by MaxHerr » Sat Apr 21, 2012 10:07 pm
If you have been sold a retirement plan by any agent or other person only to discover that what you really have is a form of life insurance, please contact me!!
Various websites, insurance agents, even insurance sales organizations and companies, have dramatically increased the amount of advertising and solicitations of life insurance disguised as a TAX-FEE RETIREMENT PLAN, such as a "Roth IRA on Steroids" or as an "INFINITE BANKING" (or "BANK ON YOURSELF") scheme. Were you shown an illustration leading you to believe you could have a multi-million dollar tax-free retirement fund for only a few hundred to a few thousand dollars per month?
These schemes are FRAUDULENT, and misrepresent life insurance as a "TAX-FREE RETIREMENT PLAN" . . . better than your 401(k), 403(b), IRA, or even your Roth IRA. Please don't fall for their slick presentations! The sale of life insurance as anything else is a violation of state insurance laws.
But if you have already become involved in something like this, there is help available. You may be entitled to recission of your contract, and full restitution of all premiums paid.
Several class action lawsuits are being prepared for litigation in various state and federal courts against major insurance companies, agencies, and agents. If you have been abused by an agent, insurance company or agency, or a "financial adviser" in this manner, please contact me. We will investigate your situation and find you legal representation.
Various websites, insurance agents, even insurance sales organizations and companies, have dramatically increased the amount of advertising and solicitations of life insurance disguised as a TAX-FEE RETIREMENT PLAN, such as a "Roth IRA on Steroids" or as an "INFINITE BANKING" (or "BANK ON YOURSELF") scheme. Were you shown an illustration leading you to believe you could have a multi-million dollar tax-free retirement fund for only a few hundred to a few thousand dollars per month?
These schemes are FRAUDULENT, and misrepresent life insurance as a "TAX-FREE RETIREMENT PLAN" . . . better than your 401(k), 403(b), IRA, or even your Roth IRA. Please don't fall for their slick presentations! The sale of life insurance as anything else is a violation of state insurance laws.
But if you have already become involved in something like this, there is help available. You may be entitled to recission of your contract, and full restitution of all premiums paid.
Several class action lawsuits are being prepared for litigation in various state and federal courts against major insurance companies, agencies, and agents. If you have been abused by an agent, insurance company or agency, or a "financial adviser" in this manner, please contact me. We will investigate your situation and find you legal representation.
Posted: Tue May 01, 2012 06:16 am Post Subject:
Hello Andy,
Thanks for the message and welcome to the forum.
Wow!! What a great idea.
If there are IUL plans out there featuring limited pay plans of only 7 years, a 1% gurantee, no caps, low COI AND no surrender charges, I want one for myself.
In which part of the country are you currently conducting business?
Which insurance companies are you currently soliciting business for?
If this plan is with either WFG or HBW, never mind.
If I send you my personal information, will you provide me with an illustration?
Posted: Tue May 01, 2012 02:43 pm Post Subject: Life insurance
Wow Max. You sure are adversarial, but I'll try to answer each objection one at a time.
1-"I have analyzed all the products on the market"
Not difficult to do. Any IUL that provides a cap on earnings does not work. In order to have the needed returns you can't lose out on the years that earn 22% 30% etc.
2-"Limited pay - seven years"
Again, no product can provide the needed returns if it does not provide the 1% floor. The market collapse of 2008 proves that theory.
3-"I calculated the actual returns of the program from 1990 to 2011"
Yes I did do this. I based the calculation on the actual cost of insurance, expenses and index returns (I also worked with acturies from the home office as well as independent actuaries) so I don't get your comment of "Are you saying there is an IUL product with a 1% interest guarantee that is fully paid up to age 120 after only seven years of premium payments? We'll likely meet one day in court" The purpose of my post was to say that I have done my due diligence to prove that there is an IUL product that can provide cash value as well as a death benefit. I never sold IUL's because they just didn't work. It's better to buy an age 100 guarantee UL or term insurance and invest the difference.
4-"Please keep in mind these are actual returns"
Yes, again, these are the actual returns. I calculated the COI for a 45 year old male standard underwriting. In year one the COI is $236 and in year 20 it's $2,024. If it was a standard table 4 wouldn't work. Now do you understand why I say the program does not work for older individuals....ding, ding ding! The cost of insurance is too much and there is not enough time to build the cash portion of the policy. With a 1% guarantee, you know what you can lose. The costs and expenses. I always just use the software illustration that provides the current return and the guarantee as well as another illustration changing the current return to 1%. You get to see how long the policy would stay in force if Armageddon hit on the day you signed the contract and we had twenty years of negative returns. That’s it. If the insurance company changes the parameters of the program and drops the participation to 50% or gets rid of 1% guarantee, cancel the program. That’s why the no surrender charge is important. It is also important that the client also has a cheap term policy just in case they surrender the policy. Again, this is what is needed to have an index UL perform.
1- Limited pay - seven years
2- No cap on earnings
3- 1% guarantee
4- 70% participation
5- No surrender charges
6- Increasing death benefit
7- Low cost of insurance
8- Returns not based on a single index
If any of the pieces of this puzzle change, the program does work.
You also have to remember that this was done not to show to the client but to prove to myself that an IUL really works. I proved every other IUL does not work. Here's a simple formula. Take an S&P Indexed Annuity that provides a 1% guarantee, a rate cap of 15% and 80% participation. That's a good product, isn't it? No risk and a good upside. If a product can outperform that scenario and most importantly provide a death benefit to protect ones family, isn't that a good product? Max, just a word of advice. Not everyone who believes in a specific program or idea is a scumbag.
Posted: Tue May 01, 2012 05:40 pm Post Subject:
You sure are adversarial
There is a difference between knowing the truth and making wild claims. You made wild claims, I am telling the truth. If that's your definition of "adversarial", so be it. Two opposing viewpoints are, in fact, adversarial. Both can be wrong, it's rare that both will be right.
You also have to remember that this was done not to show to the client but to prove to myself that an IUL really works. I proved every other IUL does not work. Here's a simple formula. Take an S&P Indexed Annuity that provides a 1% guarantee, a rate cap of 15% and 80% participation. That's a good product, isn't it?
To prove to yourself? In your mind? Show me your math and I'll give you an answer. You have not proved that "every other IUL" does not work. You haven't even shown us your documentation -- just made up numbers as far as I can tell. Which ONE IUL out of the hundreds or thousands that are currently being sold, or have been sold in the past, is THE ONE that actually works as you assert? Tell us, please, the name of the company, the policy form number, and the state of issue.
Until then, as far as I'm concerned your remarks are unsubstantiated BS. Because I have never seen a UL, IUL, or VUL product that works iin the manner as you believe you have proved otherwise. I certainly haven't seen them all, but I'm absolutely sure I've never seen the ONE you want everyone to have.
With a 1% guarantee, you know what you can lose. The costs and expenses.
Dear friend, if this is all of what you know of UL/IUL, you don't want to meet me in court when you're the defendant in one of those fraudulent misrepresentation lawsuits.
What about the loss of cash accumulation when the premium and the 1% interest is, say $100 per month short of the "costs and expenses" (or we're beyond the 7 years of paying premiums [as the agent, not the contract, told the client was all they had to pay] and no premiums are being paid at all, which increases the $100 per month by a couple of hundred more)? How does this month's increase in NAR (you do know what that is, don't you?) affect the next month's COI? What happens to the NAR and COI when the policy is negative hundreds of dollars per month for just 12 consecutive months?
A 1% guarantee is useless. It is not a "GOOD UPSIDE", it is merely a guarantee against loss of cash value in a declining market IF THERE WERE NO POLICY CHARGES AT ALL. A 0% guarantee does exactly the same thing. Getting only the minimum guaranteed rate will not support any UL or IUL policy. And VULs don't even have a minimum guaranteed rate (except in a few certain riders).
in order to have the needed returns you can't lose out on the years that earn 22% 30% etc.
Oh . . . and how many of those years did you find from 1990 to 2011? According to my research ( http://www.forecast-chart.com/historical-sp-500.html ), in those 22 years, there were 7 years of 20% or greater returns in the S&P500 Index (1991, 1995 [highest +34.1%], 1996, 1997, 1998, 2003, and 2009). There were also 6 years with negative returns (1990, 1994, 2000, 2001, 2002, and 2008 [lowest -38.5%]). The "average" rate of return was 8.89%. We can refigure that using your 1.0% minimum guarantee, and the ROR = 13.39% (care to explain why 6 years of +1% only raised the average by 5.5%?). But that's all in the past, and there were no IULs sold in 1990. So the only thing you can do is speculate on what the future looks like compared to the past. As the SEC-required disclosure in a mutual fund or VUL prospectus states: Past results are not predictive of the future. You are claiming them as a guarantee.
You also have made absolutely no mention of how you arrived at the cost of insurance amounts you stated, and, worse yet, you don't even attach those numbers to a stated death benefit or total premium. Anyone can claim anything they want with incomplete information such as that.
The policy I mentioned which has the 589,661.71% increase in COI after 90 years, has a COI increase of 1787.76% increase after 20 years (from age 30 [0.01413] to age 49 [0.26674]). However, the increase in that same policy from age 45 [0.20337] to age 64 [1.22650] is only 503.09%. By comparison, your claim of low cost -- LOL!! -- your claimed increase from $236 per year (you don't state the $$/1,000 rate as I do) to $2024 is an increase of 757.63%. And the death benefit is (I'm not making this up) $587,456. Some agent went way out of his way to calculate this amount of insurance.
Just in case you don't know the math, the formula is ((2024-236)/236)*100=757.63%.
So, Mr. "I have analyzed all the products on the market" (when in reality what you've done is simply compared a few different types of policies to one another -- hardly an analysis of "all the products"), let's have your analysis of this:
Which is better, A or B . . .
. . . A = +503.09% . . .
. . . B = +757.63% . . .
when it comes choosing a UL policy with a concern for the increasing cost of insurance in the policy? (Hint: It's not B.)
And the policy I'm quoting ACTUAL NUMBERS from, which is also the basis of a pending class action litigation I'm working on, has an 80% participation rate (30% minimum guaranteed), no rate cap, and a 2.5% minimum interest guarantee.
It exceeds ALL of the criteria you claim (above) are necessary for an IUL to work, and yet this policy still fails after 47 years of paying $6000 per year in premiums from Day 1.
So, talk to some more actuaries -- "home office and independent" -- some life insurance company executives, go do some more "analysis", and send me your spreadsheets.
Thus far, you have only demonstrated that you don't know what you're talking about.
And, by the way, how much is the 7-pay premium for your scenario? And how can you guarantee that amount of money will support the policy to age 120?
To top it off, here's your single bit of advice to your customers:
If the insurance company changes the parameters of the program and drops the participation to 50% or gets rid of 1% guarantee, cancel the program. That’s why the no surrender charge is important.
Really? Cancel a policy? What about the continuing need for life insurance? What if the insured cannot qualify for new coverage? What good does NO SURRENDER CHARGE do for that person? And maybe you don't really have a good grasp of contract law, but how could a company "get rid of" a guarantee in its contract? If they could do that, friend, then it's not a guarantee, it's a pipe dream, and when the smoke clears, there's nothing left behind. Just like you are counseling the client to do here when things go wrong.
But I thought you had the perfect policy. Nothing could go wrong. Did I miss something?
Listen to yourself. You make absolutely no sense. Ah . . . but I'm sure you'll be there to sell that replacement policy and earn a new commission for it, won't you? You'll probably be the one to twist them out of their existing policy and into the new one.
I'll be watching for you to make this mistake.
And, by the way, please don't put words in my mouth:
Not everyone who believes in a specific program or idea is a scumbag.
I made no such remark, and you are highly unlikely to ever hear me make such a remark. Perhaps you have a guilty conscience?
Posted: Tue May 01, 2012 06:14 pm Post Subject:
Readers of this thread: Please do not misunderstand my words. Every UL policy does EXACTLY what it says it will do, and there is nothing wrong with any UL / IUL / VUL policy that MONEY will not and cannot fix. When a UL policy of any flavor gets into trouble, paying more money is the only sure way to solve the problem. The policy permits you to do that. Your bank balance, on the other hand, may not.
That's the only challenge most individual UL policyowners face. Corporations that use UL (mostly VUL) policies to fund liabilities like executive deferred comp plans rely on analysts like me to monitor their cash accumulations and tell them how much more money they need to put into the policies from time to time. Most of them listen to the analysts. The ones who don't learn to regret their mistakes.
Posted: Tue May 01, 2012 06:46 pm Post Subject:
The ones who don't learn to regret their mistakes.
Hallelujah
Posted: Tue May 01, 2012 07:40 pm Post Subject:
Wow. You’re right. Your not adversarial you just drink too much coffee. Go back to my eight requirements.
1- Limited pay - seven years
2- No cap on earnings
3- 1% guarantee
4- 70 participation
5- No surrender charges
6- Increasing death benefit
7- Low cost of insurance
8- Returns not based on a single index
You disregarded my mention of buying low cost term insurance to protect your insurability if the company changes the parameters of the policy.
You disregarded returns not based on a single index
Your statement regarding a 1% guarantee is confusing to say the least. Without a guarantee, no product can work. When the markets tanked in 2008 people lost 30% of their earnings. When you factor in the COI and expenses no IUL without a guarantee can make up those losses.
The case your litigating now is based upon the S&P, correct? What did I say earlier? I don't think any IUL can work based upon a single index. All that aside, I find you to be one of the most obnoxious people I have ever corresponded with. You bloviate that you are an expert but don't even understand the "magic 7" premium payments. Show me one IUL that does work in this Global economy when you have markets that crash 30%. I did take the time to prove to myself that this program worked because I'm old school. I won't sell a product that I don't believe in. Every IUL has risks. My job is to make sure the risks can be mitigated. I keep my practice simple. Show term, an Age 100 Guarantee UL, an Age 100 Guarantee UL that provides long term care coverage and if the client fits the parameters, this type of IUL. I make less money selling this program as compared to the Age 100 UL because the target is less. I recommend it because it is a safe way to prepare for retirement. No one is trying to rip anyone off and for you to make that assumption based upon my initial post is, well, tacky. There are ways to have a civil discussion without constantly referring to seeing someone in a court of law. After you pick up a Miss Manners pamphlet and thoroughly review it we can continue our discussion. Until then, keep pretending that you are a knight in shining armour instead of a guy whose personality prevented him from succeeding in business.
Posted: Tue May 01, 2012 10:30 pm Post Subject:
You disregarded my mention of buying low cost term insurance to protect your insurability if the company changes the parameters of the policy.
You never said that. And besides, that is not always the solution. What I said was you are selling someone something only to tell them to bail out if something changes. Changing life insurance policies is usually not in a person's best interest -- why do you think there are more regulations concerning replacements than original sales?
Your statement regarding a 1% guarantee is confusing to say the least.
What? You were the one who said if the insurance company takes away the guarantee. How can this happen contractually is what I wanted to know. If you are confused by that, then you have no clue as to how contracts and contract law operates.
When the markets tanked in 2008 people lost 30% of their earnings.
In VULs maybe, but not in whole life, not in universal life. So what's your point? This is not a discussion of VUL at all.
When you factor in the COI and expenses no IUL without a guarantee can make up those losses.
Seriously? Are you saying a 1% guarantee makes up a 30% loss? You're either insane or crazy. No IUL, even with a 0% guarantee, would not have those losses. Your point is pointless.
The case your litigating now is based upon the S&P, correct?
No, it has nothing to do with the index, it has to do with marketing life insurance as a retirement plan (as stated in the original topic statement). Yes, the contract was based on the S&P500, but that is not being litigated. One index, ten indexes, it is entirely immaterial to the case.
You bloviate that you are an expert but don't even understand the "magic 7" premium payments.
Wow, a Scrabble player. I absolutely understand the "magic 7" -- it is smoke and mirrors. Here's my challenge to you: Show me a copy of THE ONE contract that states SPECIFICALLY, premiums are only payable for 7 years. It does not exist. If you tell someone that they only have to pay for 7 years, you are making a statement that is EXPRESSLY FORBIDDEN by the contract itself.
Show me one IUL that does work in this Global economy when you have markets that crash 30%.
Excuse me? They all work as the contract states. None lose value as the direct result of market declines. But somewhere in your mind, you seem to believe that a 1% internal rate of return = a policy that works. And I challenge you to show us the proof of that.
I won't sell a product that I don't believe in
Although that's a laudable position, you should not be marketing a product you don't understand as well as you think.
Every IUL has risks.
Of course. So does term, WL, UL, VUL. There is no perfect product. But inherent in ALL forms of UL is the Annual Renewable Term insurance premiums. Those increase EVERY year without fail (or at least they will eventually if there is a brief period of guarantee initially). You cannot mitigate against that except with MONEY. And that's why you cannot show a 1% guaranteed interest rate will be sufficient to mitigate COI increases of more than 1%. If you think you can, I want to see your proofs. Send me the spreadsheets and the illustrations. At this point, the only one bloviating is you.
I did take the time to prove to myself that this program worked because I'm old school.
As I indicated previously, show me your proof. If it's valid, I'll be the first to admit it. Proving something to yourself is meaningless. Proving it to the world is everything. Until Magellan circumnavigated the Earth, no one really believed is wasn't flat. Columbus, who most people credit with proving the world was round, only proved that there was not an easy path to the East by sailing to the West. He only made it to the Americas a couple of times.
I make less money selling this program
Wonderful! One of the few agents I have ever known who was less concerned with the money than what was right for the client. Highly commendable. But you still have not shown anyone what "the program" is or who it comes from. You can email that information to me to avoid publicly identifying the company and its products. I maintain confidentiality in all respects.
There are ways to have a civil discussion without constantly referring to seeing someone in a court of law
You're right. So let's see your proofs. And then we can have that discussion.
And please don't misunderstand. I am NOT casting any negative aspersions on you or your business. This is not a personal attack in any sense. You have made some statements that are plainly erroneous, and I'm trying to help you get over them, which should make you better at what you do.
I don't have anything against UL, IUL, or VUL other than most agents don't understand how they work, and when they are not appropriate. But it's the only thing they sell, and everyone gets it whether they need it or not. If you're truly "old school" as I am, you know the difference and work differently. And again, that's commendable.
I just hope you're not marketing life insurance as anything other than life insurance. It is NOT a retirement plan, program, or account.
Posted: Fri May 04, 2012 02:25 pm Post Subject:
Max and I recently handed a securities fraud case in New Jersey over to a FINRA investigator and are hoping they will help a young lady recover nearly $4 million left to her by her late husband.
Just received this late yesterday from the FINRA "Principal Analyst" who worked on the initial complaint:
I really appreciate Max’s detailed spreadsheet which I am sure will be very helpful to our District Examiners in reviewing this matter.
Posted: Fri May 04, 2012 02:55 pm Post Subject:
If you have been abused by an agent, insurance company or agency, or a "financial adviser" in this manner, please contact me. We will investigate your situation and find you legal representation.
Mark, that's not a solicitation?
"Please contact me to buy life insurance" is a solicitation.
"Please contact me so that we can find you legal representation" is a solicitation.
I can't believe that you are arguing this with me.
As for me being anonymous, you know why. So, please be respectful and stop calling me out for it. It isn't my choice.
Posted: Wed Jun 27, 2012 05:05 am Post Subject: Max
I see that you’re a guy that believes in buy term, invest the difference. You’re currently a rep. with PRIMERICA FINANCIAL SERVICES. How are your clients that invested with Primerica Mutual Funds? Do you thing that they will have a great retirement when all the baby boomers start to pull money out of the market. Did you know that the average investor earned from 1990 to 2010, an astoundingly low 3.49% return, according to 2012 DALBAR Study.
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