Response 1: This has to be the most common objection. I understand it, but I don’t totally agree with it, so please give it a LOT of thought and decide for yourself. Let’s begin with the idea that insurance is not an investment. That is false. It is absolutely an investment. You spend money in expectation of a financial return, the size of which is usually known but the probability of which is oftentimes unknown (because many people cancel term policies or cannot renew them before they pass away). 

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There are certain instances where whole life can be useful. If you have a genuine need for a permanent death benefit, such as having a disabled child, it can serve a valuable purpose. If you have a large amount of money, have already maxed out all of your tax-deferred savings, and you can afford to front-load your policy with large payments in the first several years, it can provide better returns than was discussed above. So it is a useful product in a limited number of cases.
2. For people who have already maxed out all of their tax-deferred space and have a sizable investment portfolio built up, permanent insurance can potentially offer some diversification along with some benefits of tax-deferral. These people could invest in a permanent insurance product specifically designed to maximize the investment opportunity, which would include significant up-front contributions and a few other bells and whistles. These are not the run-of-the-mill whole life insurance policies sold by your local agent, and they are generally not right for people who don’t already have significant wealth.

When insured parties experience a loss for a specified peril, the coverage entitles the policyholder to make a claim against the insurer for the covered amount of loss as specified by the policy. The fee paid by the insured to the insurer for assuming the risk is called the premium. Insurance premiums from many insureds are used to fund accounts reserved for later payment of claims – in theory for a relatively few claimants – and for overhead costs. So long as an insurer maintains adequate funds set aside for anticipated losses (called reserves), the remaining margin is an insurer's profit.
Insurance brokers represent the insurance buyer – you the consumer or business owner.  They are appointed or contracted with multiple insurance companies.  They have the flexibility to discuss many options and companies that meet your needs and budget. Insurance brokers have been around as long as insurance agents.  In many cases people will refer to insurance brokers as independent insurance agents.
In most countries, life and non-life insurers are subject to different regulatory regimes and different tax and accounting rules. The main reason for the distinction between the two types of company is that life, annuity, and pension business is very long-term in nature – coverage for life assurance or a pension can cover risks over many decades. By contrast, non-life insurance cover usually covers a shorter period, such as one year.
Second, when it comes to investing, my experience shows that most insurance companies charge MUCH higher fees than are necessary. And since cost is quite possibly the most important factor when it comes to investing, that matters a lot. I would much rather see people using a simple, low-cost index investing strategy that’s both easy to implement and backed by all the best research we have as the most likely route to success.
Looking to buy life insurance for the first time? If so, you're probably asking yourself questions, such as "How much do I need?," "What kind of policy is best?," and "Which company should I buy from?" There's no question that buying life insurance for the first time, like any other new experience, can be more than a bit daunting. Below are six important tips that we hope will make the process smoother by eliminating frustrating false starts and unnecessary bumps in the road.

Insurance Brokers work the consumer vs. insurance agents who work for the insurance company.  Brokers are very knowledgeable with both personal and commercial insurance. Utilizing state-of-the-art rating software to find the most affordable insurance policies to fit your needs and budget. Insurance Brokers save time, money and energy when shopping for lower cost insurance.


Using a broker can also simplify the process of picking insurance. There are so many different choices for insurance, with different limits and exclusions for each policy. It can be difficult to know which insurance and what level of coverage is right for you or your business. This is where an insurance broker can help. Using their experience in the field, a broker can analyze your risks and liabilities to determine exactly what coverage you need. With access to a variety of technology-based tools, brokers can make it simple to compare various options to determine which policies would best fit your needs. Using a broker eliminates the stress of learning about different types of insurance, and makes it easy to figure out what insurance will work for you.
Naturally, the float method is difficult to carry out in an economically depressed period. Bear markets do cause insurers to shift away from investments and to toughen up their underwriting standards, so a poor economy generally means high insurance premiums. This tendency to swing between profitable and unprofitable periods over time is commonly known as the underwriting, or insurance, cycle.[25]

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An agent or broker is a person or business who can help you apply for help paying for coverage and enroll in a Qualified Health Plan (QHP) through the Marketplace. They can make specific recommendations about which plan you should enroll in. They’re also licensed and regulated by states and typically get payments, or commissions, from health insurers for enrolling a consumer into an issuer's plans. Some brokers may only be able to sell plans from specific health insurers.
An agent or broker is a person or business who can help you apply for help paying for coverage and enroll in a Qualified Health Plan (QHP) through the Marketplace. They can make specific recommendations about which plan you should enroll in. They’re also licensed and regulated by states and typically get payments, or commissions, from health insurers for enrolling a consumer into an issuer's plans. Some brokers may only be able to sell plans from specific health insurers.
If one were to buy a long dated bond with a yield of 4%, and interest rates go up, one could actually end up with a loss if bond not held to maturity. On the other hand, if one were to OVERFUND a participating Whole Life policy, the CASH VALUE IRR over 20 years would be around 4% (probably slightly above) based on current dividend scales. Yet if long term rates rise, so will the returns in the policy. As long as premiums are paid, the cash value in any given time will NEVER be less than the cash value a year earlier.
Beyond that, I do agree that whole life insurance can be useful in certain situations when structured properly. But those situations are few and far between and they require the help of someone who both knows the ins and outs of these policies AND is willing to put the client’s interests over their own financial interests (i.e. minimizing commissions and other costs on the policy). That kind of person is also difficult to find.
The proceeds of a life policy will be included in the estate for death duty (in the UK, inheritance tax) purposes. Policies written in trust may fall outside the estate. Trust law and taxation of trusts can be complicated, so any individual intending to use trusts for tax planning would usually seek professional advice from an Independent Financial Adviser and/or a solicitor. 

Maximum-funding a corporate owned UL policy only long enough that it can go on premium offset, where the policy returns are enough to pay the premium indefinitely, can be attractive as well. The internal rate of return on such policies inside corporations can make a corporate UL an alternative to fixed income in an era where yield is sparse. Again, not for everyone, but there are applications out there for those with significant estates.
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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In the European Union, the Third Non-Life Directive and the Third Life Directive, both passed in 1992 and effective 1994, created a single insurance market in Europe and allowed insurance companies to offer insurance anywhere in the EU (subject to permission from authority in the head office) and allowed insurance consumers to purchase insurance from any insurer in the EU.[44] As far as insurance in the United Kingdom, the Financial Services Authority took over insurance regulation from the General Insurance Standards Council in 2005;[45] laws passed include the Insurance Companies Act 1973 and another in 1982,[46] and reforms to warranty and other aspects under discussion as of 2012.[47]
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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.
Premiums paid by the policy owner are normally not deductible for federal and state income tax purposes, and proceeds paid by the insurer upon the death of the insured are not included in gross income for federal and state income tax purposes.[28] However, if the proceeds are included in the "estate" of the deceased, it is likely they will be subject to federal and state estate and inheritance tax.
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With that said, yes the interest rates are good, but it’s not really appropriate to compare the interest rate on a whole life loan to interest rates from other sources. With whole life, you’re borrowing YOUR OWN money that you already contributed after-tax. That’s very different from borrowing from a bank, where the money was never yours. It’s much more appropriate to compare the long-term, cumulative interest rate to the long-term after-tax returns you could get from other investments. That comparison looks very different and often much less beneficial for whole life.
Another reason occurred to me as I was reviewing the sales pitch from our agent. Maybe others have mentioned this in the comments, I haven’t read them all. Basically, it’s lack of flexibility, and the fact that you have to “marry” your life insurance policy for it to work the way it’s intended. This is similar to Point #1 but from a different angle. Obviously Whole Life / Universal policies get “better” over time (supposedly)…usually after decades. Even the agents would mostly agree you need to keep it for life for it to work.
As for your point about term life insurance, it’s important to keep in mind that the point of insurance is not to pay out no matter what, but to provide protection for the period of time that you need it. The fact that term life insurance doesn’t pay out most of the time is actually a good thing because it means that most people aren’t dying young. And in the meantime, you can use the savings from the cheap premiums to build your financial independence through other, more effective savings avenues.
Insurance agents, often referred to as “captive” agents, typically represent one insurance company. Insurance brokers, on the other hand, represent multiple insurance companies to ensure that you are connected with the right insurance for you. An agent acts as a conduit to provide information to insurance buyers. The insurance buyer then has the option to choose from available policies and contracts from the insurer offered through the agent. These policies and contracts are decided through contractual agreements that the insurance agents have with the insurers to meet certain guidelines.
I have a Dividend Option Term Rider that will expire soon. I am 57 years old. New York life wrote to me stating I can change over to whole life insurance without having to answer health questions or take a physical exam. What are the advantages or disadvantages of this for someone of my age? I currently have a 401K. Would my money be better invested in that or elsewhere? Thanks.

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