Interest is a complex topic that only gets more complex as you dig down into it. As such, interest rates are often misunderstood. One example is the common misconception about how rates of return work, which we previously covered. Another misconception is about the difference between principal and interest on a mortgage, which we’ll cover soon. Today, though, we’re talking about how interest rates on life insurance loans are calculated, and why they’re not simple interest loans. For those who want to know about the innovations in slot machines on
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The Whole Truth About Indexed Universal Life: 10 Facts About IUL
In part one of this discussion, we discussed 10 myths about IUL. Now that we’ve dissected those myths, we can get to the truth of why you shouldn’t buy (or sell) indexed universal life insurance. Insurance companies have put many pages in the front of Equity Indexed Universal Life (EIUL) illustrations that describe the issues we’re going to discuss, yet most people (by design) will not take the time to read and understand what these pages are saying. Unfortunately, this is where much of the misinformation stems from. People insist that
Read MoreThe Whole Truth About Equity Indexed Universal Life Insurance: 10 Myths About IUL
One of the major problems with the agents and the companies that sell EIUL (Equity Indexed Universal Life, which is what it was originally called) or IUL (Indexed Universal Life, which is what the industry is now calling it to avoid SEC scrutiny) is the gross negligence in conveying the risks to the clients. All one has to do is carefully read the full insurance illustration or proposal to find these out. The insurance companies have avoided liability by spelling out the risks in very specific, albeit confusing and overwhelmingly
Read MoreHow to Calculate the Cost of Monthly Life Insurance Premiums
How do you calculate the cost of monthly life insurance premiums instead of paying annually? The answer isn’t quite as simple as dividing by 12, because as you know, paying a premium at an annual rate actually saves you some costs. That’s why, to be more precise, we use a Rate Calculator to find the “hidden” costs” of monthly debit charges. Using the Rate Calculator to Find the Costs Once you have your Rate Calculator, put the annual premium in the Present Value as a negative number (which changes it
Read MoreIs Convertible Term Life Insurance Worth It?
In the life insurance space, we spend a lot of time talking about whole life insurance vs. term insurance, or whole life vs. universal life insurance. We spend so much time, in fact, that we forget to talk about convertible term insurance. As whole-life-friendly advisors, of course, we know that there’s tremendous value in that asset. However, many people are asking: Is convertible term life insurance worth it? And to that, we want to offer a resounding YES. The Importance of Human Life Value The human life value approach to
Read MoreThe Human Life Value Approach and the Fallacy of “Needs Analysis”
It’s not uncommon for the Human Life Value approach to be written off as “overkill.” Clients either believe that buying insurance up to their full human life value (HLV) is simply too much money for their heirs, or the number doesn’t seem real. This approach, however, is actually incredibly important for your clients. Consider this: Would you buy a $50,000 car yet only insure it for $30,000 because you only NEEDED a $30,000 car? No, you wouldn’t dream of doing so–you’d be shortchanging yourself. And yet, this happens in the
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