Quote:
Originally Posted by Ibcuser
THE PROBLEM of all you guys debating the efficiency of whole life insurance is that you look at whole life as an investment itself.
You have to change your focus to whole life being a financing platform. when you do that there is nothing that compares against it because you are not limited to what you can do with it. You can finance all your needs like cars, vacations, college etc.
You were going to pay 8%, 14%, 24% financing those with banks and credit cards. You can now pay your own policy those same returns. Plus the amount of control that this setup gives you increses your return many times in peace of mind and real results.
|
Kind of a crazy argument, a good agent would never frame it in these terms. If you wanted to finance lifestyle as you get older with insurance company products, you fund an annuity in your earning years and then start cashing out after you turn 60. Same tax benefits as insurance, but its a true investment with no insurance costs built in. Buying insurance is purely done for protecting your assets for your family's benefit.
We could all argue until the end of time about what makes more sense. All I can say being an agent and telling you what I see in meeting clients is much of the population is better off buying whole life as long as they commit to paying the premiums. Once they understand insurance is about protection and giving you a chance to pass along benefits to your heirs, they agree whole life makes more sense. Term is merely to make sure your heirs don't suffer from lost income, but there is nothing to pass along and eventually term becomes way too expensive to continue on with.
People who have the discipline and the ability to generate 7-9% returns with the "savings" from buying term are few and far between. The average investor has a perverse tendency to buy high and sell low. The average person fears loss more than gain and therefore buys extremely safe investments which just don't measure up to the tax-adjusted rate of the guaranteed accounts of insurance companies. You'd be stunned to see people who are in their 30s with decent balances in 401k or IRA accounts with 100% in money-market or shorter duration bond funds. Its sad, its like they got the memo that they need to invest for retirement, but they missed the memo saying they have to take on some risk or they'll be eaten alive by inflation.
If you are someone who can consistently beat these rates and is just working to protect your family against loss of your income, then by all means buy term. However there are a ton of factors involved and it concerns me that people buy into simple beliefs when they should do a lot more digging and understand all the factors. They just go for whats cheap on the internet and think they are good. Its not buying car or homeowners insurance, its buying a product which will change over many years and you need to think about those potential changes for at least 20 years out. Even worse I review the coverage of potential new clients and see huge holes in their coverage. What's the point of saying you are protecting your family in case you die, but not also buying disability insurance? I see it all the time.
Fact of the matter is insurance has to be taken seriously and planned out. Most people seem to consider insurance a hassle they wish they could go without and try to avoid doing anything more than the minimum possible.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
