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.
This isn’t entirely accurate. Whole life insurance isn’t a product designed to replace term insurance. It wouldn’t make sense to have a retirement account disappear in the event of someone passing early. This would be irresponsible on the part of an agent to suggest this. Whole life has to be used with the intent of using it as collateral for loans, enhanced retirement and for leaving a legacy. In the early years it should be set up with a term rider to ensure a family’s needs will be met. Yes this is more expensive but it is a tool with an objective and if that’s not the objective then whole life makes no sense at all. It is not right for everyone. 

Within Australia there are also a number of industry bodies that issue professional accreditations to members that comply with best standards of professional practice and integrity and maintain up to date skills and knowledge. The two main accreditations are the ANZIIF[12] CIP (certified insurance professional) and NIBA[13] QPIB (qualified practicing insurance broker) qualifications.
First, there are your regular whole life policies that are non-{articipating and then there are those that are Participating. Participating policices earn dividends which is called a “return of premium” however with that dividend it purchases more insurance and the coverage keeps going on as long as a dividend is paid, the more coverage the more dividend, the more dividend the more coverage etc. After 25-30 years a person can stop paying for the policy and take reduced paid up insurance and keep the insurance enforced for the rest of their lives without paying a single cent. This is one of the features I absolutely love about participating whole life.
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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

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.

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2. Term life insurance WILL cover funeral expenses, but only for as long as it is in place. Whereas whole life insurance does not expire and could therefore cover those costs indefinitely. But in most cases it’s more prudent to simply build up your general savings, which could then be used for anything, including funeral expenses, and only keep the insurance around as long as you really need it. It’s not an incredibly cost efficient way to pay for final expenses.
With that out of the way, I’ll point out that I would not even consider selling my best friend whole life. It’s a rip-off in his hands and I value my friendships too strongly to alienate those I love by selling them whole life. I would however sell it to my wife! Why is that? Well, because the commissions on these policies are HUGE. Between the First Year Commission and the override, if I buy the policy for myself or my wife and just roll the commission into additional whole life, it begins to look attractive. That compounding makes it attractive for insurance salespeople in a way that is simply not available for the average consumer. So when your insurance guy says “oh yeah, I own this policy” it’s probably true…but the value proposition is very different for each of you. Beyond this particular case, I’m not a fan of whole life in just about any situation. Go figure then that half the people who attend the Million Dollar Round Table conferences generally sell a lot of this crap. Take from that what you will…
Life insurance is designed to provide families with financial security in the event of the death of a spouse or parent. Life insurance protection can help pay off mortgages, help provide a college education, help to fund retirement, help provide charitable bequests, and, of course, help in estate planning. In short, if others depend on your income for support, you should strongly consider life insurance.
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?
The information on this site is general in nature. Any description of coverage is necessarily simplified. Whether a particular loss is covered depends on the specific facts and the provisions, exclusions and limits of the actual policy. Nothing on this site alters the terms or conditions of any of our policies. You should read the policy for a complete description of coverage. Coverage options, limits, discounts, deductibles and other features are subject to individuals meeting our underwriting criteria and state availability. Not all features available in all states. Discounts may not apply to all coverages and/or vehicles. 
I recently reviewed my mother’s life insurance policy. Someone sold her a whole life policy with a 35K death benefit for $197.00 per month. She was 71 years old when she bought it! She brought it to my attention last month after being diagnosed with lung cancer, explaining she could no longer afford the payments. She requested I review/change the policy to pay less so she would have lower payments. Of course, no one will insure her now! My mother does not have a lot of money and I think the guy that sold it to her is a jerk as she already had a term policy – which she cancelled after buying this one. Is there an ethical recourse?
Question Matt, what are your credentials? On the subject of finance and securities, do you hold any of the licenses I mentioned in my response earlier? Are you in the industry, or were you just sold by an agent and didn’t know what you were buying and now you are having buyers remorse looking at an illustration that was shown to you and figuring how you may have gotten a little less than you bargained for by using a calculator? Because dealing with some of our top clients who are in a tax bracket that you nor I will ever see, they are happy with the level of service we provide and the products we offer, maybe you just had a bad agent that needed to close a deal before the month’ s end and made you a customer and it was very transactional as opposed to assessing your need and making you a client. If you couldn’t afford the policy he should have given you a term policy that you could later convert. People with the money prefer not to “rent” as in a term policy, and people that can afford it get permanent insurance. Some people want their wealth to be managed properly and leave a legacy behind for future generations, that is done through life insurance and the other products we offer.
All points have merit but, like any service, unprofessional service can be punished by walking. However, point #4, “market blocking” is a particularly confounding practice in P&C (I don’t think this occurs in LIfe & Health). Market blocking is a matter which Insurance Commissioners could easily correct nationwide to the immediate benefit of the customer.
But I love how you talk about it here, being excited by the sales pitch before grounding yourself in some of the things you had read prior to the meeting. Whether it’s insurance, investing, buying a car or anything else, all of us get excited in the moment when we’re being presented with a new opportunity. The real challenge is in doing exactly what you were able to do so successfully: stepping back from the moment and reflecting on your real goals here, what you really set out to do, and then analyzing the facts objectively. You did a terrific job there and in the end were able to make the best decision for you and your family.

As to me, I am a commercial, non-insurance attorney who tries to be an “informed” consumer of financial products. 27 years ago, when I already was carrying no credit card balances and was funding my IRAs and 401ks in appropriate amounts, I, along with other of the partners in our then small law firm, purchased a Universal Life policy on my wife with Manufacturer’s Life (a mutual company) purchased now by John Hancock. Over the next 7 years, I purchased laddered term life insurance policies for my wife and I with terms designed to expire between our ages 55 and 72 (so our coverage would drop as our savings increased). The universal life coverage was for about 8-10% of our total aggregate insurance coverage.

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The second is that I’ve heard enough horror stories about indexed life insurance in general to be skeptical. It’s not that it can’t work, it’s that there are plenty of examples of it underperforming, having a catch that wasn’t made clear up front, and other instances where it just doesn’t work the way it was sold to work. Any time something is sold as being able to pay for any financial goal no matter the market conditions, it’s usually too good to be true.
Earthquake insurance is a form of property insurance that pays the policyholder in the event of an earthquake that causes damage to the property. Most ordinary home insurance policies do not cover earthquake damage. Earthquake insurance policies generally feature a high deductible. Rates depend on location and hence the likelihood of an earthquake, as well as the construction of the home.
For example, most insurance policies in the English language today have been carefully drafted in plain English; the industry learned the hard way that many courts will not enforce policies against insureds when the judges themselves cannot understand what the policies are saying. Typically, courts construe ambiguities in insurance policies against the insurance company and in favor of coverage under the policy.

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Securities and investment advisory services offered solely through Ameritas Investment Corp. (AIC). Member FINRA/SIPC. AIC and The Business Benefits Group / IFG are not affiliated. Additional products and services may be available through The Business Benefits Group / IFG that are not offered through AIC. Securities products are limited to residents of Virginia. This is not an offer of securities in any jurisdiction, nor is it specifically directed to a resident of any jurisdiction. As with any security, request a prospectus from your Registered Representative. Read it carefully before you invest or send money. A Representative from The Business Benefits Group / IFG will contact you to provide requested information. Representatives of AIC do not provide tax or legal advice. Please consult your tax advisor or attorney regarding your situation.

In Jordan’s case, assuming that all those numbers will stay consistent and that there aren’t any scenarios in which he might need to put significantly more into the policy in order to keep it active (which is possible), then it’s a relatively small price to pay for security that sounds like is important to him. I wouldn’t personally take out the policy because I would rather put that money to work elsewhere, but I could understand the appeal.


I have a few whole life policies. I was older when I really started to save and have the ability to pay into these accounts now (one I paid $95,000 right at start) and started late on a 401K. I max out my 401K contributions every year (I’m in the 50+ catch up department) so I believe the thinking was that these policies were the best option given my late start. Is that true? It seems your article is geared toward the young investor.
When you start your search, you can pick an independent agent or a captive (or direct) agent. An independent agent may sell policies from many different companies. A captive agent sells insurance for only one company. Independent and captive agents represent insurance companies and receive a commission from the insurance company for the sale of its policies.
Your comment on liquidity and guaranteed returns is tough to agree with too. Life insurance returns have continued to decrease since interest rates have decreased from all time highs to all time lows. Life insurance is a long term fixed income asset. There are both guaranteed returns and maximum charges in both Universal Life and Whole life. These are lower than the “current illustrations” but the are guaranteed to never fall below those points. This can not be said about any other fixed income investment other than short term treasury notes. This is why banks hold 10-15% of their deposits in cash value life insurance…billions of dollars I might add. It is a tax free fixed income asset that they do not need to “mark to market.”
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).
Builder's risk insurance insures against the risk of physical loss or damage to property during construction. Builder's risk insurance is typically written on an "all risk" basis covering damage arising from any cause (including the negligence of the insured) not otherwise expressly excluded. Builder's risk insurance is coverage that protects a person's or organization's insurable interest in materials, fixtures or equipment being used in the construction or renovation of a building or structure should those items sustain physical loss or damage from an insured peril.[28]
Although some aspects of the application process (such as underwriting and insurable interest provisions) make it difficult, life insurance policies have been used to facilitate exploitation and fraud. In the case of life insurance, there is a possible motive to purchase a life insurance policy, particularly if the face value is substantial, and then murder the insured. Usually, the larger the claim, and the more serious the incident, the larger and more intense the ensuing investigation, consisting of police and insurer investigators.[30]
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.

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Contingent or incentive commissions reward agents and brokers for achieving volume, profitability, growth or retention goals established by the insurer. For example, Elite Insurance promises to pay the Jones Agency an extra 3 percent commission if Jones writes $10 million in new property policies within a certain time frame. If Jones renews 90 percent of those policies when they expire, Elite will pay Jones an addition 2 percent commission.

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