Having worked in an insurance office which offered these products, you really have to see why you’re even talking about whole life insurance. We also looked at things like Generational trust, ILITs (Irrevocable living trusts), estate planning issues, etc…
First thing is, insurance is NOT an investment. For 99% if the people out there, you probably don’t need whole life and most people are trying to rip you off.
Commissions can be as high as 8% I think…been a while, but generally, the carrying cost of all these products would be more than what a separate insurance and investment portfolio will be. A lot of them are also poor investment instruments as well.
There are now some no-load annuities as well, but again, I think people should ask why they even need to complicate things.
As an attorney, you may want to just talk to a fee-only financial planner or interview a few and see what their take on it is and what they can do for you and your family/kids/legacy planning if you have the assets, etc…
A common thought now is also to never pass wealth to kids directly and leave it in trust forever/as long as possible in case your kids marry a whack job, gets divorced, etc…
Life insurance is used in a lot of estate planning because estate taxes used to be very bad with having to do A/B bypass trust so both spouses can take advantage of the lifetime exemption, etc…but the laws have changed recently as well…
Simple idea was just that the wealthy person would pay for the permanent insurance, then when they die, the life insurance will pay out the death benefit so you can use that to pay the estate tax. This is more flexible since some people might not have the cash, have non-liquid assets, a business, property, etc so families wouldn’t have to liquidate upon a death…
Some tax benefits too since these accounts tend to defer income and if I recall, the death benefit is tax free, but it’s not really used for that I don’t feel…
If you have a large amount of assets, you really need to just talk to a planner and run the numbers…as well as an estate attorney.
