Methods for transferring or distributing risk were practiced by Chinese and Babylonian traders as long ago as the 3rd and 2nd millennia BC, respectively.[1] Chinese merchants travelling treacherous river rapids would redistribute their wares across many vessels to limit the loss due to any single vessel's capsizing. The Babylonians developed a system which was recorded in the famous Code of Hammurabi, c. 1750 BC, and practiced by early Mediterranean sailing merchants. If a merchant received a loan to fund his shipment, he would pay the lender an additional sum in exchange for the lender's guarantee to cancel the loan should the shipment be stolen, or lost at sea.
Though not an absolute separation; an insurance agent is an insurance company's representative by way of agent-principal legal custom. The agent's primary alliance is with the insurance carrier, not the insurance buyer. In contrast, an insurance broker represents the insured, generally has no contractual agreements with insurance carriers, and relies on common or direct methods of perfecting business transactions with insurance carriers. This can have a significant beneficial impact on insurance negotiations obtained through a broker (vs. those obtained from an agent).
Mores also gave the name actuary to the chief official—the earliest known reference to the position as a business concern. The first modern actuary was William Morgan, who served from 1775 to 1830. In 1776 the Society carried out the first actuarial valuation of liabilities and subsequently distributed the first reversionary bonus (1781) and interim bonus (1809) among its members.[7] It also used regular valuations to balance competing interests.[7] The Society sought to treat its members equitably and the Directors tried to ensure that policyholders received a fair return on their investments. Premiums were regulated according to age, and anybody could be admitted regardless of their state of health and other circumstances.[9]

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At the center of everything we do is a strong commitment to independent research and sharing its profitable discoveries with investors. This dedication to giving investors a trading advantage led to the creation of our proven Zacks Rank stock-rating system. Since 1988 it has more than doubled the S&P 500 with an average gain of +25.28% per year. These returns cover a period from January 1, 1988 through February 4, 2019. Zacks Rank stock-rating system returns are computed monthly based on the beginning of the month and end of the month Zacks Rank stock prices plus any dividends received during that particular month. A simple, equally-weighted average return of all Zacks Rank stocks is calculated to determine the monthly return. The monthly returns are then compounded to arrive at the annual return. Only Zacks Rank stocks included in Zacks hypothetical portfolios at the beginning of each month are included in the return calculations. Zacks Ranks stocks can, and often do, change throughout the month. Certain Zacks Rank stocks for which no month-end price was available, pricing information was not collected, or for certain other reasons have been excluded from these return calculations.

You’re typically asked about your current and past health conditions, and your family health history. The insurer may ask for your consent to get your medical records and may ask you to take a life insurance medical exam. Insurers will also check other data sources to determine term life insurance quotes. More: What you need to apply for term life insurance
Disability insurance policies provide financial support in the event of the policyholder becoming unable to work because of disabling illness or injury. It provides monthly support to help pay such obligations as mortgage loans and credit cards. Short-term and long-term disability policies are available to individuals, but considering the expense, long-term policies are generally obtained only by those with at least six-figure incomes, such as doctors, lawyers, etc. Short-term disability insurance covers a person for a period typically up to six months, paying a stipend each month to cover medical bills and other necessities.
In the United States, brokers are regulated by the state (or states) in which they work. Most brokers are required to have an insurance broker license, which involves taking courses and passing an examination. Each state has different requirements for insurance brokers, which a broker must meet to be licensed in that state. Most states require insurance brokers to take continuing education courses in order to maintain their license.
In any case, I thought I might chime in given that I disagree with your statement about all of these policies being legal robbery. As a disclaimer, I should point out that I agree that unscrupulous life insurance agents definitely do have a tendency to oversell these policies where term life would do, and I do not disagree that commissions are often the likely motivation in many of these cases.
When the market experiences “down years” you will want to used a fixed investment to take your distributions in order to give your market-exposed vehicles time to recoup losses. This is one of the best pieces I have seen regarding “Taming a Bear Market” where one uses whole life insurance to supplement 401(k) distributions in bad years: http://www.becausewearewomen.com/documents/LEGACY10-RETIREMENTSUPP.pdf
Well, actually, that was a fairly slanted article from someone who is advocating in his best interest from his point of view. Most Brokers are highly ethical and Brokers (not agents) DO have a fiduciary responsibility to their clients. Most CFO’s also do not allow their Brokers to “last minute” them nor have an uncontrolled process. One of the biggest problems is not the Broker or Agent, but divisional reluctance to co-ordinate safety and loss prevention efforts WITH the CFO so that the CFO has a basis to negotiate with first of all, and for the organization to take a portion of it’s risk and self-insure where financially appropriate. For example, the adoption of telematics in fleets has moved very slowly and their is no good reason for proactive management to have allowed that to happen. That takes proactive risk management and coordination which is why many CFO’s have a risk manager position in their department.
Thanks for adding to the sea of confusion. Term insurance may be dirt cheap when you are young, but it is deathly expensive by the time you turn 50 or 60. Term or permanent insurance are just tools for different needs. There isn’t a one size fits all solution to life insurance, and just because a few mis-guided and zealous agents have sold the wrong product doesn’t do justice to a great industry that provides a lot of security to families in their time of need.

Yes, backdoor Roths are capped at $5,500 per year. Still, I think they’re a better first option than whole life for all of the reasons mentioned in the post. Exposure to market risk is not an inherent problem, and is also not a characteristic of Roth IRAs. A Roth IRA is just a type of account within which the individual can invest however they want. If they want to be exposed to market risk (something that many people deem desirable), they can be. If not, they don’t have to be. It’s up to them.

You do write that “some of our top clients who are in a tax bracket that you nor I will ever see” enjoy the benefits of whole life. As I say in the post, there is a small percent of the population with a very large amount of money that can benefit from whole life. That is not who I’m writing for here. For 98% of the population, it is not a useful tool.
Hi James. Sorry for the late reply! So I’ll be honest that I’m not an expert on this exact strategy, but my understanding is that it’s generally something you might look to implement later in life, closer to when you’re actually making the decision about what type of pension payout you want. That’s simply because there are a lot of variables involved that could make it either more or less advantageous, and if you’re in your early 30s it’s just hard to know what all of those variables will look like 30 years down the line.
This life insurance information is provided for general consumer educational purposes and is not intended to provide legal, tax or investment advice. Life Insurance offered through Allstate Life Insurance Company, Northbrook, IL; Allstate Assurance Company, Northbrook, IL; Lincoln Benefit Life Company, Lincoln, NE and American Heritage Life Insurance Company, Jacksonville, FL. In New York, life insurance offered through Allstate Life Insurance Company of New York, Hauppauge, NY. All guarantees are based on the claims-paying ability of the issuing insurance company.
Insurance brokerage is largely associated with general insurance (car, house etc.) rather than life insurance, although some brokers continued to provide investment and life insurance brokerage until the onset of new regulation in 2001. This drove a more transparent regime, based predominantly on upfront negotiation of a fee for the provision of advice and/or services. This saw the splitting of intermediaries into two groups: general insurance intermediaries/brokers and independent financial advisers (IFAs) for life insurance, investments and pensions.
Nice write up. I personally have been able to save with an independent agent. A big concern of mine was finding an agent that worked with more reputable insurance carriers. There seems to be alot of agents who will use non-standard insurance carriers to provide cheaper coverage. I've heard some horror stories about customer service, sub-par adjustments, and claims services. I'd definitely do alot of research into the insurance companies the independent agent is appointed with.
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I’ll be up front that I am not an expert on life insurance and long term care for people in your situation and therefore don’t have a great answer for you. I have heard good things about certain hybrid policies like you’re describing, but I would be very careful about who you’re buying it from and how exactly the policy works. If you would like a referral to a fee-only financial planner who specializes in this kind of decision, just let me know and I would be happy to help.
Also, you said whole life is not an investment. But by definition, it is an investment. An investment is simply where you put money into something expecting a return in the future. And whole life insurance does provide that. Plus if it is a mutual company as mine is then you become a partial owner which means you get to vote and help the business make good business decisions.
So I should have guessed that this was some form of equity-indexed universal life, both because of the “IUL” in the acronym and because they are all the rage right now with insurance salesmen. They claim to provide stock-market returns without the risk, which is of course impossible. You did an excellent job here of laying out exactly why that minimum 0.75% return is nowhere near as attractive as it sounds, and one of the other big issues with many of these policies is that they don’t count dividends as part of the formula that determines your return, which is a pretty significant thing to leave out!
Any death benefit of the policy will not be payable if the named insured commits suicide or if anyone covered by additional riders commits suicide, while sane or insane, within two years from the policy or rider effective date. All premiums paid will be refunded, less any indebtedness. The following information only applies to the Accelerated Death Payment, Waiver of Premium Benefit Rider, and Accidental-Death Benefit Rider:
Deciding whether to purchase whole life or term life insurance is a personal decision that should be based on the financial needs of your beneficiaries as well as your financial goals. Life insurance can be a very flexible and powerful financial vehicle that can meet multiple financial objectives, from providing financial security to building financial assets and leaving a legacy.

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I have only read the comments so far as Feb 2014 (tho i will read them all), but i have to say thank you for the article, but more so for the objectiveness and courteous mannerism in all your responses. While there may sometimes be cause for snarkiness or sarcasm on your part, I have yet to see it in your responses. And the fact that you actually respond to everyone (as far as I have read) deserves a huge KUDOS as well. You have certainly given me much more insight to my family’s planning goals.
It is your responsibility to evaluate the accuracy, completeness and usefulness of any opinions, advice, services, or other information provided. All information contained on any page is distributed with the understanding that the authors, publishers and distributors are not rendering legal, accounting or other professional advice or opinions on specific facts or matters, and accordingly assume no liability whatsoever in connection with its use. Consult your own legal or tax advisor with respect to your personal situation.
Know when to cut coverage. Don’t strip away coverage just for the sake of a lower price. You’ll need full coverage car insurance to satisfy the terms of an auto loan, and you’ll want it as long as your car would be a financial burden to replace. But for older cars, you can drop comprehensive and collision coverage, which only pay out up to your car’s current value, minus the deductible.
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I am an agent with one of the top companies and have been for 5 years. The “buy term and invest the rest” sounds like a great idea but here’s what I have found. People don’t actually do it. You cannot change human behavior. I try to hold my clients accountable and want them to do the same for me. If a client is a spender, they will never stop being a spender. For those people we design a savings plan that let’s them spend their money guilt free, as long as they hit their monthly savings goal, they can spend what they wish.
Qualifying status is determined at the outset of the policy if the contract meets certain criteria. Essentially, long term contracts (10 years plus) tend to be qualifying policies and the proceeds are free from income tax and capital gains tax. Single premium contracts and those running for a short term are subject to income tax depending upon the marginal rate in the year a gain is made. All UK insurers pay a special rate of corporation tax on the profits from their life book; this is deemed as meeting the lower rate (20% in 2005–06) of liability for policyholders. Therefore, a policyholder who is a higher-rate taxpayer (40% in 2005-06), or becomes one through the transaction, must pay tax on the gain at the difference between the higher and the lower rate. This gain is reduced by applying a calculation called top-slicing based on the number of years the policy has been held. Although this is complicated, the taxation of life assurance-based investment contracts may be beneficial compared to alternative equity-based collective investment schemes (unit trusts, investment trusts and OEICs). One feature which especially favors investment bonds is the '5% cumulative allowance'—the ability to draw 5% of the original investment amount each policy year without being subject to any taxation on the amount withdrawn. If not used in one year, the 5% allowance can roll over into future years, subject to a maximum tax-deferred withdrawal of 100% of the premiums payable. The withdrawal is deemed by the HMRC (Her Majesty's Revenue and Customs) to be a payment of capital and therefore, the tax liability is deferred until maturity or surrender of the policy. This is an especially useful tax planning tool for higher rate taxpayers who expect to become basic rate taxpayers at some predictable point in the future, as at this point the deferred tax liability will not result in tax being due.
Matt, the illustration does have a guaranteed element to it, the guaranteed keeps going up every year whether the company issues a dividend or not, obviously the guarantees are less. Like I said the purpose of this type of life insurance is not to “invest” its to have something that you wont other wise have. with 30 year term, the term is guaranteed to expire in 30 years. anyhow I wont debate you on that as I can see where you are coming from. I understand that when a person gets into a plan to pay off debt and invest heavily they will have “no need” for life insurance after they’ve paid debt and their children have grown. I’m more conservative therefore I like to make sure I have something despite having debt paid for etc.. I’d like to leave an article for you to read, its an actual case study of a gentlemen who opened a small 29000 participating whole life policy back in the mid 60’s. in 2013 he now had $166,424 in Coverage and had only paid $26,186. Anywho not bad for the guy. heres the article for anyone interested in reading the case study.
It’s a great point about the cost causing people to be underinsured. I have no idea if there are any statistics on that, but intuitively it would seem to make sense. It’s a shame if someone with a real need for life insurance is under-protected because a salesman could make a bigger commission off the more expensive product. But I’m sure it happens.

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4The monthly rate shown is for Preferred Elite based on a Male, age 37, and a 20-year level term period. Terms and limitations will apply. Rates shown are monthly as of January 1, 2018. Allstate TrueFit® is a term life insurance to age 95 policy issued by Allstate Assurance Company, 3075 Sanders Rd., Northbrook IL 60062 and is available in most states with contract/series ICC14AC1/ AC14-1. In New York, issued by Allstate Life Insurance Company of New York, Hauppauge, NY with contract/series NYLU818. The premiums will be the same for the level term period selected. Beginning with the anniversary following the level term period, the company reserves the right to change premium rates each policy year, but rates cannot be more than the maximum guaranteed amounts stated in the policy.


In 2017, within the framework of the joint project of the Bank of Russia and Yandex, a special check mark (a green circle with a tick and ‘Реестр ЦБ РФ’ (Unified state register of insurance entities) text box) appeared in the search for Yandex system, informing the consumer that the company's financial services are offered on the marked website, which has the status of an insurance company, a broker or a mutual insurance association.[50]
The best thing to compare permanent life insurance policy to is to another similar type permanent life insurance policy. And you don’t want to focus on the interest rate specifically but on the actual values in each policy that are “guaranteed” – not projected. All things being equal, this tells you which permanent policy is less expensive and provides a higher net interest rate instead.
Agents and brokers both earn the bulk of their income through commissions earned on the sales they make. An agent working for one company can enjoy the stability that comes from having one compensation plan. A broker who works with a number of insurance companies can experience income variances, depending on which company's products she sells. However, brokers have the flexibility to write business through the companies that offer the highest commission rates, assuming they provide the products that meet their clients' needs.
First of all, it’s important to understand that while the death benefit is certainly valuable, it is not technically an “asset”. The asset that you can include on your balance sheet with a whole life policy is the cash value. The only way you get the death benefit is by dying, so it is not an asset you can actually use today. Again, that doesn’t mean it’s worthless, it’s just not correct to compare it to money in a savings or investment account.
Universal life insurance (ULl) is a relatively new insurance product, intended to combine permanent insurance coverage with greater flexibility in premium payments, along with the potential for greater growth of cash values. There are several types of universal life insurance policies, including interest-sensitive (also known as "traditional fixed universal life insurance"), variable universal life (VUL), guaranteed death benefit, and has equity-indexed universal life insurance.
In the United States, insurance brokers are regulated by the individual U.S. states. Most states require anyone who sells, solicits, or negotiates insurance in that state to obtain an insurance broker license, with certain limited exceptions. This includes a business entity, the business entity's officers or directors (the "sublicensees" through whom the business entity operates), and individual employees. In order to obtain a broker's license, a person typically must take pre-licensing courses and pass an examination. An insurance broker also must submit an application (with an application fee) to the state insurance regulator in the state in which the applicant wishes to do business, who will determine whether the insurance broker has met all the state requirements and will typically do a background check to determine whether the applicant is considered trustworthy and competent. A criminal conviction, for example, may result in a state determining that the applicant is untrustworthy or incompetent. Some states also require applicants to submit fingerprints.

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Most people are familiar with or have worked with an insurance agent at some point in their lives. However, a broker has an entirely different role from an insurance agent. Unlike insurance agents, insurance brokers do not work for an insurance company. They work for their clients, providing advice on the best insurance options for their clients’ needs. Their goal is to support their clients’ interests — not to sell a particular policy on behalf of an insurance company.

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2)The lack of cash flow flexibility is troubling in that the largest assumption driving my analysis is that I am able to continue paying the premiums and keeping my policy current. If I want to take time off for travel (which is a near-term goal) or lose my job before this becomes self-funding, the policy can lapse and I would get only the cash surrender value at what is most likely a loss depending on timing
Hi Matt – my 3 kids (now all in their 20’s) had whole life policies opened for them by Grandpa 20 years ago. He has been paying a fixed annual payment of $240, but it’s now up to me (the kids are just starting out and don’t have a cent to spare). My first thought is to have them cancel and take the cash value (~7k each), but in looking at the policies (for the first time) it looks like at this point they are getting a decent cash value return – each of the last 3 years it’s been about 4.2% PLUS the $240. AND the dividend the last few years has been almost as much as the annual payment – but has been buying more insurance (that they don’t need). Is it possible that if you suffer through the first 20 years, it then becomes a good investment? especially if I redirect the dividends to the cash value or a premium reduction? Great article by the way.
Cash value increases within the policy are not subject to income taxes unless certain events occur. For this reason, insurance policies can be a legal and legitimate tax shelter wherein savings can increase without taxation until the owner withdraws the money from the policy. In flexible-premium policies, large deposits of premium could cause the contract to be considered a modified endowment contract by the Internal Revenue Service (IRS), which negates many of the tax advantages associated with life insurance. The insurance company, in most cases, will inform the policy owner of this danger before deciding their premium.
Life insurance can be very confusing. What is term life insurance? What is whole life insurance? How can you get the information you need and make the right decision about life insurance for you and your family or other beneficiaries? We’ll provide an overview of these two popular types of life insurance so you can get an idea of what might be a good fit for you. Find out more by contacting an insurance agent in your area.
My advice: Load up on Term, especially when you are young and healthy, but make sure it is renewable and convertible. As well, buy some permanent coverage to at least pay for final expenses. When you buy term insurance the premiums are gone forever. Unless you die no one benefits. At least with whole life insurance someone will get back all, and in most cases more, than you ever put in. The most important question to be answered when getting insurance is, how much do you need? Typically, you will need 5 – 10 times your income plus debt coverage, if you have someone financially dependent upon you.
Good question Steve. The full answer is that I don’t know exactly what options you have and it likely makes sense to talk to a good independent agent. But you are right that it is much harder to find affordable term life insurance as you get older, and in your case some kind of permanent insurance may make sense if you have an insurance need. Just make sure that you are only getting the features you need, and none that you don’t, so that your premium is being used as efficiently as possible. For example, if you are only buying it for the death benefit, do you need the cash value?
5The monthly rate shown is for Preferred Elite based on a Male, age 37. Whole Life Advantage® is a whole life insurance policy issued by Allstate Life Insurance Company, 3075 Sanders Rd, Northbrook IL 60062. Whole Life Advantage is available in most states with series LU11040 or form ICC12A1. In New York, issued by Allstate Life Insurance Company of New York, Hauppauge, NY, and is available with contract NYLU796.
4. The guaranteed dividend or return rate was 0.75% and the last time the company had to resort to this rate was in 2008. In 2013 and 2014 the return was 12%. The average return was 8% and the return was capped at 15%. This average return seemed better than whole life policies that I had read about. Your money was invested similar to any other moderate risk investment account and this was different from the conservative approach that I thought most whole life policies took.
To sell insurance products on behalf of a particular insurer, an agency must have an appointment with that insurer. An appointment is a contractual agreement that outlines the specific products the agency may sell. It also specifies the commissions the insurer will pay for each product. The contract usually describes the agency's binding authority, meaning its authority to initiate a policy on the insurer’s behalf. The agent may have permission to bind some types of coverage but not others.
Additionally, this can be a great way to compliment a financial plan that is linked to the markets performance. When I am in my 60’s nearing retirement and have a good amount of cash value in my policy–I will not be terribly worried about the market performance (401(k)s/mutual funds/ IRA/ stocks). I know that flucuations in the market will occur and if a recession happens when I am 62, I will use my cash and policy cash value to hold me over until the markets recover. Again, my aim is not to buy high and sell low, it is to buy low and sell high.
The television series Forensic Files has included episodes that feature this scenario. There was also a documented case in 2006, where two elderly women were accused of taking in homeless men and assisting them. As part of their assistance, they took out life insurance for the men. After the contestability period ended on the policies, the women are alleged to have had the men killed via hit-and-run car crashes.[31]
Any risk that can be quantified can potentially be insured. Specific kinds of risk that may give rise to claims are known as perils. An insurance policy will set out in detail which perils are covered by the policy and which are not. Below are non-exhaustive lists of the many different types of insurance that exist. A single policy that may cover risks in one or more of the categories set out below. For example, vehicle insurance would typically cover both the property risk (theft or damage to the vehicle) and the liability risk (legal claims arising from an accident). A home insurance policy in the United States typically includes coverage for damage to the home and the owner's belongings, certain legal claims against the owner, and even a small amount of coverage for medical expenses of guests who are injured on the owner's property.
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It’s a very fair point, especially coming from someone with so much first-hand experience. Your earlier point about long-term care diminishing assets, even if you’ve saved for those expenses, is a good one too. Thanks for the input. I’m going to do some digging on the cost of a trust vs. the cost of whole life. I definitely think it’s important to make sure you don’t leave your family members with a huge bill when you die.

The IRS regulation on how much can be put in over 7 year period to not cause a whole life policy to be considered a Modified Endowment Contract. Additionally, many long standing highly rated institutions will limit the amount of OPP that can be dumped into the policy over a given period. Why is that? Because people will use whole life in low interest environments with the intention of withdrawing in the event of a market change.
^ Anzovin, Steven, Famous First Facts 2000, item # 2422, H. W. Wilson Company, ISBN 0-8242-0958-3 p. 121 The first life insurance company known of record was founded in 1706 by the Bishop of Oxford and the financier Thomas Allen in London, England. The company, called the Amicable Society for a Perpetual Assurance Office, collected annual premiums from policyholders and paid the nominees of deceased members from a common fund. 

Deciding whether to purchase whole life or term life insurance is a personal decision that should be based on the financial needs of your beneficiaries as well as your financial goals. Life insurance can be a very flexible and powerful financial vehicle that can meet multiple financial objectives, from providing financial security to building financial assets and leaving a legacy.
I have a joint term life insurance policy with my husband and a universal life insuranc for my self. The term life face value is $100,000 and the uni is $25,000. The latter cash value is $761.00 apparently they were taking the monthly premiumout of it without my knowledge. They asked me if I would like to close it out and take the closed out value of $700.00. I need advice on what to do. 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. I pay $50.00 a month for that. I think the term life is too expensive and I am concerned that with my husband an I whom are in our fifties that we may need to die just before we reach 80 so that our child can have some financial stability times are tough and we are poor people. Poor people take out insurance to cover their death and to leave something for their children. There just aren’t enough money to invest in stocks and bonds or other things and the little retirement money is needed to live off.
Limited risk of catastrophically large losses: Insurable losses are ideally independent and non-catastrophic, meaning that the losses do not happen all at once and individual losses are not severe enough to bankrupt the insurer; insurers may prefer to limit their exposure to a loss from a single event to some small portion of their capital base. Capital constrains insurers' ability to sell earthquake insurance as well as wind insurance in hurricane zones. In the United States, flood risk is insured by the federal government. In commercial fire insurance, it is possible to find single properties whose total exposed value is well in excess of any individual insurer's capital constraint. Such properties are generally shared among several insurers, or are insured by a single insurer who syndicates the risk into the reinsurance market.

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*Payoff Protector is not an insurance product. Subject to the terms, conditions, and restrictions of the Payoff Protector provision in your State Farm Bank Promissory Note and Security Agreement. If your vehicle is determined to be a total loss before the loan is paid off, State Farm Bank will cancel the difference between the insurance payout and the unpaid principal balance due on the loan. Certain restrictions apply. For example, your loan must be in good standing.
Hi, Matt. My parents are actually talking to an agent to get the whole life insurance and their premium monthly is about $1000 so which makes them to pay $120000 (since it’s the 10 yr plan) and the agent presented that the guaranteed value will be $250000. I have very little knowledge about the whole life insurance plan but wouldn’t it be easier for them to just get it and be insured with that guaranteed value if they are not the type to find where to invest and all that? or is it something that they shouldn’t relay on.. they are doing it for more their retirement and asked me for help but i am very confused about this whole life plan. Thanks!
In July 2007, The Federal Trade Commission (FTC) released a report presenting the results of a study concerning credit-based insurance scores in automobile insurance. The study found that these scores are effective predictors of risk. It also showed that African-Americans and Hispanics are substantially overrepresented in the lowest credit scores, and substantially underrepresented in the highest, while Caucasians and Asians are more evenly spread across the scores. The credit scores were also found to predict risk within each of the ethnic groups, leading the FTC to conclude that the scoring models are not solely proxies for redlining. The FTC indicated little data was available to evaluate benefit of insurance scores to consumers.[54] The report was disputed by representatives of the Consumer Federation of America, the National Fair Housing Alliance, the National Consumer Law Center, and the Center for Economic Justice, for relying on data provided by the insurance industry.[55]
I am looking at it all from the perspective of an inheritance. In my line of work, I see pensions and IRA’s taken by healthcare and Medicaid all the time. Heirs are left with nothing and it is sad. Im researching and researching but cannot find something that is safe enough, can grow to at least $100,000 for thirty so years, and cannot be taken touched aside from….life insurance. I have elderly grandfathers who left their families w/ something because of life insurance. My veteran grandfathers 
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Interesting read, I certainly agreed with the lack of transparency and fees associated with some policies. I would disagree though that it is undiversified. Take Northwestern Mutual, an almost 300 billion dollar general portfolio that you participate in as a policy owner. Most is bonds, like all other companies, but the remaining investments are private equity deals that as individual investors, we would have no access to. Also keep in mind that the equity in policies are extremely safe. Look at any market crash, and compare what dividends we’re paid out by the top companies. The equity in the policies do not go backwards which makes it very attractive when you’re retired because you’ll have no other sources of money so well protected and still growing at 4%.

One point I would like to counter is the idea that whole life “is insurance that CANNOT BE TAKEN AWAY”. It can be taken away if you are not able to keep up with your premium payments, which is pretty common given that people’s lives and financial situations are constantly changing. With some policies, the premium can even go up depending on the performance of the policy, forcing you to pay more than expected if you want to keep the coverage in place. So it’s not quite as simple as saying that the death benefit is a sure thing.
The best thing to compare permanent life insurance policy to is to another similar type permanent life insurance policy. And you don’t want to focus on the interest rate specifically but on the actual values in each policy that are “guaranteed” – not projected. All things being equal, this tells you which permanent policy is less expensive and provides a higher net interest rate instead.
Those who buy life insurance do so to help ensure their loved ones are taken care of financially. Life insurance is a promise by an insurance company to pay those who depend on you a sum of money upon your death. In return, you make periodic payments called premiums. Premiums can be based on factors such as age, gender, medical history and the dollar amount of the life insurance you purchase.

None of the below should be taken as actionable advice. You should consult someone who you know and trust before making any important financial decisions. This is just a window into how I made my decision, so you can see some things I considered. I might be wrong about some of these things, but everything I’ve written below is what I believe today based on my current understanding and the guidance of my own advisers. Please note that I do also max out my 401k and IRAs and keep a modest taxable account as well, so whole life is just one piece (albeit a fairly sizable one) of my portfolio.
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Well, first of all, I know nothing about how things work in Canada so I’m definitely not qualified to advise you on this. Given the same situation in the US though, I would say that it’s something you could consider. I would just make sure that you work with a fee-only financial planner who specializes in this kind of thing, can evaluate all of your options in the context of your specific goals, and, if this ends up being a good option, can help you find a policy specifically structured to minimize costs and maximize growth. That’s really the only way I would consider it.
Except for the very wealthy, most people could benefit from a combination of a highly overfunded Whole Life Insurance policy, and a term policy to make up for the difference. For example, let’s say a 25 year old determines that he needs $3,000,000 of insurance. He might purchase a $1,000,000 Whole Life with an annual premium of $12,000, but overfund it buy paying $30,000. He would also get a term policy of $2,000,0000, which he might convert partially down the road, after the first Whole Life policy is well seasoned.
Redlining is the practice of denying insurance coverage in specific geographic areas, supposedly because of a high likelihood of loss, while the alleged motivation is unlawful discrimination. Racial profiling or redlining has a long history in the property insurance industry in the United States. From a review of industry underwriting and marketing materials, court documents, and research by government agencies, industry and community groups, and academics, it is clear that race has long affected and continues to affect the policies and practices of the insurance industry.[53]
One point I would like to counter is the idea that whole life “is insurance that CANNOT BE TAKEN AWAY”. It can be taken away if you are not able to keep up with your premium payments, which is pretty common given that people’s lives and financial situations are constantly changing. With some policies, the premium can even go up depending on the performance of the policy, forcing you to pay more than expected if you want to keep the coverage in place. So it’s not quite as simple as saying that the death benefit is a sure thing. 

Hi Matt, I’m a Life Insurance agent and Advisor and I work for New York Life. Some of your points make sense but saying that whole life is bad is a little off. It is good for savings toward your retirement and will do a lot more than a savings account, money market or cd will ever do. So to agree with you to a certain extent I’ll explain what I do for younger individuals, I’ll sell a whole life policy and later it with term insurance. Basically the whole life will build a cash value with guaranteed returns and the term insurance is in the event of an untimely death. $1,000,000 of term can be as low as $50 a month. Also NY Life has never guaranteed dividends but has paid them out for 159 years, even during the Great Depression. Our company is backed by a $180 billion general account and a $19 billion surplus. So yeah, we guarantee your returns. And we don’t just sell life insurance, that’s why our agents like myself have life, series 6,7,63,66,65 licenses, if our clients, not customers want more than life, we diversify for them into brokerage or anything else they want. Just puttin my 2 cents in.

A Roth IRA certainly gives you a lot more investment options, with the added benefit of not starting with an account balance of essentially $0. It’s important to understand though that there are always risks involved with investing, and you could lose money within a Roth IRA too. Still, while I don’t know the specifics of your situation it will generally be a good idea to go with something like a Roth IRA before considering any kind of life insurance. 

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