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Strange Things in the Precious Metals
Issue #531, July 17, 2018

Buying Years of Retirement
Issue #530, July 09, 2018

Rent-A-Kid for Retirement
Issue #529, July 02, 2018

The Dark Side of Student Loans
Issue #528, June 25, 2018

The Cost of Out-sourcing Convenience
Issue #527, June 18, 2018

Social Security: 66 or 70?
Issue #526, June 11, 2018

Student Loans: There’s (Unfortunately) a Lot More!
Issue #525, June 04, 2018

Co-signing a Note
Issue #524A, May 31, 2018

The Knight Frank Luxury Index and Collectables
Issue #524, May 28, 2018

The Importance of Diversification: The Myth of Diversification
Issue #523, May 21, 2018

How to Save Thousands on Your Food Bill
Issue #522, May 14, 2018

MoviePass and Other Things
Issue #521A, May 10, 2018

Degree Inflation, Long Training Periods, and “Certification”  Part III
Issue #521, May 07, 2018

Degree Inflation, Long Training Periods, and Certification” Part II of III
Issue #520, April 30, 2018

Follow-up on Several Things
Issue #519A, April 25, 2018

Degree Inflation, Long Training Periods, and “Certification”: Part I of II
Issue #519, April 23, 2018

The Kids Birthday Party Hustle
Issue #518A, April 18, 2018

A Pension Question: Part II of II
Issue #518, April 16, 2018

A Physician is an Executive
Issue #517A, April 11, 2018

A Pension Question: Part I of II
Issue #517, April 09, 2018

Is the Correction Over?
Issue #516A, April 05, 2018

Used Car Dealers, Student Loans, the Chinese, and Uncle George’s Rule
Issue #516, April 02, 2018

Starter Homes
Issue #515, March 26, 2018

Redecorating: Beware!
Issue #514, March 19, 2018

NASDAQ Closes at Record High
Issue #513, March 12, 2018

A 40% Chance
Issue #512, March 05, 2018

Several Things
Issue #511, February 27, 2018

Human Capital, Education and Wealth
Issue #510, February 19, 2018

Another Stock Market Update
Issue #509A, February 18, 2018

Some Thoughts on Savings
Issue #509, February 12, 2018

A Stock Market Upfate
Issue #508S, February 10, 2018

Who Can You Trust? Part II of II
Issue #508, February 05, 2018

The Christmas Decoration Pre-worn Jeans Hustle
Issue #Interim Bulletin #507A, February 03, 2018

2018 Outlook for Financial Markets
Issue #507, January 29, 2018

Who Can You Trust? Part I of II
Issue #506, January 22, 2018

Life Insurance Settlements
Issue #505, January 15, 2018

Commodities and Buying the Breakout
Issue #504, January 08, 2018

Buffett Wins His Bet
Issue #503A, January 04, 2018

Practice Real Estate and Free Agency
Issue #503, January 01, 2018

Outlook for 2018: Part III: Stocks and Bonds
Issue #502, December 25, 2017

My Outlook for 2018: Part Ii: Precious Metals
Issue #501A, December 21, 2017

Outlook for 2018: Hard Assets: Part I of III
Issue #501, December 18, 2017

More Thoughts on Bitcoin
Issue #500A, December 14, 2017

Fees and Good Relations with Bankers
Issue #500, December 11, 2017

Salvator Mundi
Issue #499A, December 07, 2017

Should You Rent or Own a Home?
Issue #499, December 04, 2017

A Gift Subscription
Issue #Interim Bulletin #498A, December 02, 2017

Stocks vs Real Estate: Asset Allocation: Part II of II
Issue #498, November 27, 2017

When Good Enough is Fine
Issue #497A, November 22, 2017

Stocks vs Real Estate: Asset Allocation. Part I of II
Issue #497, November 20, 2017

The Saudi Arrests and the Perils of Foreign Investing
Issue #496, November 13, 2017

Gambling and Las Vegas
Issue #495, November 06, 2017

Some Tips on Auto Insurance
Issue #494, October 31, 2017

Bitcoin and the Digital (Crypto) Currencies
Issue #493, October 23, 2017

The Coming Bear Market: Part II How to Prepare
Issue #492, October 16, 2017

Some Observations on Cemeteries
Issue #Interim Bulletin #491A, October 12, 2017

The Coming Bear Market: Part I: The Myth of Buy and Hold Forever
Issue #491, October 09, 2017

The Market makes New Highs
Issue #490, October 02, 2017

The Importance of a New High
Issue #489, September 25, 2017

A Little Insurance: Wealth, War and Wisdom
Issue #488, September 18, 2017

Some Observations
Issue #487, September 11, 2017

How to be Successful in Your Career
Issue #486A, September 07, 2017

How NOT to Buy a Home
Issue #486, September 04, 2017

This Week in the Market
Issue #485, August 28, 2017

Is the “Trump Bump” Running Out of Gas?
Issue #484, August 21, 2017

Gold is on the Move
Issue #483, August 14, 2017

The Importance of Estimation
Issue #482, August 07, 2017

Buying Art and Collecting: Part II of II
Issue #481, July 31, 2017

Buying Art and Collecting in General, Part I of II
Issue #480, July 24, 2017

Physicians need to be More Forceful: Follow-up
Issue #479, July 17, 2017

Physicians need to be More Forceful
Issue #478, July 10, 2017

Your First “Real” Investment
Issue #477, July 03, 2017

Leasing a Watch: Don’t
Issue #476, June 26, 2017

The Importance of Your Children having a Job
Issue #475, June 16, 2017

The Problem with Medical Student Debt is—the Med Schools
Issue #474, June 12, 2017

Critters and Varmints in your Home and Yard
Issue #473A, June 07, 2017

Leveraged ETFs
Issue #472, May 29, 2017

Leasing a Vehicle: Don’t!
Issue #471, May 22, 2017

Issue #470, May 15, 2017

More on Buying Jewelry
Issue #469, May 08, 2017

Buying Jewelry: Gold, Diamonds and Pearls
Issue #468, April 30, 2017

Thomas Sowell: Part III of III
Issue #467, April 24, 2017

Thomas Sowell: Pat II of III
Issue #466, April 17, 2017

Live Close to Where You Work
Issue #465, April 10, 2017

Medtronic in Hospital Management
Issue #Interim Bulletin #464A, April 07, 2017

Thomas Sowell: Part I of II
Issue #464, April 03, 2017

A Political Contribution a an Investment: Part II of II
Issue #463, March 27, 2017

A Political Contribution as an Investment: Part I of II
Issue #462, March 20, 2017

Buffett Selling Vacation Home
Issue #461, March 13, 2017

Advanced Placement (AP) ourses
Issue #460, March 06, 2017

The Importance of a Credit History
Issue #459A, March 02, 2017

A Credit Card Scam
Issue #459, February 27, 2017

The Electronic Health Reord
Issue #458, February 20, 2017

Issue #457, February 13, 2017

Platinum and Palladium
Issue #456, February 06, 2017

Economic Outlook for 2017: Part II of II
Issue #455A, February 02, 2017

Economic Outlook for 2017: Part I of II
Issue #455, January 30, 2017

A Story From Vegas
Issue #454A, January 25, 2017

Land Donation Deals and the IRS
Issue #454, January 23, 2017

The Theory of Gambler’s Ruin
Issue #453, January 16, 2017


By Robert M. Doroghazi, M.D., F.A.C.C.

Life Insurance Settlements

Issue #505, January 15, 2018

    There are 2 basic types of life insurance (see below). Term is in force only during the term of the policy, while whole life, also called a cash value policy, is in force your whole life. Term is far less expensive than whole life, and I believe should provide 98-99% of your life insurance needs. The only time to consider a whole life policy is when recommended by your estate lawyer to insure there is cash available at the time of your death (ex: you are in a partnership with a buy-sell agreement), or as part of a donation where the proceeds go to charity.
    Other things being equal, I don’t think a person needs life insurance until you have dependents. The pain of the death of a child is unimaginable, but because no one depends on a child for support, I don’t believe children need life insurance. Likewise, I believe a person should plan to drop life insurance at age 60. 1) The premiums increase pari passu (means to proceed at the same rate) as the risk of death. 2) Your obligations should be funded: you own your home free and clear, you have no other debt, and your children’s education should be completed or funded.
    If you depend on an insurance agent to recommend your insurance needs, you are almost certain to be over-insured. They will recommend, No—strongly recommend!—that you purchase whole life. The reason is because their commission in the first year is 80-90% of the premium. That’s not a misprint: eighty to ninety percent goes to the agent’s commission, leaving a dime and a few pennies to build up cash value. Because the agent also receives residual commissions on subsequent premiums, and the administrative costs, it can take up to 6 or 7 years for your whole life policy to build up a positive cash value.
    What if you realize you’ve made a mistake, and want to get out of a whole life policy?
    1) Go to your physician for a checkup, make sure you are in good health, and secure the term life insurance you need, or will need, in the future. In Issue #428 (7/25/16), I note that term life insurance premiums typically increase on the 10s, so when you are 29, and considering having children, think of the life insurance you would will need at 45.
    2) Redeem (cash out) the policy. This is a real-life example. A physician asked me to evaluate his general financial situation. I thought he was over-insured, so he spoke with the company about dropping his $1M whole-life policy. The premiums were $5K per quarter, and the policy had a “cash value” of $32,748. The current surrender value was $12,275, i.e., it did not have a cash value of $32,748. He would have to pay the premiums for another 15 years to receive his money without a penalty.
    3) The main point of this newsletter. The London School of Business recently performed a study showing that selling a whole life policy into the secondary market realized 4 times the cash surrender value from the insurance company. The options to do this, and the details, are far beyond this newsletter. If you are in this situation, this is by far the best option to maximize the value of a whole life policy you wish to terminate.     
    There is also universal life, variable life, and you can convert a term policy into whole life. I discourage all of these, and won’t discuss them any further. Stick to term.
    Warren Buffett was interviewed last week on CNBC.
    1) He put the tax cuts in perspective. I paraphrase. “Previously I paid a 35% tax on my profits. Now I pay 21%. Compare 79% to 65%. My profits are up 21%”.
    RMD comment: The significance of that is not to be underestimated. It’s huge, and I believe explains, but only in part, the run-up in the markets. Businesses are suddenly worth 10 or 15 or 20% more. With the strong action of the first 2 weeks of this year, Lowry’s Buying Power continues to rise, and Selling Pressure continues to fall. It’s time to ride the bull.
    2) He is not long—or short—Bitcoin. “But if there were 5-year put options, I would buy them on every cryptocurrency”.
    There was an article in the Wall Street Journal earlier this week about how many state schools are offering out-of-state students in-state tuition to lure them to attend.
    RMD comment: This is a perfect example of what I call “the University-Industrial Complex”. Rather than serve society, universities garner power and grow just to grow. I believe that too many people go to college, and many come out in hock up to their eyeballs with worthless degrees. Demographics dictate there are only so many potential students, so rather than admit the truth and scale back operations—that ain’t never gonna happen—they bust each other’s chops, to the detriment of us all. 
    The US Dollar is on the verge of breaking to multi-year lows. Not surprisingly, gold, and the commodity space in general, are red hot. This will be the subject of next week’s Newsletter. There is never a bad time to buy physical gold.
    After this I will devote at least one, or maybe two, Newsletters to Who Can You Trust? How Technology Brought Us Together and Why It Drives Us Apart (Botsman, Public Affairs). In the meantime, please understand that when you post anything on social media, or search on Google or Amazon, big brother (i.e. the computers at Facebook, Google, Amazon—and various government agencies, foreign and domestic) is watching. After discussing this topic, you’ll see why old-school guys like me, cousin Tony, Canada Mike and Tail-gunner Dave, pay cash for much of what we buy, and don’t carry our cell phones around.     
    Quote of the month.
    Last year I hosted our Grassland’s neighborhood 4th of July party for about 150 people. There was some beer left over. I then hosted the neighborhood Christmas party. Younger son Michael appreciates craft beers, so I asked him if the beer purchased in July would still be OK. “Dad, even if it’s a little stale, nobody’s going to complain about free beer”. 

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