I have purchased a whole life policy from a company that uses the LEAP system to market whole life insurance.
What is the LEAP system, and why is it controversial? I see that Joseph Belth has written some skeptical articles in the Insurance Forum on it, but I don't subscribe to his publication.
> What is the LEAP system, and why is it controversial? I see that > Joseph Belth has written some skeptical articles in the Insurance > Forum on it, but I don't subscribe to his publication.
I've had several LEAPers explain the system to me, and I have to admit that much of it didn't take. The terminology is a little fuzzy; they use words like 'turbocharged money' and stuff like that.
I know that this system helps persuade people to purchase vast sums of whole life insurance.
One of the highlights is that you can borrow your own money, then deduct interest payments, as long as the money borrowed was for investment purposes. I'm not sure how they deal with wash loans, since that's available on darn near every permanent product now. Perhaps they are deducting interest payments made back into the contract, even though they are 100% credited back to the policy? I just really don't know. Perhaps Ed can jump in and explain how most personal interest payments are not deductible, and where there may be an exception.
The real problem I see is that, as far as I know, it has never been approved by the NASD or a broker/dealer for sales purposes. Even if you only use it for whole life, color me crazy, the regulators would find a way to nail a registered rep in one way or another. I'm not interested in getting in trouble, so I've avoided paying the $3,000 toll for the seminar on the system.
I was told by someone at NYLIC that they were trying to get it past their internal compliance department, earlier this year. I have no idea if they ever did. Guardian agents are known to use the system, probably more than any other company. I have no idea if they have it 'officially approved' or not. The people who use is swear by it. In some cases, they totally change how they do business. I've never met anyone who attended the seminar who came back saying it was bogus -- they all thought it was the real deal.
Perhaps why I'm not convinced is this: If it was all it cracked up to be, insurance companies would be all over it like flies on honey. This casual unwritten endorsement stuff isn't good enough for me. When I see Guardian, Mass Mutual, Northwestern Mutual and NYLIC company produced literature with LEAP on it, I'll change my mind. Until then, I'm a doubting Thomas. =)
<< <i>I have purchased a whole life policy from a company that uses the LEAP system to market whole life insurance.
What is the LEAP system, and why is it controversial? I see that Joseph Belth has written some skeptical articles in the Insurance Forum on it, but I don't subscribe to his publication.</i> >>
The LEAP (Lifetime Economic Acceleration Process - as you may already know what the acronym stands for) is actually a SYSTEM to help life insurance agents/brokers sell more life insurance, in particular . . . Whole Life insurance. It's designed to help the agent sell higher amounts of whole life insurance using a particular "philosophical" point of view. This philosophical point of view mainly has to do with concept of "velocity of money" and tries to incorporate other financial concepts like "time value of money" into that philosophy. And so, the bottom line turns out to be . . . buy as much Whole Life insurance as you can afford and don't use any other system of determining one's life insurance needs/wants.
It tends to be very controversial because those who've actually bought the system will not or can not discuss the details of the system to outside sources. So, in effect, unless you're a member of the cult like group, you not authorized to know how it works and why.
If you go to their web site, about all you can find out is there ( http://www.leapsystems.com/ ), though it really doesn't answer your or anyone else's question(s). The best place to get such question answered is to pay the exorbitant fee to attend one of their seminars where they SELL the system to life insurance producers.
> What is the LEAP system, and why is it controversial? I see that > Joseph Belth has written some skeptical articles in the Insurance > Forum on it, but I don't subscribe to his publication.
Interestingly enough, I received this in my email today:
I suspect, based on the concept of "being your own bank" and the testimonials on this page, that LEAP and Pam's new seminar have something in common. This isn't an endorsement of Pam Yellen, but her 10 hour seminar is a heck of a lot cheaper than LEAP, and she has some kind of money back guarantee.
> If you go to their web site, about all you can find out is there ( http://www.leapsystems.com/ > ), though it really doesn't answer your or anyone else's > question(s). The best place to get such question answered is to > pay the exorbitant fee to attend one of their seminars where they > SELL the system to life insurance producers.
I remember looking that site over a couple years ago...I'd hardly give it a glowing endorsement (from the investor's perspective) based on what they put up on the "consumer" side of the site. I'm all for things that help people to save/invest, and to understand the process. But it's full of trite statements, nonsensical language, and just plain bad writing.
The pages on things like compound interest, IRAs, and dividend reinvestment look specifically tailored to confuse uninformed investors. They're repeatedly making the point "tax deferral is good" but clouding the issue in the process. You don't need to talk someone out of an IRA contribution to sell them whole life insurance, and I think it's a bit irresponsible to do so. If an agent using LEAP or SPIN or AIDA or whatever convinces someone with no savings to sign up for whole life, great. If they stop contributing to their 401k and IRA to do so, or sign on for more premium than they can afford, not so great (I recall that exact scenario in an article on one of the more aggressive LEAP practitioners).
I saved about $100,000 of a P&C client's money from the clutches of a LEAP salesman a few years ago.
Seems that the lady of the house got a lump sum distribution from her company's retirement plan when she quit to be a full time mom, and she rolled it into an IRA at the credit union paying 4%, pending a decision on what to do with it long term. This LEAP guy smelled the money and came in to talk about velocity of money and all the other stuff they like to pass gas on. He succeeded in persuading them to take $10,000 a year out of the IRA holding her pension rollover to pay premiums on a whole life policy. Net after tax and penalty, they didn't have $10k left, but whatever they had went to the policy. There was enough for 10 to 15 years of premiums and then the policy would coast on dividends -- based on the then current dividend scale, which probably didn't hold up. Long story made short >> I derailed this scheme, got them to put the pension money into a Vanguard IRA, got threatened with a lawsuit from this LEAPer, and in many other ways had a good time. The LEAPer is out of the business now, as far as I know, and these folks continue to buy their auto, home and term life insurance from me. I'd maybe try to sell 'em whole life or one of its variations if I could think of a reason for them to own some ... but I can't.
rsunder...@aol.com (RSunder198) wrote in message <news:20021023022046.05661.00003730@mb-mm.aol.com>... > I saved about $100,000 of a P&C client's money from the clutches of a LEAP > salesman a few years ago.
> Seems that the lady of the house got a lump sum distribution from her company's > retirement plan when she quit to be a full time mom, and she rolled it into an > IRA at the credit union paying 4%, pending a decision on what to do with it > long term. This LEAP guy smelled the money and came in to talk about velocity > of money and all the other stuff they like to pass gas on. He succeeded in > persuading them to take $10,000 a year out of the IRA holding her pension > rollover to pay premiums on a whole life policy. Net after tax and penalty, > they didn't have $10k left, but whatever they had went to the policy. There > was enough for 10 to 15 years of premiums and then the policy would coast on > dividends -- based on the then current dividend scale, which probably didn't > hold up. Long story made short >> I derailed this scheme, got them to put the > pension money into a Vanguard IRA, got threatened with a lawsuit from this > LEAPer, and in many other ways had a good time. The LEAPer is out of the > business now, as far as I know, and these folks continue to buy their auto, > home and term life insurance from me. I'd maybe try to sell 'em whole life or > one of its variations if I could think of a reason for them to own some ... but > I can't.
Ron!
How's it going up there in God's country? =)
So the guy threatened you with a lawsuit because you derailed his sale - now that's funny!
Anybody participating on the AOL boards anymore? I dumped them earlier this year when I got a bill for $1,500 - for one months service.
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