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In this episode, we ask:
- Is the policy correctly structured?
- How about a case study?
- Does the policy with the most cash value always win?
- What is the difference between a direct recognition and a non-direct recognition whole life insurance policy loan?
- What did the footnotes say?
- What are some possible outcomes?
- What happened to the dividends with an outstanding direct recognition loan balance?
- What happens to the dividends with an outstanding non-direct recognition loan balance?
- What’s the difference?
- How much loan interest?
- What’s the big takeaway here?
- Why would this policy become a modified endowment contract (MEC)?
- How about another example?
- What happened with the dividends?
- What about the policy loan interest?
- What are the takeaways?
- Why do Bank on Yourself® type whole life insurance policy loans use non-direct recognition policy loans?
Would you like to avoid direct recognition loans and loss of dividends?
Is my policy a Bank on Yourself® type whole life insurance policy?
Agent
- Is my agent captive or independent? (Can he/she work with multiple companies or just show me one company’s product line?)
- Is my agent trained to confidently and competently answer all of my questions? (Am I having to educate him/her?)
- What is the agent’s training and stability? How long will the advisor be around to help me?
- Is my agent among the ~200 Bank on Yourself® Professionals in good standing with the Bank on Yourself® organization?
Insurance Company
- Does the company offer whole life insurance? (Do I have Whole Life or a Universal Life, Variable Life, Indexed Universal Life or Term policy?)
- Is the insurance company mutually owned or stock owned?
- Is the insurer’s customer service department educated enough to help me with policy loans?
- Does this company have a high Comdex Rating and solid financial strength? Will they have the stability to be in business for the next 100 years at least?
Tax considerations
- Will this policy become a modified endowment contract (MEC)?
- Will both principal and gains be accessible tax-free under current law?
Riders
- Are paid-up additions (PUAs) offered through premiums or just through dividends?
- What is the Insurance Company’s PUA load cost? How does it compare to other whole life products?
- What are the PUA limits (and any other gotchas)? When and why must we reduce our PUAs, even if we don’t want to?
- Were any other riders available to help accelerate my cash value growth, like term riders?
- If I miss a premium payment, are there protections? What will happen to the policy?
- Is there a Chronic Illness Rider or similar available? What are the fees for this rider?
- What are the limits on Chronic Illness, Long Term Care and Accelerated Death Benefit riders?
Dividends
- Does the insurer who issued my whole life insurance policy pay dividends?
- Does the whole life product I purchased receive dividends?
- Is the dividend based on company performance, with me participating as an owner, or is it merely “interest sensitive” based on industry performance?
- Has the insurance company paid dividends at least 100 years straight?
- Was there significant dividend variability over the last 12 years, suggesting risk to future cash value growth?
Loans
- If I take a loan, how will it affect the policy, short-term and long-term?
- Do I have non-direct recognition loans or direct recognition loans?
- When will I pay policy loan interest (at the end of year or immediately)?
- What limits are at work for policy loans? Is there a maximum amount per loan
- What will they allow me to borrow out at a time?
- What is my loan interest rate on this policy? Is it above or below the industry average?
- Is the loan simple interest or compound interest?
- At what time interval is the loan interest being accrued (annually, daily, etc.)?
Would you like a second set of eyes to review an existing policy, or would you like to discuss your specific situation? Reach out to meet with Mark or one of Mark’s associates.
Brian Claus
Max Brusky is an attorney specializing in civil litigation, particularly insurance defense, coverage, and subrogation. He is currently an “in-house” and Claims Director for a national trucking company. He is a happy husband to a happy (and brilliant, and understanding) wife, and the proud father of two, one in college, one almost in college. He currently lives in Chicago’s far west suburbs, but still considers himself a Wisconsin expatriate.
Mike Michalowicz is an investor, active partner in multiple companies and a prolific author. His bestselling book, Profit First, has sold more than one million copies.
Dave Bonnemort is a current client and active practitioner of the Becoming Your Own Banker concept, as well as a husband to an amazing wife and father to three incredible kids.
Jay Helms, Founder of the W2 Capitalist, escaped the rat race after 6 years of side hustling in real estate investing. Jay has a goal to help one million people create multiple streams of income, achieve financial freedom, or build legacy wealth through real estate investing. Jay met his wife Cassie when they were contestants on a reality TV show and when their family of 5 are not traveling the country in their RV, Jay and Cassie reside in Gulf Breeze, FL, with their three kids, Rowland, Stella, and Ellen Anne. Knowing that closing on the first deal is the biggest hurdle and roadblock for new investors, he wrote a book, 