with guarantees that it will deliver the foundation and the Four Pillars you may want to ask your advisor why not – or find another advisor it the answer isn’t satisfactory.
To learn all of the secrets of Money for Life visit www.TheMoneyForLifeBook.com
Posted in Money, The Four Pillars, Whole Life Insurance | Tags: agon fly, annuities, annuity, bank, bank on yourself, banker, banking, banks, be the bank, become your own bank, becoming your own banker, bonds, circle of wealth, debt, debt to others, disability income insurance, Dr Agon Fly, Dr_Agon_Fly, financial, financial advice, financial planning, health insurance, housing market. stocks, how to thrive, infinite banking, insurance dividends, investing, jeff reeves, jeffrey reeves, leap system, life insurance, long term care insurance, Money, money for life, money under management, mutual funds, mutual insurance, mutual insurance company, nash, nelson nash, pamela yellen, passive income, pirates of manhattan, r nelson nash, saving, stock dividends, stock market, Taxes, term life insurance, The Four Pillars, thrive, universal life insurance, variable life insurance, Whole Life Insurance, Who’s helping you, yellen | 2 Comments »
The Vanishing Wealth of the Stock Market…
January 23, 2008 | Author Dr Agon Fly
American’s who follow the practices of Money for Life…in good times and bad may have money in the markets. They may even be experiencing losses as the markets self-destruct. The equities they hold may lose value. They have no reason to panic, however, and they are able to maintain peace of mind about their money situation.
Money for Life taught them how to protect their wealth from the turmoil that is the market. Money for Life taught them to build a foundation for their personal economy and to erect The Four Pillars upon which every successful personal economy rests:
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Freedom from debt-to-others
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Ready money to deal with the ever present risks to wealth and well being – job loss, market crashes, accidents and sickness, children in trouble, divorce, con artists, dishonest business partners, and on and on and on…
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Income they don’t have to work for and they cannot outlive
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A legacy of wealth and wisdom for those they care about – family, religious and charitable causes, etc.
Americans who follow Money for Life practices have built their financial structure to withstand the earthquakes of the markets and the tsunamis of fear and panic that follow.
Americans who follow Money for Life practices will still have more money at the end of 2008 than they have today
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because they are using cash value life insurance as the foundation and support for their Four Pillars;
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because they are recovering both the principal and interest that others pay to retailers, credit card companies and banks;
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because they are growing their dollars tax free;
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because they never put foundation dollars at risk without the commitment to replace them;
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because they have learned that being the bank is better than being the servant of the banking system.
Discover what American’s who follow Money for Life practices know that most Americans (including most financial planners and advisors) don’t know…
Place your advance order: Money for Life…in good times and bad – How to Thrive in the 21st Century www.TheMoneyForLifeBook.com The e-book will be released by the end of January 2008 and you too can have a Great 2008!
Posted in Money, The Four Pillars, Whole Life Insurance | Tags: agon fly, annuities, annuity, bank, bank on yourself, banker, banking, banks, be the bank, become your own bank, becoming your own banker, bonds, circle of wealth, debt, debt to others, disability income insurance, Dr Agon Fly, Dr_Agon_Fly, financial, financial advice, financial planning, health insurance, housing market. stocks, how to thrive, infinite banking, insurance dividends, investing, jeff reeves, jeffrey reeves, leap system, life insurance, long term care insurance, Money, money for life, money under management, mutual funds, mutual insurance, mutual insurance company, nash, nelson nash, pamela yellen, passive income, pirates of manhattan, r nelson nash, saving, stock dividends, stock market, Taxes, term life insurance, The Four Pillars, thrive, universal life insurance, variable life insurance, Whole Life Insurance, Who’s helping you, yellen | No Comments »
Success With Money Begins with Awareness…
January 14, 2008 | Author Dr Agon Fly
Are you aware that a generation ago, American men in their 30s had median annual incomes of about $40,000? Today, men of the same age, make about $35,000 a year, adjusted for inflation. That’s a 12.5% drop over the last 30 years.
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Perhaps, if that were a 12.5% gain, there would be more mothers who could choose motherhood at home over exhaustion from the burden of both work and motherhood.
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Perhaps there would be fewer fatherless families and fewer child support payment delinquencies, too.
Are you aware that The Standard & Poor’s 500-stock index closed 2007 at 1468.36, up 3.5 percent for the year? Subtract the Bureau of Labor and Statistics inflation rate of 4.3% through Nov. 2007 and the stock market lost 0.8% — BEFORE taxes, fees, and commissions.
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Perhaps more Americans would sleep better if they had less money at risk and more of their money was safely growing (guaranteed) in a whole life insurance contract.
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Perhaps there might be fewer Wall Steet Fat Cats too, but we can tolerate that
Are you aware that the Case-Schiller National home price index marked the highest real estate decline since 1991. Home prices dropped a record 6.7% compared to last year.
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Perhaps if so many Americans were not using their homes like piggy banks, there would not be this disastrous erosion of Americans’ wealth.
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Perhaps the foreclosure rate would be falling instead of rising if the mortgage industry had not conned American families out of their equity for its immediate gain – but eventual loss.
Are you aware that the savings rate in America today is still near 0%? We have forgotten how to save. We have been duped by the merchants of misinformation about money and the financial snake oil salesmen (and women) into thinking that our only hope for prosperity lies in ”buying” their investment products.
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Perhaps we would be better off if we controlled our own money instead of giving it to some mythically wise mutual fund manager or investment advisor.
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Perhaps we would sleep better if we had enough money safely set aside to care for ourselves and our families when –it happens…and it always does.
WAKE UP AMERICA!
Discover that there is a better way that has been tested and proven for over 100 years that is based on principles that have been known by the wealthy for millennia. www.TheMoneyForLifeBook.com
Money for Life…in good times and bad – How to Thrive in the 21st Century
©2008 Poor Richard Publishing Company
Posted in Money, Whole Life Insurance | Tags: annuities, annuity, bank, bank on yourself, banker, banking, banks, be the bank, become your own bank, becoming your own banker, circle of wealth, debt, debt to others, disability income insurance, financial, financial advice, financial planning, health insurance, infinite banking, insurance dividends, investing, leap system, life insurance, long term care insurance, Money, money for life, money under management, mutual funds, mutual insurance, mutual insurance company, nash, nelson nash, pamela yellen, passive income, pirates of manhattan, r nelson nash, saving, stock dividends, Taxes, term life insurance, The Four Pillars, thrive, universal life insurance, variable life insurance, Whole Life Insurance, Who’s helping you, yellen | No Comments »
Mutual Insurance Companies Are Thriving in the 21st Century…
January 10, 2008 | Author Dr Agon Fly
Wednesday, January 9, 2008
Small life insurance companies flourish
“A new study from Conning Research and Consulting shows that despite tighter competition and consolidation in the life insurance market, many smaller life insurance companies are still flourishing.
The study, entitled “Successful Small Life Companies: Remaining Nimble in a Supersized World,” analyzed small companies as a group to identify the key earmarks of their success, which, according to the study’s authors, can be helpful to companies of any size.
Whole Life Insurance is one of the keys
Findings indicate that successful small life companies often share these common traits: a stronger focus on ordinary life insurance, a defined and sustainable niche, and effective cross-selling strategies, all of which lead to premium growth that’s higher than average. ” (Emphasis added)
Ordinary life insurance is just another way of saying whole life insurance.
I just thought you might like to know that not only are the people who want to build a solid foundation for their personal finances putting their confidence in whole life insurance, but also that the companies who are committed to helping them achieve that goal are building strong financial reserves in support.
Learn more! Money for Life…How to Thrive in Good Times and Bad shows you how whole life insurance can help you travel the safe and easy path to prosperity.
Buy your own copy of Money for Life…How to Thrive in Good Times and Bad today!
©2008 Poor Richard Publishing Company – PoorRichard.Reborn@yahoo.com
Posted in Whole Life Insurance, You BE the "Bank" | Tags: be the bank, become your own bank, becoming your own banker, financial, financial advice, financial adviser, financial advisor, financial management, financial planning, infinite banking, insurance dividends, life insurance, Money, money for life, mutual insurance, mutual insurance company, nash, nelson nash, r nelson nash, term life insurance, The Four Pillars, universal life insurance, variable life insurance, Whole Life Insurance | No Comments »