On Aug 29, 11:23 am, "Cal" <cal-les...[at]comcast.net> wrote:
- quote -

Of course. I omitted "option B" for multiple reasons. At a quick
glance, I checked a guaranteed UL that cost $2k annually (45yo female,
standard health, 15 yrs premiums). That exact same UL costs $2600 for
"option B". The death benefit was projected to only be $132k at life
expectancy ($100k face + $32k cash value). I checked multiple ages and
companies and "option B" premiums were ~30% higher than level death
benefit. I thought price disparity intiated this thread so I assumed
option B was unsuitable (maybe I assumed incorrectly).

Also, option B is dependent on cash value accumulation (CVA). The base
face amount of $100k (barring loans, surrenders, etc). Because of the
variablilty of the CVA, option B can be good or bad. If the cash value
of the policy has begun declining the insured usually would have been
better investing the excess premium elsewhere. If the CVA is still
climbing, option B may yield a higher payout than an alternative
investment would have. In the illustration I used above, the cash
value of that policy is 0 by age 89 (IOW, over $25k in additional
premium and not $1 of additional death benefit).

Of course over-funding the policy so that the CVA never decreases
makes option B more attractive, but again I thought the OP was
weighing guarantee versus price and I didn't get the impression that
overpaying was her intention.

- quote -

Sorry. We must be splitting hairs here. According to our contracts
"cash SURRENDER value" includes acumulated interest, dividends on
deposit, cash value of paid-up additions, etc, etc. Cash value alone
does not include these other items. I cannot say whether all companies
use the term in this sense.

http://en.wikipedia.org/wiki/Cash_surrender_value


P.S. - where is my earlier post and how did Cal see it, yet I do not
(special glasses, magical powers???)

- quote -

Not neccesarily true. Although P/U/A's in a PARTICIPATING W/L policy
do INCREASE the Death Benefit, the same can be achieved with the
use of "Option B " in the U/L policy. Option"B" provides that the contract
will pay the Face Amount, P L U S the accumulate Cash Value Account,
upon "due proof of death". SO that same 100k policy might provide a
Death Benefit of 150 to 200K...............................


To further clarify,
- quote -

If done judiciously, the C/V Account could continue to grow
to major potortions.

- quote -


That should read "Cash surrender value, PLUS Accumulated Interest ! ! !

Cal Lester CLU

Olivia,

Is the guaranteed policy WHOLE life or UNIVERSAL life? I checked a non
guaranteed whole life policy (may or may not require out-of-pocket
premiums after 15 years) against a guaranteed universal life policy
(definitely no OoP premiums after 15 years) and the non-guaranteed was
barely more expensive. A guaranteed whole life was, as you said, about
twice as much.

The drawback to universal life is that the policy does not endow. IOW,
the cash value increases for a long time and then sharply decreases
near the end of the policy. Also, it is not uncommon for whole life
policies to purchase "paid-up additions" that increase the death
benefit over time. This is not the case with UL, the death benefit
will remain the $100k.

To some, the parabolic nature of the cash value is a very big turn-off
to UL. To others, the cash value is not a big deal. Are looking solely
for death benefit, or is the cash value important? Most here agree
that there are many better ways to build cash. To further clarify,
even in a UL policy the cash often continues to climb policy for 30+
years before it begins to decline. You can also overpay a UL by just a
small amount and often prevent the cash from ever declining (flexible
payment options are also an advantage of UL).

Lastly, if you decide many years from now that you don't need the
coverage you have at least two options: 1. Surrender the policy and
take the cash surrender value (probable advantage to whole life) or 2.
"settle" the policy with an investment company and you'll usually
receive an amount greater than the cash value (equally advantageous,
but life settlements are a whole other conversation).

Whatever you decide, there is certainly no harm in making your agent
show you universal life illustrations to compare to what he has
already shown you. More options are always better than less options.
FWIW, whole life policies pay larger commissions to the agent.

- quote -

It includes a portion of the interest that was earned the company,
that has been
applied to YOUR contracts C/V. That Cash Value does NOT (and I
repeat)
DOES NOT belong to YOU. It is the property of the Company, and it IS
required to REMAIN in the contract, to offset the cost of the
payment of
the Face Amount of the contract.

You seem to be confused with the fact that in the event that Y O U
decide to SURRENDER the contract, (give up the Face Value Benefit),
then the C/V account, no longer being REQUIRED, is RETURNED to YOU.

In the meantime, YOU can ask for a LOAN, from the COMPANY (which is
guarranteed), using that same Cash Value as COLLATERAL........

If it is a form or Universal Life (as opposed to W/L), then you can
WITHDRAW money from the account, which will REDUCE the FACE VALUE
(read Death Benefit) by that same amount. So in effect you are
taking a portion
of your Death Benefit while alive.


- quote -

I used that word to signify that you NO LONGER HAVE THAT NEED.
There was NO reference to investment.

Cal Lester CLU

Cal wrote:

- quote -

Whole life, universal life, guaranteed life, whatever you want to call
it, clearly there is an investment component. I get an annual statement
from the policy I bought twenty years ago which shows me exactly how
much interest I earned the past year. At present, my interest earnings
meet or exceed my premium payments plus costs, but that is not
necessarily true of past or future periods.

- quote -

What do you mean by "dissipated [sic] over time"? Is there an
investment component?

-Mark Bole

"Mark Bole" <makbo[at]pacbell.net> wrote in message news:iG4Ai.21418$eY.1667[at]newssvr13.news.prodigy.net...
- quote -


I have to take issue with the above reference to the Whole Life Policy
being a bundled product of Insurance, plus investment.

There is NO Investment offered in Traditional Whole Life. The investment
that occurs is done BY the Company, for the benefit OF THE COMPANY.
The contract offers a GUARANTEED interest to be earned on the Cash
Value of the contract, which is REQUIRED by LAW, for the SOLE PURPOSE
of guaranteeing that there will be sufficient dollars in the company coffers
to pay the Face Amount upon YOUR Death.

Anyone who purchases a Whole Life contract as an "investment tool" is
being mislead.There are MANY better vehicles that can be used for that purpose.

Any Life Insurance should be purchased to fill an INSURANCE NEED.
If per chance that NEED is dissipated over time, then ANY Permanent
policy's Cash Value may turn out to be the best investment made ! ! ! ! !

"olivia" <olivia.carmichael[at]gmail.com> wrote in message
news:1188080663.763769.257950[at]r29g2000hsg.googlegroups.com...
- quote -

The basic premis involved with ANY Paid Up Policy, is to have the
Insured pay in the ENTIRE premium within a certain time period.
ex: it would normaly require that the insured paying premiums for
"a lifetime", would pay in $xx,xxx over that time period.
The company offers to "allow" the insured to pay a HIGHER premium,
that will result in that same amount of $'s (plus interest to be
earned),
in say 15 or 20 years.
The insured gives up the use of the money, in exchange for a guarrantee
that he will no onger be required to pay any more premiums. The effect
is actuarily the same..................................


Other option is standard whole
- quote -

You are talking here about a "participating policy", where the
DIVIDEND is NOT guarranteed. It WILL fluctuate over the time
period, and does NOT offer ANY guarrantee of having a sufficient
Cash Value to provide a P/U/ Contract.


It almost seems that the guaranteed paid-up is a
- quote -

IF that possibility IS attractive to you, then by all means go for it.
Keep in mind the "time cost of money" over the 15 year period ! ! ! ! !



Meanwhile, the standard whole life does have almost half
- quote -

This is true, as I explained above. The company NEEDS those extra
dollars to earn THEM extra interest, to accumulate the projected
Cash Values that would accrue in the Standard W/L policy where
the premium is FIXED for the life of the contract.

Cal Lester CLU

olivia wrote:

- quote -

No, there really isn't more to this equation. Do you want to pay more
for reduced risk, or pay less for increased risk? If you took the
standard policy for half-premium, would you put the difference into a
15-year investment, or just spend it?

The main problem with whole life is that, as a bundled product
(insurance plus investment plus tax treatment), it is harder to compare
apples-to-apples with separate products.

More important might be your choice of whole life vs. term life. If your
beneficaries include young children with no other source of support, you
probably want to load up on relatively cheap term life until they are
close to adulthood. This doesn't preclude a complementary whole life
policy, but I would think of it more as diversificaton than the primary
way of meeting my needs.

-Mark Bole

I am planning to buy a 100K whole life insurance and am confused by
the options. One option is to purchase the insurance with a fixed
premium for the 15-years and the insurance will be "guaranteed" to be
paid-up at the end of the 15th year. Other option is standard whole
life insurance, where I pay a fixed premium and the "hope" is that the
policy will hopefully (depending on the dividend return rate) paid-up
at the end of the 15th year. The premium for the second option
(standard life insurance) is almost half as that of the guaranteed
paid-upn policy. It almost seems that the guaranteed paid-up is a
better option as I do not have to worry about the rate of returns and
will be releieved from any payment responsibilities after the 15th
year. Meanwhile, the standard whole life does have almost half
premium (fixed for the lifetime of the policy). However, I think
there is more to this equation than I am understanding.... Any help
will be greatly appreciated. Thanks much in advance.

Olivia