The Forces of Dis-immedition Converge on Permanent Life Insurance:
A Victory For LOVE
I don’t think I ever realized how much I was in love until I walked down the isle of that
church with God & all my friends the room. I again felt the same emotions when my
children were born; it was the most unselfish feeling that I ever felt. Most of the
residents here in Southlake, like me, are married with children. With Valentine’s Day
approaching I wanted to write about one of the most misunderstood and controversial
products in finance: Life Insurance. When you sum it all up leaving behind money after
your death is a lasting economic representation of your love. Permanent Life Insurance
has often been one of the most efficient financial vehicles used pass on money to our
loved ones, protect our families from premature death, or to provide liquidity to fund a
buy sell.
Life insurance is the only product that creates an estate where none existed before,
making it one of the most important & versatile financial planning tools in finance. Most
would agree that life insurance is an important product that has tremendous societal
benefits (Uncle Sam doesn’t tax Life Insurance Death benefit.) However, controversy
exists because many people would argue feverently and passionately about which type of
insurance (term or permanent; universal or whole) should be used for the many of the
types of circumstances where life insurance can solve financial problems and make a
financial plan better.
Permanent Life Insurance has been used for years by institutional investors. Banks and
Bankers, one of the most sophisticated financial strategist, are one of the largest buyers of
permanent insurance, yet for a variety of reasons permanent insurance has experienced
sluggish growth for years. Why? Clearly the benefits of permanent insurance are _____.
Tax Free Death Benefits typically have cost of around1-4% per year which is much
cheaper and typically more efficient than paying 15- 35% income taxes on investments,
add to that the other benefits of permanent insurance like tax deferral, creditor protection,
disability waiver of premium, and the avoidance of probate.
I personally believe that there is a place for both term and permanent life insurance, but
there is a new development insurance that will make permanent life insurance much more
attractive than it has been in the past. The distribution cost and commission that is paid
to the insurance salesman is about to go away in the same fashion that the commission on
mutual funds disappeared in the face of no load or index funds. Currently a permanent
policy will often take 10 years to break even or have a 10-15 year surrender charge built
into a policy which reduces flexibility for the insured and makes it very difficult to
change policies easily and in a cost effective manner. I believe distribution cost and last
investment flexibility are 2 of the main reasons why more people don’t own permanent
insurance which has been referred to as the greatest financial product and the foundation
of a financial plan are the only reason this is
This means that the insurance industry is about to become fee based, and that means

cheaper and more flexible policies for the consumer.
Why is Permanent Life Insurance so popular with wealthy consumers?
If you could buy a bank account that had a guaranteed interest rate that was higher than
any other bank, it grows tax deferred, it is protected from their creditors, it is self
completeing DI, LI:
Perm Life Current Practices:
We are at the beginning of this trend, so mark my words. While it is possible to already
buy a fee based insurance policy, it’s not currently the norm because there is a lot of
resistance for selling insurance the old fashioned way. You might remember there was a
lot of resistance by stock brokers before the fee based system was fully accepted by all.
I personally believe that life insurance should be the foundation of a financial plan, but
many people ignore, minimized. Or avoided as a necessary evil because of its reputation,
lack of consensus, and most importantly its up front and on going distribution cost…Oh
but the times are a changing and the genie has been let out of the bottle and the future has
been told and it is only a matter of time before Love will finally find a way and Life
Insurance will be readily available in a fee based, no surrender charge manner, with
nearly limitless investment choice, similar to buying mutual funds in a brokerage
account. As with any major shift that involves changing compensation of a large
influential sales force that has an incredibly strong lobby in Washington, it will take time,
but the disimmedioation and the flattening world of finance will prevail and capital will
always eventually migrate to the best
Change is inevitable Love and guarantees whole life is good because the closer people
get to their mortality the more the usually “want” insurance. Imagine if you could buy
insurance after an event occurred how much would you buy? Typically people would
buy as much as they could get (their human life value or replacement cost)
A financial plan should attempt top reduce risk to near as close to zero is possible
The forces of Dissemiation are a changing many an industry and the life insurance
industry is no different:
For years a multi level agency system filled with cost has often overshadowed the fact
that life insurance is a magical product a lasting gift of love that has so many different
uses it has often been referred to as the foundation of a financial plan.

The Life Insurance industry like the banking industry has been around for hundreds of
years, and when you look behind banks you will often find that they are ne of the largest
buyers of life insurance, even though they may
Fact: term insurance is the most expensive form of life insurance when you measure
cost over ones whole (entire) life. Analogy: leasing car or renting house is requires less
cash flow but always cost more money over the long run.
Quote: pirates of manhatten
Killing sacred cows:
Why people doubt if permanent life insurance is right for you? 10 -15 year breakeven on
premiums.. this is because of the upfront commissions built into the policy…really no
different from banks, rates of returns are higher + you get all the extra benefits:
W/P, tax deferred build up of cash values, death benefit, tax free eventual payout:
Question that makes most people buy PLI: Is it more expensive to pay taxes or to pay the
cost of insurance? With the cost of insurance typically ranging from 1-3% per year and
taxes typically averaging 15% - 35%, I think most would agree that Life insurance is a
pretty attractive when evaluated in the light of taxes, however tax law changes frequently,
I don’t think tax law enough supports the justification to buy a policy. So if I could buy a
permanent life policy that had all the benefits of a fee based personal brokerage account
at your favorite broker where you could own anything from indexes, ETFs, hedge funds,
to private equity partnerships in a tax deferred vehicle, that is afforded creditor protection
to boot. Imagine the planning possibilities and the flexibility that would be afforded to a
fee based product that had almost unlimited flexibility in regard to investment choices,
total insurance cost of around .8% - 1.5% per year, with no loads or painful surrender
charges where the insurance company would be forced to earn your business each year
otherwise you would have the f;lexibility to buy a new policy assuming you are still
healthy.