Life insurance agent here and I also work for a company that really believes in IULs. However, there is a scenario that’s fairly common that I have a problem with: Say I’m 30 years old with a family and I’m in the market for life insurance. I’m torn between going with a term policy or a permanent (in this case an IUL). An agent really sells me on the IUL and all of its advantages, so we set up an Option A, level death benefit policy to have permanent insurance, maximize my cash value. We went with option A because they explained to me that the insurance component of an IUL is Annually Renewable Term (ART), so if I went with the Option B, increasing benefit benefit, I would be sacrificing a lot of cash value over time… especially as I get older and the portion of my premium that’s being allocated to covering the cost of insurance increases. I pay into my Option A, level death benefit IUL policy for 28 years and I’m now 58 years old. I’m going to retire in 2 years and I’m so excited to start taking TAX-FREE policy loans at age 60 to supplement my retirement income. Unfortunately, I tragically die in a car accident on the way home from work at age 58. The death benefit from my IUL is paid out to my family, but my cash value… where does it go? Back to the insurance company. I funded an IUL for 28 years and you’re telling me that my beneficiaries don’t get a single penny of my cash value? If I had a term policy and invested the difference elsewhere, yes there would still be minor management fees, yes there would still be taxes when said investments are paid out to my beneficiaries. However, they would still be receiving SOMETHING rather than $0, along with my death benefit since I died during my term. Response?
Life insurance agent here: I have contracts with some of the largest life insurance carriers in the country. Aside from universal life (if option 2 is elected) there is NOT a whole life product that adds cash value to your total death benefit. Cash value, simply put, is the $amount your policy is worth in the event you wish to cancel the policy. You DO NOT receive both. Universal life is a completely different demon. Most agents use a ‘minimum premium’ value to sell the product under promises it will last to age ‘x’. The policy builds cash value during early years, HOWEVER, it’s depleted rather quickly. As an insured pays the same ‘minimum premium’, the cost of insurance rises with their age. Once the cost of insurance exceeds what they’re paying into the policy (ie monthly premium), the difference is deducted from their cash value. So yes, the policy will last until age ‘x’ but your cash value will also = $0.
@@DavidMcKnight Do you have someone you can connect me with, to show me why this makes sense? Every time I ask someone, I get the run around, or they avoid the conversation. Makes me even more skeptical.
@@hsmolanoff go to davidmcknight.com and click work with David and I’m happy to refer you to a Power of Zero advisor that lives in your neck of the woods. Where are you?
I describe it like this, one is fully baked and the other provides more flexibility. With that flexibility comes some benefits but more work to stay on top of it. So, when you buy whole life after you get it, there is no changing it. Universal has the abiliyt to increase or decrease the amount of insurance and amount you pay (to some extent) and when you add the variable aspect now I believe its being supported a little more by risk & rewards....we dont have any of these as of yet nor do we have the indexed universal policies but I am hopeful we soon will as this seems to provide the best of all teh worlds...
@@JeremiahS Some policies are good, when put together certain ways, when an agent doesn't know how to put one together, the policy is said of being a rip off. Makes little sense.
The savings portion of the IUL, is controlled by the Life Insurance Company and must give more and more Mortality Cost Fee (MCF) to the Insurance company every year. That fee doubles about every 8 to 10 years. History has also proved that the current mortality cost fee (MCF) slides to the guaranteed mortality cost fee over about 8-15 years. So, the projections you showed isn't going to happen. You could use a Whole Life example with the same amounts and of course, the interest will be lucky to get 1-3% interest over a 35 year period. So, with UL's the 6.24% you claim, will go down every year the MCF increases. Over time, back to the 1-3% returns of the past. Why is it that the MCF is never pointed out on these videos and across the kitchen table with clients?
Great comparison and video. You missed a few key factors that Ramsey Omits in this as well. Investor discipline, (the success of the investment is dependent on the investor continuing to contribute funds and not go buy that fancy new sport car because they now feel comfortable with their roth performance) Job Market instability, (The projection you are offering I am sure would have premium loan provision where the policy would stay in force if the insured couldn't afford premiums for a period of time. Show me a term that will do that sans an EXPENSIVE rider) Fund management costs go up as the account value increases, so, the initial investment levy is feed as well as the overall account. Not to mention any commissions paid for "Management and transactions" Way too many people have the wool pulled over there eyes in so many Mutual Funds and reps that even a simple indexed annuity would out perform the actual mutual fund over time.
Some of these assumptions are wild. 1 percent fees? Only if your accounts are actively managed. Invest into your own account through vanguard and your fees are 0.04 percent, more than 20 times lower. Also what whole life policy has 1.9 million in cash value after 30 years? Average return rate for a whole life is 1.5 percent. Even assuming 1.7 percent, that whole life would make just under a million after 30 years. Where did the other 900+ thousand come from??
Also 6.24 is wildly conservative. Long term investments in the S&P 500 average more like 10.5-11 percent. Even 8.24 percent would've been a questionable assumption.
Not really. First of all this is not While Life. It’s IUL which has much higher historic returns. Secondly, go it alone Vanguard investors earn roughly 3% lower over time than the investors who pay a fee to an advisor who can hold their feet to the fire through up and down markets. And this is according to Vanguard’s own research.
@@DavidMcKnight I did watch the whole video. Addresses or not, these numbers are not realistic. You frame them as if doing better is possible but tough. It's not. Getting 0.05 percent fees and 9-10 percent returns is the norm, for any average person, if they're diligent.
@@DavidMcKnight also you're wrong advisors best the market. Bogle disproves that in his books. Advisors rarely beat the market returns of 10 percent and often do worse. Non actively managed accounts average 10 percent long term. How well most accounts perform is neither here nor there as this just speaks to the emotional reactions of some investors. It's perfectly within reason for a non actively managed account to get market returns, which best 95+ percent of all actively managed accounts.
don't think so, I think he has a relationship with a company that does the comparisons of all insurance. but even so, on the other hand, the only people I find recommending permanent life insurance are people who sell insurance, so conflict of interest is bigger there.
@@bradleys2320 Well, consider those selling other things, even for a fee, what is the goal of every person? Increase your finances so I would argue unless you find a quality person who really cares about you and your goals then they probably wont take care of your needs. Ignorance comes into play more so because the public lacks the info they need to make wise decision and they rely on those of us in the industry to help them make decisions. So, no matter what you are doing I think you are going to find a conflict of interest. The challenge begins to make sure you find someone who will walk through all the important items in your life and help you build a plan that fits you and your family holistically. Dave R. has millions of followers and uses that to his interest and most of what he talks are ways we all should live ourlives getting out of debt and being debt free but that cannot always happen....but again I think he fails on this one point does a dis-service to those who place so much stock on what he has to say about it. He should cover all the facts of using this tool and let people decide for themselves if the benefits outweigh the drawbacks.
@@DavidMcKnight It's actually like saying they only people who recommend leasing a car are people who benefit from you leasing a car, which is 100% true. Anyone who can do math or read consumer advocates know leasing is the most expensive way to have a car (can't say own/buy, because you don't actually own it unless you buy it at the end). I'm just finding your channel. Interesting, yet I'm finding a few flaws in your assumptions and how you characterize Dave Ramsey.
Buy Term and Invest the difference was the worst advice I ever attempted to follow. A judgment against you will have claimants dicing up your 401ks and IRAs and devoured in no time. Your Life Policies will still be yours. Dave Ramsey is great for the working poor and people who have trouble with debt. His advice flies off the rails at Baby Step #4.
Not to mention, that your examples use a consistent ror, which doesn’t happen. One down year and the BTID slides off the rails. A WL policy doesn’t have a down year.
Over a 30 year time horizon, as he's showing, 1 down year doesn't derail anything. If I die in a whole life policy, my cash value is gone. Talk about being derailed.
@@hsmolanoff misguided. Policy pays higher of cash value or face. Premium for both would be cost prohibitive. It is literally the reason for buying whole life: that it will last your whole life. If you die young, it pays face. If you die old enough, it pays the grown investment. It literally guarantees a good payout. That’s what permanent protection is all about. How did you miss it? I’m not an agent. I figured this out as a customer.
@@opt4living Why wouldn't you want both the death benefit and your investment? And if I have millions of dollars in an investment account at 60, 70, 80 years old, why do I still need life insurance?
@@hsmolanoff first question, because it would cost too much for both to guarantee me now and guarantee me later. Insurance is to average the risk, not make you rich. No one nowhere gives you both. How much does it cost to cover both red and black on roulette? Not worth the risk of the rare green. In essence, insurance is giving you the larger of red or black for a smaller more manageable premium. Second question, you don’t ‘need’ to keep the life insurance if you outlive the protection it was for. You ‘get’ to keep it because you already paid for it. I should add that decades old whole life policies pay for themselves. There is no incremental cost to keeping them, just benefits from a wise decision earlier.
@@opt4living I think you truly need to look at the cost of a cash value policy compared to a Buy Term & Invest the Difference strategy. I've never seen a scenario where cash value made more sense. Prove me wrong.
So disappointing. No Christian / Mormon values here. My expense ratio is not 1.0, it’s 0.04 . Hidden fees in insurance contracts make their return much smaller than what he states. The greed keeps him from giving a balanced presentation. In a Christian / Mormon view one would say the worship of money has taken his soul. Take in his good information , but spit this part out.
Hard to believe you’re making a spiritual judgment here when I’m dealing with basic facts that have been pulled from life insurance illustrations (net of fees) and trusted third party sources. How do we have honest and open discourse about these types of issues when you approach it in such a fraught, condemnatory way?
Really, your going to bring your faith into this conversation and I would say, you might need to understand his background a little better before accusing him. I would argue he has faith as a big part of his life but then I dont know him personally but I have done enough research to know a little about that part. From a pure financial stand point take this into consideration. Two things are for sure - Death & Taxes. Take advantage of these two scenarios and bless your family because you did your homework to understand how, even with the insurance charges, this tool accomplishes taking care of your family. Look at it like this. Even with "all the fees", if you make one payment and pass away who really wins? well, I would argue the family wins because the major bread winner thought enough of their family to ensure they woudl be taken care of. the insurance company has to pay out even after only one payment so I would think that's a pretty good deal. Now if you live too long then this type of policy will pay for its self in most times, in a few years. so, when you look at it over the long haul the insurance company ends up "paying you" to have this type of policy, although you will keep making payments up to a certain period. Find a good agent that knows how to walk through this as a scenario... I have gone through Dave Ramsey's stuff and I was never convinced and now I am in the insurance industry and see it first hand from the inside out.
Life insurance illustrations are not worth the paper they are written on. “Trusted third parties “ are bought off by the insurance companies. Again, 0.04 expense ratio crushes the products these companies push. Don’t invest with insurance products. Invest by buying stocks from productive companies using low cost index funds.
How about when you get older and money is taken away from the cash value to pay for an IUL by the insurance company because you are getting older. The company will not tell you that. You losing that cash value. I'm just saying that it should be noted.
But the amount of insurance the IRS requires you to buy at that point is minuscule so even though you are older you’re paying for much less of it and the effect on the cash value is negligible.
No. Even for example purposes, ROR should never be the same between any life insurance product and an investment account tracking a broad US stock market index. Using your own math, and based on S&P 500 annual total returns since 1928 (so Great Depression and Great Recession included), a $25,196 annual contribution split between a Roth IRA and Roth 401k, each with a 1% expense ratio and both holding index fund shares tracking the S&P, would have produced at worst $2,489,237 (7.25% ROR), on average $4,630,305 (10.58% ROR), and at best $11,075,771 (15.06% ROR). So AT WORST, these S&P 500 based roth investments would still outperform the $2,444,215 (your figure) the insurance company would give a family for losing a loved one. So at worst, $45,271 richer and nobody has to die. Buy term and invest the rest for the win.
Thanks for your comment. Did you see the part of the video where I said the life insurance should be seen as a bond replacement not a stock replacement?
I didn't. That'll teach me. I have believed for a while now that perm life's performance is bond-like, so that's a thought provoking idea. I suppose the policy's cash value, and some face amounts, could be considered an adjustable allocation like bonds are. I can actually rerun my Roth math using annual total returns of the Agg bond index since 1976. Ok so I did, and here are the numbers. Again, 1% expense ratio. $25,196 contributed annually for 30 years. This produces at worst $1,314,288 (3.56% ROR), on average $1,770,928 (5.33% ROR), and at best $2,606,261 (7.50% ROR). So your $2,444,215 face amount produced a near-best bond-like performance while providing tons of life insurance from the start. You may be onto something.
@@recisuser UH....YOU OBVIOUSLY ARE NOT AN INSURANCE AGENT??? YOU JUST GOT CONNED BY HIM...AGAIN! YOU...WILL...NOT...RECEIVE...THE...DEATH...BENEFIT...AND...THE...CASH...VALUE...PERIOD!! IF YOU USE THE CASH VALUE WHILE LIVING IT IS DEDUCTED FROM THE DEATH BENEFIT...IF THEY TRY TO OFFER YOU THAT STUPID "OPTION" TO "FULLY FUND" IT YOU'RE OVER PAYING AND IT'S NO LONGER APPLES TO APPLES, WHICH MEANS NO OF YOUR NUMBERS ARE APPLICABLE NOW??? IT'S SIMPLE LOGIC....THE LIFE INSURANCE INDUSTRY CREATED THESE PRODUCTS TO TAKE ADVANTAGE OF UNINFORMED MIDDLE TO LOWER INCOME PEOPLE WHO DO NOT HAVE "REAL" FINANCIAL ADVISORS TO GIVE THEM INVESTMENT OPTIONS THAT HAVE OUTPERFORMED CASH VALUE POLICIES, ALWAYS!!!
Whole Life doesn’t call it option 1 or option 2 but there are ways to structure it with paid up additions such that the death benefit grows over time. My videos generally reference Indexed Universal Life.
But what happens if you have a gap in employment/income or need to reduce contributions for a while? A 401K lives on, the insurance policy lapses. Just saying this assumes a lot just to demonstrate "apples-to-apples". And if you're reading this Mr. McKnight, can you please do a video on the value of a LIRP if one can get almost everything into Roth by retirement? * update, I just got to the FAQ chapter of The Power of Zero where it says one can use the surrender value money to carry the premiums for as long as it lasts.
As you know, I'm a huge fan of the Roth IRA, Roth 401(k) and Roth Conversion. For those approaching retirement, the LIRP can be very useful because of its death benefit that doubles as LTC. And if you die peacefully in your sleep never having needed LTC, then someone's still getting a death benefit, probably your kids or grandkids. I've done quite a few videos on my channel that address this particular benefit. Thanks!
Hey Lisa, that is a great point and supports the reason for having this tool in the tool box. You can use the cash value as an emergency fund to help the customer weather these gaps as well as help pay for the policy. So, I look at this tool like a swiss army knife solution because you can use it in so many ways to benefit the customer's needs. So, instead of designating money to an emergency fund, savings account, life insurance, retirement etc you can use this tool and take a portion of those moneys, where it makes sense to the customer, and designate this tool to replace some or all of those items in some fashion depending on what the customer deems important to them. It doenst replace their 401k or ROTH but when you take a look at how they can consolidate their funds into one tool it can make lots of sense. Like I mentioned above, why not take adavantage of a sure thing? Death & Taxes....this tool allows you to set your customers up to do both.
@@DavidMcKnight How about LIRP having protections from creditors,bankruptcies,frivilous law suits..IRA’s/Roth’s don’t have these protections..can you please shed some light on this? I am interested in learning more about it, what is the point of building this huge nest egg but it has no asset protection
You can with most carries adjust the face amount of the policy reducing the cost. That flexibility you don't have in other financial accounts. Tell your 401K company to reduce their fees when you don't contribute or are going thru rough times. I wait.
Lies. Dave is correct. Dave just said whole life average 1.5%-2% returns not 6% and your family can not take the cash value and the death benefit. And if you borrow against your cash value you will get charged a percentage.
I have always been bothered by Dave's either ignorance or perspective on this topic. First of all, I think you do need a knowledgeable agent to help walk through how to beneift from the benefits of having permanent life insurance in your portfolio and when you get right down to it this is a multi-faceted tool that allows you to have an emergency fund and other benefits built in. So, like Dave recomends, you can now have your emergency fund built into this policy and should the worst happen you can access these funds. People also like the fact that you can delegate your funds into a tool like this while creating a self completing plan should the worst happen to you; it also helps you maximize your pension etc. Dave also fails to consider the LTC aspect of some of the policies should you need that. How about the accelerated amount you would have access to should you become terminal. How many more benefits are needed in order to understand the value of having this as part of your portfoilio? Thanks for putting this together great job! ~ remember the death benefits are tax free so, there is that aspect of passing this along to your family without any strings or government attached.
Jeremiah - you do realize there are accelerated benefits in term policies too, right? Well, at least good term policies. As for the emergency fund, how do you access that money? Borrow it, you say? If I have an emergency, sounds like borrowing money would make my financial situation worse? Plus, how long does it take for real money to accumulate in there? If I need to access my "savings" in the first couple of years, is there anything in there? Just teach families to save for an emergency fund, instead of OVERCHARGING them for an insurance policy. I COMPLETELY agree that someone needs a professional to walk them through this. But let's not miss this - if you DON'T need an investment license to sell the product, it's NOT AN INVESTMENT!! You all keep misleading people - retirement program, pension, whatever. Death benefits are tax free in ANY life insurance product. The cash value, however, is only tax free if there is LESS money in there than what you put in = CAPITAL LOSS.
@@hsmolanoff so you have to get a good term policy and who would admit they sell less than optimal policies? And there is good o'l Murphy's law.... when the term policy runs out is exactly when you will need the benefits, most likely. Well, its like Dave mentioned you have to understand how your permanent policy works to make sure you can explain its options to your customers but yes, it does come out as a "loan" which allows you the opportunity to not have to pay taxes on funds within the tool. Oh and because your trolling around bashing a great thing you must have your securities license? You should better understand these tools for your customers but may be you just dont like insurance? Either way no big deal just give people the truth and options and let them decide which fits best into their financial scenario / life! Having security knowing this tool will be there no matter what happens in our economy provides a little reassurance, wouldn't you say? No need to bash a strategy you might not completly understand or that you just have a bias against. I could spend all day bashing stocks and other products that you have NO control over but its every customer's choice to choose the best options for them and you should be doing that for them, right? This is a part of your finanical planning like Dave mentioned or did you miss that part? You cannot argue with his pulling out bonds and replacing it with this option.
@@JeremiahS I have asked many agents who sell these products to show me a plan where this will be the best long term option for a client, and they either can't, never respond, or choose not to. So I'm not sure. Are you an agent, or do you have one you can connect me with? I would love to be convinced otherwise.
@@hsmolanoff I am an agent and would love to hear your thoughts regarding what you mean by long term option? The people I share this with like the option of creating a Swiss Army Knife type solution where this policy "can" provide benefits when needed and if you ahve watched the movie The power of zero the tax train is coming then you will better understand how this would benefit your customer. Amazon Prime rents this for $5 and its well worth it. There is not a lot of detail on how to implement but the high level stragety is described and why we should be considering this as an option, especially now. Now, I am getting my securities license but even as I move through this process I am not totally convinced bonds provide the tools people really need, at least if you have had a good conversation with folks about meeting their family needs. so, from that standpoint if you were to compare this option to the bond portion of a portfolio you would have to highlight all the benefits that come along with this tool. It may have a lower ROI but the benefits, in my opinion, far out weigh, the ROI that might be gained. Espeically the tax free portion along side having the death benefit. After all two things are certain Death & Taxes, why not take advantage of a sure thing!, right?
This guy isn’t telling you the whole story. He isn’t revealing the actual costs of what he’s selling. Misleading. Also, who has $26,000 a year to spend on a life insurance policy?
The numbers were pulled directly from the life insurance illustration which nets out all the fees. In short, this is a perfectly apples to apples comparison. And if you’re fixated on the $26k you’ve missed the point of the exercise.
If the gross rate of return for the LIRP is 6.24%, what is the net rate of return? FYI - if someone has a 6.24%rate of return in their 401k, they are seeing that AFTER fund expenses. Just like you're claiming Dave Ramsay is doing, you're not painting an accurate picture.
@@DavidMcKnight Oh, maybe I misunderstood. Before you said you're "showing a gross rate of return of 6.24% in either scenario." So if we're showing a NET return, than doesn't the Roth option have more money in it? If we're talking gross, than we need to see the fees for BOTH programs. To me, it sounds like you're explaining NET returns for the LIRP, but GROSS returns for the ROTH - which is why you then talk through expense ratios. If 6.24% is the net return, than that already factored in expense ratios. What am I missing?
@@hsmolanoff I'm trying to get at what a net rate of return would be in the Roth given a 1% expense ratio and a gross ROR of 6.24%. The life insurance illustration is already showing the return net of fees. So, it is actually apples to apples. We're comparing net to net.
PEOPLE REALLY CAN'T BE THIS DUMB TO BELIEVE THIS CRAP, RIGHT??? SIMPLE QUESTION EVERYONE....WHICH TYPE OF INSURANCE GIVES THE CLIENT THE MOST COVERAGE, FOR THE LEAST AMOUNT OF MONEY, FOR THE TIME THAT THEY ACTUALLY NEED INSURANCE, PERIOD (TERM)??? LIFE INSURANCE IS NOT, NEVER WAS, AND SHOULD NEVER BE USED FOR ANY OTHER PURPOSE THAN PROTECTING OR REPLACING YOUR INCOME AS LONG AS YOU HAVE "INSURABLE NEEDS", PERIOD! THE ONLY PERSON(S) THAT BENEFIT FROM A CLIENT PAYING MORE PREMIUM FOR LESS INSURANCE IS THE AGENT AND THE INSURANCE COMPANY, DUH!!! SECOND QUESTION....WHICH POLICY TYPE PAYS THE AGENT 2 TO 3 TIMES THE COMPENSATION???? CASH VALUE POLICIES! THIRD QUESTION.....IF TERM POLICIES ARE SOOOO TERRIBLE WHY THE HELL DO YOU INSURANCE AGENTS AND COMPANIES EVEN HAVE THEM AS AN OPTION?!?! IF YOU FEEL SO STRONGLY WHY ARE SELLING TERM INSURANCE??? DAVE RAMSEY FEELS SO RESOLUTE THAT HE NEEVVVEEERRR RECOMMENDS THEM! AND IF TERM IS BAD WHY HAS TERM INSURANCE BEEN AROUND FOR 300 STINKIN YEARS, BUT CASH VALUE POLICIES HAVE ONLY BEEN AROUND FOR 70 YEARS?!?! FOURTH QUESTION....IF THE DEFINITION/PURPOSE OF INSURANCE IS TO "INDEMNIFY" OR MAKE WHOLE AGAIN/PROTECT FROM LOSS....WHY THE HECK ARE ONLY LIFE INSURANCE COMPANIES LYING TO PEOPLE ABOUT WHAT LIFE INSURANCE REALLY IS AND DOES?? HEALTH, AUTO, HOME AND DISABILITY INSURANCES DO NOT HAVE A "BORROWING" COMPONENT, NOR A "REFUND" OR CASH VALUE COMPONENT THAT IS RETURNED TO CUSTOMER IF THEY DON'T USE THE INSURANCE ANNUALLY OR EVER!! THESE "SALESMEN" ASSUME BECAUSE WE (THE GENERAL PUBLIC) CAN NOT OBTAIN A DEGREE IN ANY OF THE THINGS THEY SAY, THAT WE WILL JUST "TRUST" THEM BECAUSE THEY WORK FOR A BIG COMPANY OR HAVE A BUNCH LETTERS AND COMMAS AFTER THEIR NAME....WELL THAT CRAP AINT WORKIN NO MORE SIR! THERE'S AN "DESERVING" REASON WHY LIFE INSURANCE SALESMEN HAVE A BAD REPUTATION AND THIS GUY IS A PERFECT EXAMPLE!
Why are you yelling? Your answer makes it sound like you didn’t watch the video. I laid out a math-based case for permanent life insurance yet you go on endlessly in an un-paragraphed tirade spouting platitudes that have been recycled and debunked for years. I literally address everything in your screed in my video. Dig deeper.
I'll stick with Dave Ramsey and BTID (BUY TERM AND INVEST THE DIFFERENCE). What should have been mentioned about Permanent Whole Life Policy's being a rip-off is the fact that in the event of death, Whole Life Permanent Policy's only pay the beneficiary the Face Amount of the Policy and they keep the Cash Values. Whole Life Policy's also have a so-called benefit where the policyowner can borrow the Cash Values. My first, question would be if the Cash Values belong to the policyowner why do they have to borrow it and be charged interest to get their own money? When you go to the bank and withdraw money from your account you don't have to borrow it, you simply fill out a withdrawal slip. And then to make it even worst if the policyowner does not pay-back what was borrowed from their Cash Values that amount is deducted from the Face Amount of the Policy and that is the amount the beneficiary will receive. Therefore, it doesn't matter what the Cash Values grow to be if the Beneficiary will only receive the Death Benefit/Face Amount anyway. And in addition to that the only way the policyowner can receive the Cash Value Savings in the policy without borrowing it would be to surrender the policy and pay a surrender charge. But what happens to the Death Benefit? Once the policy is surrendered there is no Death Benefit. There may be a video here on TH-cam. However, if not, READ Norman Dacey's Book, "What's Wrong with Your Life Insurance?" He talks about the abuses of the Life Insurance Industry years ago concerning Permanent Whole Life Policy's. Unfortunately, they're still selling that stuff, even though many Whole Life Insurance Companies have gone out of business since then. I wander why?
Life insurance agent here and I also work for a company that really believes in IULs. However, there is a scenario that’s fairly common that I have a problem with:
Say I’m 30 years old with a family and I’m in the market for life insurance. I’m torn between going with a term policy or a permanent (in this case an IUL). An agent really sells me on the IUL and all of its advantages, so we set up an Option A, level death benefit policy to have permanent insurance, maximize my cash value. We went with option A because they explained to me that the insurance component of an IUL is Annually Renewable Term (ART), so if I went with the Option B, increasing benefit benefit, I would be sacrificing a lot of cash value over time… especially as I get older and the portion of my premium that’s being allocated to covering the cost of insurance increases.
I pay into my Option A, level death benefit IUL policy for 28 years and I’m now 58 years old. I’m going to retire in 2 years and I’m so excited to start taking TAX-FREE policy loans at age 60 to supplement my retirement income.
Unfortunately, I tragically die in a car accident on the way home from work at age 58. The death benefit from my IUL is paid out to my family, but my cash value… where does it go? Back to the insurance company. I funded an IUL for 28 years and you’re telling me that my beneficiaries don’t get a single penny of my cash value?
If I had a term policy and invested the difference elsewhere, yes there would still be minor management fees, yes there would still be taxes when said investments are paid out to my beneficiaries. However, they would still be receiving SOMETHING rather than $0, along with my death benefit since I died during my term.
Response?
Here you go:
What Happens to My Cash Value When I Die? (What Dave Ramsey Thinks)
th-cam.com/video/NOkbUF6lcoY/w-d-xo.html
Life insurance agent here: I have contracts with some of the largest life insurance carriers in the country. Aside from universal life (if option 2 is elected) there is NOT a whole life product that adds cash value to your total death benefit.
Cash value, simply put, is the $amount your policy is worth in the event you wish to cancel the policy. You DO NOT receive both.
Universal life is a completely different demon. Most agents use a ‘minimum premium’ value to sell the product under promises it will last to age ‘x’. The policy builds cash value during early years, HOWEVER, it’s depleted rather quickly. As an insured pays the same ‘minimum premium’, the cost of insurance rises with their age. Once the cost of insurance exceeds what they’re paying into the policy (ie monthly premium), the difference is deducted from their cash value.
So yes, the policy will last until age ‘x’ but your cash value will also = $0.
This is an IUL max funded Option 2.
@@DavidMcKnight Do you have someone you can connect me with, to show me why this makes sense? Every time I ask someone, I get the run around, or they avoid the conversation. Makes me even more skeptical.
@@hsmolanoff Sure, what specific question are you looking to get answered?
@@DavidMcKnight I want to sit with someone and have them show me exactly how this works, with real numbers.
@@hsmolanoff go to davidmcknight.com and click work with David and I’m happy to refer you to a Power of Zero advisor that lives in your neck of the woods. Where are you?
The thing you are missing is the investment vehicles perform way better than 6%. My Roth has averaged 28%
28% over how many years? Do you think that’s a realistic expectation over 30 years?
what is your opinion of whole life insurance, and variable universal life insurance ?
I think that they each have their proper context in which they work the best.
I describe it like this, one is fully baked and the other provides more flexibility. With that flexibility comes some benefits but more work to stay on top of it. So, when you buy whole life after you get it, there is no changing it. Universal has the abiliyt to increase or decrease the amount of insurance and amount you pay (to some extent) and when you add the variable aspect now I believe its being supported a little more by risk & rewards....we dont have any of these as of yet nor do we have the indexed universal policies but I am hopeful we soon will as this seems to provide the best of all teh worlds...
@@JeremiahS Some policies are good, when put together certain ways, when an agent doesn't know how to put one together, the policy is said of being a rip off. Makes little sense.
Thank you Dave! This is fantastic information!
Thanks brother!
The savings portion of the IUL, is controlled by the Life Insurance Company and must give more and more Mortality Cost Fee (MCF) to the Insurance company every year. That fee doubles about every 8 to 10 years. History has also proved that the current mortality cost fee (MCF) slides to the guaranteed mortality cost fee over about 8-15 years. So, the projections you showed isn't going to happen. You could use a Whole Life example with the same amounts and of course, the interest will be lucky to get 1-3% interest over a 35 year period. So, with UL's the 6.24% you claim, will go down every year the MCF increases. Over time, back to the 1-3% returns of the past. Why is it that the MCF is never pointed out on these videos and across the kitchen table with clients?
Not if properly structured. That’s a key point
How specifically would it be properly structured to avoid that drag on projected returns?
Thank you for this video... It couldn't have come in a better time for me!!!!❤
Glad you found it helpful!
Great stuff Dave!
Thanks for watching Scott!
Great comparison and video. You missed a few key factors that Ramsey Omits in this as well. Investor discipline, (the success of the investment is dependent on the investor continuing to contribute funds and not go buy that fancy new sport car because they now feel comfortable with their roth performance) Job Market instability, (The projection you are offering I am sure would have premium loan provision where the policy would stay in force if the insured couldn't afford premiums for a period of time. Show me a term that will do that sans an EXPENSIVE rider) Fund management costs go up as the account value increases, so, the initial investment levy is feed as well as the overall account. Not to mention any commissions paid for "Management and transactions" Way too many people have the wool pulled over there eyes in so many Mutual Funds and reps that even a simple indexed annuity would out perform the actual mutual fund over time.
Good points.
Some of these assumptions are wild.
1 percent fees? Only if your accounts are actively managed. Invest into your own account through vanguard and your fees are 0.04 percent, more than 20 times lower.
Also what whole life policy has 1.9 million in cash value after 30 years? Average return rate for a whole life is 1.5 percent. Even assuming 1.7 percent, that whole life would make just under a million after 30 years. Where did the other 900+ thousand come from??
Also 6.24 is wildly conservative. Long term investments in the S&P 500 average more like 10.5-11 percent. Even 8.24 percent would've been a questionable assumption.
Not really. First of all this is not While Life. It’s IUL which has much higher historic returns. Secondly, go it alone Vanguard investors earn roughly 3% lower over time than the investors who pay a fee to an advisor who can hold their feet to the fire through up and down markets. And this is according to Vanguard’s own research.
@@britlandtabney3357this tells me you didn’t watch the whole video because I addressed this point at the end.
@@DavidMcKnight I did watch the whole video. Addresses or not, these numbers are not realistic. You frame them as if doing better is possible but tough. It's not. Getting 0.05 percent fees and 9-10 percent returns is the norm, for any average person, if they're diligent.
@@DavidMcKnight also you're wrong advisors best the market. Bogle disproves that in his books. Advisors rarely beat the market returns of 10 percent and often do worse. Non actively managed accounts average 10 percent long term. How well most accounts perform is neither here nor there as this just speaks to the emotional reactions of some investors. It's perfectly within reason for a non actively managed account to get market returns, which best 95+ percent of all actively managed accounts.
I could be wrong but doesn't Ramsay own or have a vested interest in a term life insurance company?
don't think so, I think he has a relationship with a company that does the comparisons of all insurance. but even so, on the other hand, the only people I find recommending permanent life insurance are people who sell insurance, so conflict of interest is bigger there.
This is like saying the only people who recommend cars are those who sell cars therefore there can be no inherently good reason for owning a car.
He definitely has a relationship with a term brokerage but I’m not sure what the financial arrangements are.
@@bradleys2320 Well, consider those selling other things, even for a fee, what is the goal of every person? Increase your finances so I would argue unless you find a quality person who really cares about you and your goals then they probably wont take care of your needs. Ignorance comes into play more so because the public lacks the info they need to make wise decision and they rely on those of us in the industry to help them make decisions. So, no matter what you are doing I think you are going to find a conflict of interest. The challenge begins to make sure you find someone who will walk through all the important items in your life and help you build a plan that fits you and your family holistically. Dave R. has millions of followers and uses that to his interest and most of what he talks are ways we all should live ourlives getting out of debt and being debt free but that cannot always happen....but again I think he fails on this one point does a dis-service to those who place so much stock on what he has to say about it. He should cover all the facts of using this tool and let people decide for themselves if the benefits outweigh the drawbacks.
@@DavidMcKnight It's actually like saying they only people who recommend leasing a car are people who benefit from you leasing a car, which is 100% true. Anyone who can do math or read consumer advocates know leasing is the most expensive way to have a car (can't say own/buy, because you don't actually own it unless you buy it at the end). I'm just finding your channel. Interesting, yet I'm finding a few flaws in your assumptions and how you characterize Dave Ramsey.
Buy Term and Invest the difference was the worst advice I ever attempted to follow. A judgment against you will have claimants dicing up your 401ks and IRAs and devoured in no time. Your Life Policies will still be yours.
Dave Ramsey is great for the working poor and people who have trouble with debt.
His advice flies off the rails at Baby Step #4.
Thanks for your comment James.
Can a LIRP beneficiary be a charity? Thanks David.
Sure can, so long as there's an insurable interest.
Not to mention, that your examples use a consistent ror, which doesn’t happen. One down year and the BTID slides off the rails.
A WL policy doesn’t have a down year.
Over a 30 year time horizon, as he's showing, 1 down year doesn't derail anything. If I die in a whole life policy, my cash value is gone. Talk about being derailed.
@@hsmolanoff misguided. Policy pays higher of cash value or face. Premium for both would be cost prohibitive. It is literally the reason for buying whole life: that it will last your whole life. If you die young, it pays face. If you die old enough, it pays the grown investment. It literally guarantees a good payout. That’s what permanent protection is all about. How did you miss it?
I’m not an agent. I figured this out as a customer.
@@opt4living Why wouldn't you want both the death benefit and your investment? And if I have millions of dollars in an investment account at 60, 70, 80 years old, why do I still need life insurance?
@@hsmolanoff first question, because it would cost too much for both to guarantee me now and guarantee me later. Insurance is to average the risk, not make you rich. No one nowhere gives you both. How much does it cost to cover both red and black on roulette? Not worth the risk of the rare green. In essence, insurance is giving you the larger of red or black for a smaller more manageable premium.
Second question, you don’t ‘need’ to keep the life insurance if you outlive the protection it was for. You ‘get’ to keep it because you already paid for it.
I should add that decades old whole life policies pay for themselves. There is no incremental cost to keeping them, just benefits from a wise decision earlier.
@@opt4living I think you truly need to look at the cost of a cash value policy compared to a Buy Term & Invest the Difference strategy. I've never seen a scenario where cash value made more sense. Prove me wrong.
So disappointing. No Christian / Mormon values here. My expense ratio is not 1.0, it’s 0.04 . Hidden fees in insurance contracts make their return much smaller than what he states. The greed keeps him from giving a balanced presentation. In a Christian / Mormon view one would say the worship of money has taken his soul.
Take in his good information , but spit this part out.
Hard to believe you’re making a spiritual judgment here when I’m dealing with basic facts that have been pulled from life insurance illustrations (net of fees) and trusted third party sources. How do we have honest and open discourse about these types of issues when you approach it in such a fraught, condemnatory way?
Really, your going to bring your faith into this conversation and I would say, you might need to understand his background a little better before accusing him. I would argue he has faith as a big part of his life but then I dont know him personally but I have done enough research to know a little about that part. From a pure financial stand point take this into consideration. Two things are for sure - Death & Taxes. Take advantage of these two scenarios and bless your family because you did your homework to understand how, even with the insurance charges, this tool accomplishes taking care of your family. Look at it like this. Even with "all the fees", if you make one payment and pass away who really wins? well, I would argue the family wins because the major bread winner thought enough of their family to ensure they woudl be taken care of. the insurance company has to pay out even after only one payment so I would think that's a pretty good deal. Now if you live too long then this type of policy will pay for its self in most times, in a few years. so, when you look at it over the long haul the insurance company ends up "paying you" to have this type of policy, although you will keep making payments up to a certain period. Find a good agent that knows how to walk through this as a scenario... I have gone through Dave Ramsey's stuff and I was never convinced and now I am in the insurance industry and see it first hand from the inside out.
Life insurance illustrations are not worth the paper they are written on. “Trusted third parties “ are bought off by the insurance companies. Again, 0.04 expense ratio crushes the products these companies push.
Don’t invest with insurance products. Invest by buying stocks from productive companies using low cost index funds.
How about when you get older and money is taken away from the cash value to pay for an IUL by the insurance company because you are getting older. The company will not tell you that. You losing that cash value. I'm just saying that it should be noted.
But the amount of insurance the IRS requires you to buy at that point is minuscule so even though you are older you’re paying for much less of it and the effect on the cash value is negligible.
No. Even for example purposes, ROR should never be the same between any life insurance product and an investment account tracking a broad US stock market index. Using your own math, and based on S&P 500 annual total returns since 1928 (so Great Depression and Great Recession included), a $25,196 annual contribution split between a Roth IRA and Roth 401k, each with a 1% expense ratio and both holding index fund shares tracking the S&P, would have produced at worst $2,489,237 (7.25% ROR), on average $4,630,305 (10.58% ROR), and at best $11,075,771 (15.06% ROR). So AT WORST, these S&P 500 based roth investments would still outperform the $2,444,215 (your figure) the insurance company would give a family for losing a loved one. So at worst, $45,271 richer and nobody has to die. Buy term and invest the rest for the win.
Thanks for your comment. Did you see the part of the video where I said the life insurance should be seen as a bond replacement not a stock replacement?
I didn't. That'll teach me. I have believed for a while now that perm life's performance is bond-like, so that's a thought provoking idea. I suppose the policy's cash value, and some face amounts, could be considered an adjustable allocation like bonds are. I can actually rerun my Roth math using annual total returns of the Agg bond index since 1976. Ok so I did, and here are the numbers. Again, 1% expense ratio. $25,196 contributed annually for 30 years. This produces at worst $1,314,288 (3.56% ROR), on average $1,770,928 (5.33% ROR), and at best $2,606,261 (7.50% ROR). So your $2,444,215 face amount produced a near-best bond-like performance while providing tons of life insurance from the start. You may be onto something.
@@recisuser I appreciate your response!
@@recisuser UH....YOU OBVIOUSLY ARE NOT AN INSURANCE AGENT??? YOU JUST GOT CONNED BY HIM...AGAIN! YOU...WILL...NOT...RECEIVE...THE...DEATH...BENEFIT...AND...THE...CASH...VALUE...PERIOD!! IF YOU USE THE CASH VALUE WHILE LIVING IT IS DEDUCTED FROM THE DEATH BENEFIT...IF THEY TRY TO OFFER YOU THAT STUPID "OPTION" TO "FULLY FUND" IT YOU'RE OVER PAYING AND IT'S NO LONGER APPLES TO APPLES, WHICH MEANS NO OF YOUR NUMBERS ARE APPLICABLE NOW??? IT'S SIMPLE LOGIC....THE LIFE INSURANCE INDUSTRY CREATED THESE PRODUCTS TO TAKE ADVANTAGE OF UNINFORMED MIDDLE TO LOWER INCOME PEOPLE WHO DO NOT HAVE "REAL" FINANCIAL ADVISORS TO GIVE THEM INVESTMENT OPTIONS THAT HAVE OUTPERFORMED CASH VALUE POLICIES, ALWAYS!!!
I have never seen a whole life policy that pays the cash value and the death benefit upon the death of the policy holder.
Whole Life doesn’t call it option 1 or option 2 but there are ways to structure it with paid up additions such that the death benefit grows over time. My videos generally reference Indexed Universal Life.
But what happens if you have a gap in employment/income or need to reduce contributions for a while? A 401K lives on, the insurance policy lapses. Just saying this assumes a lot just to demonstrate "apples-to-apples". And if you're reading this Mr. McKnight, can you please do a video on the value of a LIRP if one can get almost everything into Roth by retirement? * update, I just got to the FAQ chapter of The Power of Zero where it says one can use the surrender value money to carry the premiums for as long as it lasts.
As you know, I'm a huge fan of the Roth IRA, Roth 401(k) and Roth Conversion. For those approaching retirement, the LIRP can be very useful because of its death benefit that doubles as LTC. And if you die peacefully in your sleep never having needed LTC, then someone's still getting a death benefit, probably your kids or grandkids. I've done quite a few videos on my channel that address this particular benefit. Thanks!
Hey Lisa, that is a great point and supports the reason for having this tool in the tool box. You can use the cash value as an emergency fund to help the customer weather these gaps as well as help pay for the policy. So, I look at this tool like a swiss army knife solution because you can use it in so many ways to benefit the customer's needs. So, instead of designating money to an emergency fund, savings account, life insurance, retirement etc you can use this tool and take a portion of those moneys, where it makes sense to the customer, and designate this tool to replace some or all of those items in some fashion depending on what the customer deems important to them. It doenst replace their 401k or ROTH but when you take a look at how they can consolidate their funds into one tool it can make lots of sense. Like I mentioned above, why not take adavantage of a sure thing? Death & Taxes....this tool allows you to set your customers up to do both.
@@DavidMcKnight How about LIRP having protections from creditors,bankruptcies,frivilous law suits..IRA’s/Roth’s don’t have these protections..can you please shed some light on this? I am interested in learning more about it, what is the point of building this huge nest egg but it has no asset protection
You can with most carries adjust the face amount of the policy reducing the cost. That flexibility you don't have in other financial accounts. Tell your 401K company to reduce their fees when you don't contribute or are going thru rough times. I wait.
Most people are not disciplined to do that
Lies. Dave is correct. Dave just said whole life average 1.5%-2% returns not 6% and your family can not take the cash value and the death benefit. And if you borrow against your cash value you will get charged a percentage.
True about whole life but I’m not talking about whole life in this video.
I have always been bothered by Dave's either ignorance or perspective on this topic. First of all, I think you do need a knowledgeable agent to help walk through how to beneift from the benefits of having permanent life insurance in your portfolio and when you get right down to it this is a multi-faceted tool that allows you to have an emergency fund and other benefits built in. So, like Dave recomends, you can now have your emergency fund built into this policy and should the worst happen you can access these funds. People also like the fact that you can delegate your funds into a tool like this while creating a self completing plan should the worst happen to you; it also helps you maximize your pension etc. Dave also fails to consider the LTC aspect of some of the policies should you need that. How about the accelerated amount you would have access to should you become terminal. How many more benefits are needed in order to understand the value of having this as part of your portfoilio? Thanks for putting this together great job! ~ remember the death benefits are tax free so, there is that aspect of passing this along to your family without any strings or government attached.
Spot on, Jeremiah.
Jeremiah - you do realize there are accelerated benefits in term policies too, right? Well, at least good term policies. As for the emergency fund, how do you access that money? Borrow it, you say? If I have an emergency, sounds like borrowing money would make my financial situation worse? Plus, how long does it take for real money to accumulate in there? If I need to access my "savings" in the first couple of years, is there anything in there? Just teach families to save for an emergency fund, instead of OVERCHARGING them for an insurance policy. I COMPLETELY agree that someone needs a professional to walk them through this. But let's not miss this - if you DON'T need an investment license to sell the product, it's NOT AN INVESTMENT!! You all keep misleading people - retirement program, pension, whatever.
Death benefits are tax free in ANY life insurance product. The cash value, however, is only tax free if there is LESS money in there than what you put in = CAPITAL LOSS.
@@hsmolanoff so you have to get a good term policy and who would admit they sell less than optimal policies? And there is good o'l Murphy's law.... when the term policy runs out is exactly when you will need the benefits, most likely. Well, its like Dave mentioned you have to understand how your permanent policy works to make sure you can explain its options to your customers but yes, it does come out as a "loan" which allows you the opportunity to not have to pay taxes on funds within the tool. Oh and because your trolling around bashing a great thing you must have your securities license? You should better understand these tools for your customers but may be you just dont like insurance? Either way no big deal just give people the truth and options and let them decide which fits best into their financial scenario / life! Having security knowing this tool will be there no matter what happens in our economy provides a little reassurance, wouldn't you say? No need to bash a strategy you might not completly understand or that you just have a bias against. I could spend all day bashing stocks and other products that you have NO control over but its every customer's choice to choose the best options for them and you should be doing that for them, right? This is a part of your finanical planning like Dave mentioned or did you miss that part? You cannot argue with his pulling out bonds and replacing it with this option.
@@JeremiahS I have asked many agents who sell these products to show me a plan where this will be the best long term option for a client, and they either can't, never respond, or choose not to. So I'm not sure. Are you an agent, or do you have one you can connect me with? I would love to be convinced otherwise.
@@hsmolanoff I am an agent and would love to hear your thoughts regarding what you mean by long term option? The people I share this with like the option of creating a Swiss Army Knife type solution where this policy "can" provide benefits when needed and if you ahve watched the movie The power of zero the tax train is coming then you will better understand how this would benefit your customer. Amazon Prime rents this for $5 and its well worth it. There is not a lot of detail on how to implement but the high level stragety is described and why we should be considering this as an option, especially now. Now, I am getting my securities license but even as I move through this process I am not totally convinced bonds provide the tools people really need, at least if you have had a good conversation with folks about meeting their family needs. so, from that standpoint if you were to compare this option to the bond portion of a portfolio you would have to highlight all the benefits that come along with this tool. It may have a lower ROI but the benefits, in my opinion, far out weigh, the ROI that might be gained. Espeically the tax free portion along side having the death benefit. After all two things are certain Death & Taxes, why not take advantage of a sure thing!, right?
This guy isn’t telling you the whole story. He isn’t revealing the actual costs of what he’s selling. Misleading. Also, who has $26,000 a year to spend on a life insurance policy?
The numbers were pulled directly from the life insurance illustration which nets out all the fees. In short, this is a perfectly apples to apples comparison. And if you’re fixated on the $26k you’ve missed the point of the exercise.
Spend? There’s your issue. Simply undereducated.
If the gross rate of return for the LIRP is 6.24%, what is the net rate of return? FYI - if someone has a 6.24%rate of return in their 401k, they are seeing that AFTER fund expenses. Just like you're claiming Dave Ramsay is doing, you're not painting an accurate picture.
I’m showing a gross rate of return of 6.24% in either scenario.
@@DavidMcKnight Ok, so are you saying there are no fees to the LIRP?
@@hsmolanoff no, I’m saying that those fees are all netted out in the numbers I showed in the projection in the video.
@@DavidMcKnight Oh, maybe I misunderstood. Before you said you're "showing a gross rate of return of 6.24% in either scenario." So if we're showing a NET return, than doesn't the Roth option have more money in it? If we're talking gross, than we need to see the fees for BOTH programs. To me, it sounds like you're explaining NET returns for the LIRP, but GROSS returns for the ROTH - which is why you then talk through expense ratios. If 6.24% is the net return, than that already factored in expense ratios. What am I missing?
@@hsmolanoff I'm trying to get at what a net rate of return would be in the Roth given a 1% expense ratio and a gross ROR of 6.24%. The life insurance illustration is already showing the return net of fees. So, it is actually apples to apples. We're comparing net to net.
PEOPLE REALLY CAN'T BE THIS DUMB TO BELIEVE THIS CRAP, RIGHT??? SIMPLE QUESTION EVERYONE....WHICH TYPE OF INSURANCE GIVES THE CLIENT THE MOST COVERAGE, FOR THE LEAST AMOUNT OF MONEY, FOR THE TIME THAT THEY ACTUALLY NEED INSURANCE, PERIOD (TERM)??? LIFE INSURANCE IS NOT, NEVER WAS, AND SHOULD NEVER BE USED FOR ANY OTHER PURPOSE THAN PROTECTING OR REPLACING YOUR INCOME AS LONG AS YOU HAVE "INSURABLE NEEDS", PERIOD! THE ONLY PERSON(S) THAT BENEFIT FROM A CLIENT PAYING MORE PREMIUM FOR LESS INSURANCE IS THE AGENT AND THE INSURANCE COMPANY, DUH!!! SECOND QUESTION....WHICH POLICY TYPE PAYS THE AGENT 2 TO 3 TIMES THE COMPENSATION???? CASH VALUE POLICIES! THIRD QUESTION.....IF TERM POLICIES ARE SOOOO TERRIBLE WHY THE HELL DO YOU INSURANCE AGENTS AND COMPANIES EVEN HAVE THEM AS AN OPTION?!?! IF YOU FEEL SO STRONGLY WHY ARE SELLING TERM INSURANCE??? DAVE RAMSEY FEELS SO RESOLUTE THAT HE NEEVVVEEERRR RECOMMENDS THEM! AND IF TERM IS BAD WHY HAS TERM INSURANCE BEEN AROUND FOR 300 STINKIN YEARS, BUT CASH VALUE POLICIES HAVE ONLY BEEN AROUND FOR 70 YEARS?!?! FOURTH QUESTION....IF THE DEFINITION/PURPOSE OF INSURANCE IS TO "INDEMNIFY" OR MAKE WHOLE AGAIN/PROTECT FROM LOSS....WHY THE HECK ARE ONLY LIFE INSURANCE COMPANIES LYING TO PEOPLE ABOUT WHAT LIFE INSURANCE REALLY IS AND DOES?? HEALTH, AUTO, HOME AND DISABILITY INSURANCES DO NOT HAVE A "BORROWING" COMPONENT, NOR A "REFUND" OR CASH VALUE COMPONENT THAT IS RETURNED TO CUSTOMER IF THEY DON'T USE THE INSURANCE ANNUALLY OR EVER!! THESE "SALESMEN" ASSUME BECAUSE WE (THE GENERAL PUBLIC) CAN NOT OBTAIN A DEGREE IN ANY OF THE THINGS THEY SAY, THAT WE WILL JUST "TRUST" THEM BECAUSE THEY WORK FOR A BIG COMPANY OR HAVE A BUNCH LETTERS AND COMMAS AFTER THEIR NAME....WELL THAT CRAP AINT WORKIN NO MORE SIR! THERE'S AN "DESERVING" REASON WHY LIFE INSURANCE SALESMEN HAVE A BAD REPUTATION AND THIS GUY IS A PERFECT EXAMPLE!
Why are you yelling? Your answer makes it sound like you didn’t watch the video. I laid out a math-based case for permanent life insurance yet you go on endlessly in an un-paragraphed tirade spouting platitudes that have been recycled and debunked for years. I literally address everything in your screed in my video. Dig deeper.
I'll stick with Dave Ramsey and BTID (BUY TERM AND INVEST THE DIFFERENCE). What should have been mentioned about Permanent Whole Life Policy's being a rip-off is the fact that in the event of death, Whole Life Permanent Policy's only pay the beneficiary the Face Amount of the Policy and they keep the Cash Values. Whole Life Policy's also have a so-called benefit where the policyowner can borrow the Cash Values. My first, question would be if the Cash Values belong to the policyowner why do they have to borrow it and be charged interest to get their own money? When you go to the bank and withdraw money from your account you don't have to borrow it, you simply fill out a withdrawal slip. And then to make it even worst if the policyowner does not pay-back what was borrowed from their Cash Values that amount is deducted from the Face Amount of the Policy and that is the amount the beneficiary will receive. Therefore, it doesn't matter what the Cash Values grow to be if the Beneficiary will only receive the Death Benefit/Face Amount anyway. And in addition to that the only way the policyowner can receive the Cash Value Savings in the policy without borrowing it would be to surrender the policy and pay a surrender charge. But what happens to the Death Benefit? Once the policy is surrendered there is no Death Benefit. There may be a video here on TH-cam. However, if not, READ Norman Dacey's Book, "What's Wrong with Your Life Insurance?" He talks about the abuses of the Life Insurance Industry years ago concerning Permanent Whole Life Policy's. Unfortunately, they're still selling that stuff, even though many Whole Life Insurance Companies have gone out of business since then. I wander why?
Dig deeper.
I agree with David McKnight. Dig deeper and if you have not find an answer I pray for you