When Does Whole Life Insurance Make Sense?

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54 thoughts on “When Does Whole Life Insurance Make Sense?”

  1. Start with a whole life with a low death benefit but the ability to add lots of paid up additions. You will be happier with the rates. This is long term — the cash can be loaned to yourself (interest on the loan goes to the policy) – invest in higher rates of return (e.g. real estate rentals, secured private loans) . Buy cheap term at work. I do not sell insurance or any financial advice. I bought 4 rental houses in 2 years with this strategy. Plenty of YouTube videos on the process. The biggest secret is to find an insurance agent who understands the system.

    1. @Andy guys bashing it aren’t snake oil salesmen. Most people selling it won’t tell you about what the original poster said. This only applies to a very small percentage of the population that are actually real estate investors. So what, maybe 2% of the population?

    2. This. Too many agents are pushing WL as a set it and forget it retirement plan. That’s just not appropriate. There are better options out there for that. But what you are doing is how you properly leverage it. Mutual funds alone will always beat life insurance alone. Period. But you can’t leverage a mutual fund, especially during down markets like you can a life insurance policy. That is it’s strength.

    1. Really, what books and successful people using this are you debunking? How specifically is it a ripoff? Did you inform your bank they are being ripped off by holding billions of dollars in whole life contracts? And if so then why are you trusting them with your savings needs if they are being ripped off?

  2. I was thinking of it as a bet of living that id win; i look at it like theyre like a stock broker; i throw money at them and they make me money and then sell the policy for that profit i wouldnt have gotten if i had just saved in a bank or made random bets doing my own stocks (or more likely spending it).

    Only thing is, i wouldnt know how to make them accountable, and account correctly for my cut of the annual dividens

  3. It’s pretty obvious to me this isn’t the case.
    1. Term is much cheaper and protects income just like whole life does.
    2. Seg funds have much less fees and protect just like whole life policies do. Plus seg funds have much greater rates of returns than whole life.
    ****Why not buy term invest the difference? ****

  4. I’m paying for 100k whole life insurance and I pay $52 a month at age 22rn for the rest of my life. I could die at age 90 and only have spent a total of $42,432. Thats so worth it for my family, on top of the company dividends I receive which I just reinvest for my beneficiaries to take over. It all depends on where you are at in life but I wouldnt talk down on either.

    1. As someone that loves whole life, and owns it. If your plan is to die at 90 and leave money to your family then you should use a roth IRA. Odds are you won’t be triggering estate taxes anyways. Now, if you actually plan on borrowing against that policy while you are young to leverage for investments that is a different story. Whole life is awesome for the right people. But why not max out a Roth and get the exact same tax treatment?

    2. @Paul Stutsman This. If you actually use the cash value through loans you can multiply your returns substantially. Too many people push whole life as a set it and forget it retirement plan. Which is bad advice since a Roth will give you the same benefits and grossly outperform it. Just be aware that interest on policy loans is guaranteed, whereas dividends, and in this case returns on investing elsewhere are not. One thing that the people who trash whole life miss though is that borrowing from the cash value doesn’t actually remove the cash value from the policy. It does keep growing, often as if it was never borrowed. This means your WL can continue to grow while we leverage the money and invest elsewhere.

    1. @VK RGFAN Referring to me? I’m not affiliated with any firm. And yes guaranteed WL cash values are absolutely a volatility buffer to markets. The contractual guarantees are not directly tied to the market. And yes I agree the firm you met with seems to be very unbalanced and didn’t listen to your needs or educate you properly on the WL. Would you like a list of some firms, books, channels that would educate you correctly? BTW the insurance companies I would recommend have been around longer than the stock market and have produced dividends over 120 years and were the backbone to our economy through all the crashes.

    2. @Andy What is volatility buffer to markets? You make no sense and I don’t think you know what you are taking about. If you can’t explain in the simple language, that only means that you don’t understand it yourself.
      And what firm is that that has been around for 120 years? LOL

    3. @Mei Lyn Firms: Paradigm Life, Cash-Flow Tactics, IBC Global, Wealth Factory.
      Channels: Garrett Gunderson (major author on many books), Life180, IBC Global, The Chris Naugle, Life Benefits, Wise Money Tools.
      Books: What Would the Rockefellers Do. Heads I Win, Tails You Lose by Patrick H. Donohoe

    1. The first question would be “who is it with?” “What is the purpose behind it?” Depending on these answers, the advice may vary.

      FOR THOSE WHO DON’T KNOW… there are a lot of bad life insurance agents out there who have no idea what they are talking about (as well as people, advisors, etc), or how to properly structure a whole life insurance contract. Let me break it down..

      A good life insurance agent/financial planner will recommend you view WL insurance as a supplemental retirement vehicle (a high performing bond with a death benefit attached). NOT for death benefit purposes at this time (that should be term, and should come before whole life, or investing in Mutual Funds, stocks, etc.) The reason being that the policy will have a guarantee on cash value growth, and the cash value cannot legally go down. THIS IS WHERE YOUR SAFE/LESS RISKY DOLLARS GO IN YOUR PORTFOLIO. Not to mention it grows tax deferred and can be pulled tax free (depending on the company you do it with), For those who say “well you can’t take the cash value with you when you die” that is true. But, if the contract is set up probably, the dividends will be used to purchase more insurance and the increased death benefit will far outweigh the original death benefit + cash value at time of death.

      Who should you do this with? MassMutual, New York life, Penn Mutual, and Northwestern.

      Anyone else got anymore questions? I’m more than happy to address and educate. Because the people in this video clearly have no idea how it works.

  5. Whole Life shouldn’t be used as a retirement fund anyways. If I have a $50,000 death benefits and $100,000 accidental death benefit added for extra protection…At 65, my cash value will be $23k and some change. If i die at 68, my beneficiary will get $150,000 if my death was some type of accident. If I die because of something other than an accident, my beneficiary gets the $50,000 – which that $23k is a part of that. The cash value is only how much you are allowed to take out or borrow against from your main death benefit. If i take out $20k at 65 to use for myself, that leaves $3k that will be given to my beneficiary instead of the $50k if I don’t pay it back. If death was an accident then he’d get $103k.

    1. @Cammie Robinson”My death benefit is $50,000, and if at 65 my cash value is at $23,000, that just means that of that 50,000, I can only take out up to 23,000.” Hence, you can only BORROW AGAINST YOUR CASH VALUE. If you had $50k DB and $0 CV, you can’t borrow!! This is why the CV is NEVER part of the DB. YOU DON’T GET BOTH!! Stop trying to lie.

    2. @Cammie Robinson No, you’re missing the point that there are people in here WHO KNOW THE TRUTH and have worked in this industry. NYL, MM, Guardian….etc. do not appreciate their products being misrepresented. You can only borrow up to 90% of your CV assuming you qualify. YOU DO NOT BORROW AGAINST YOUR DB. Stop telling people that.

  6. Buy term and invest the rest is garbage.
    Not going to discuss the use for cash value throughout retirement? The guarantees of cash value growth not to mention index riders than can be effectively placed to enhance these policies value. Hedge to protect against higher taxes in the future?

    Everyone is different and both types of policies have values for different people. But to completely neglect to mention to people the tax benefits throughout the life of the policy and guaranteed growth of the cash value that isn’t tied to the markets is crazy. No one has ever woke up one morning and saw their cash value lower than the previous day.

    Life insurance is not an investment. It is a valuable tool that can enhance the life of the policy holder and open up a lot more freedom throughout retirement.

    Do these guys neglect to mention these benefits because they are paid by AUM?

  7. Whole life makes sense when you have estate needs, where MECing it may actually be ok. Or in a scenario where you are looking for a conservative and liquid account to leverage for say real estate investments when you don’t want your liquid assets to be at the whim of the market when you may need it. But even a properly structured whole life policy takes at least 5 years to break even. That will impact long term cash value. The idea that you should use it alone to save for retirement when there are other qualified savings vehicles available which will outperform it even with the tax benefits, is just not a go. Using a whole life policy with high early cash value can make sense for people that actually use the cash value throughout the policy. But it’s very situational and shouldn’t be pushed as a catch all solution. Buy term and investing the rest makes sense for most people.

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