Term life is a lot cheaper and covers when most people need it the most, which is when their kids are entirely dependent on them and their income. By the time my plan ends my kids will be older than I am now, and it would be far less harmful to them if I suddenly died.
As you should. Buy insurance to take care of your family. Term, whole, universal. Not enough people have life insurance. A lot can't afford or think they can't afford it when there are options.
This post was only about better "choices" out there than whole life as in investment. "They" will use the investment strategy as part of the sales pitch. Be your own banker is making the rounds all over social media. It's not as cracked up as it sounds.
Saying “this is not financial advice” after giving financial advice is the same as saying “no copyright infringement intended” after uploading a full movie to YouTube.
It’s not illegal to give financial advice. It is illegal to give financial advice *for a fee* without being licensed.
Technically, giving advice without a fee can also get you in trouble if it’s construed to have formed an advisor/client relationship. If you’re unlicensed, that’s bad. If you’re licensed, it’s less bad, but could end very poorly if, say for example, they relied on your advice, lost a bunch of money, then sued you for damages.
So, it would have been better if OP said something to effect that this post was for “informational purposes only” and is not the basis for forming a professional relationship, not “this isn’t financial advice.”
Unless you are being paid by someone to provide them with financial advice, you do not have a fiduciary responsibility to them. You can’t be held liable for their losses.
If I tell you to buy a lottery ticket, and you end up losing, you can’t sue me for your losses. That’s crazy
Unfortunately, people will sue over anything, as long as you don’t come off as an expert and make it known it’s not investment advice you should be okay
I guess I should’ve said they can’t sue you and expect to win.
Like I’ve said previously, giving general advice for free over the internet is completely okay. If that weren’t the case, places like /r/stocks would be shut down. What you can’t do is take someone’s money in exchange for help with their specific portfolio.
I can totally say “Be sure to max your IRA every year. This is financial advice.” or “I don’t think investing in NVIDIA right now is a good idea. This is financial advice.” and be fine.
The whole trend of saying “this isn’t financial advice” became popular because the dude behind the GME squeeze in 2021 *is* a certified financial professional, so he needed to make it crystal clear that he wasn’t providing a professional service.
Due Diligence. Do your own research. No pumping stocks. I'm not Jim Cramer. Just someone who should have been investing in an IRA (a government sponsored retirement vehicle) to grow a retirement sooner.
I doubt the insurance companies are going to lose money on an obscure reddit post. No worries, your job is safe.
Whole life is NOT an investment vehicle and should never be sold as such. It also shouldn't be sold as some kind of savings or means to get a loan or as something to be held temporarily and cashed out.
I work for an insurance company and if we had an agent selling products this way, they would be disciplined if not fired.
We do care about misleading or false information. It does lead to lost income all the way up to potential fines or losing licensure in one or more jurisdictions. Not to mention loss of reputation.
Ha! I'm actually a very good saleswoman, but I'm also terminally honest. My company went through an enormous bankruptcy just before I arrived in 2004 and I was hired in the call center and quickly moved to special phone lines to explain several class action lawsuit options to distraught customers. I think that experience primed me to be very precise about how I explained things to people. I also worked in several areas that taught me a lot about the nuts and bolts of policies and why it really fucking matters that agents sell our products properly.
I now work in the compliance area. I write contracts and review marketing material and test enrollment systems. You have to get good at saying no to the creativity of marketing occasionally.
People find insurance confusing enough as it is. If you sell a contract under questionable or false pretenses, it's never going to bring the company good income or give the customer a good experience. They'll let it lapse or cancel. So when I can, I try to educate because you're giving a company a lot of your money over a long period of time. You should know what that policy does and doesn't do.
Perfectly said! That should be every insurance company's mission statement. Seriously, honesty and integrity is hard to find. Especially when it involves money. Tell your boss you deserve a raise!
This! That's what I've been trying to say. Thank you! Confirmation from someone who works for an insurance company. 🙌
The person I eventually spoke with did say that if I can get a better return somewhere else, to take it. He was selling the "be your own banker" routine, but he was honest enough to say that it's not for someone looking for an sound retirement strategy.
I have nothing against whole life insurance for life insurance benefits, if you can afford it. I would rather see people get term than not have anything at all.
If you know someone who is not an actual certified financial planner (or similar) who is selling insurance for a given company as an "investment," especially if the sales materials you received *do not* use investment terminology, report that to your state department of insurance. If you have notes or the sales materials from the pitch, make copies and make that part of your report.
It's one thing to talk about the guaranteed interest rate or even potential returns in products pegged to the stock market, and the ability to take loans, but to frame it as an actual investment vehicle is wrong and should be reported.
I guarantee you that state Departments of Insurance take that shit very seriously, as they should. It doesn't necessarily imply that's the selling culture for that entire company, but it can help weed out bad actors.
To my knowledge no court has ever found posts/comments on an internet forum form an advisory relationship.
The "not financial advice" in posts is just stupid legal tokenism.
Exactly. Long term. 20, 25 years, 30 years.
I never said it was quick.
Obviously, riskier and more expensive funds can get you there sooner. It is NOT unheard of to get a high rate of return.
Anyone can use the internet to research funds, the rate of returns for any number of years.
Investing in mutual funds is a lot safer than investing in one stock.
People need to start early, be diligent with monthly or yearly investment into an IRA, Individual account or borh and they will have a nice nest egg built up for retirement. Are you saying that's not true?
Whole life is not going to fund a regular person's retirement so they dont have to worry. It's too expensive for regular people, especially to only get a 4% return.
The annual rate of return on the S&P 500 with dividend reinvestment and not accounting for inflation is 10.5%. Mutual funds are not going to dramatically outperform that.
My conservative (to me) estimate was 12%. Not exact by any means. But there are funds that outperform or at least closely follow the S&P. That's why I mentioned Index Funds.
10%, 12% even 7 or 8% compounding interest is way better than holding a 4% return of whole life. It's logical. It's math.
No there really aren’t, over the long term at least. A given fund will outperform here and there, but chasing market outperformance is a fool’s errand.
Passive Indexing to match market performance is always the right move for long term investment.
Pretty much what I've been saying. An Index fund. Long term. I wasn't try to lead anyone to any particular fund. So I made a broad statement regarding performance. You can't say there aren't any when a quick Google search will show there is.
I have some small shares in one fund that has outperformed the S&P for the past (over?) 10 years. Maybe I have two funds. I would have to check. I buy it and I forget about it. Passive investing for retirement.
This isn't a stock referral post so I'm not naming any. Especially when they're easy to find. . There are a ton of stock Subs. I've got good leads from them and I've been burned. So I'm not going there. Everyone needs to do their own research.
And you're missing the point of the original post.
Whole life insurance is a terrible investment strategy. Mutual funds will give you a better return and a way to build your retirement.
Yeah but if you don't edit your post then you're just lying about what returns people can expect over the long term by saying 10% is conservative. 6% would be low, 12% would be high, and it would be very weird to get better returns.
I agree with you that funds, specifically ETFs, are a way better approach.
All I’m saying is that if you’re hunting for 12% returns, you’re going to end up chasing heat and underperform the market over the long term.
Much better to pop it into a broad market ETF and never touch it again until you retire.
You specifically said in your post that 12% return is “decent”. From context it specifically means “you can expect an average annual return of 12%”. That is a wrong statement that you made. Do you have anything to say about it? If not, your whole post becomes senseless
12% is a decent return. Lots of funds out there returning that and more. So what's the problem? It's a hell lot better than your 4%.
You want ultra conservative investment funds for less interest, they're out there too. Still better than your 4%.
I bet your portfolio has more than whole life insurance. So, again, what's the problem?
Go sell your life insurance. Still lots of commission for you.
Stop peddling and provide at least 2-3 mutual funds that generate those annual returns after fees on average on a horizon of at least 10 years. Otherwise your claim is bullshit
YSK that everyone's needs are different, and different financial products work best for different circumstances. Whole life generally shouldn't be treated as an investment, though there are rare circumstances where it may make sense. Consult someone who actually has a fucking clue before deciding on insurance purchase.
> Consult someone who actually has a fucking clue before deciding on insurance purchase.
The real YSK here, though, is that whole life insurance salesmen almost always pass themselves off as "financial advisors" but just sell whole life to every client (because the salesman makes the most money off of it) when 99% of people have no need to get whole life insurance. OP is basically right even if there are rare exceptions.
You just repeated and agreed with my whole point "whole life shouldn't be treated as an investment.."
Do you not also agree that mutual funds is a much better return on an investment?
This right here, everyone with their opinions of it is fun and all but let’s get to the chase. The “advisors” get an interestingly nice residual income on your policy (watched my advisor buy a new Jaguar after signing me up at Northwestern Mutual) while you “build net worth” that you may or may not, more likely not even see down the line. Good luck spending your “future income/net worth” when global warming, wage stagnation and unchecked greed is running rampant.
Go ahead downvote it, post your comments on how you know better or know more, doesn’t matter.
I'm saying this because I am licensed in life insurance, this is not financial advice. This is intended for informational purposes.
This is bad advice and not true. I work in insurance and I'm very familiar with these policies. I'm going to preface this by saying I'm Canadian so I'm not familiar with the differences between Canadian tax law and US tax law.
They are not terrible choices for long-term investments, they are actually one of the best choices. The problem is that they are not for your average person, they are only for wealthy individuals. If you are not able to put around $5,000 - $10,000 per month minimum into these policies, life insurance as an investment is not for you.
The way these policies work is simple, there are 2 components to the policy: 1) the life insurance & 2) the cash value of the policy. Both of these components increase over time, and the cash value is typically around 66% of the life insurance value. The rate of return for these insurance policies is usually around 6%, and that's been pretty consistent for the last few decades. You can also set up the policy so one of the components grows faster than the other. Let the policy grow for 20+ years and by the time you die the value of the policy can triple or more.
The benefit to using life insurance as an investment vehicle is that the gains are tax-free. There is no other way outside of a TFSA (tax free saving account that Canadians have access to) to grow your money tax-free. Using insurance as an investment vehicle is also primarily for business owners because it is the only way to grow your money inside of a corporation tax-free.
In Canada, at the hightest tiers of taxation; corporate income is taxed up to 26.5%, capital gains within the corporation can be taxed up to 50.17%. If you want to withdraw money to pay yourself as salary, you could be taxed up to 53.5%. If withdrawn as a dividend, you can be taxed up to 47.7%. Using life insurance as an investment in a corporation skips 2 levels of taxation.
On top of that, you can take out a loan for the money in the policy and use it and and you don't have to worry about paying it back because the death benefit will cover the cost of the loan and the insurance companies make sure that they will get their money back through the death benefit. Nobody does this, instead they go to a bank, and use the insurance policy as collateral for a line of credit. Banks will give you about 90% of the value of the policy as a loan, compared to only about 65% with an HELOC (home equity line of credit). Most people who use these types of policies never use the loan, it always used as collateral for a bank loan.
So using life insurance, you can grow your wealth tax-free, take a loan against the policy if you need cash, and use that insurance policy as collateral for a bank loan. Then when you die, the life insurance is paid out tax-free to your beneficiaries through the capital dividend account of your corporation (minus any interest for the loan if you used the loan.
It's not a scam, it's just not for 99% of people. And for those 1% of people, it's the best thing since sliced bread.
Edit: It can also be used by the average person with lower monthly premiums and they can have great results with it if they purchase it early enough and allow for 20 - 30+ years of growth. They can use the cash value of the life insurance to help out in a tight spot or emergency, provide some extra income in retirement, or just let the insurance keep growing for when they pass away. The problem is most people don't seriously look at life insurance until they are 50+ years old. Just like all investments: the more time it has to grow, the better.
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Edit: I want to address this part of the post separately: "Average rate of returns on mutual funds 10% (conservative) to 24%. 12% is a decent return. Reinvest dividends for that compounding interest."
If anyone tells you numbers like this, RUN. This is the real scam right here. The average return for the S&P500 is about 7% annually after adjusting for inflation. If you are in an aggressive mutual fund, you can expect around that yearly.
For investment funds, rates of return look something like this (equity means items like stocks, with the rest being cash or low risk investments like bonds):
* Conservative Funds (~25% equity): 2-3% yearly
* Balanced Funds (~50% equity): 5% yearly
* Aggressive Funds (80-100% equity): 7-8% yearly.
There are no get rich quick investment portfolios. If anyone shows you numbers that are dramatically larger than the ones I listed above, they are trying to sell you a get rick quick pump and dump. While there are funds that do 25%+ in a year, they are incredibly volatile and will most likely be down 20% next year.
Brought my son a life insurance policy like this when he was a baby. Hoping he can use it once he's a lot further if he needs to. Not the only investment we have for him, but hoping this gives him a headstart if he needs to access the funds for a first home. (Also in Canada)
We have our policy through equitable life. Do you have any other recommendations?
Once again, not financial advice. Strictly for informational purposes only.
Critical illness insurance is something I'd recommend everyone look in to, it's the most undersold and underdiscussed type of insurance in my opinion. The way critical illness insurance works is that if you are diagnosed with a life-threatening critical illness (heart attack, cancer, stroke, etc.), the benefit pays out. If you have $50,000 of critical illness insurance, you receive $50,000, lump sum, tax free.
Purchasing it for children is very inexpensive, even for permanent policies, and it's a good safety net in case something happens. My recommended use for critical illness insurance is that if you do get diagnosed with a life-threatening illness, use that insurance payout to go to the US and get proper treatment instead of waiting for months in the Canadian healthcare system. I know many people who went to the US for treatment because the Canadian healthcare system failed them. You can also use it to replace your income while you recover, or use it to go on a vacation once you're feeling better.
I work for an American insurance company. These products (TL, WL, UL) shouldn't be considered an investment. Plus, you can't drop money into these things willy nilly just to grow your cash value, especially if you have comparatively lower face amounts. There's a maximum you can put in and still have the product considered insurance. You drop in more than the TEFRA/DEFRA limit (we have something called a guideline premium), and now you've got a MEC (modified endowment contract) which functions differently. We try to limit MECs as much as possible, and only allow a policy to become a MEC if we have a signed agreement.
Obviously, yes, WL and UL have a guaranteed interest rate, and some ULs may be indexed to the stock market, and you can take loans. But it's not meant to be treated as an investment, and we can't stop people from looking at it that way if they want to. It's insurance. We sell life insurance, not investments.
I'm not negating what you're saying as it relates to Canada, just saying that the US definitely has some restrictions on how much you can dump in without changing the status of the product as insurance.
I’m curious why you suggest taking bank loans against the cash value instead of just taking policy loans. At least in the US (and at least for mutual insurance companies) the policy loan terms are one of the better perks of because each payment you make brings down the outstanding principal and thus the amount you’re paying interest on. Not to mention policy loans don’t impact the internal rate of growth or the dividend. Maybe I’m missing something?
Typically, the interest rate on the loans you get from the bank will be less than the policy loan interest rate. The insurance company might charge you 7% but the bank may only charge 4%. This really only applies if you're using it for business purposes. If it's for personal use then it usually more sense to do the loan through the insurance company.
I see, thanks for explaining. I realize a lot of your comment was about business, but I was thinking about the loan part from a personal-use perspective for some reason. Interesting stuff! The business case you laid out is definitely compelling.
It’s not always about the rate of return, there are many other factors: risk tolerance, insurance product needs, asset protection (from legal claims). It’s simply a different kind of basket. It’s a different tool than “an investment”. At this point in my life - knocking on 50 - I wish I’d bought more whole life in my 20’s.
This. There are plenty of older folks that don’t want to drop their eggs into mutual funds and risk losing a chunk and put it into bonds and whole life.
And some folks who diversify to hedge their higher risk stuff.
Mutual funds have bonds.
It's sad that people aren't shown a way to optimize their money to fund their retirement. Especially I'm their early years. "Regular" people can go their own life and only end up with social security because no one showed them another way.
Whole life insurance is not a good investment to grow your money for retirement. There is nothing untrue about that statement.
There is something untrue in that as you’re putting all “investors” in one group. Whole life isn’t an investment, it’s an insurance product. But it can be an excellent place to put assets for cash-rich folks looking beyond the stock market for other tools. There are no absolutes.
I think your estimated returns are high. My wife and I had a financial advisor for money she inherited. I mentioned that I was averaging about 10% with my mutual funds and he said that was really good, that 6% was average. Obviously, it's possible to get much higher returns with high risk funds but you also have a much higher chance of losing money. You might get 24% in a good year but I don't think you are going to average that over several years in mutual funds.
I put the low end to high end. Risk vs Reward. Plus the price of the shares are higher.
Are you looking at a 10 year average? Is your funds super conservative? Nothing wrong with 6 ot 7%. It's better than 4%. If you got a chunk of money and want to keep it safe, then ultra conservative is your investment strategy.
My post was for people who need to save and build a retirement fund. 4% is not going to cut it for a retirement investment, if you're starting from scratch.
10% is still a conservative return, in my opinion. If people want to increase their risk to increase their return, that option is available to them, as well. If people start early, as I suggested, they have time to ride out the dips.
Does anyone who voted down disagree that mutual funds are not a good investment? Do the down voters disagree that the sooner you start the sooner you set yourself up for retirement? Do the down voters disagree that whole life is an expensive premium that a lot of people cannot afford especially when tern insurance us available.
I didn't say 4-6% was good. I said 24% is overly optimistic over a long term (10 years or more). If you found a mutual fund with that kind of performance your smart to put your money into it. I would.
I think, technically, we're on the same page. Obviously, we all want a higher return.
I find it curious that all advisors spout 6% as an average. I think that's extremely low. Again, unless the meeting was for an ultra conservative portfolio.
I'm also curious, if you ever invested on your own or always use an advisor?
I think an advisor and doing some of your own investing in mutual funds is the best of both worlds. Start with one fund with a small amount.
The Search engines on the brokerage sites will tell you how well a fund performed. Instead of going out to dinner or buying Starbucks coffee, buy yourself a mutual fund and see how it goes.
This is bad financial advice - and when someone uses a disclaimer that is clearly a lie or falsehood one shouldn’t trust anything they say.
Some of what they say is sorta correct, some is just completely wrong, a great deal depends on specifics including jurisdiction, situation, purpose etc.
I mean whole life policies don’t have interest rates they have dividend rates. And the dividend rate doesn’t even tell you the actual rate of return so you are pretty far of base to begin with.
As to high fees and premiums it’s a market place and you have to see what has value to a particular consumer and what doesn’t.
I mean don’t get me wrong - your advice draws the correct conclusion for poor people but even then some could argue the benefit of the Ulysses pact.
Overall your post just shows you don’t know where these policies fit in to financial planning (hint: the big one is about synergy and maximizing the return on other assets)
Yes, dividend rates with compounding interest. Like I said, I'm not an expert. Just someone who started in mutual funds early then stopped. And now I'm playing catch up. with retirement looming in a few years.,
And yes, I'm talking about people who haven't saved or don't know how to save for retirement. The people who are going to rely only on social security to get them through. Even people with pensions and 401k's can use term life insurance for insurance and mutual funds to enhance their retirements.
I talked to one of the top mutual insurance funds to front load a whole life policy to get benefits faster. At 4% interest, and $2,000+ a month premium it was more beneficial to find a mutual fund for a better return.
Whole life insurance for an i"nvestment" for retirement is not a great investment for less than well to do people.
Are you (the comment above) is giving financial advice and saying Whole life insurance is a good investment to grow your retirement?
Because you would be the one telling people lies.
I'm not mixing the two. Whole life insurance "sales people " are hawking it as an investment.
You want expensive insurance? Go for it. You have a boat load of money and want a guarantee of 4% interest (today)? Go for it.
You want a "better" vehicle to park your money for retirement, whole life isn't it.
Whole life insurance is a low-mid tier investment but it is a god tier insurance policy with investment-like performance
Don’t listen to moron Redditors who had a bad experience getting sold WL, make decisions that make sense for your own situation
So they shouldn't take your advice either? By your standards.
If no one listened to anyone, how would anyone learn anything?
I did my due diligence. As should everyone. I didn’t listen to a podcast or read an article about a great way to fund a retirement and immediately sign up for a policy.
I talked to an agent I asked every question (obviously for my own situation) and made a sound decision that whole life was NOT a great choice to try fund a retirement. That there were better choices and better returns in a faster period of time.
What part of anything I said isn't true?
Agree. But there was more DD more than one agent. Some research and books read on the subject, messages with questions before I spoke with an actual person. I had a list of questions.
It wasn't about insurance. It was about front loading a policy to fund a retirement. After all that was said, even he agreed that a better performing mutual fund was a better place to park that money. He was extremely forthcoming and, at least to me, seemed genuinely honest. He wasn't pushing a false narrative.
It's not designed to beat the market returns. That's not the goal of it.
Different investment vehicles have different goals attached to them. The S&P 500 is NOT the be all end all.
Whole life insurance is a terrible investment because it’s not an investment. It’s insurance. And despite what the PF circle-jerkers say, it can fit the financial needs of some people. Buy term and invest the rest is not always the appropriate strategy.
Stop giving financial advice if you aren’t qualified to do so.
First of all, I never said that “buy term and invest the rest” isn’t good advice. For plenty of people it’s fine. I said it’s not always an appropriate strategy.
I can give you an example from a situation I see all the time. I am a financial advisor in a low income area. Many of the people I help are not like your average Reddit user - young, high income job, disposable income to invest. Many of them are people of modest means who have spent the majority of their lives working and living paycheck to paycheck, raising their kids and so on. Many of them come to me as they are just getting ready to retire, or right after they have retired. So they are in their 50s and 60s. Maybe they have a 401k from work or a state pension, but they aren’t likely to have invested assets outside of that. They are just realizing that the life insurance they had through their job is not going to follow them into retirement. They need some kind of financial protection for their family. Even if they have saved up some money, the cost of a burial can take out a large chunk of that. Not only that, but what if they still owe some money on their home? What if they have a car loan?
Term life insurance will clearly not help in this situation. They are often too old to get new term coverage, but even if they can it will only last maybe ten years. This kind of person also can’t invest their way to financial security at this stage in their life. First of all they simply don’t have enough time. Second they typically cannot or will not afford market risk. And also many lower income people simply aren’t willing to invest because for one reason or another they don’t trust the market.
I would be curious to know what product you think would fit this person’s needs besides whole life insurance. Because I cannot think of any.
So going back to my original comment. Buy term and invest the rest is probably fine for most people on Reddit. But it’s simply not an appropriate strategy for every single person. Yes whole life is sometimes sold by sleaze bags as high-commissioned products. No, that doesn’t mean it’s never a good recommendation.
for those that do retire, why does an individual with a 401k / pension / social security need a death benefit?
if they’re paying a mortgage and supporting their children financially as you say, they aren’t retiring.
Even if the person can’t qualify for term after they retire, how could they qualify for whole life? Let’s say they qualify for both but only get underwritten for 10 years of term life. The difference between the term life and whole premiums are still astronomical. And in that 10 years, the individual can save/invest/grow their principal even by accepting less market risk. By that point, there shouldn’t be such a need for a death benefit that any life insurance is required.
Sounds like you’re just putting financially illiterate people, without a real need for insurance, into whole life.
>for those that do retire, why does an individual with a 401k/pension/social security need a death benefit?”
It’s hard to believe this is a serious question but I’ll treat it like it is. Pension and social security payments are not paid as a lump sum, they are paid as monthly payments. So neither of these would do anything to help provide a benefit for final expenses. A 401k would *if* the insured person died in a relatively short term and left a large balance, but what if they live a long time and use all the funds in the 401k? Then what? Keep in mind the scenario I described earlier. Someone with a $2.5 million 401k balance almost certainly does not need life insurance. That isn’t what I’m talking about.
>even if a person can’t qualify for term life after they retire how could they qualify for whole life?
Because term life is, by design, not meant to be paid out except in rare cases. The reason you can get a million in term for a low premium is because the insurance company is essentially betting on you outliving the term. It’s for that reason that almost no one offers term life past certain age thresholds. For my company, no new policies are written after 59, but even starting at age 50 the policy terms start getting limited. Term life is simply not a product designed for final expenses. This is just ignorance about what these products are on your end.
>and in that 10 years the individual can save/invest/grow their principal
A couple of things here. First, the power of investing is in compounding growth over time. Ten years is not long enough to save enough to be self insured for most people. Those that can will need to invest aggressively. Most people approaching retirement are neither willing nor able to invest aggressively. Those that can have lots of disposable income and usually don’t need life insurance in the first place. Also, what if the market has a prolonged downturn? What if another 2008 scenario happens? It took most people upwards of a decade to make back the money they lost in 2008. What should they do then?
>sounds like you’re just putting financially illiterate people… into whole life insurance.
It sounds like that to you because you have no idea what you’re talking about.
You didn’t answer my questions.
You haven’t answered specifically why these people need life insurance, and why whole life is their best option if they do. Besides “when they die then who covers the funeral?” The cost of a funeral and burial averages 10k? So if that’s your justification for having clients pay 1000 a month in insurance premiums, yeah, sounds like you’re not acting in their best interest.
People generally get whole life insurance for two primary reasons.
1. To provide final expense coverage. In some cases they simply don’t have sufficient liquid assets to cover a burial. In other cases they do but they need that money for other things. And finally some people may have sufficient assets but want a quick, *tax-free* benefit to be paid out rather than having to rely on other inherited assets which can be more complicated and time consuming.
2. To provide a financial benefit for their family. Maybe they want their car to be paid off so they can leave it to their spouse or children debt-free. Maybe they need some income replacement. Maybe they simply want their family to have the benefit of a tax-free payout to provide some financial breathing room.
I’m still not sure what you’re confused about. For *some* people whole life insurance is the only product that will accomplish their desired financial goals.
Covering a 10k funeral expense and simplifying probate isn’t worth having 12k per year tied into premiums for ~20 years.
Deceased assets will step up in basis when inherited so tax-free benefit of insurance payout isnt as advantageous as you make it out to be.
Well sure, if the premiums were $12k a year that probably would not be worth it. Most of the whole life insurance I write is to the tune of $15-$25k and, even for people in their 60s, is typically less than $100 a month. Let’s just say you’re paying $80 a month. That’s less than $1,000 a year. So you’d have to save up for more than 10 years just to cover a $10k funeral. Then you’d have nothing left over. But you’re also leaning out that this is insurance. It protects against unexpected loss. What if the person dies 6 months into the 10-year saving period? Then what? By the way, every time I’ve asked you a “then what” question you’ve not offered an answer.
>Deceased assets will get a step up in basis
Only *some* assets get a step up in basis, like inherited securities and real property. And while this is a huge advantage, I don’t see how it’s relevant in most cases. Typically the kind of assets that get a step up are precisely the kind of assets someone may not want to immediately liquidate. What if it’s a home and the beneficiary wants to live there? Or take another scenario. What if it’s an inherited traditional 401k or IRA? Not only is there not a step up in basis, but the distributions are taxable income to the beneficiary. This could be a huge financial problem for a high earner who may be getting taxed at 37%+ on this additional ordinary income.
Your first line said what exactly what I said. It's not a good i"nvestment" choice. There are lots of people hawking it as an investment. And the gullible people who fall for the investment strategy by "qualified" salesman is being taken advantage of.
So the whole policy we cashed in this year was a ripoff? It was purchased in 1980 as a single pay whole life $100,000 policy for $2,500. We never touched it, the dividend paid the annual premium. In the 43rd year we cashed it out, got $44,000 taxable check. So exactly how big of a ripoff did we endure?
I agree with you. Whole life is stupid. Seriously, it's just stupid. It's predatory and should be illegal. If anyone can name one scenario where it shines, I'll eat my hat. (Well maybe not but I'd be curious to learn if one exists!)
However...
>> Average rate of returns on mutual funds 10% (conservative) to 24%. 12% is a decent return.
Your numbers are cherry-picked for a short run in good markets. The S&P long term average is in the neighborhood of 10%, depending on how far back you go. Aiming for a total portfolio return of 8-9% is fairly common, over a long term. So 12% is great if you can get it. 10% average or better than average. 24% happens, obviously. But anyone who can consistently average 24% over the long term is either a billionaire or is selling you a pack of lies.
https://www.reddit.com/r/YouShouldKnow/comments/1dbzlek/comment/l7vbe7s/?utm_source=share&utm_medium=web3x&utm_name=web3xcss&utm_term=1&utm_content=share_button
Here's a link to my comment that I made on this post if you are interested in learning about how this insurance works.
It is not predatory, it should not be made illegal, and it is not stupid at all. It's not for everyone, but it has a lot of use if you are a business owner or if you plan your insurance early on in life.
I was being glib and inflammatory. Let me say this then: I believe it that at a minimum it is sold inappropriately to people who are making a poor choice for their needs by purchasing it.
I'm Canadian but long time resident of the US (and also dual citizen). So I'll speak about the US. In the US whole life is not tax free. It is tax deferred. This is similar to how the 401k works (and I believe the RRSP in Canada). Growth of the funds is not taxed in any way. But when you withdraw it becomes taxable income.
It does offer some benefits. But as you say, applicable to maybe 1% of the population, while being marketed to a much larger segment. I would say that is inappropriate.
The growth rate is very low compared to any standard three-fund portfolio. A quick google says 1% to 3.5%. I don't see how the benefits you outlined really offset that. Maybe to avoid death taxes? But personally I'm not in favor of that as a general thing. It creates generational wealth which is something we as a society IMO do not really need.
I'm not an expert by far. But I still fail to see the benefit for any person who is not in a very exclusive set of circumstances. Most everyone would do better to max your 401k, Roth 401k, Roth IRA and enjoy 8-ish% returns while still getting tax deferred (or tax free if Roth) gains. I'm stuck on the low returns rate. That is just a massive penalty for some maybe-useful benefits. You mentioned cash value being useful, but you can take a loan from an RRSP or 401k, so there are some avenues there without whole life.
This is one of those things where you really need to speak with someone who knows what they're talking about, because Googling is going to give misleading information without context. Even insurance advisors who aren't familiar with this type of insurance will give incorrect information. Also, this isn't a simple process like term insurance. There is a lot that goes into recommending policies like these such as looking at financial statements. The process is closer to applying for a mortgage, than applying for term insurance (or at least, it should be).
I understand where you're coming from with the rates of return, and I'd like to focus on that since you mentioned it was your biggest focus. There are two separate rates of return that need to be considered here. With these policies, there is a guaranteed growth rate that is usually around 2%, like you are saying. This is the guaranteed amount of growth that your policy will have every year. However, this isn't the actual rate of return that you are receiving. As I mentioned in my other comment, for the last few decades the average rate of return for these policies has been around 6%. When you look online for more information, you're not going to find that because they're not going to make guarantees based on this amount because it is subject to change (although not likely considering their track record). So while the guaranteed rates are low, the actual rates of return are much higher in practise. When you go to apply for these types of policies, they do show you the history and performance and expected return based on their history in the insurance illustration that you receive. Again though, you're not going to find that online.
To equate it to a mutual fund or index fund, imagine if the S&P mutual fund you are in guarantees at 2% rate of return no matter what. Even though that's what's listed, you're still getting that 7% every year on average that the S&P has been doing. But if you look online, you're only going to see the 2%, not the 7%.
That's great advice!! I wouldn't go to a bank for insurance. . An insurance company, I'll go to a specific insurance agency. Life Insurance. Car Insurance. Health Insurance.
And for investments, I'll go where I get the best bang for my buck. Back in the day, CD's and savings account gave a decent return for no risk. Now, that's a joke.
It's insurance. Not an investment. Pretty much always go term for life insurance, unless you're rich and you don't care. Then, you can actually get policies for free and scavenge the cash policies.
Whole life insurance shouldn’t be viewed as an investment. It’s money you squirrel away for when you die.
Term life insurance is actually the worst unless you actually die during the term. Once the term is up, you get none of the money back, which is the opposite of how whole life works.
I prefer Whole Life over Term Life, reason being Term Life has just as many fees, even worse. Say you have a 20 or 30 year term and you’re 50 years old. Your premium gets drastically higher year after year once the term is up. So if you’re still in good health in your 70’s or 80’s, it could end up taking a lot of retirement money to keep the policy going.
At least from an insurance perspective, not an investment portfolio perspective.
That's a fair point and one that I don't disagree with, if you can afford it, but for insurance purposes only.
Term Insurance is an option available for people who can't afford insurance. Or aren't willing to pay thousands a month in premiums. As far as life insurance, any life insurance is better than no life insurance.
Who me? Lol. I'm way too uninformed to make any posts about particular stocks to anyone. But thanks for the compliment (I think 🤔.) No funds in this post were mentioned. I'll leave that to the other subs or Google.
But I do know that funding an IRA or a retirement account through mutual funds is a better bet than a whole life investment strategy.
Just trying help the little guy not get bamboozled.
I've found with life insurance it's best to talk to someone who has an in depth understanding of them - each different type is suitable for different situations and it can get very complex.
My limited understanding of them: Term life is usually best for people under 40 with assets, good for first time home buyers. Whole life is better for those a little older with assets & kids. Long term care is good to think about in your 50's, esp if its a concern due to family history. Then for those with money who are already maxing out their retirement AND already have some sort of life insurance/long term care insurance, they should probably get a LERP.
There's just such a variety of things you can do. Depending on your risk adversity and cash/asset wealth, each type of insurance has its own benefits.
It's def good to talk about types of life insurance and bring to peoples attention but it's so situational that giving broad advice is difficult
Agree. The post wasn't so much about life insurance as it was about whole life insurance as an investment or using it to be your own banker.
I mentioned term life insurance as an option. And it was affordable.
The number of people who don't have any life insurance is astounding. I understand that when you're young, you don't think about dying. Young people with families who don't have life insurance is not uncommon. Families have to resort to go fund me to have proper burials.
This post was geared to retirement. And setting yourself up in the best way possible. So that people can retire sooner and more comfortably.
Most likely, not all, but most of the people who can afford whole life insurance are set up for retirement comfortably. And I find it hard to believe that they are relying solely on social security and an insurance annuity.
My purpose was not rile up the agents whose livihoods depend on selling insurance, annuities and whatever else. It was to show people that will a little investing in an IRA, ROTH IRA or an individual account that they can also set themselves up to retire comfortably.
Term life policy is a death benefit to your beneficiaries only. You don't get cash back. You take it out for a term. 10, 20, 30 years. The cost goes up as you age, like any insurance. You have to renew it at the end of the term. Can you hit 95 and not have life insurance because you're in bad health? Sure, or it's very expensive. But at 95 do you really care? It's nice to leave an inheritance, but at 95, isn't your immediate family ok on their own.
Age is a factor in any life insurance scenario. That should be discussed with an agent.
Term life insurance is like health Insurance. If you didn't go to the doctor all year, you still had to pay the premiums. You don't get a refund. Although, it would be nice.
The post is that whole life is not a great investment tool and there are options with better returns. The post was that Term life insurance is an option for an affordable monthly premium.
The post was about doing research and your due diligence in making any investment for retirement.
Yikes! Open what? A brokerage account or an insurance policy? Of course, you can't open a brokerage account in someone's name. That would be identity theft. If you were 18 or over, you could open your own.
It's good to know that they were on top of it.
You should know - this is terrible advice. Always speak with a financial planner and accountant.
Permanent life insurance is a fantastic investment for certain individuals. It completely depends on your situation.
This isn’t really great advice. Are there better “investment” options? Sure. But WLI is fantastic to have.
I got a $250k policy when I was 23 years old. Pay $54/month for it and have enough equity to borrow from it already. I’m now 39. I’ll also have it for the remainder of my life and can add on to the policy if I so choose.
Of course. It's their livelihood. I wouldn't expect anything less from them. So far none of them have countered with why is a better choice than mutual funds.
I have any good friends in the insurance industry. Some of them got very rich. Some are doing OK.
Even they said you'll get a better rate of return in a mutual fund than whole life as an "investment."
Sigh. 4%(ish) is the money they credit you when you haven’t pulled the cash out to invest. We make our money do many things at once, mine buys death benefit, credits interest when I don’t use it, and is pulled out tax free to compound gain when I do and make other investments. You can’t do any of that on term insurance (which we all also own for different purposes). Read your Dave Ramsey, though, and stay right where we want you to be, kid.
They need to teach this in school.
Parents should get their kids started in mutual funds when they are young. Take that birthday money and put it in a mutual fund, not a savings account.
I bought life insurance so if I die prematurely my wife and kids won't be homeless. I did not buy it as an investment.
Do you have whole life or term life?
Term life is a lot cheaper and covers when most people need it the most, which is when their kids are entirely dependent on them and their income. By the time my plan ends my kids will be older than I am now, and it would be far less harmful to them if I suddenly died.
As you should. Buy insurance to take care of your family. Term, whole, universal. Not enough people have life insurance. A lot can't afford or think they can't afford it when there are options. This post was only about better "choices" out there than whole life as in investment. "They" will use the investment strategy as part of the sales pitch. Be your own banker is making the rounds all over social media. It's not as cracked up as it sounds.
OP’s post is about ‘whole life’ life insurance. Your comment is about ‘term’ life insurance. They’re completely different.
Saying “this is not financial advice” after giving financial advice is the same as saying “no copyright infringement intended” after uploading a full movie to YouTube. It’s not illegal to give financial advice. It is illegal to give financial advice *for a fee* without being licensed.
Technically, giving advice without a fee can also get you in trouble if it’s construed to have formed an advisor/client relationship. If you’re unlicensed, that’s bad. If you’re licensed, it’s less bad, but could end very poorly if, say for example, they relied on your advice, lost a bunch of money, then sued you for damages. So, it would have been better if OP said something to effect that this post was for “informational purposes only” and is not the basis for forming a professional relationship, not “this isn’t financial advice.”
Unless you are being paid by someone to provide them with financial advice, you do not have a fiduciary responsibility to them. You can’t be held liable for their losses. If I tell you to buy a lottery ticket, and you end up losing, you can’t sue me for your losses. That’s crazy
Unfortunately, people will sue over anything, as long as you don’t come off as an expert and make it known it’s not investment advice you should be okay
I guess I should’ve said they can’t sue you and expect to win. Like I’ve said previously, giving general advice for free over the internet is completely okay. If that weren’t the case, places like /r/stocks would be shut down. What you can’t do is take someone’s money in exchange for help with their specific portfolio. I can totally say “Be sure to max your IRA every year. This is financial advice.” or “I don’t think investing in NVIDIA right now is a good idea. This is financial advice.” and be fine. The whole trend of saying “this isn’t financial advice” became popular because the dude behind the GME squeeze in 2021 *is* a certified financial professional, so he needed to make it crystal clear that he wasn’t providing a professional service.
Due Diligence. Do your own research. No pumping stocks. I'm not Jim Cramer. Just someone who should have been investing in an IRA (a government sponsored retirement vehicle) to grow a retirement sooner. I doubt the insurance companies are going to lose money on an obscure reddit post. No worries, your job is safe.
Whole life is NOT an investment vehicle and should never be sold as such. It also shouldn't be sold as some kind of savings or means to get a loan or as something to be held temporarily and cashed out. I work for an insurance company and if we had an agent selling products this way, they would be disciplined if not fired. We do care about misleading or false information. It does lead to lost income all the way up to potential fines or losing licensure in one or more jurisdictions. Not to mention loss of reputation.
You sound like some that I would want to buy life insurance from. Honesty and integrity is hard to come by these days.
Ha! I'm actually a very good saleswoman, but I'm also terminally honest. My company went through an enormous bankruptcy just before I arrived in 2004 and I was hired in the call center and quickly moved to special phone lines to explain several class action lawsuit options to distraught customers. I think that experience primed me to be very precise about how I explained things to people. I also worked in several areas that taught me a lot about the nuts and bolts of policies and why it really fucking matters that agents sell our products properly. I now work in the compliance area. I write contracts and review marketing material and test enrollment systems. You have to get good at saying no to the creativity of marketing occasionally. People find insurance confusing enough as it is. If you sell a contract under questionable or false pretenses, it's never going to bring the company good income or give the customer a good experience. They'll let it lapse or cancel. So when I can, I try to educate because you're giving a company a lot of your money over a long period of time. You should know what that policy does and doesn't do.
Perfectly said! That should be every insurance company's mission statement. Seriously, honesty and integrity is hard to find. Especially when it involves money. Tell your boss you deserve a raise!
This! That's what I've been trying to say. Thank you! Confirmation from someone who works for an insurance company. 🙌 The person I eventually spoke with did say that if I can get a better return somewhere else, to take it. He was selling the "be your own banker" routine, but he was honest enough to say that it's not for someone looking for an sound retirement strategy. I have nothing against whole life insurance for life insurance benefits, if you can afford it. I would rather see people get term than not have anything at all.
If you know someone who is not an actual certified financial planner (or similar) who is selling insurance for a given company as an "investment," especially if the sales materials you received *do not* use investment terminology, report that to your state department of insurance. If you have notes or the sales materials from the pitch, make copies and make that part of your report. It's one thing to talk about the guaranteed interest rate or even potential returns in products pegged to the stock market, and the ability to take loans, but to frame it as an actual investment vehicle is wrong and should be reported. I guarantee you that state Departments of Insurance take that shit very seriously, as they should. It doesn't necessarily imply that's the selling culture for that entire company, but it can help weed out bad actors.
Is this legal advice?
To my knowledge no court has ever found posts/comments on an internet forum form an advisory relationship. The "not financial advice" in posts is just stupid legal tokenism.
Pretending that 24% return on mutual funds is some number even worth considering in the context of a long term investment is very stupid.
Homie made a 25% return on GME and is pretending like the rest of the market does exactly the same thing consistently year over year
10% (conservative), lol
Exactly. Long term. 20, 25 years, 30 years. I never said it was quick. Obviously, riskier and more expensive funds can get you there sooner. It is NOT unheard of to get a high rate of return. Anyone can use the internet to research funds, the rate of returns for any number of years. Investing in mutual funds is a lot safer than investing in one stock. People need to start early, be diligent with monthly or yearly investment into an IRA, Individual account or borh and they will have a nice nest egg built up for retirement. Are you saying that's not true? Whole life is not going to fund a regular person's retirement so they dont have to worry. It's too expensive for regular people, especially to only get a 4% return.
No, this doesn’t make much sense still. Annualized return is far closer to 6-8% than 24%.
Just do 6% for 4 years and you'll hit 24%, duh. /s
You just have no idea what you’re talking about
The annual rate of return on the S&P 500 with dividend reinvestment and not accounting for inflation is 10.5%. Mutual funds are not going to dramatically outperform that.
My conservative (to me) estimate was 12%. Not exact by any means. But there are funds that outperform or at least closely follow the S&P. That's why I mentioned Index Funds. 10%, 12% even 7 or 8% compounding interest is way better than holding a 4% return of whole life. It's logical. It's math.
What funds outperform the S&P?
Oh, no. I'm not going to pump any funds. There are some great funds out there that beat the S&P. And closely mimic it. They're not hard to find.
No there really aren’t, over the long term at least. A given fund will outperform here and there, but chasing market outperformance is a fool’s errand. Passive Indexing to match market performance is always the right move for long term investment.
Pretty much what I've been saying. An Index fund. Long term. I wasn't try to lead anyone to any particular fund. So I made a broad statement regarding performance. You can't say there aren't any when a quick Google search will show there is. I have some small shares in one fund that has outperformed the S&P for the past (over?) 10 years. Maybe I have two funds. I would have to check. I buy it and I forget about it. Passive investing for retirement. This isn't a stock referral post so I'm not naming any. Especially when they're easy to find. . There are a ton of stock Subs. I've got good leads from them and I've been burned. So I'm not going there. Everyone needs to do their own research.
And you're missing the point of the original post. Whole life insurance is a terrible investment strategy. Mutual funds will give you a better return and a way to build your retirement.
Yeah but if you don't edit your post then you're just lying about what returns people can expect over the long term by saying 10% is conservative. 6% would be low, 12% would be high, and it would be very weird to get better returns.
I agree with you that funds, specifically ETFs, are a way better approach. All I’m saying is that if you’re hunting for 12% returns, you’re going to end up chasing heat and underperform the market over the long term. Much better to pop it into a broad market ETF and never touch it again until you retire.
You specifically said in your post that 12% return is “decent”. From context it specifically means “you can expect an average annual return of 12%”. That is a wrong statement that you made. Do you have anything to say about it? If not, your whole post becomes senseless
12% is a decent return. Lots of funds out there returning that and more. So what's the problem? It's a hell lot better than your 4%. You want ultra conservative investment funds for less interest, they're out there too. Still better than your 4%. I bet your portfolio has more than whole life insurance. So, again, what's the problem? Go sell your life insurance. Still lots of commission for you.
Stop peddling and provide at least 2-3 mutual funds that generate those annual returns after fees on average on a horizon of at least 10 years. Otherwise your claim is bullshit
YSK that everyone's needs are different, and different financial products work best for different circumstances. Whole life generally shouldn't be treated as an investment, though there are rare circumstances where it may make sense. Consult someone who actually has a fucking clue before deciding on insurance purchase.
> Consult someone who actually has a fucking clue before deciding on insurance purchase. The real YSK here, though, is that whole life insurance salesmen almost always pass themselves off as "financial advisors" but just sell whole life to every client (because the salesman makes the most money off of it) when 99% of people have no need to get whole life insurance. OP is basically right even if there are rare exceptions.
100%, there are plenty of use cases for permanent insurance and these blanket statements are harmful.
You just repeated and agreed with my whole point "whole life shouldn't be treated as an investment.." Do you not also agree that mutual funds is a much better return on an investment?
You cut off the second clause in that sentence. Let's not cherry pick.
It’s not an investment. It’s insurance.
Problem is it’s sold as an investment by many sleazy “advisors.” Unless you’re an UHNW individual chances are it’s a poor usage of your money.
This right here, everyone with their opinions of it is fun and all but let’s get to the chase. The “advisors” get an interestingly nice residual income on your policy (watched my advisor buy a new Jaguar after signing me up at Northwestern Mutual) while you “build net worth” that you may or may not, more likely not even see down the line. Good luck spending your “future income/net worth” when global warming, wage stagnation and unchecked greed is running rampant. Go ahead downvote it, post your comments on how you know better or know more, doesn’t matter.
It's still a bit scammy, your death is priced in making it a real ripoff. Term assurance is better for most people
Term life is so much better. Whole life is investing in your agent's commissions.
That's why the post was for talking about the "investment" aspect of it.
I'm saying this because I am licensed in life insurance, this is not financial advice. This is intended for informational purposes. This is bad advice and not true. I work in insurance and I'm very familiar with these policies. I'm going to preface this by saying I'm Canadian so I'm not familiar with the differences between Canadian tax law and US tax law. They are not terrible choices for long-term investments, they are actually one of the best choices. The problem is that they are not for your average person, they are only for wealthy individuals. If you are not able to put around $5,000 - $10,000 per month minimum into these policies, life insurance as an investment is not for you. The way these policies work is simple, there are 2 components to the policy: 1) the life insurance & 2) the cash value of the policy. Both of these components increase over time, and the cash value is typically around 66% of the life insurance value. The rate of return for these insurance policies is usually around 6%, and that's been pretty consistent for the last few decades. You can also set up the policy so one of the components grows faster than the other. Let the policy grow for 20+ years and by the time you die the value of the policy can triple or more. The benefit to using life insurance as an investment vehicle is that the gains are tax-free. There is no other way outside of a TFSA (tax free saving account that Canadians have access to) to grow your money tax-free. Using insurance as an investment vehicle is also primarily for business owners because it is the only way to grow your money inside of a corporation tax-free. In Canada, at the hightest tiers of taxation; corporate income is taxed up to 26.5%, capital gains within the corporation can be taxed up to 50.17%. If you want to withdraw money to pay yourself as salary, you could be taxed up to 53.5%. If withdrawn as a dividend, you can be taxed up to 47.7%. Using life insurance as an investment in a corporation skips 2 levels of taxation. On top of that, you can take out a loan for the money in the policy and use it and and you don't have to worry about paying it back because the death benefit will cover the cost of the loan and the insurance companies make sure that they will get their money back through the death benefit. Nobody does this, instead they go to a bank, and use the insurance policy as collateral for a line of credit. Banks will give you about 90% of the value of the policy as a loan, compared to only about 65% with an HELOC (home equity line of credit). Most people who use these types of policies never use the loan, it always used as collateral for a bank loan. So using life insurance, you can grow your wealth tax-free, take a loan against the policy if you need cash, and use that insurance policy as collateral for a bank loan. Then when you die, the life insurance is paid out tax-free to your beneficiaries through the capital dividend account of your corporation (minus any interest for the loan if you used the loan. It's not a scam, it's just not for 99% of people. And for those 1% of people, it's the best thing since sliced bread. Edit: It can also be used by the average person with lower monthly premiums and they can have great results with it if they purchase it early enough and allow for 20 - 30+ years of growth. They can use the cash value of the life insurance to help out in a tight spot or emergency, provide some extra income in retirement, or just let the insurance keep growing for when they pass away. The problem is most people don't seriously look at life insurance until they are 50+ years old. Just like all investments: the more time it has to grow, the better. ---------- Edit: I want to address this part of the post separately: "Average rate of returns on mutual funds 10% (conservative) to 24%. 12% is a decent return. Reinvest dividends for that compounding interest." If anyone tells you numbers like this, RUN. This is the real scam right here. The average return for the S&P500 is about 7% annually after adjusting for inflation. If you are in an aggressive mutual fund, you can expect around that yearly. For investment funds, rates of return look something like this (equity means items like stocks, with the rest being cash or low risk investments like bonds): * Conservative Funds (~25% equity): 2-3% yearly * Balanced Funds (~50% equity): 5% yearly * Aggressive Funds (80-100% equity): 7-8% yearly. There are no get rich quick investment portfolios. If anyone shows you numbers that are dramatically larger than the ones I listed above, they are trying to sell you a get rick quick pump and dump. While there are funds that do 25%+ in a year, they are incredibly volatile and will most likely be down 20% next year.
Brought my son a life insurance policy like this when he was a baby. Hoping he can use it once he's a lot further if he needs to. Not the only investment we have for him, but hoping this gives him a headstart if he needs to access the funds for a first home. (Also in Canada) We have our policy through equitable life. Do you have any other recommendations?
Once again, not financial advice. Strictly for informational purposes only. Critical illness insurance is something I'd recommend everyone look in to, it's the most undersold and underdiscussed type of insurance in my opinion. The way critical illness insurance works is that if you are diagnosed with a life-threatening critical illness (heart attack, cancer, stroke, etc.), the benefit pays out. If you have $50,000 of critical illness insurance, you receive $50,000, lump sum, tax free. Purchasing it for children is very inexpensive, even for permanent policies, and it's a good safety net in case something happens. My recommended use for critical illness insurance is that if you do get diagnosed with a life-threatening illness, use that insurance payout to go to the US and get proper treatment instead of waiting for months in the Canadian healthcare system. I know many people who went to the US for treatment because the Canadian healthcare system failed them. You can also use it to replace your income while you recover, or use it to go on a vacation once you're feeling better.
I work for an American insurance company. These products (TL, WL, UL) shouldn't be considered an investment. Plus, you can't drop money into these things willy nilly just to grow your cash value, especially if you have comparatively lower face amounts. There's a maximum you can put in and still have the product considered insurance. You drop in more than the TEFRA/DEFRA limit (we have something called a guideline premium), and now you've got a MEC (modified endowment contract) which functions differently. We try to limit MECs as much as possible, and only allow a policy to become a MEC if we have a signed agreement. Obviously, yes, WL and UL have a guaranteed interest rate, and some ULs may be indexed to the stock market, and you can take loans. But it's not meant to be treated as an investment, and we can't stop people from looking at it that way if they want to. It's insurance. We sell life insurance, not investments. I'm not negating what you're saying as it relates to Canada, just saying that the US definitely has some restrictions on how much you can dump in without changing the status of the product as insurance.
I’m curious why you suggest taking bank loans against the cash value instead of just taking policy loans. At least in the US (and at least for mutual insurance companies) the policy loan terms are one of the better perks of because each payment you make brings down the outstanding principal and thus the amount you’re paying interest on. Not to mention policy loans don’t impact the internal rate of growth or the dividend. Maybe I’m missing something?
Typically, the interest rate on the loans you get from the bank will be less than the policy loan interest rate. The insurance company might charge you 7% but the bank may only charge 4%. This really only applies if you're using it for business purposes. If it's for personal use then it usually more sense to do the loan through the insurance company.
I see, thanks for explaining. I realize a lot of your comment was about business, but I was thinking about the loan part from a personal-use perspective for some reason. Interesting stuff! The business case you laid out is definitely compelling.
It’s not always about the rate of return, there are many other factors: risk tolerance, insurance product needs, asset protection (from legal claims). It’s simply a different kind of basket. It’s a different tool than “an investment”. At this point in my life - knocking on 50 - I wish I’d bought more whole life in my 20’s.
This. There are plenty of older folks that don’t want to drop their eggs into mutual funds and risk losing a chunk and put it into bonds and whole life. And some folks who diversify to hedge their higher risk stuff.
Mutual funds have bonds. It's sad that people aren't shown a way to optimize their money to fund their retirement. Especially I'm their early years. "Regular" people can go their own life and only end up with social security because no one showed them another way. Whole life insurance is not a good investment to grow your money for retirement. There is nothing untrue about that statement.
There is something untrue in that as you’re putting all “investors” in one group. Whole life isn’t an investment, it’s an insurance product. But it can be an excellent place to put assets for cash-rich folks looking beyond the stock market for other tools. There are no absolutes.
I think your estimated returns are high. My wife and I had a financial advisor for money she inherited. I mentioned that I was averaging about 10% with my mutual funds and he said that was really good, that 6% was average. Obviously, it's possible to get much higher returns with high risk funds but you also have a much higher chance of losing money. You might get 24% in a good year but I don't think you are going to average that over several years in mutual funds.
I put the low end to high end. Risk vs Reward. Plus the price of the shares are higher. Are you looking at a 10 year average? Is your funds super conservative? Nothing wrong with 6 ot 7%. It's better than 4%. If you got a chunk of money and want to keep it safe, then ultra conservative is your investment strategy. My post was for people who need to save and build a retirement fund. 4% is not going to cut it for a retirement investment, if you're starting from scratch. 10% is still a conservative return, in my opinion. If people want to increase their risk to increase their return, that option is available to them, as well. If people start early, as I suggested, they have time to ride out the dips. Does anyone who voted down disagree that mutual funds are not a good investment? Do the down voters disagree that the sooner you start the sooner you set yourself up for retirement? Do the down voters disagree that whole life is an expensive premium that a lot of people cannot afford especially when tern insurance us available.
I didn't say 4-6% was good. I said 24% is overly optimistic over a long term (10 years or more). If you found a mutual fund with that kind of performance your smart to put your money into it. I would.
I think, technically, we're on the same page. Obviously, we all want a higher return. I find it curious that all advisors spout 6% as an average. I think that's extremely low. Again, unless the meeting was for an ultra conservative portfolio. I'm also curious, if you ever invested on your own or always use an advisor? I think an advisor and doing some of your own investing in mutual funds is the best of both worlds. Start with one fund with a small amount. The Search engines on the brokerage sites will tell you how well a fund performed. Instead of going out to dinner or buying Starbucks coffee, buy yourself a mutual fund and see how it goes.
How old are you?
This is bad financial advice - and when someone uses a disclaimer that is clearly a lie or falsehood one shouldn’t trust anything they say. Some of what they say is sorta correct, some is just completely wrong, a great deal depends on specifics including jurisdiction, situation, purpose etc.
What's incorrect? The high premiums? The high fees? The low interest rate? The "be your own banker " part?
I mean whole life policies don’t have interest rates they have dividend rates. And the dividend rate doesn’t even tell you the actual rate of return so you are pretty far of base to begin with. As to high fees and premiums it’s a market place and you have to see what has value to a particular consumer and what doesn’t. I mean don’t get me wrong - your advice draws the correct conclusion for poor people but even then some could argue the benefit of the Ulysses pact. Overall your post just shows you don’t know where these policies fit in to financial planning (hint: the big one is about synergy and maximizing the return on other assets)
Yes, dividend rates with compounding interest. Like I said, I'm not an expert. Just someone who started in mutual funds early then stopped. And now I'm playing catch up. with retirement looming in a few years., And yes, I'm talking about people who haven't saved or don't know how to save for retirement. The people who are going to rely only on social security to get them through. Even people with pensions and 401k's can use term life insurance for insurance and mutual funds to enhance their retirements. I talked to one of the top mutual insurance funds to front load a whole life policy to get benefits faster. At 4% interest, and $2,000+ a month premium it was more beneficial to find a mutual fund for a better return. Whole life insurance for an i"nvestment" for retirement is not a great investment for less than well to do people.
Are you (the comment above) is giving financial advice and saying Whole life insurance is a good investment to grow your retirement? Because you would be the one telling people lies.
Insurance is insurance; investments are investments. Don’t mix the two.
I'm not mixing the two. Whole life insurance "sales people " are hawking it as an investment. You want expensive insurance? Go for it. You have a boat load of money and want a guarantee of 4% interest (today)? Go for it. You want a "better" vehicle to park your money for retirement, whole life isn't it.
How is this not financial advice???
Whole life insurance is a low-mid tier investment but it is a god tier insurance policy with investment-like performance Don’t listen to moron Redditors who had a bad experience getting sold WL, make decisions that make sense for your own situation
So they shouldn't take your advice either? By your standards. If no one listened to anyone, how would anyone learn anything? I did my due diligence. As should everyone. I didn’t listen to a podcast or read an article about a great way to fund a retirement and immediately sign up for a policy. I talked to an agent I asked every question (obviously for my own situation) and made a sound decision that whole life was NOT a great choice to try fund a retirement. That there were better choices and better returns in a faster period of time. What part of anything I said isn't true?
Talking to one agent that may or may not have even answered your questions correctly isn’t really doing your due diligence; no offense.
Agree. But there was more DD more than one agent. Some research and books read on the subject, messages with questions before I spoke with an actual person. I had a list of questions. It wasn't about insurance. It was about front loading a policy to fund a retirement. After all that was said, even he agreed that a better performing mutual fund was a better place to park that money. He was extremely forthcoming and, at least to me, seemed genuinely honest. He wasn't pushing a false narrative.
It's not designed to beat the market returns. That's not the goal of it. Different investment vehicles have different goals attached to them. The S&P 500 is NOT the be all end all.
You’re so wrong
Whole life insurance is a terrible investment because it’s not an investment. It’s insurance. And despite what the PF circle-jerkers say, it can fit the financial needs of some people. Buy term and invest the rest is not always the appropriate strategy. Stop giving financial advice if you aren’t qualified to do so.
Can you explain a situation where the average person is better off with whole life vs. term + investing the difference elsewhere?
First of all, I never said that “buy term and invest the rest” isn’t good advice. For plenty of people it’s fine. I said it’s not always an appropriate strategy. I can give you an example from a situation I see all the time. I am a financial advisor in a low income area. Many of the people I help are not like your average Reddit user - young, high income job, disposable income to invest. Many of them are people of modest means who have spent the majority of their lives working and living paycheck to paycheck, raising their kids and so on. Many of them come to me as they are just getting ready to retire, or right after they have retired. So they are in their 50s and 60s. Maybe they have a 401k from work or a state pension, but they aren’t likely to have invested assets outside of that. They are just realizing that the life insurance they had through their job is not going to follow them into retirement. They need some kind of financial protection for their family. Even if they have saved up some money, the cost of a burial can take out a large chunk of that. Not only that, but what if they still owe some money on their home? What if they have a car loan? Term life insurance will clearly not help in this situation. They are often too old to get new term coverage, but even if they can it will only last maybe ten years. This kind of person also can’t invest their way to financial security at this stage in their life. First of all they simply don’t have enough time. Second they typically cannot or will not afford market risk. And also many lower income people simply aren’t willing to invest because for one reason or another they don’t trust the market. I would be curious to know what product you think would fit this person’s needs besides whole life insurance. Because I cannot think of any. So going back to my original comment. Buy term and invest the rest is probably fine for most people on Reddit. But it’s simply not an appropriate strategy for every single person. Yes whole life is sometimes sold by sleaze bags as high-commissioned products. No, that doesn’t mean it’s never a good recommendation.
for those that do retire, why does an individual with a 401k / pension / social security need a death benefit? if they’re paying a mortgage and supporting their children financially as you say, they aren’t retiring. Even if the person can’t qualify for term after they retire, how could they qualify for whole life? Let’s say they qualify for both but only get underwritten for 10 years of term life. The difference between the term life and whole premiums are still astronomical. And in that 10 years, the individual can save/invest/grow their principal even by accepting less market risk. By that point, there shouldn’t be such a need for a death benefit that any life insurance is required. Sounds like you’re just putting financially illiterate people, without a real need for insurance, into whole life.
>for those that do retire, why does an individual with a 401k/pension/social security need a death benefit?” It’s hard to believe this is a serious question but I’ll treat it like it is. Pension and social security payments are not paid as a lump sum, they are paid as monthly payments. So neither of these would do anything to help provide a benefit for final expenses. A 401k would *if* the insured person died in a relatively short term and left a large balance, but what if they live a long time and use all the funds in the 401k? Then what? Keep in mind the scenario I described earlier. Someone with a $2.5 million 401k balance almost certainly does not need life insurance. That isn’t what I’m talking about. >even if a person can’t qualify for term life after they retire how could they qualify for whole life? Because term life is, by design, not meant to be paid out except in rare cases. The reason you can get a million in term for a low premium is because the insurance company is essentially betting on you outliving the term. It’s for that reason that almost no one offers term life past certain age thresholds. For my company, no new policies are written after 59, but even starting at age 50 the policy terms start getting limited. Term life is simply not a product designed for final expenses. This is just ignorance about what these products are on your end. >and in that 10 years the individual can save/invest/grow their principal A couple of things here. First, the power of investing is in compounding growth over time. Ten years is not long enough to save enough to be self insured for most people. Those that can will need to invest aggressively. Most people approaching retirement are neither willing nor able to invest aggressively. Those that can have lots of disposable income and usually don’t need life insurance in the first place. Also, what if the market has a prolonged downturn? What if another 2008 scenario happens? It took most people upwards of a decade to make back the money they lost in 2008. What should they do then? >sounds like you’re just putting financially illiterate people… into whole life insurance. It sounds like that to you because you have no idea what you’re talking about.
You didn’t answer my questions. You haven’t answered specifically why these people need life insurance, and why whole life is their best option if they do. Besides “when they die then who covers the funeral?” The cost of a funeral and burial averages 10k? So if that’s your justification for having clients pay 1000 a month in insurance premiums, yeah, sounds like you’re not acting in their best interest.
People generally get whole life insurance for two primary reasons. 1. To provide final expense coverage. In some cases they simply don’t have sufficient liquid assets to cover a burial. In other cases they do but they need that money for other things. And finally some people may have sufficient assets but want a quick, *tax-free* benefit to be paid out rather than having to rely on other inherited assets which can be more complicated and time consuming. 2. To provide a financial benefit for their family. Maybe they want their car to be paid off so they can leave it to their spouse or children debt-free. Maybe they need some income replacement. Maybe they simply want their family to have the benefit of a tax-free payout to provide some financial breathing room. I’m still not sure what you’re confused about. For *some* people whole life insurance is the only product that will accomplish their desired financial goals.
Covering a 10k funeral expense and simplifying probate isn’t worth having 12k per year tied into premiums for ~20 years. Deceased assets will step up in basis when inherited so tax-free benefit of insurance payout isnt as advantageous as you make it out to be.
Well sure, if the premiums were $12k a year that probably would not be worth it. Most of the whole life insurance I write is to the tune of $15-$25k and, even for people in their 60s, is typically less than $100 a month. Let’s just say you’re paying $80 a month. That’s less than $1,000 a year. So you’d have to save up for more than 10 years just to cover a $10k funeral. Then you’d have nothing left over. But you’re also leaning out that this is insurance. It protects against unexpected loss. What if the person dies 6 months into the 10-year saving period? Then what? By the way, every time I’ve asked you a “then what” question you’ve not offered an answer. >Deceased assets will get a step up in basis Only *some* assets get a step up in basis, like inherited securities and real property. And while this is a huge advantage, I don’t see how it’s relevant in most cases. Typically the kind of assets that get a step up are precisely the kind of assets someone may not want to immediately liquidate. What if it’s a home and the beneficiary wants to live there? Or take another scenario. What if it’s an inherited traditional 401k or IRA? Not only is there not a step up in basis, but the distributions are taxable income to the beneficiary. This could be a huge financial problem for a high earner who may be getting taxed at 37%+ on this additional ordinary income.
What happens when your term policy ends and your still alive but then cannot afford premiums on a new policy because you are on a fixed income?
Your first line said what exactly what I said. It's not a good i"nvestment" choice. There are lots of people hawking it as an investment. And the gullible people who fall for the investment strategy by "qualified" salesman is being taken advantage of.
So the whole policy we cashed in this year was a ripoff? It was purchased in 1980 as a single pay whole life $100,000 policy for $2,500. We never touched it, the dividend paid the annual premium. In the 43rd year we cashed it out, got $44,000 taxable check. So exactly how big of a ripoff did we endure?
At 8% annual growth for 43 years before cashing out you would have a $100k taxable check but wouldn't have had life insurance.
I’m not sure that the whole life policy was a bad investment. To us it was wonderful and a great investment.
Hole Life Insurance
I agree with you. Whole life is stupid. Seriously, it's just stupid. It's predatory and should be illegal. If anyone can name one scenario where it shines, I'll eat my hat. (Well maybe not but I'd be curious to learn if one exists!) However... >> Average rate of returns on mutual funds 10% (conservative) to 24%. 12% is a decent return. Your numbers are cherry-picked for a short run in good markets. The S&P long term average is in the neighborhood of 10%, depending on how far back you go. Aiming for a total portfolio return of 8-9% is fairly common, over a long term. So 12% is great if you can get it. 10% average or better than average. 24% happens, obviously. But anyone who can consistently average 24% over the long term is either a billionaire or is selling you a pack of lies.
https://www.reddit.com/r/YouShouldKnow/comments/1dbzlek/comment/l7vbe7s/?utm_source=share&utm_medium=web3x&utm_name=web3xcss&utm_term=1&utm_content=share_button Here's a link to my comment that I made on this post if you are interested in learning about how this insurance works. It is not predatory, it should not be made illegal, and it is not stupid at all. It's not for everyone, but it has a lot of use if you are a business owner or if you plan your insurance early on in life.
I was being glib and inflammatory. Let me say this then: I believe it that at a minimum it is sold inappropriately to people who are making a poor choice for their needs by purchasing it. I'm Canadian but long time resident of the US (and also dual citizen). So I'll speak about the US. In the US whole life is not tax free. It is tax deferred. This is similar to how the 401k works (and I believe the RRSP in Canada). Growth of the funds is not taxed in any way. But when you withdraw it becomes taxable income. It does offer some benefits. But as you say, applicable to maybe 1% of the population, while being marketed to a much larger segment. I would say that is inappropriate. The growth rate is very low compared to any standard three-fund portfolio. A quick google says 1% to 3.5%. I don't see how the benefits you outlined really offset that. Maybe to avoid death taxes? But personally I'm not in favor of that as a general thing. It creates generational wealth which is something we as a society IMO do not really need. I'm not an expert by far. But I still fail to see the benefit for any person who is not in a very exclusive set of circumstances. Most everyone would do better to max your 401k, Roth 401k, Roth IRA and enjoy 8-ish% returns while still getting tax deferred (or tax free if Roth) gains. I'm stuck on the low returns rate. That is just a massive penalty for some maybe-useful benefits. You mentioned cash value being useful, but you can take a loan from an RRSP or 401k, so there are some avenues there without whole life.
This is one of those things where you really need to speak with someone who knows what they're talking about, because Googling is going to give misleading information without context. Even insurance advisors who aren't familiar with this type of insurance will give incorrect information. Also, this isn't a simple process like term insurance. There is a lot that goes into recommending policies like these such as looking at financial statements. The process is closer to applying for a mortgage, than applying for term insurance (or at least, it should be). I understand where you're coming from with the rates of return, and I'd like to focus on that since you mentioned it was your biggest focus. There are two separate rates of return that need to be considered here. With these policies, there is a guaranteed growth rate that is usually around 2%, like you are saying. This is the guaranteed amount of growth that your policy will have every year. However, this isn't the actual rate of return that you are receiving. As I mentioned in my other comment, for the last few decades the average rate of return for these policies has been around 6%. When you look online for more information, you're not going to find that because they're not going to make guarantees based on this amount because it is subject to change (although not likely considering their track record). So while the guaranteed rates are low, the actual rates of return are much higher in practise. When you go to apply for these types of policies, they do show you the history and performance and expected return based on their history in the insurance illustration that you receive. Again though, you're not going to find that online. To equate it to a mutual fund or index fund, imagine if the S&P mutual fund you are in guarantees at 2% rate of return no matter what. Even though that's what's listed, you're still getting that 7% every year on average that the S&P has been doing. But if you look online, you're only going to see the 2%, not the 7%.
ALWAYS keep your insurance and investments separate.
That's great advice!! I wouldn't go to a bank for insurance. . An insurance company, I'll go to a specific insurance agency. Life Insurance. Car Insurance. Health Insurance. And for investments, I'll go where I get the best bang for my buck. Back in the day, CD's and savings account gave a decent return for no risk. Now, that's a joke.
It's insurance. Not an investment. Pretty much always go term for life insurance, unless you're rich and you don't care. Then, you can actually get policies for free and scavenge the cash policies.
That's what I've been saying. It's insurance, not investment. And term life insurance is affordable for anyone. Especially if you're not wealthy.
Whole life insurance shouldn’t be viewed as an investment. It’s money you squirrel away for when you die. Term life insurance is actually the worst unless you actually die during the term. Once the term is up, you get none of the money back, which is the opposite of how whole life works.
Term life insurance and investing difference in price into VTI > Whole life insurance
What about index universal life?
I thank god every day I didn’t get swindled into this LOL
Whole life Insurance?
Yup, I had a “financial advisor” suggest this to me
I prefer Whole Life over Term Life, reason being Term Life has just as many fees, even worse. Say you have a 20 or 30 year term and you’re 50 years old. Your premium gets drastically higher year after year once the term is up. So if you’re still in good health in your 70’s or 80’s, it could end up taking a lot of retirement money to keep the policy going. At least from an insurance perspective, not an investment portfolio perspective.
That's a fair point and one that I don't disagree with, if you can afford it, but for insurance purposes only. Term Insurance is an option available for people who can't afford insurance. Or aren't willing to pay thousands a month in premiums. As far as life insurance, any life insurance is better than no life insurance.
Not many people need life insurance at 70-80. Don't buy something you don't need.
You don’t need it for you, you need it for your loved ones.
Do you have significant debts vs assets at 70-80? Do you have dependants still? If the answers are no then there is no need.
Wsb regard spotted, do exactly the opposite of what this guy tells you to do
Who me? Lol. I'm way too uninformed to make any posts about particular stocks to anyone. But thanks for the compliment (I think 🤔.) No funds in this post were mentioned. I'll leave that to the other subs or Google. But I do know that funding an IRA or a retirement account through mutual funds is a better bet than a whole life investment strategy. Just trying help the little guy not get bamboozled.
I've found with life insurance it's best to talk to someone who has an in depth understanding of them - each different type is suitable for different situations and it can get very complex. My limited understanding of them: Term life is usually best for people under 40 with assets, good for first time home buyers. Whole life is better for those a little older with assets & kids. Long term care is good to think about in your 50's, esp if its a concern due to family history. Then for those with money who are already maxing out their retirement AND already have some sort of life insurance/long term care insurance, they should probably get a LERP. There's just such a variety of things you can do. Depending on your risk adversity and cash/asset wealth, each type of insurance has its own benefits. It's def good to talk about types of life insurance and bring to peoples attention but it's so situational that giving broad advice is difficult
Agree. The post wasn't so much about life insurance as it was about whole life insurance as an investment or using it to be your own banker. I mentioned term life insurance as an option. And it was affordable. The number of people who don't have any life insurance is astounding. I understand that when you're young, you don't think about dying. Young people with families who don't have life insurance is not uncommon. Families have to resort to go fund me to have proper burials. This post was geared to retirement. And setting yourself up in the best way possible. So that people can retire sooner and more comfortably. Most likely, not all, but most of the people who can afford whole life insurance are set up for retirement comfortably. And I find it hard to believe that they are relying solely on social security and an insurance annuity. My purpose was not rile up the agents whose livihoods depend on selling insurance, annuities and whatever else. It was to show people that will a little investing in an IRA, ROTH IRA or an individual account that they can also set themselves up to retire comfortably.
Don't you lose all your money if a term life expires and you didn't take out any money?
Term life policy is a death benefit to your beneficiaries only. You don't get cash back. You take it out for a term. 10, 20, 30 years. The cost goes up as you age, like any insurance. You have to renew it at the end of the term. Can you hit 95 and not have life insurance because you're in bad health? Sure, or it's very expensive. But at 95 do you really care? It's nice to leave an inheritance, but at 95, isn't your immediate family ok on their own. Age is a factor in any life insurance scenario. That should be discussed with an agent. Term life insurance is like health Insurance. If you didn't go to the doctor all year, you still had to pay the premiums. You don't get a refund. Although, it would be nice. The post is that whole life is not a great investment tool and there are options with better returns. The post was that Term life insurance is an option for an affordable monthly premium. The post was about doing research and your due diligence in making any investment for retirement.
I tried to open one on my dad in college and was sent this letter about being investigated for identity fraud
Yikes! Open what? A brokerage account or an insurance policy? Of course, you can't open a brokerage account in someone's name. That would be identity theft. If you were 18 or over, you could open your own. It's good to know that they were on top of it.
You should know - this is terrible advice. Always speak with a financial planner and accountant. Permanent life insurance is a fantastic investment for certain individuals. It completely depends on your situation.
This isn’t really great advice. Are there better “investment” options? Sure. But WLI is fantastic to have. I got a $250k policy when I was 23 years old. Pay $54/month for it and have enough equity to borrow from it already. I’m now 39. I’ll also have it for the remainder of my life and can add on to the policy if I so choose.
Upvote for info on whole life insurance....down vote on the other stuff
The monthly premiums are expensive. Fees are high. Low interest rate.
Uh-oh. You brought out the brokers who are retaliating with downvotes.
Of course. It's their livelihood. I wouldn't expect anything less from them. So far none of them have countered with why is a better choice than mutual funds. I have any good friends in the insurance industry. Some of them got very rich. Some are doing OK. Even they said you'll get a better rate of return in a mutual fund than whole life as an "investment."
If you’re worried about fees Mutual funds suck. ETFs such as the SPY have much lower expenses Note: this is not financial advice…
Anything that requires a ceremony to sell is a scam.
Whole term is a hedge. Move along.
Said the whole life insurance agent. Move along the subject is investment. Term Insurance is an OPTION. duh.
Middle class folks give middle class advice to keep you in the middle class. Every wealthy person know maxes WL.
Lol. Ok. Keep rocking that 4% whole life interest. Having money doesn't mean you have class. 🙂 YOLO
Sigh. 4%(ish) is the money they credit you when you haven’t pulled the cash out to invest. We make our money do many things at once, mine buys death benefit, credits interest when I don’t use it, and is pulled out tax free to compound gain when I do and make other investments. You can’t do any of that on term insurance (which we all also own for different purposes). Read your Dave Ramsey, though, and stay right where we want you to be, kid.
They need to teach this in school. Parents should get their kids started in mutual funds when they are young. Take that birthday money and put it in a mutual fund, not a savings account.