Contingent commissions are controversial. For one thing, brokers represent insurance buyers. Some people contend that brokers shouldn't accept contingent commissions. Moreover, some brokers have collected contingent commissions without the knowledge of their clients. Another problem is that contingent commissions may give brokers (and agents) an incentive to steer insurance buyers into policies that are particularly lucrative for the broker. If agents and brokers accept contingent commissions, they should disclose this fact to policyholders.
And I agree with you Matt. People that just try to make a buck on someone else’s loss or something they truly can’t afford is despicable to me. And I apologize for my “are you licensed?” Comment. Your actually doing a noble thing as a father and informing people that need to hold on to what they can or invest it correctly in this economy. I have a lot of business owners and high end clients and I sell them whole life for a ton of reasons. But for my blue collar average joe or even white collar for that matter, I just wanna take care of them and their families. They’re not my customers their my clients. And that’s drilled into us by New York Life, I hope you have continued success in your Financial Planning career. God bless you.
For more than 85 years, Safeco has delivered new and better ways to protect cars and drivers with auto insurance. If you drive a sedan, hybrid, minivan, station wagon, SUV, pickup truck or anything in between, your local independent agent can provide personalized coverage that's right for you. If trouble comes along, we’ll make sure you’re taken care of every step of the way.
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.
I really wish you would have stated more clearly the difference between the typical whole life plans with zero overfunding and a participating overfunded whole life policy. But I agree with you: What’s the point of not overfunding? Those policies have such a low cash component that they typically are just a ploy to make money by the agent and it seems as if that was your point all along. Which you should have clarified. Why minimum whole life insurances plans are a scam, especially when sold as a main investment vehicle. But then a little drama drives traffic right?
If you need life insurance (which in order to find out , you must ask yourself one question : am I going to die ?) a Whole Life Insurance policy is a non-risky , non-volitile way of earning a high rate of return with a very conservative risk portfolio. A whole life policy is part of a healthy financial portfolio. It grows with preferential tax treatment and pays tax free to your beneficiary or estate. In nearly every case of par Whole life if you are under 50 you will have a cash surrender value equal to 100% and up to 800% of the premiums paid.
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In the United States, economists and consumer advocates generally consider insurance to be worthwhile for low-probability, catastrophic losses, but not for high-probability, small losses. Because of this, consumers are advised to select high deductibles and to not insure losses which would not cause a disruption in their life. However, consumers have shown a tendency to prefer low deductibles and to prefer to insure relatively high-probability, small losses over low-probability, perhaps due to not understanding or ignoring the low-probability risk. This is associated with reduced purchasing of insurance against low-probability losses, and may result in increased inefficiencies from moral hazard.[52]

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Evaluating a policy that’s in place, and especially one that’s been in place as long as your husband’s, is much different than deciding whether or not to purchase a new policy. It might be that at this point, with all of the money already put in, it’s actually a good investment despite the ongoing cost. It’s hard to evaluate though, so if you’re really considering what to do I would think about talking to a professional. Ideally you should be able to find a financial planner who will charge you a flat rate to help evaluate the policy, without trying to sell you anything else. A planner who belongs either to NAPFA (http://www.napfa.org/) or the Garrett Planning Network (http://garrettplanningnetwork.com/) would probably be your best bet. Good luck!
Insurance is offered by Safeco Insurance Company of America and/or its affiliates, with their principal place of business at 175 Berkeley Street, Boston, Massachusetts, 02116. This website provides a simplified description of coverage. Nothing stated herein creates a contract. All statements made are subject to the provisions, exclusions, conditions and limitations of the applicable insurance policy. Please refer to actual policy forms for complete details regarding the coverage discussed. If the information in these materials conflicts with the policy language that it describes, the policy language prevails. Coverages and features not available in all states. Eligibility is subject to meeting applicable underwriting criteria.

*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.


I am Also current working toward my CFP as well and I do see some good points. However, what weaken your argument is that you need to include instances where WL is a valuable tool. Your article is bias (as Dave Ramsey is also quite bias) because it is just as easy for me to argue term life insurance is always bad. If that is the case, then no one will buy life insurance and every family will be in financial trouble. You claimed that you are a CFP, and you should know better that you have the obligation to ensure the public is given both pros and cons about all products.

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I’m sorry you’re finding yourself in this situation Debbie, but the good news is that you have options. I would first ask your current insurance company for an in-force illustration. This will show you exactly what your cash surrender value is right now, which is the amount of money you would walk away with today if you canceled the policy. It will also show you how that cash surrender value is expected to grow in the future.

Wow, what a great article, Matt. A couple of nights ago, I was listening to Clark Howard on the radio, and to my dismay, heard him start talking about one of the worst investments for college. He continued, and when he actually said whole life insurance, my heart dropped, because about ten years ago, my wife and I were talked into this “investment” for paying for our kids college.

So I’ll start by saying that evaluating a policy that’s been in place for a while, like yours has, is different from evaluating a new policy. It’s possible that at this point keeping the policy may actually be a good idea, but you will need more information from your insurance company before making the decision. Here are some questions you’d want to have the answers to:
People in the tobacco category typically have to pay higher premiums due to the higher mortality. Recent US mortality tables predict that roughly 0.35 in 1,000 non-smoking males aged 25 will die during the first year of a policy.[22] Mortality approximately doubles for every extra ten years of age, so the mortality rate in the first year for non-smoking men is about 2.5 in 1,000 people at age 65.[22] Compare this with the US population male mortality rates of 1.3 per 1,000 at age 25 and 19.3 at age 65 (without regard to health or smoking status).[23]
Keep in mind, not all insurance companies use agents. You can do business directly with many companies by purchasing coverage online. These policies may be less expensive since the company doesn't have to pay the agent's commission. Regardless of how you buy the policy, make sure the company is licensed in your state, is financially stable and check to see if they have complaints.

You will find independent insurance agents represent many of the same insurance companies offered by local insurance agents.  The biggest benefit is the time savings individuals and business will find.  Because the selection of insurance companies for personal, commercial and life insurance is so comprehensive you don't have to contact several agents for quotes.  An independent insurance agent may represent 5 to 10 insurance companies. 
Second, I would say that it’s debatable whether whole life insurance is actually better than a savings account or CD, in terms of a savings vehicle. You mention the guaranteed return. Well, as I mention in the post, my policy had a “4% guaranteed return”, but when I ran the numbers it only actually amounted to 0.74% event after 40 years. It was less before that. And this was from one of the top mutual life insurers in the country. Not only is that incredibly misleading (and that’s being kind), I can get a better guaranteed rate than that right now from an online savings account, even though interest rates are at an all-time low. And my online savings account doesn’t have any of the other huge drawbacks that are also mentioned in the article.
However, there may be areas where your pension doesn’t stack up to individual plans. For example you can leave your individual account to a beneficiary but that may not be possible with your pension. Also, survivor benefits may be insufficient or altogether absent. 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. This means you can leave with a bigger pool of dough than you could in an era where interest rates were much higher and so if things turn around and we find ourselves in a rising rate environment with improved fixed income opportunities, you can make out like a bandit. Of course, things could slide into negative interest rate territory and you could be left years left to live and no cash to live it on.
The best part of the cash value? You have access to it at any time, for any reason, without taxes or penalties. This is probably the best benefit of whole life and is what is most attractive to my high net clients who are already maximizing contributions to IRA’s, 401k’s etc. Also, whole life does not carry the same penalties for withdrawals as these other accounts do

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