<p>Did you want to wash your hands after shaking that guys hand, notrichenough? Slimy…</p>
<p>
Actually, he is a pretty nice guy. He saw a need and is trying to make a business out of it.</p>
<p>Look, there are tons of people who can’t even do their own taxes, and when confronted with FAFSA and the CSS Profile, just can’t deal with it. There are plenty of people who have no idea about whether the kid should own significant money in his own name, or whether a regular IRA or Roth IRA is better from a FA point of view, or how to best have Grandma help contribute some money for college, or how can a family take advantage of the exclusion of business assets for FAFSA if the business has less than 100 employees, or put some color behind the FA statistics for a particular school, or how to time bill payments to minimize assets on hand when you fill out the FAFSA, or not to use Zillow to estimate the value of your house but look up the Federal multiplier instead, etc etc etc.</p>
<p>There are already tons of people who use college counselors to help fill out/edit/in some cases actually write their kids’ college apps. </p>
<p>In my case the value wasn’t there, but I am sure for a lot of people he can save them at least as much as they pay him, and maybe help the kids’ chances to get into school.</p>
<p>I did get a free dinner out of it, so it wasn’t a total loss.</p>
<p>I know plenty of “nice guys” who are slimy. Many politicians fall into that category! Trying to get you to move equity into life insurance to duck under the CSS radar and then conveniently having a product to sell seems like a potential conflict of interest to me. Nice guy- poor ethics. JMO</p>
<p>Let’s face it, the insurance salesman has a product - insurance.</p>
<p>When the pharma salesman is notified of a new off-label use for a drug, he tries to get his doctor clients to give out the samples and write a script for this new off-label use.</p>
<p>Life insurance is a financial planning tool that deals with financial security over a life expectancy. Somebody in the insurance company decided that using their whole life product could have a side-effect of lowing the EFC of Profile filing families and voila! - a new off-label use for life insurance. </p>
<p>So now the life insurance salesman is trying to drum up business for this misapplicaiton (and not necessarily approved use) of his product.</p>
<p>I am not a fan of whole life insurance. It is meant for people with assets to manage who don’t necessarily have the skill or inclination to manage it for the benefit of their loved ones who might be affected by thier demise. </p>
<p>It has been misused as a savings vehicle with security benefits for young families who don’t have assets and would be better off with term insurance (much cheaper) and saving the difference (the part that would turn into long term savings of whole life) in an IRA or 401k type investment (equally good tax advantages and generally better investment options with fewer management fees).</p>
<p>Treat that insurance salesman like you think the pharma rep pushing pills should be treated. Not understanding the ethics of the product being sold.</p>
<p>Exactly, goaliedad. I assume you chose the off-lable pharma use example because of the recent rulings? [Big Pharma Promotes Illegal “Off-Label” Drug Uses The 2012 Scenario](<a href=“Big Pharma Promotes Illegal “Off-Label” Drug Uses | The 2012 Scenario”>A Balanced Androgyny | The 2012 Scenario)
Big Pharma Promotes Illegal “Off-Label” Drug Uses</p>
<p>**Pfizer Broke the Law by Promoting Drugs for Unapproved Uses **</p>
<p>[Pfizer</a> Broke the Law by Promoting Drugs for Unapproved Uses - Bloomberg.com](<a href=“Bloomberg - Are you a robot?”>Bloomberg - Are you a robot?)</p>
<p>My accountant may help me organize and file my taxes, and may even discuss financial planning ideas in light of changes in the tax law, but she isn’t then trying to sell us an annuity or something. That is wrong.</p>
<p>I don’t see it being a conflict of interest as long as he is up-front about it, which he was. Had I chosen to go this route I would certainly have investigated numerous companies to find the best product, whether it was from this guy or not. There was no high pressure sales pitch, and he was offering more services than just selling insurance; it was by no means a “when all you have is a hammer everything looks like a nail” type of situation.</p>
<p>The insurance idea was the one tool he had in his chest that I didn’t know about. Like I said, I could see that he could provide value for many people; there are a lot of financially unsophisticated people out there. Just not much value for me.</p>
<p>He was selling advice and a product. And the advice was to circumvent or shelter money so that a person qualifies for more aid. We shall just agree to disagree. Its shady, IMO. Goaliedad did a beter job explaining it than I am. BTW, I dont buy any load funds from financial advisors either.</p>
<p>The problem here is that I believe the type of life insurance being sold in these policies often is not the typical “fixed” type of whole life return. Instead the underlying investment is directly in stock portfolios with the proceeds determining the value of the policy and without the guarantee of a specific return - i.e. wrapping a whole life policy around a mutual fund type investment. </p>
<p>This is an area where taxguy might be better able to speak of the specific regulation, but insurance salespeople are not held to the same client responsibilities (making appropriate suggestions for investments - not selling deriviates and junk bonds to widows) as registered securities dealers, because what they sell is technically insurance. However, the creative people in insurance have created a product that behaves much like a mutual fund. I believe the requirements for registering as a securities dealer (able to sell mutual funds and stocks) are much more stringent than registering to sell insurance.</p>
<p>I think it would be unethical (and perhpas illegal) for an insurance salesman to say "take all your home equity (putting you at substatial risk of loss of assets) and buy this insurance policy where your returns are based upon some managed stock portfolio. I don’t think your broker would be allowed to suggest that (although if you do that without their suggestion it is perfectly legal - yikes!)</p>
<p>Oh, and the problem I have with the pharma sales process is that we have completely untrained sales people trying to “educate” doctors on these “unapproved” uses for drugs. Yes, sometimes they are ahead of the curve on using the drug. Other times they are just selling snake oil.</p>
<p>^^ And the untrained salespeople are usually gorgeous females.</p>
<p>
There were something like 6 different investment choices in the insurance product I briefly looked at, ranging from pure fixed income paying 3% or so, up to “we’re going to Vegas and betting it all on double-zero”. Ok, maybe not quite that risky.</p>
<p>Send it to me and I won’t tell them about it</p>
<p>swdad1,
Ya gotta get in line! I already suggested
in post #97. But cash would be fine too. In small bills, preferably.</p>
<p>Many years in healthcare…all of those pharma salespeople were pharmacists, nurses or medical technologists.
Hardly untrained or uneducated.</p>
<p>Yes, Erin’s Dad, thread goes back to 2005, yet gets new life!
Imagine the ups and downs of everybody’s finances since 2005!</p>
<p>jym626 </p>
<p>I thought you were just interested in the hard assets, my bad.</p>
<p>
</p>
<p>Have met about a dozen over my lifetime. Not a single one with a masters level degree in any science related field. Some working in drugs that have lots of off-label uses. Worrisome! All insist that their employer provides all the education they need. Even more worrisome!</p>
<p>Must run in different circles, I guess…</p>
<p>Since I work in the insurance industry and am aware of the policies, I cannot see how putting your home equity in a UL policy works well for some one?</p>
<p>First off, it could be a variable UL with the “cash account” invested in equities, but the rep better be securities licensed to sell it. Or it could be a regular UL which is fine (though has lost most of the pre-1987 tax advantages) We have clients who purchased pre-1987 ULs who are still benefiting greatly from them, not so much with newer plans.</p>
<p>In either case, a life insurance policy has a surrender charge, most plans these days take 15-20 years before you have no charge. If your income is low enough to obtain financial aid without that nasty home equity value, then how are you paying that HELOC or mortgage? You cannot repay it after junior graduates, at least not fully due to the surrender charge…plus you had to make payments all 4years and more if you have more kids.</p>
<p>The best use of a UL policy is a lifetime benefit that cannot be outlived, for example a guy who owns a business or real estate and will have a large estate tax to pay when he dies, but is not liquid enough to cover it, and does not want to sell off the assets to pay the taxes. The idea of a UL is that if you pay the appropriate premium you cannot outlive the coverage. If your term plan expires at age 65 you may not choose to afford a new plan at that age, which is fine, if you no longer need the death benefit.</p>
<p>In my case, by refinancing, I could have tapped all the equity in my house with little to no increase in payment, because I would have been switching from a 15 year to a 30 year mortgage at a lower rate. I might have lost some of the interest deduction, but I didn’t analyze it enough to tell for sure. I might not have.</p>
<p>I’m not in the insurance business, and I may be misremembering some of the details, but it was a single-premium policy, and had no surrender charges. As it was explained to us, you could start taking your money out right away if you wanted. In the meantime you could tap the earnings to pay for the mortgage or for college, and in theory my CSS Profile EFC would have been about $15K lower, which hopefully would have been covered by non-loan aid. </p>
<p>In the 3% investment plan, the policy would have been earning $9K/year, and saving $15K/year in college expenses, for a $24K/year win if everything breaks the right way (no guarantees of course).</p>
<p>When your kid is done, you cash it out, pay down/refi your mortgage, and you’ve saved a boatload of money.</p>
<p>RE: Pharma - my dad was a sales rep for a major drug company for 32 years. He was a registered pharmacist who always kept his license current and was overweight and balding.
RE: “hiding” money - You want a lower EFC? Just get lucky like me and lose your job, like I did! S now gets more subsidized loans, a small Pell grant and a grant from our state! See, problem solved!</p>