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CalvinT · 07-09-2007, 12:21 PM

I agree with you Jude, I see alot of people with beautiful big house and nice new cars that are one paycheck away from losing it all, because they are making so many loan payments all over the place, and it boggles my mind why someone would risk the security of their family in this manner.

If I was going for the Insurance aspect of this, myself I would probably go for a term or possibly a universal life, but this is where alot of people get hung up on this bank on yourself scenerio. The insurance policy is just the vehicle, the fact that there is a death benefit is just an extra. Ideally you have loaned yourself all the value out of this account at death to have a funfilled retirement.

I will use my personal worst case scenerio policy illustration as an example of the power of this program. If my policy returns avg dividends (Dividends are not guaranteed but the company I am with has paid dividends every year for the last 104 years) If I do not loan any money to myself and pay myself any interest. My cash value at the age of 65 will be approx $350,000. Having used the paid up additions rider to increase my death benefit, it will be approx 1.7 million, my compounded profit on my contribution over the course of 34 years is 17.5% annualy!!!!!!!
I am 99% guaranteed this, the only way I can lose this is if I fail to make my principle payment (after the seventh year the policy can make its own principle payment, but this stops the increase in cash value and paid up additions) or the company goes out of business, but as a policy holder I have first dibs at any money in case of a business lapse.

But the whole point of this is to have this nice big cozy pool of money to borrow and pay yourself interest, which increases the cash value even more. And while this money is borrowed since the policy is non-direct recognition it gains the same dividends as if it was still in the policy, letting your money pull double duty.

I'm sure it is possible to gain more than this through some well timed stock or mutual fund investing, but with this you will never have a drawdown in your account as long as you make your principle payments, and you can loan the money back to yourself for any reason you want, and not have it affect the performance in the long run, in fact it helps because of the extra interest you should be paying yourself. And there are no capitol gains taxes to pay the government as this was a loan.

Should this be the only step you take for a financial plan? Probably not, but in my opinion it is a very versitile addition to any bigger financial picture.

07-09-2007, 12:21 PM	#3 (permalink)
CalvinT Junior Crapper Join Date: Apr 2007 Location: US, AZ Posts: 83 My Mood: Portfolio: I give up!!!!!!!! Fav Ecurrency: E-gold Thanks: 26 Thanked 18 Times in 13 Posts	Re: Make money by saving money. I agree with you Jude, I see alot of people with beautiful big house and nice new cars that are one paycheck away from losing it all, because they are making so many loan payments all over the place, and it boggles my mind why someone would risk the security of their family in this manner. If I was going for the Insurance aspect of this, myself I would probably go for a term or possibly a universal life, but this is where alot of people get hung up on this bank on yourself scenerio. The insurance policy is just the vehicle, the fact that there is a death benefit is just an extra. Ideally you have loaned yourself all the value out of this account at death to have a funfilled retirement. I will use my personal worst case scenerio policy illustration as an example of the power of this program. If my policy returns avg dividends (Dividends are not guaranteed but the company I am with has paid dividends every year for the last 104 years) If I do not loan any money to myself and pay myself any interest. My cash value at the age of 65 will be approx $350,000. Having used the paid up additions rider to increase my death benefit, it will be approx 1.7 million, my compounded profit on my contribution over the course of 34 years is 17.5% annualy!!!!!!! I am 99% guaranteed this, the only way I can lose this is if I fail to make my principle payment (after the seventh year the policy can make its own principle payment, but this stops the increase in cash value and paid up additions) or the company goes out of business, but as a policy holder I have first dibs at any money in case of a business lapse. But the whole point of this is to have this nice big cozy pool of money to borrow and pay yourself interest, which increases the cash value even more. And while this money is borrowed since the policy is non-direct recognition it gains the same dividends as if it was still in the policy, letting your money pull double duty. I'm sure it is possible to gain more than this through some well timed stock or mutual fund investing, but with this you will never have a drawdown in your account as long as you make your principle payments, and you can loan the money back to yourself for any reason you want, and not have it affect the performance in the long run, in fact it helps because of the extra interest you should be paying yourself. And there are no capitol gains taxes to pay the government as this was a loan. Should this be the only step you take for a financial plan? Probably not, but in my opinion it is a very versitile addition to any bigger financial picture.