I usually get a client or two a month showing me how out of touch with the financial world they are when they confuse whole life with indexed life insurance (IUL). They just don’t get it, they seem not to understand the mechanisms of what makes WL different to IUL!
I also have genuine, hard working people crying when telling them how their world turned upside down in 2008 because their 401K went down 38%+. On top of that, they don’t know, or don’t remember that taxes are still to be paid, probably 30%+, plus, the up to 24 charges the 401K brokers apply to the buying and selling stocks.
For purposes of this topic, 401K was never intended for retirement! But so many ignorant people, and I say it as a compliment, not to scald anybody, but many people ignore, even how much they have “invested” in their accounts, they don’t know if they are earning $ or not! They just know they are “earning” and that this money will be for their retirement, of course, uncle Sam is awaiting for his respective piece of the pie with a 30%+ of the money.
For example: IULs, at least the one I promote, has living benefits as free riders. But I am not going to teach smart guys like you what you should know about LBs, right? You too may know there are no surrender charges, if there are, so minimal, you would laugh, right? Try that with WL…And, tax free loans?..
Whole life doesn’t have the indexing feature. The market goes down, your account goes down too because your whole money is invested in the stock market! Duh! You know that, right?
Our policy also has a rider, that allows the policy holder to leave a legacy to his charitable organization, that is out of the books, it comes from the policy carrier. About $30K to any charity.
Anyway, if you don’t like whole life insurance, ask yourself how come New York Life is still in the market? We see their policies almost every day, and we better not comment on them because the clients I’ve seen, have been with them for 18 years and out of the $18K they put in premiums, they have $12K available. I can easily tell them that they were better with a term insurance, $60 for $300K < > with living benefits. What an incredible deal! And they have been paying $92 for a $50K WL policy…Geesus!
Here, this following article is full of ideas, misconceptions and it can teach you people more than one detail about this nonsense.
Then, something about whole life…pfffttt…
The Bottom Line on Whole Life Insurance
Whole life insurance will provide a death benefit, tax benefits and cash value, but will cost you a lot more than the cheaper more straightforward term life insurance option.
Whole life insurance is a safer permanent life insurance choice than some others, it can provide guaranteed interest, premium, and death benefit, so you know what to expect.
Whole Life is the most expensive option in the life insurance family of policies …and may cost 5 to 10 times more than a term life policy and a little more than a universal life policy.
Get whole life while you are young as part of a strategy to maximize benefits, or when you are older if you are wealthy and want to do something with all your extra money.
Make sure you will be able to pay your life insurance policy. Buying a whole life policy will not help you if you end up skipping payments or choosing an amount you can’t afford and have to try and switch life insurance policy later, or worse get canceled and end up losing everything. Start reasonably, you can always add coverage as you need it. The important thing is to start somewhere.
Make sure that the insurance company you are purchasing your life insurance policy from has strong financial ratings, you are investing in a policy that will last a lifetime, so the insurance company you choose should have good stability.
Beware of Hidden Costs in Whole Life Policies
Do not ever just buy whole life insurance because someone says its the best choice. Whole life insurance pays higher commissions to the broker, and may also include fees for the management of the investments. This is totally normal for investments, you will usually pay fees somewhere, but make sure you discuss these aspects with an advisor and have been well informed on your choices and what to expect.
Tip: Asking your financial advisor or life insurance broker or agent questions will yield the best results for you long term. If you don’t like how they handle your answers, find someone you are comfortable with. This is your life you’re investing in and your family’s security.
Stocks Are Volatile, Will That Impact Your Whole Life Policy? <----------
Address concerns about fluctuating stock market prices, for example, ask your advisor what they think of what happened with universal life policies in the past 20 years. Make sure you are comfortable with the answers you get. Find out how your whole life policy will protect you and how the savings portion works. Being well informed will always protect you fully and a good advisor will not be annoyed with your life insurance questions but will be happy to thoroughly review your concerns and give you guidance.