401k rollover

[Cyforce]

So I'm guessing you don't have your securities license and aren't talking about variable annuities (since their account value is always subject to losses...even if there are protections in place)?

I can also make strong arguments for annuities for several scenarios....especially to those that are incredibly risk adverse (so the alternative is they'll just keep their money in a saving account)....and are older . There is a good chance they'll be better off in the long run given their strong aversion to risk taking.

That said, we all should understand that "when risk is removed", you are paying for that protection. As you know, the insurance (annuity) company is charging a premium one way or another to offer you that protection. In other words for the "peace of mind", a person is trading some opportunity away, due to the higher expenses and caps on performance you receive), as compared to if they fully participated in the market outside of an annuity. For some (especially the younger you are), this could be a trade-off of several, several thousands of dollars in returns.

Correct, I'm a Life insurance agent with a BA in Finance that's certified to sell annuities in Iowa. If anyone has an old 401k that isn't being managed send me a PM.

 

[Cyforce]

Last I checked $287,000 was a lot of money to buy term insurance and pay taxes with.

Term policy would cost him $32.00/mo. over the next 30 years. $11,520.00
Then $105.00 over the next 15. $10,500.00 totaling $22,000.00

So the $54,000.00 he'll pay has a dual purpose. May not be for everyone but for a risk adverse product it's a solid foundation.

 

[keepngoal]

That term puts protections up front. The investment model pays off later. Both have a purpose, both can be good solutions.

 

[DeereClone]

Term policy would cost him $32.00/mo. over the next 30 years. $11,520.00
Then $105.00 over the next 15. $10,500.00 totaling $22,000.00

So the $54,000.00 he'll pay has a dual purpose. May not be for everyone but for a risk adverse product it's a solid foundation.

So after paying the term premium payments you laid out he’d have an extra $233,000 less taxes under my scenario.

 

[Pollard4Life]

I have thoroughly enjoyed reading every post on this thread! From the OP going to a sports forum for financial advice to someone thinking an annuity is a good investment. Best of luck to all of you.

 

[Cyched]

I have thoroughly enjoyed reading every post on this thread! From the OP going to a sports forum for financial advice to someone thinking an annuity is a good investment. Best of luck to all of you.

To be fair, I'd be doing the same thing if I sold the stuff for a living.

 

[capitalcityguy]

Term policy would cost him $32.00/mo. over the next 30 years. $11,520.00
Then $105.00 over the next 15. $10,500.00 totaling $22,000.00

So the $54,000.00 he'll pay has a dual purpose. May not be for everyone but for a risk adverse product it's a solid foundation.

I'm curious to hear the rationale behind why someone would need life insurance policy for 45 yrs? Again, I'm going with the premise that the main reason to purchase life insurance is to replace income that a family depends on that they would lose if the insured dies.

So, let's say you start having kids/dependents at age 26. Let's assume next kid born 3 yrs later. To be very, very conservative , let's say in 25 yrs they are out of the house and no longer financially dependent on you.

In this time period, you and your spouse have been paying on a 30 yr mortgage and again, being conservative, is almost paid off.

If you bought a 30yr term policy at age 26 when first baby born, you'd likely have no other need for life insurance once the policy runs out. Dependants gone. House paid off. I think that is more likely then a case where you'd have the need to shell out for another 15yr policy.

 

[BCClone]

I'm curious to hear the rationale behind why someone would need life insurance policy for 45 yrs? Again, I'm going with the premise that the main reason to purchase life insurance is to replace income that a family depends on that they would lose if the insured dies.

So, let's say you start having kids/dependents at age 26. Let's assume next kid born 3 yrs later. To be very, very conservative , let's say in 25 yrs they are out of the house and no longer financially dependent on you.

In this time period, you and your spouse have been paying on a 30 yr mortgage and again, being conservative, is almost paid off.

If you bought a 30yr term policy at age 26 when first baby born, you'd likely have no other need for life insurance once the policy runs out. Dependants gone. House paid off. I think that is more likely then a case where you'd have the need to shell out for another 15yr policy.

If one person makes a lot more, that stream would need to be covered until enough passive income could make up the difference.

 

[BCClone]

As an insurance agent with an annuity certification I'm not able to sell you anything that puts your principal or gains at risk. If you're old like me and in Iowa or a nearby state I would be happy to talk with you further on this.

However, if you're young (under 40) we should talk about an IUL. I just set my 21 y/o son up with a policy. He'll pay $100.00/mo. until he's 65. From day one he'll have a $175,000.00 term policy. At 65 his cash value will equal the policy's face value. At that point he can continue to contribute and build wealth, take a lump sum or receive the interest as a pension type annuity. That best part is because it's post tax money there's absolutely no tax on any of it. (Basically a cross between a Roth and a Term life policy w/ the risk removed)

From what I always understood is that only the amount you paid in premium is non taxable. Is this a special situation?

 

[capitalcityguy]

If one person makes a lot more, that stream would need to be covered until enough passive income could make up the difference.

Good point. This is probably less common now a days, but certainly there are circumstances like this. That said, ideally, the higher producing income spouse has been aggressively saving for retirement and thus those funds would becomes the spouses should they die. Secondly, the reality is you've gone down to one person's expenses, vs two (so that is a net reduction in household expenses)...and if you have no dependents and a house paid off, the loss of the income isn't lifestyle changing.

 

[capitalcityguy]

From what I always understood is that only the amount you paid in premium is non taxable. Is this a special situation?

I think the point he made got a little muddled.

Any gains are tax free due to favorable benefits provided in the Internal Revenue Code towards insurance products (which annuities are considered one).

 

[BCClone]

Good point. This is probably less common now a days, but certainly there are circumstances like this. That said, ideally, the higher producing income spouse has been aggressively saving for retirement and thus those funds would becomes the spouses should they die. Secondly, the reality is you've gone down to one person's expenses, vs two (so that is a net reduction in household expenses)...and if you have no dependents and a house paid off, the loss of the income isn't lifestyle changing.

You have never met my wife. I am 75-80% of the income and outside the kids, I can honestly say I’d be only 30% of the expenses now while my wife would still be around the 75-80%. (I am not being dramatic here either, we are night and day different). Now with LI? Mine is up in about four years and by then, I would be close to having the business be close to autopilot. Would just need enough for 1) rest of kids college expenses. 2) pay the last 1-2 years on the house and 3) pay off any debt the business has (lender requires this of me).

 

[capitalcityguy]

You have never met my wife. I am 75-80% of the income and outside the kids, I can honestly say I’d be only 30% of the expenses now while my wife would still be around the 75-80%. (I am not being dramatic here either, we are night and day different). Now with LI? Mine is up in about four years and by then, I would be close to having the business be close to autopilot. Would just need enough for 1) rest of kids college expenses. 2) pay the last 1-2 years on the house and 3) pay off any debt the business has (lender requires this of me).

Makes sense..and business owners always have unique needs too (especially with insurance) , so I wasn't trying to be too blanketed with the comments (but may have failed there) . I was speaking mainly to those of us that still work for "the man".

 

[Cyforce]

From what I always understood is that only the amount you paid in premium is non taxable. Is this a special situation?

Best way to describe an IUL is as a cross between a term policy and Roth.