As I mentioned before, I realized a lot of things in my years working for a mortuary. The way it’s presented is often very misleading. I challenge you to find an example of a whole life illustration that clearly details these costs for you, similar to the way a mutual fund has to tell you the expense ratio, sales commissions, and other fees. I am not aware of term insurance policies for people much past the age of 70 for $200,000 or more. I just choose to invest that conservative portion in something other than whole life for all of the reasons listed above. While this article is very insightful for a very specific audience (young workers), it does not fully take into consideration the needs of older retirees. I’m wondering if I should get out now and take the $2700 and run, or wait until I can pull out what I’ve paid into it which I hear is 10 years. But nobody ventures into looking at market action prior to 1980s. It’s always amazing to me when uneducated people like yourself spew false claims about whole life insurance. You’re welcome Helen. I don’t understand the tax efficiency. Whole life is an amazing product that you are confusing with Universal Life. But only if you but the right type of policy and only if it doesn’t negatively affect the rest of your financial plan. My father in law is deciding whether to buy a whole life policy because his term life premium is going up and he only has 5 years left until the policy expires. Getting all of this information will help you better evaluate whether keeping this policy is a good idea compared to your other options. That’s very different from borrowing from a bank, where the money was never yours. You buy it so the day you pass on your family will have money to ease their grieving by giving them time off, financial security, and most importantly for whole life insurance to pay the cost of your funeral, etc. Sure thing Dylan. While I do not share the same views with you on all of this, I appreciate the way you laid it out. Also, locking up guaranteed inheritance for next of kin early allows you to enjoy retirement and spend your savings rather than worrying . Like many others, we’ve been pitched repeatedly for Whole and Universal Life. Having whole life leaves money at the end regardless of what unforeseen circumstances happen. The nice thing about transferring your pension to an individual account today is that with interest rates at all-time lows, the amount the pension has to provide you on exit (the commuted value) is inflated to reflect the larger pool of capital required to fund your retirement years. But until it’s gone, there are some great applications that take advantage of a policy’s ability to pay out the investment portion of a policy tax free to a beneficiary upon the first death on a joint-last-to-die contract. I seriously doubt anyone will spring for an obituary when I die. I challenge you to post images of inforce illustrations where cash value growth is less that the annual premium by year 6. Alas, no one reads the contract or the prospectus for that matter. It’s tough to find. Our gross income is @140k a year. These policies can definitely be confusing. A policy that’s been in place for a while can often have a lot more promise as an investment going forward than a brand new policy. I am paying $135.00 a month for the joint policy and I also have a whole life insurance on my 22 years old child in college. (as long as you don’t go into the death benefit). Do you have clients that have had an overfunded life policy when markets are tanking and can use that cash to float their business and still earn money while their money is loaned out? Great comments and the article was interesting as well. I want my investment to go to me and then my heirs. First off, thanks for stopping by and asking your question. The first is that it’s being presented to you by a guy who invited you to a seminar. In the case portrayed in Table 1, the guaranteed minimum cash value is $190,000. But then again some super conservative clients love them. All interest is non-taxable. This all takes 10 minutes to manage and about $20 in cost (compared to an asset manager charging a percentage,) Because life insurance is guaranteed to maintain its value, it protects the remaining money that is not tied up when directly invested in stocks and is available to that an investor can be “greedy when others are fearful” (Warren Buffet) or “buy low while others are selling”. Plus, if the policy holder is not careful, their investment can go back to the insurance company. Just be careful and take a long time to think through the issues. Great question Jennifer. I wish you all the best, and hope that one day your mind can be opened to what the product (when it is well designed) can do and not focus on how it had been sold. I had a term policy which expired and it made me wonder if i should have bought a whole. Love your site! Thank you for this great, straightforward article. My research shows that the insurance agent ate up 90% of my monthly premiums for the first couple years. disability, premature death, and need for liquidity (yes I said liquidity). Thanks for reaching out Wanda. Do you have a recommendation of someone to talk to. As for, is the insurance enough for my children; I added an additional purchase benefit where they can add ten times as much coverage no matter what health issues they have. This article is written by someone who is going to make money off of you not doing what is best for you. I hope that helps! I want to make sure there’s an actual need before pointing you in any particular direction. They reduce their life time income by taking payment early. Proponents of Term policies either are honestly misinformed or intentionally misinforming: if life insurance is used for legacy or final expenses (at death), do you really know when exactly you are going to die? And it seems that there are two main reasons for that. Additionally, this can be a great way to compliment a financial plan that is linked to the markets performance. As a CFP, CLU, CHS , and Ch.FC , been in the market as a non-commissioned advisor for many years. And if you have 5 dollar bills in your pocket, that’s insignificant, but you wouldn’t want to keep 20 quarters in your pocket for very long. Not hard or misleading at all. I get to collect all the interest I would have paid the banks. I am an agent with one of the top companies and have been for 5 years. I really can’t say enough about how impressed I am with all of your work and analysis here, and how appreciative I am that you’ve taken the time to share it all. You and your brother should have simply received the face amount of the life insurance policy. Withdrawing (borrowing) money from your account was seemingly easy with a 0.75 % interest rate in the first 10 years and 0% interest after the first 10 years. are you saying it would be worth hit if I could put say 30-45k into each of the first few years? I disagree with the majority of these reasons. I agree that life insurance is very different from other savings vehicles like CDs and retirement accounts. You can evaluate what you expect to get from the whole life policy going forward vs. what you might expect from other options, and then decide which options give you the best chance of achieving your personal goals. But, it is what it is. As to the universal life policy, I don’t have data as to how much I paid in the early years before the premium vanished. 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