With that said, I honestly think that the best thing you can do for your son is work as hard as you can to put the money you do make to work building a solid financial foundation for yourself and, when he’s old enough, involve him in the process so that he can learn real world money lessons at a young age and be more prepared to deal with it when he’s on his own. 

OK, I made the mistake of getting whole life insurance policy for $25000 when I was in my late 20’s. I’m now 63 & have been paying $126/month since then. What happens to the amount over the $25000 I’ve already paid in? Do my beneficiaries get back more than the $25000 death benefit? Should I quit making payments &, if so, what does that mean for my death benefit?
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Great article Matt. You provide 8 great reasons as to why whole life insurance isn’t the best option for the majority of people. As you noted, there are times when it is advisable such as if you have a disabled child (also a no-lapse universal life policy is another alternative in this instance), but for most term life insurance and investing the rest is the way to go.
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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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!
Lets also not forget a very important aspect of whole life INSURANCE. It provides guaranteed insurance, for life. Term policies are nice, and serve a purpose, but they eventually end and the cost to continue term as you get older can be way too expensive for most people. Whole Life allows you to lock in a guaranteed premium, that will never increase.

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The first is that, as you say, no one invests all their money at the beginning of the period and cashes out at the end. Usually you invest some at the beginning and more at various points along the way. For example, someone who contributes part of their monthly paycheck. And since the stock market generally goes up, that means that you will inherently get lower returns than if you had invested all of your money at the beginning, simply because some of your money will not have been invested for the entire ride.
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For all of the above advantages, I believe the actual returns seen were far less then the 8% a year on the simulation. The reason was probably fees similar to Reason#2 in the above article. I wish I had the tables that were presented so I could verify this (I have asked my friend for the tables). At any rate, after my reading, I am leaning toward not purchasing this product because it seems to give weaker results (after fees) compared to other tax advantaged and non tax advantaged investment accounts which I have barely begun to invest in. It may be useful in some cases if all the better investments have been maximized and one is looking for a tax free long term low yield conservative investment account that allows one to withdraw tax and interest free and provides a life insurance payout in the event of death.
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.

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Who ever said anything about only having whole life insurance as an investment? Savings, The Market and Insurance (a mix of whole and term) is the best way to plan and protect one’s retirement. Plus once your premiums are paid up, the need to repay the loan is not true. (as long as you don’t go into the death benefit). What the real issues is people are tapping into loans while they are making premiumpayments and they aren’t receiving the proper assessment.


And your conclusion at the end is spot on: the insurance industry ABSOLUTELY knows about the negative stigma associated with these kinds of products and is ALWAYS looking for new ways to package things to make them sound attractive. Whether it’s variable life, universal life, equity-indexed universal life, or whatever this new thing is that they were trying to sell to you (I’ve honestly never heard of FFIUL), there’s always a new angle and the sales pitch is always going to sound good.

According to the section 80C of the Income Tax Act, 1961 (of Indian penal code) premiums paid towards a valid life insurance policy can be exempted from the taxable income. Along with life insurance premium, section 80C allows exemption for other financial instruments such as Employee Provident Fund (EPF), Public Provident Fund (PPF), Equity Linked Savings Scheme (ELSS), National Savings Certificate (NSC), health insurance premium are some of them. The total amount that can be exempted from the taxable income for section 80C is capped at a maximum of INR 150,000.[26] The exemptions are eligible for individuals (Indian citizens) or Hindu Undivided Family (HUF).


As for the specifics of the infinite banking model, I’ll admit that I don’t know a lot of details. It’s always seemed to me to mostly be a clever marketing ploy more than anything else, but if you want a more informed opinion I would check out this article here: http://www.mypersonalfinancejourney.com/2013/04/infinite-banking-concept-whole-life-insurance.html.

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