Analysis: You’ll likely get better services from outside specialists, but that’s not the overriding factor here. The real problem is that tying services to insurance products makes it disruptive for you to leave your broker. The products and services should be unbundled so that there’s real competition for the big-ticket item: the insurance itself.
Unless you truly need permanent life insurance, then you’re likely looking at these policies purely as an investment. In most cases it makes sense to max out at least other tax-advantaged accounts first (like your IRA, but also a 401(k) and others). Are you already doing that? You can read more about which accounts to consider here: How to Choose the Right Investment Account.

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
Any person who uses permanent insurance should be out of debt and have the discipline to maintain a long term approach. There aren’t any get rich quick schemes and any plan can work as long as an investor looks to get the maximum value for the money they pay. Cash Value Life insurance provides values that promises you or I can’t keep unless we partner with one of these companies.
Matt; Thank you for the thought provoking information you have taken the time to post here. My question: I am 66 and my wife 54. We got a whole life policy several years ago. We wanted insurance that would extend into our 70’s and 80’s (if we are so blessed), because we experienced how end of life costs for elderly parents can add up and be a possible burden to the children. we also want the surviving spouse to be assured of not being cleaned out financially. When I looked at the numbers; Cash value plus death benefit plus a long-term care rider, it seems to be a pretty good return, after all, we know for sure that we will die. I am not aware of term insurance policies for people much past the age of 70 for $200,000 or more. Am I looking in the wrong places or is my think askew?
Weiner was talking about rolling returns for Vanguard. So, it’s his argument, not mine. And, this is a different issue from what you’re talking about anyway regarding annual returns based on monthy savings. So I’m not sure where you’re going with this or why you think it’s misleading. I believe Weiner got his figures from Vanguard…so…that would mean Vanguard is misleading itself? Doesn’t make sense man.
Insurance Card Co Aurora CO 80015

Analysis: You’ll likely get better services from outside specialists, but that’s not the overriding factor here. The real problem is that tying services to insurance products makes it disruptive for you to leave your broker. The products and services should be unbundled so that there’s real competition for the big-ticket item: the insurance itself.

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). 

Insurance Card Co


Analysis: In what other circumstance do customers sign contracts without seeing them? The full policy language is not presented as part of the proposal. And don’t count on the broker to know, or be able to negotiate, the terms. A broker proposal typically contains language like “Your review of these documents and any review you may seek from legal counsel or insurance consultants is expected and essential.”


Universal life insurance addresses the perceived disadvantages of whole life—namely that premiums and death benefits are fixed. With universal life, both the premiums and death benefit are flexible. With the exception of guaranteed-death-benefit universal life policies, universal life policies trade their greater flexibility off for fewer guarantees.

Insurance Endorsement Co Aurora 80015


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.
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.
Insurance Quote Comparison Co Aurora CO 80015

And yes, the “guaranteed” cash value is the minimum growth that the insurance company is promising. When they tell you that there is a guaranteed interest rate, this cash value is the result of that guaranteed interest rate. The non-guaranteed cash value is their projection based on their expected returns, which as the name suggests are not guaranteed.

3. Why don’t you mention the 4-5% ROR on CV to premium? You state it’s a bad investment – it’s not it’s life insurance. But what bond does 4-5% now? And did you know the pubic’s ACTUAL ROR in the market is less than 4%? Look it up – google will work – try “Why Investors May be Fooling Themselves” – from the Wall Street Journal – I think they know what they speak!!!
4. If the monthly premium is within your budget and and individual has saved money into other forms of retirement savings. Then why not get the benefit of having the safety net that the whole life insurance gives you then Surrendering that policy when you no longer need it and receiving (what I believe to be tax free) money for having that safety net in place
Example a 30 year male old non-smoker can purchase a small 25,000 policy for 34.97 a month, by adding an additional 10 a month or paying 44.97 a month he will have after the 1st year $25,649 death benefit, this will increase every year. After 20 years he will have $41,492 death benefit non guaranteed death benefit or a $32,258 guaranteed death benefit. The difference in death benefit is the non guaranteed assumes dividends. This company has been around for over 100 years and every year has declared a dividend, which is important to note despite not being guaranteed there is a high probability the person will end up better off than the guaranteed. After 30 years the death benefit will be $52,008 at this point (or any point whatsoever) the person can decide to take reduced paid up insurance,at this 30 year mark if they take RPU they can keep 45,485 of insurance for the rest of their lives, this amount will keep going up as long as the company keeps issuing a dividend. i think this is so cool. The person has paid $16,200 over those 30 years and the coverage is way more than that, a few cents on the dollar.
The primary purpose of life insurance is to protect the people who are financially dependent upon you. Once those people are no longer dependent upon you (e.g. your kids grow up), you no longer have the need for that protection. Term life insurance is like having car insurance for as long as you own a car. Whole life insurance is like having car insurance forever, even when you no longer own a car.
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]

Insurance Solutions Company


Unless you truly need permanent life insurance, then you’re likely looking at these policies purely as an investment. In most cases it makes sense to max out at least other tax-advantaged accounts first (like your IRA, but also a 401(k) and others). Are you already doing that? You can read more about which accounts to consider here: How to Choose the Right Investment Account.
You have likely come across brokerage firms when shopping for insurance. Many buyers prefer working with these firms as most have established track records with staff that offer the experiences and resources you need to make an informed decision. With a brokerage firm available to guide you and answer all of your questions, you can gain a solid understanding of what terms and rates are being offered by various insurers. Of course, not all insurance brokers offer the same level of quality. Just like shopping for insurance, it is important to shop around to find an insurance broker who you can trust.
The questions we ask on our site are used only to determine which insurance companies and products best match your unique needs. Each insurance company bases its final prices on its own criteria. To more accurately match you with the best company, product and policy for your needs, we gather some general health, lifestyle, family history, and contact information on our site. A licensed representative will then review your submission and, if necessary, either call or email you to clarify any outstanding issues and provide you with the information you request.
SelectQuote uses pixels, or transparent GIF files, to help manage online advertising. These GIF files are provided by our partners for the duration of a campaign and are then removed from the site. These files enable an advertiser to recognize a unique cookie on your Web browser, which in turn enables us to learn which advertisements bring users to our website. The cookie was placed by us or by another advertiser with explicit permission from SelectQuote. With these cookies the information that we collect and share is anonymous and not personally identifiable. It does not contain your name, address, telephone number, or email address.

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.
Shopping for car insurance? You've come to the right place! State Farm keeps you and your family covered with great auto insurance that's also a great value. Get an online auto insurance quote, or find a car insurance agent or representative, any time, day or night. Either way, you'll learn how competitively priced auto insurance from the industry leader can be.
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.
You’re welcome Helen. If you have already surrendered the policy, the best thing you can do is simply make a good decision with the money you get back. If you are still considering whether or not you should surrender the policy, you need to ignore what the policy has done for you (or not done) in the past and focus only on what it should do going forward and compare that to the other options available to you. That’s something I can help you with if you’d like, and you can email me at matt@momanddadmoney.com if you want to learn more about that.
Analysis: You’ll likely get better services from outside specialists, but that’s not the overriding factor here. The real problem is that tying services to insurance products makes it disruptive for you to leave your broker. The products and services should be unbundled so that there’s real competition for the big-ticket item: the insurance itself.
So our financial adviser is telling us we should have whole life insurance because we can use the cash amount, tax free. We have been contributing to Roth IRAs, but will now not be able to due to our AGI. We could contribute to IRAs, but we’ll be in a higher tax bracket. We’ve been maxing out our 401k accounts, and have investments in the stock market. What other options might we have for retirement?
The issue of diversification eludes to a level of risk. However, the history of paid dividends over 50+ years for the companies I reviewed demonstrated extremely low risk, with standard deviation on dividend of 1.5. This is extremely low risk. Of the companies I reviewed the 30 year history of dividend ranged between 5.4% (lowest) to 13.3% (highest) .
Home insurance, also commonly called hazard insurance or homeowners insurance (often abbreviated in the real estate industry as HOI), provides coverage for damage or destruction of the policyholder's home. In some geographical areas, the policy may exclude certain types of risks, such as flood or earthquake, that require additional coverage. Maintenance-related issues are typically the homeowner's responsibility. The policy may include inventory, or this can be bought as a separate policy, especially for people who rent housing. In some countries, insurers offer a package which may include liability and legal responsibility for injuries and property damage caused by members of the household, including pets.[31]
Certain insurance products and practices have been described as rent-seeking by critics.[citation needed] That is, some insurance products or practices are useful primarily because of legal benefits, such as reducing taxes, as opposed to providing protection against risks of adverse events. Under United States tax law, for example, most owners of variable annuities and variable life insurance can invest their premium payments in the stock market and defer or eliminate paying any taxes on their investments until withdrawals are made. Sometimes this tax deferral is the only reason people use these products.[citation needed] Another example is the legal infrastructure which allows life insurance to be held in an irrevocable trust which is used to pay an estate tax while the proceeds themselves are immune from the estate tax.
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.

State Farm (including State Farm Mutual Automobile Insurance Company and its subsidiaries and affiliates) is not responsible for, and does not endorse or approve, either implicitly or explicitly, the content of any third party sites hyperlinked from this page. State Farm has no discretion to alter, update, or control the content on the hyperlinked, third party site. Access to third party sites is at the user's own risk, is being provided for informational purposes only and is not a solicitation to buy or sell any of the products which may be referenced on such third party sites.


Moreover, with hindsight, because I suspect that the conversion options in the term policies, as I look into them, won’t prove all that attractive, I am thinking that it would have been optimum to have had universal or whole life coverage for closer to 20% of our aggregate, total original insurance coverage, rather than 10%. Still, while I am pretty satisfied that my prior decision-making was close to right, I do wonder if you see this all very differently.
Full Circle, one time I thought whole life insurance was great. Then I cashed it in, bought at least 5 new automobiles, a house, a couple motorcycles and more bullshit. Then I learned how to properly use life insurance as a bank, instead of borrowing money from a bank, I borrow the money from myself and pay myself back what I would have paid banks. I get to collect all the interest I would have paid the banks. I get to grow my money tax free. I get to pass my hard earned money on to my family tax free. The key is understanding Whole life vs creating your own banking system.
As for it being undiversified, NO investment by itself is completely diversified. Cash value life insurance can ADD diversity and security to a portfolio (the top companies have incredible financial strength, good policies can have a solid conservative return while meeting a life insurance need). Diversification is an issue with cash value life insurance if it makes up a good portion of your assets, and if it would, you shouldn’t be buying it.
Your point about eventually not having to pay premiums is a common one used by agents, and in some cases that does happen. But in many cases it doesn’t, or at least it doesn’t happen as early as is illustrated and the policyholder is left paying premiums for longer than they had anticipated. The point is that this is not a guarantee, and it’s important for people to understand that.
Good question Eski. I would encourage you to look into long-term disability insurance as a potentially more effective way to provide coverage for the exact risk you’re talking about. In general you’ll get better, more comprehensive coverage from a disability insurance policy that’s specifically designed for this than from a life insurance policy that includes it as a limited add-on.
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.
After insurance has been selected and purchased, most insurance brokers will continue to provide service to their clients. This includes advising clients on technical issues that may be helpful in the event that a client has to file a claim, helping clients decide if they should change their insurance policies or coverage, and even making sure that clients comply with their policy’s requirements.

Insurance Solutions Co


Several comments……first, I didn’t read all the posts so I apologize if this has already been discussed/addressed………you mentioned loans on a whole life policy is the means by which “tax free” income is distributed and that makes for the equivalent of double taxation, however the first monies coming out of a whole life policy would be your own contributions and therefore no taxation would be in effect as those monies, when contributed, had already been taxed…….the loan process would kick in when the policy detects taxable growth and would switch to loans instead of withdrawals………..also, let me just mention the insidious monster called “sequence of returns” and how it pertains to “returns” in the market……..returns in the market are reported by averages…….once you look at the “real rate of return” of a stock or mutual fund you might find the long term return of a whole life policy much more palatable……….example: what is the average rate of return in this example and real rate of return……..you have a $1,000,000 home and in the first year it goes down by 40%……….your home is worth $600,000…….the very next year your home goes up by 60%……..your home is now worth $960,000…….but what is going to be your reported average rate of return?……….10%, yet you are still under water; the “real rate of return is -4%…….this is a very eye opening expose on how the “market” makes things look…..it is the downs in the market that kill an investments return…….there are no downs in a whole life policy………..I hope this helps in perspective.
Whole life is insurance not an investment. You buy it so the day you pass on your family will have money to ease their grieving by giving them time off, financial security, and most importantly for whole life insurance to pay the cost of your funeral, etc. It can mean a lot to people to have a nice funeral for their loved one as a proper send off. I view whole life as a product, like my house, which I also don’t view as an investment.
Through these educational requirements and experience in the field, brokers gain a significant level of knowledge in insurance. They are well informed about specific types of insurance and how claims of a particular type are covered. For example, a broker can explain to an individual exactly what types of risks a homeowner’s insurance policy will cover and what it will exclude (such as acts of god, intentional acts, negligent acts, slip and falls, loss of theft of valuable items, etc.). With this knowledge, clients can make better informed choices about what type of insurance they need, along with how much coverage is necessary. This is a broker’s job: to help clients understand the liabilities that they have and how those risks can be adequately managed through insurance. Brokers can then help clients review a number of insurance options to pick the policy and premium that best fits their needs and budget.
3 The above example is based on a scenario for 20‐year term life insurance (domicile state) that includes the following benefit conditions: $50,000 death benefit, $50,000 accidental death benefit, and $12,500 seatbelt benefit. Benefits may vary by state, benefit option, and level of coverage selected. Review your state‐specific brochure below for a “How It Works” scenario customized for your state.
But here is the key: the most astute line in the article is “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. It is a useful product in a limited number of cases.”
Affordable premium: If the likelihood of an insured event is so high, or the cost of the event so large, that the resulting premium is large relative to the amount of protection offered, then it is not likely that the insurance will be purchased, even if on offer. Furthermore, as the accounting profession formally recognizes in financial accounting standards, the premium cannot be so large that there is not a reasonable chance of a significant loss to the insurer. If there is no such chance of loss, then the transaction may have the form of insurance, but not the substance (see the U.S. Financial Accounting Standards Board pronouncement number 113: "Accounting and Reporting for Reinsurance of Short-Duration and Long-Duration Contracts").
With whole life insurance, you can’t just decide to stop paying premiums. Well, you can, but if you do then the policy lapses and you’re forced to withdraw the cash value, which will subject you to taxes and possibly a surrender charge. And if you haven’t had the policy in place for multiple decades, you will also be left with meager, and possibly negative, returns.

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]

Insurance Broker

×