TA: GVUL
10-20-2023 | 12:04 PM
#71
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Joined: Dec 2007
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The GVUL plan pays imputed income on the premiums delta actually pays. The term plan pays taxes based off an IRS chart. The chart says you got more value in insurance than what Delta actually paid for premiums. The difference in premiums vs the chart grows wider the older you get. The tax savings is the taxes charged on the difference between premiums and the chart. It’s probably not going to be very much for most of us, but less tax is a good thing.
10-20-2023 | 12:16 PM
#72
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Joined: Apr 2018
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Yeah there's really no downside. The only thing I can think of is if they raise the premiums in a few years so our imputed income goes up.. but at that point we could just switch back to term right?
10-20-2023 | 01:13 PM
#73
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Joined: Oct 2013
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This is what I'm hung up on. I don't plan on using the investment option. So does this mean you would get the premiums Delta paid returned to you if you elect to surrender the plan at retirement? What exactly is the cash value if you aren't using the investment option?
with other whole life plans … the premiums build some cash value. There are lots of options on how you can use that cash value. One way is to pay the premiums on the insurance policy.
for example …
(I’m making all these numbers up)
let’s say I have a whole life
policy that I bought at age 20. The monthly cost of the policy doesn’t change, and let’s say it’s $100 a month. At age 60,
after paying in for 40 years, my policy has a cash value of $10,000. I can stop paying the premium out of pocket and use the cash value to pay the premium for 100 months (ish…). So I can stop paying at 60, but keep the insurance until 68 ish.
would be interested to know if that’s an option with GVUL. Not particular useful if deltas only paying the premium for 2-3
years. But could be something if they’re paying for 35 years ….
10-20-2023 | 01:51 PM
#74
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Joined: Jul 2010
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Point 1: Anyone know how are cash value gains above the cost basis taxed? Long term capital gains rate or ordinary income? Is that the “modified endowment contract” tax treatment? Any gouge on this situation?
Point 2: Even if they are taxed the same, over 10, 20 years, even a 1-2% difference in rate of return between GVUL and after tax brokerage could make a huge difference with compounding.
Point 2: Even if they are taxed the same, over 10, 20 years, even a 1-2% difference in rate of return between GVUL and after tax brokerage could make a huge difference with compounding.
If is like my WLI, I don’t pay taxes on it. Once I’m done taking all the cash value as taxes…you let the policy lapse and close the account.
10-21-2023 | 06:02 AM
#75
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Joined: Jun 2015
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for example …
(I’m making all these numbers up)
let’s say I have a whole life
policy that I bought at age 20. The monthly cost of the policy doesn’t change, and let’s say it’s $100 a month. At age 60,
after paying in for 40 years, my policy has a cash value of $10,000. I can stop paying the premium out of pocket and use the cash value to pay the premium for 100 months (ish…). So I can stop paying at 60, but keep the insurance until 68 ish.
(I’m making all these numbers up)
let’s say I have a whole life
policy that I bought at age 20. The monthly cost of the policy doesn’t change, and let’s say it’s $100 a month. At age 60,
after paying in for 40 years, my policy has a cash value of $10,000. I can stop paying the premium out of pocket and use the cash value to pay the premium for 100 months (ish…). So I can stop paying at 60, but keep the insurance until 68 ish.
10-21-2023 | 08:58 AM
#76
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Joined: Jul 2010
Posts: 3,866
Likes: 115
I don’t know if this applies to GVUL … so take with a grain of salt.
with other whole life plans … the premiums build some cash value. There are lots of options on how you can use that cash value. One way is to pay the premiums on the insurance policy.
for example …
(I’m making all these numbers up)
let’s say I have a whole life
policy that I bought at age 20. The monthly cost of the policy doesn’t change, and let’s say it’s $100 a month. At age 60,
after paying in for 40 years, my policy has a cash value of $10,000. I can stop paying the premium out of pocket and use the cash value to pay the premium for 100 months (ish…). So I can stop paying at 60, but keep the insurance until 68 ish.
would be interested to know if that’s an option with GVUL. Not particular useful if deltas only paying the premium for 2-3
years. But could be something if they’re paying for 35 years ….
with other whole life plans … the premiums build some cash value. There are lots of options on how you can use that cash value. One way is to pay the premiums on the insurance policy.
for example …
(I’m making all these numbers up)
let’s say I have a whole life
policy that I bought at age 20. The monthly cost of the policy doesn’t change, and let’s say it’s $100 a month. At age 60,
after paying in for 40 years, my policy has a cash value of $10,000. I can stop paying the premium out of pocket and use the cash value to pay the premium for 100 months (ish…). So I can stop paying at 60, but keep the insurance until 68 ish.
would be interested to know if that’s an option with GVUL. Not particular useful if deltas only paying the premium for 2-3
years. But could be something if they’re paying for 35 years ….
you can pay your policy premium and it will keep growing 3% per year. It will be more than 8yrs before it will lapse.
10-21-2023 | 11:20 AM
#77
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Joined: Oct 2013
Posts: 523
Likes: 1
if that’s an option for GVUL…then you can take some significant life insurance with you after your retire for “free”
10-21-2023 | 04:45 PM
#78
Line Holder
Joined: Jul 2023
Posts: 702
Likes: 236
I don’t know if this applies to GVUL … so take with a grain of salt.
with other whole life plans … the premiums build some cash value. There are lots of options on how you can use that cash value. One way is to pay the premiums on the insurance policy.
for example …
(I’m making all these numbers up)
let’s say I have a whole life
policy that I bought at age 20. The monthly cost of the policy doesn’t change, and let’s say it’s $100 a month. At age 60,
after paying in for 40 years, my policy has a cash value of $10,000. I can stop paying the premium out of pocket and use the cash value to pay the premium for 100 months (ish…). So I can stop paying at 60, but keep the insurance until 68 ish.
would be interested to know if that’s an option with GVUL. Not particular useful if deltas only paying the premium for 2-3
years. But could be something if they’re paying for 35 years ….
with other whole life plans … the premiums build some cash value. There are lots of options on how you can use that cash value. One way is to pay the premiums on the insurance policy.
for example …
(I’m making all these numbers up)
let’s say I have a whole life
policy that I bought at age 20. The monthly cost of the policy doesn’t change, and let’s say it’s $100 a month. At age 60,
after paying in for 40 years, my policy has a cash value of $10,000. I can stop paying the premium out of pocket and use the cash value to pay the premium for 100 months (ish…). So I can stop paying at 60, but keep the insurance until 68 ish.
would be interested to know if that’s an option with GVUL. Not particular useful if deltas only paying the premium for 2-3
years. But could be something if they’re paying for 35 years ….
10-25-2023 | 08:52 PM
#80
Thread Starter
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Joined: Jun 2015
Posts: 2,008
Likes: 184
Podcast was very well done.
Highlights: investment fee was 2.25%. (Saw 2.25 and 2.5% in previous posts.) That fee was for all deposits into the “investment” side of the policy. Withdrawals also have a 2% or $25 fee, whichever less. Deposits go in after-tax basis. All investment side withdrawals below your cost basis are tax free.
For me, running side-by-side comparisons with identical ROIs, it looked like terms under 12 years, GVUL investing made sense. Beyond 18 years after-tax brokerage wins due to that 2.25% fee hammering your principal. Between 12-18 years, your individual tax rate situation could make a difference and it gets more nuanced. YMMV, DYODD, etc. If anyone has access to a monte-Carlo probability simulator, you might get some better results with some confidence intervals.
Highlights: investment fee was 2.25%. (Saw 2.25 and 2.5% in previous posts.) That fee was for all deposits into the “investment” side of the policy. Withdrawals also have a 2% or $25 fee, whichever less. Deposits go in after-tax basis. All investment side withdrawals below your cost basis are tax free.
For me, running side-by-side comparisons with identical ROIs, it looked like terms under 12 years, GVUL investing made sense. Beyond 18 years after-tax brokerage wins due to that 2.25% fee hammering your principal. Between 12-18 years, your individual tax rate situation could make a difference and it gets more nuanced. YMMV, DYODD, etc. If anyone has access to a monte-Carlo probability simulator, you might get some better results with some confidence intervals.
