Happy Birthday!

“We are food for worms, lads”

So goes the line from a classic film about living your life and embracing the gifts you have been given.  Dead Poets Society is the film and it was released nearly 30 years ago.  For those unfamiliar, do yourselves a favor and check it out.

The entire film centers around breaking out of our own shell, getting out of our own way, and ensuring our lives have meaning, and the quote above comes from the pivotal scene.  A group of students are encouraged to look at a trophy case celebrating young men from years past.  Those pictured in the case were the stars of their day and they all have one thing in common.  They are all dead.  Their hearts have played their final beat.  What would any of them give to be back on the other side of the glass and live for another day?

Yesterday I was at a talk where the presenter quoted Walt Whitman referring to his “barbaric yawp” (another scene from Dead Poets Society), and today is my birthday.  This somewhat random reference combined with 9/25 may not seem like much, but to me it sounds like a subtle reminder from above – seize the day.  It’s too easy to get stuck in a rut of your own making.  To check off another year and still be in the same place you were on your last birthday.  To only experience what you have in the past.

Help me celebrate my birthday by embracing the message in the scene above.  Make your life extraordinary, and you will bring others along for the ride.  Thanks for breaking out of the rut.


What’s your exit strategy, LIAM?

As we approach the end of Life Insurance Awareness Month (LIAM), it’s fitting to bring up one more financial benefit provided by Participating Whole Life Insurance policies.  Specifically, the exit strategy.  A properly designed PWLI policy should provide you tax exempt income when entering your new phase of retired life.  Ideally, this saving for retirement via the PWLI policy starts early in life, but you can still take advantage of the benefits in your later years.

No matter your age, for now let’s imagine you are going to attempt to climb Mt. Everest and you need to choose between two guides; do you choose the guide with a track record of getting climbers to the top of the mountain, or the guide known for getting you safely back to camp?  Your answer could help determine your preferred way to save and plan for your passive income years.

Similar to our imaginary Everest adventure, we have to decide what is more important to us with regard to our retirement funds.  Is it the total balance in the account, or the amount we have left once it is withdrawn?  Qualified plans, while being tax deferred, are still subject to taxes at the most important time.  And the Roth IRA may not be subject to taxes (for now), but the investments are still subject to market risk.  Why take the risk of not getting off the mountain when you have a guide that can help you avoid both taxes and market corrections?

LIAM is coming to an end, but the daily game/challenge of managing your finances continues.  When considering your options for saving and investing, remember the flexibility and guarantees provided by a properly designed PWLI.  We’re already on the mountain.  Let’s make sure we make it back to camp with stories to tell.

Confirmation that Universal Life is all Sizzle

The Wall Street Journal published an article[i] today that confirms what many of us have known for some time.  Universal Life (UL) insurance, along with sister products Variable Universal Life (VUL) and Indexed Universal Life (IUL), does not live up to the sales hype.  The article reveals several sad cases where customers have paid more in premiums than their heirs will receive when they pass on, due to the way the policies are designed.  While there is little to be done for the poor souls highlighted by the Journal, this piece may be a blessing to clients who have recently purchased any variation of a UL policy.

To be clear, this post assumes clients wish to create a guaranteed savings account that will provide a significant benefit to their heirs at the end of their life.  There may be people who don’t care about the size of the death benefit or the predictability of premiums.  It’s also possible there are clients who want to believe the UL policy they purchased is different.  This post is not for them.

From the Journal article (emphasis added) –

Universal life is among the reasons Americans are approaching retirement in the worst shape in decades[ii]. The insurance policy type emerged in an era nearly four decades ago when the Federal Reserve was fighting inflation with high interest rates. Some financial advisers suggested people forgo traditional “whole life” insurance and buy less-expensive policies that covered just a limited term, investing what they saved in the mutual funds and money-market funds then proliferating. Insurance companies embraced this mantra of “buy term and invest the difference” by inventing a new product.

After practicing the advice of ‘buy term and invest the difference’, many Americans are approaching retirement with little to show for it.  We don’t like using scare tactics to sell products, but do yourself a favor and re-read the snippet from the Journal.  Before you start (or continue) down the UL path, consider that this method has proven to be unreliable at best.  These contracts rely on assumptions that interest rates will remain at or above a certain level, and/or the stock market returns a certain amount annually.

Sadly, market performance and interest rates not only impact the performance of an individual policy, it can impact all UL policies sold by that company.  From the Journal again (emphasis added) –

With future profits expected to be hurt by low rates, at least a half-dozen insurers have invoked policy provisions that they say allow them to raise the rates used to calculate the annual cost of customers’ term insurance, according to ITM TwentyFirst, which provides policy-management services.

This means some customers see costs rising not simply because they are a year older, or because their savings account didn’t grow as planned, but because their insurer has changed its price formula. As a result, even some customers who kept their policies well funded are being hit with unexpectedly higher costs.

We like to say “it’s the process, not the product” when talking about the Perpetual Wealth Code(TM) and the benefits you can create.  In the case of UL products, it appears the product can actually derail the process even if you follow it properly.  Thankfully, there is a better way.

The objective when purchasing a permanent life insurance policy is to create a legacy that you can pass to your loved ones when you pass away.  A more immediate benefit is the ability to access your saved capital now and into retirement.  The gold standard for building both the legacy and accessible capital is a properly designed Participating Whole Life Insurance (PWLI) policy.  Premiums remain level, both the death benefit and cash values are guaranteed, and the insurance company cannot change the cost/benefit if the market declines.

Feel free to contact me with any questions on PWLI or how to incorporate the Perpetual Wealth Code(TM) into your life.


[i] – https://www.wsj.com/articles/universal-life-insurance-a-1980s-sensation-has-backfired-1537368656?mod=hp_lead_pos5

[ii] – https://www.wsj.com/articles/a-generation-of-americans-is-entering-old-age-the-least-prepared-in-decades-1529676033?mod=article_inline