Comments on: The Missed Fortune 101 debate continues

By: SS

SS — Thu, 13 Nov 2008 16:07:04 +0000

Although fortune 101 could be a good thing. A couple of things I found out the hard way is that you need to do this when your younger not when your ready to retire, Because it takes 7yrs to fully fund a life insurance policy in which time your premiums are extremely high and there’s not much money to borrow until it is completely funded. Also your only allowed to put so much in th policy each year so you have to put the rest of your mortgage money into low interest liquid accounts probably 3%. so you can lose money in 3 ways. The difference between 3% and a 6.5% mortgage, high premium rates, and a stock market like we have now. Also once your money is in the insurance policy your stuck with the funds that the policy offers and nothing else. So after 7yrs not much of your money is left to borrow from. One other point is to make sure that your policy is a fixed indexed insurance policy and not a variable indexed insurance policy. The fixed index has the minimum and maximum cap, but the variable indexed is at the wim of the market ,and in this market, you probably would have lost half of everything (but there is the opportunity to make more) and not only had 7yrs but also the time it takes the market to recoup which is ok for some one a little younger and not ready to retire. Hope this helps to anybody whose making decisions about this type of investment.

By: Al

Al — Sat, 18 Oct 2008 00:27:49 +0000

Interesting comments on an on going thread (subject matter), but here are a few thoughts from a insurance professional with over 24 years experience.
1. If it sounds too good to be true, believe it, it’s NOT;
2. Check out the author, and I mean not what him/her state in their publications, but their credentials to be able to make their claims;
3. What connects do they have to any company offering any products in conjunction with the subject matter;
4. Are there any creditable resources to substantiate the author’s claims? And lastly;
5. Ask yourself one simple question: If this proposed idea, is so wonderful, why is not everyone promoting it?
I have personally read the authors books and found that 99.8% contain the same essential “message,“ any investment outside of his idea is poor planning. Regardless of the fact that one would be putting all their “eggs into one basket.” Only on one does he state any real warning.
As one who has reviewed several of the authors proposals, let me offer up some items:
1. I did not find any direct comparison of what the individual had to what was being proposed. WHY? It would seem prudent that one would want to see a direct comparison, would they not?
2. The idea being suggested that one can get a mortgage interest rate deduction beyond $100,000 is ludicrous, refer to IRC section 163a.
3. IRC 264a states very clearly that any interest on a loan to purchase a life insurance contract is NOT deductible. And this is what has been proposed.
4. He suggests “investment grade life insurance companies.” One individual in this thread claimed to be with “OM.” One of the companies the author claimed was an investment grade company. By their website (http://www.omfn.com/about/Financials.aspx) they are rated by AM Best as an “A,” Fitch “BBB” and by Moody’s as Baa1,” with no rating by Standard & Poor’s. This may not seem terrible, except when you look at the ratings of another company mention in this thread, Northwestern Mutual. There rating across the board from all four rating services is “AAA.” My simple question here would be, if you were one who needed surgery, would you want a doctor who received all “A’s” or partial “A’s) in medical school?
5. If one were to look at any proposal offering up an Equity Index Universal Life, one would find the “illustrated” interest rate around “7.5% to 9%” based upon some “look back period of the S&P 500 Index fund (10, 15, 20 0r even 54 years). Not bad rates, except the continuous annual growth rate of the fund has been only 5.9% since it’s incept in 1926 without the benefit of reinvested dividends!
A reasonable question here should be, “what proof do you offer to back your claims?” Then I would refer you to the following web sites and let you read for yourself.
http://www.seniormarketexpo.com/r/WPI/d/contentFocus/?adcID=4daa2f2417a91ed703caf68bca7d9b83
Burns, Scott. “What’s missing is reality.” Dallas Morning News September 3, 2005.
Burns, Scott. “If you follow author’s advice, you could lose a bundle.” Dallas Morning News December 29, 2005.
Cruz, Humberto. “Life insurance investment might be worth a very careful look.” Milwaukee Journal Sentinel September 10, 2005.
Cruz, Humberto. “Fighting back against those who target the elderly.” Tribune Media Services November 27, 2005.
Johnson, Shane. “Once we were lost.” Salt Lake City Weekly December 29, 2005.
Katt, Peter. Life Insurance Perspectives: “Missed Fortune 101.” February 2006.
NASD Investor Alert, “Betting the Ranch: Risking Your Home to Buy Securities.” March15, 2004

By: Jonathan

Jonathan — Mon, 02 Jun 2008 17:24:06 +0000

Jeff V

I challenge your above assertions with the following facts

1. Dateline’s NBC special was on Equity Indexex Annuities ONLY, not Universal Life Insurance – 2 entirely different products

2. Whole life has proven to be the biggest sham on planet earth – just look at what MILLIONS of people were doing with them in the late 70s & early 80s – CASHING THEM IN !

By: Jeff V

Jeff V — Mon, 28 Apr 2008 12:26:26 +0000

EIUL is a scam, that’s why Dateline NBC just did an expose on the people that sell them. What makes sense is a Northwestern Mutual WL policy that has averaged 7.5% – 9.0% over the past 30 years with relatively zero market risk. John Bogel the founder of Vanguard says that the average 60/40 investor who gets 8% ROR over time will make out fine. The more you can reduce the negative ROR over the years, the better the investment ROR will be. I belive in “interest cancellation”, not leveraging your mortgage. You can take a 30 YR mortgage and reduce it to less than 10 YRS without paying anymore than you’re paying currently with MMA software. A 3K investment in the S/W is worth the 50K of interest you can cancel in just 1 YR.

By: Pete Colon

Pete Colon — Wed, 02 Apr 2008 21:28:06 +0000

There are many good IUL products. Its just a matter of doing your research and seeing which ones cap you out and wich ones have a lower Cost of insurance. You should look at the AmerUS-AVIVA, F&G product, National & Prudential.

Pete Colon
786-399-7412

By: Pete Colon

Pete Colon — Wed, 02 Apr 2008 21:22:29 +0000

Apperently all the concepts in the book weren’t understood. The purpose of this concept is to LEVARGE your asset (Home) to INCREASE Cash Flow. Cash Flow for what? To Build a NEST EGG. If you’re a person with enough cash flow to overfund your qualified retirement accounts and then some then maybe this strategy might not be for you. However, I can still make a compeling argument that even if someone with much money socked away should still consider the negatives of paying off your mortgage. #1 Tax consequence= even though you’ll be in a lwer tax bracket when you retire you also have less deductions so having a mortgage will help you with deductions. #2 Safety = how safe is your money trapped in your home equity? If your in a down market like the one we’re in your equity will drop hence you’ve lost money. #3 Liquidity = How liquid is your equity when you retire. What if you encounter health isuues or some unforseen event. You MIGHT not qualify for a refinance and if you have to sell in a down market guess what you won’t sell it SO QUICK. Hence making it UNSAFE AND UNLIQUID.

In Conclusion, to all the people who try to dispell the concept of missed fortune. Try re evaluating your knowledge and consider expanding you financial horizon. To the ones who don’t understand all the concepts keep studying the WEALTHY and see how they’re doing it.

Pete Colon
Miami, FL
786-399-7412

By: Franklin Peck II

Franklin Peck II — Tue, 28 Aug 2007 07:20:46 +0000

MLR,
Currently the best EIULs are with Old Mutual and if you are not doing home equity then Avia. Lincoln Financial has a pretty good product too!

The Missed Forutne Concepts are indeed contrarian. People tend to be affraid of things that they dont understand. Its obvious isn’t it? The product for the OM product is currently averaging 9.18% tax-free which could be as much as 12.5%+ taxable.

Investing at a rate that is tax-deductible and getting a higher rate tax-free…need we say more? Let’s not make this complicated!

By: SS

SS — Fri, 10 Aug 2007 00:59:00 +0000

MRL — My financial adviser took the course with Douglas Andrews and he put me in a policy called Master Choice Group Flexible Premium Life Insurance with Equity Index option by OM Financial Life Insurance company. I think it is out of Amsterdam. It follows the Index 500 with a minimum of 1% cap and a maximum of 17% cap. It also has an annual reset period which reestablishes my initial investment yearly and never lets it go below that point. This was for the equity money that I had in my house. It has averaged 9.18% over the last 17 years. It has no lapse guarantees and decreasing insurance premium rates because the insurance premiums are high at the beginning but only 1% of the policy value. My 401K was put in a different type of insurance policy with a little more risk but is being actively managed by Foxhall Capital Management Inc. which charges approximately 1.2% but has averaged 12.5% return over the past 12 years. Hope this helps.– SS

By: MLR

MLR — Fri, 20 Jul 2007 15:33:09 +0000

Too much noise. This is a relatively easy and good concept. The real issue is: where are the alternative Equity Indexed Universal Life opportunities that will get you 7.75% (net)??? If you can tell me some good oportunities, then it is a no-brainer to invest taken-out equity financed well below the 7.75%. Can anyone point me to the best EIUL vehicles???

By: BOB

BOB — Tue, 17 Jul 2007 05:51:18 +0000

I HAVE read “Missed fortune 101″ and the most interesting aspect of using your “locked” up equity is 1.)the growth factor and liquidity of your investment grade life insurance fund, 2.) the tax deferral of the interest left on that loan when you start dispursements from 401k, IRA or annuity that are going to be taxable, 3.)the best of all is the growth in the life insurance policy is disbursed tax “FREE”