Whole Life Insurance: The Truth Salespeople WON’T Tell You
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- เผยแพร่เมื่อ 9 มิ.ย. 2024
- Is whole life insurance a scam or a worthwhile investment? You may have heard us talk about whole life insurance before, but we’d bet we’re not the only ones mentioning it to you. Your financial advisor, business partner, parents, or fellow investors could have also let you in on the “amazing benefits” that only whole life insurance can provide. But how much of this is fact, and how much is fiction? And, if whole life insurance is such a bulletproof investment, why not buy a policy right now instead of investing for retirement?
We brought on Dr. Jim Dahle, better known as, "The White Coat Investor," to explain the truth behind the whole life insurance system and whether or not it really is a scam. Jim started his financial education during his medical school residency after realizing that almost every financial professional was trying to take advantage of him. Whether it was a real estate agent, financial advisor, or accountant, Jim felt like he couldn’t hold his own when in casual conversation with them. So, he beefed up his knowledge of investing and finance and started "The White Coat Investor" to help doctors, just like him, make sense of their cents.
Early in his investing career, Jim spent over seven years paying into a high-priced whole life insurance policy, only to realize that he made a negative return. Now, he’s here to educate EVERY investor on what whole life insurance really is, who truly needs it, and the MASSIVE commissions salespeople make when selling you a policy. If you have whole life insurance, you NEED to hear this. And if you don’t, you’ll now understand why it’s pushed so hard on everyday Americans.
Show Notes at:
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Episodes Mentioned in Today’s Show:
Kyle Mast (FInd a Financial Planner): www.biggerpockets.com/blog/bi...
Joe Saul-Sehy (Life Insurance): www.biggerpockets.com/blog/bi...
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Why All Real Estate Investors Should Have Solid Life Insurance Coverage:
www.biggerpockets.com/blog/re...
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Connect with Jim:
Books: shop.whitecoatinvestor.com/co...
Podcast: www.whitecoatinvestor.com/wci...
Website: www.whitecoatinvestor.com/
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Why Whole Life Insurance Is a Bad Investment-Debunking the Myths:
www.whitecoatinvestor.com/deb...
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Episode #390
00:00 Intro
01:29 Money Moment
02:10 Learning the Money Language
06:25 Whole Life Insurance Explained
12:33The Real Reason You're Sold Whole Life Insurance
16:29 Who Should Get Whole Life Insurance?
20:50 The "Infinite Banking" Illusion
31:18 Refuting the Sales Pitches
38:07 When to Dump Your Policy
41:43 Breaking Up With Your Advisor
53:02 Most Policies Don't Make It!
54:27 Fee-Based vs. Fee-Only Advisors
55:42 Connect with Jim!
56:21 The RIGHT Way to Buy Life Insurance
“it is difficult to get a man to understand something, when his salary depends on his not understanding it.” - Upton Sinclair.
I have a whole life policy and it's great. But I'm one of the edge cases he mentioned where it makes sense to get one. I took a good year to research whole life so I designed my policy with exactly everything that I wanted.
Lots of good and bad advice here. Too much time spent talking about the policies that are designed poorly. We can all agree those are not good. Just like any product or advisor, there are good, bad and in between. The focus should be on what makes a good policy, the design of base premium and paid up additions is ridiculously important. IF these components are set up properly, the agent gets paid way less (which creates a much higher cash value day one, and break even point)… breaking even around year 5. I have 4 of these properly designed policies and am in year 6. I’ve put in $590k and my cash values are slightly higher. I’ve flipped two properties using the cash value and paid it all back with the flip proceeds.
I’m glad you guys are trying to bring light to this topic! Have someone on who actually puts this in practice with real estate investing and is willing to show their policies (I am)
Half of what he says is true. Half is false. But he says it with 120 percent confidence.
Terrible understanding of the value of whole life. So many so called experts see WL as only a death benefit or they don’t clearly understand it, no different than an ortho surgeon not appropriate for heart surgery. And this guy admittedly doesn’t sell it. He’s a competitor to it though which clearly misinforms his opinions. An easy example of his folly is saying insurance agent makes $30k commission. Only a ripoff would pay that. But he doesn’t say a 1% AUM fee cost several hundred thousand in commissions over the same period of holding insurance. Very deceptive video.
I have delivered so many claim checks mostly Whole Life or Universal Life policies- and only 1 term policy- only 50% of folks have any life insurance.
Its a risk mitigation product...not an investment or bad deal.
It all depends on what you are trying to do…it feels like they forgot there’s a death benefit to whole life.
I would love to know which whole life insurance company is providing a contract for 1million with a premium of $600 a year! I'm waiting, oh none.
Wouldn't there be a tax benefit to the interest deductions created by borrowing against a efficient whole life policy with maximum pua
Whole life is the best way to transfer assets to your kids without taxed
Great info, I needed this... Thank you Mindy & Scot , Ty doc🥰
Love this guy! White coat investor is pretty awesome. I referenced his blogs as I researched whole life policies. I actually have 3 policies, 2 of which are structured incorrectly and I will be surrendering and the third is properly structured for long term growth. 👍
Another great video with awesome insights. Thank you Mindy and Scott.
Thank you Dr Jim - I like reading your book 📚 The White Coat investor !
Awesome thank you!
11:02 you can borrow against your cash value from the ins company
13:01 typical commission 50-100%
18:20 estate planning tax exemption amount
20:01 whole life at 45 w/ a disabled kid may be good idea
19:01 real estate investing infinite banking
21:20 breaks it down; deal w/ bad returns for the first 5 yrs
21:45 or get 4-5 w/ mmas
25:30 5,10,15 yrs your behind compared to if you had just put it in savings
25:50 use for real estate
32:30 when your assets are not liquid like a farmer, you may need wl
33:20 guaranteed no lapse insur univ life, variable univ life etc
35:01 getting married to a permanent life ins policy
35:20 use it for college? you break even after 15yrs
35:45 529 acc for colege
36:30 alternatives taxable accounts
37:30 projected 5% but only really getting 2-3%
38:20 best structure is to have option to pay up as much as possible
40:35 inservice illustration to see projected benefits
46:20 write a good financial plan yourself or pay for it
51:20 kyle mast fa charge $1k to assess your situation
So disingenuous. Are you telling people that because they don't need A MILLION of life insurance after 65, they shouldn't have any at all?
This ex doctor has no clue.
He had some good points but missed some points. R.E. investors & business owners buy it for control, leverage, liquidity, and tax-exempt income. If designed properly for banking you are designing it for the minimum commission because you're flipping the policy upside down. The loan feature it doesn't show on your credit report and you basically have $1 working in 2 places at the same time where you control the payback schedule. Depending on your state there are asset protection benefits. The IRR on these policies if structured correctly 3.5%- 5% tax-free. If you are getting 4% what is the tax equivalent for someone in the 30% tax bracket in the low 5% range. What is your external rate of return based on what your policy helping you accomplish outside the policy? Is it for everyone? Nope
This guy is so biased and misleading. I researched whole life just like he says he did. Get me on the bigger pockets podcast to debate this guy or get an actual authority on whole life to balance out your show. The lavel of confidence/arrogance in his demeanor is a clue that he would immediately get argumentative in a debate. The insurance sales people I have dealt with have never come across this arrogant or aggressive. This guy comes from the medical industry and so I am not surprised he and his colleagues bash life insurance because they cant make money off of patients that are self insured via their whole life cash values. They would rather have you come in with your regular health insurance/Medicaid card so they can make a fortune cheating the health insurance carriers with excessive and unnecessary claims while keeping their patients sick as long as possible.
Wow. Unbelievable what people sell u.
We here 🙌
People like this just have no clue about how everyday Americans live. A 5000 dollar whole life policy that has a bit of cash value can make a world of difference for most folks, especially seniors. Especially if they can't qualify for term or are too old for term. He's talking about physicians who make hundreds of thousands of dollars per year having a financial catastrophe, smh.
😂 People need to learn personal finance when they are young so they don’t have to scramble to find money when they need it. How much people have to put in to get just $5,000 value in whole life insurance? It’s expensive, has lots of fees/commissions and complicated for most people to understand. For everyday people, go with term life which is cheap and then save/invest money themselves outside of life insurance. By the time their term life insurance expires, they should have a lot of money in their investments and retirement accounts and probably enough to pass it down to their children.
@Kanjana K and Willa M I totally agree. The curriculum should include personal finances starting in elementary school! Whole life is not that expensive, lol. I just wrote a $5000 policy for a 50 year old woman, and it was $15 per month. No fees. The cash starts building in year two, not ten years down the line like they want you to believe.
@Kanjana K and Willa M As far as the commission, it's paid from the monthly premium times twelve. I am sooooo rich now, smh😄😄 Those large policies happen very rarely for the average agent unless they pick customers to work with based on their income bracket, which most of us don't! We are out here helping anyone who needs us, regardless of how rich they are.
@Kanjana K and Willa M locking your money up in the stock market with no liquidity until 59 1/2 years is not working for people anymore, that's why people are turning to these infinite banking type policies. Join your company's 401k matching program for the stock market portion, then add a cash building life insurance policy that you can use for major purchases such as a car, home improvements, or even a down payment on a home. Later on, as it continues to grow, invest in a business or real estate, etc.
The whole point is to be SELF-INSURED when you are elderly, to the point that you can cover your burial, tombstone, etc.
Be aware that he doesn't bother to mention the "other methods" that are better than a whole life policy for cash value. Omg who the heck is this guy!! 😂😂 He said 99% of agents that sell whole life do it for a living, wtf...DUH!!!! So these huge insurance carriers across the United States just have empty buildings that don't have career salespeople working in them??? WTF AND HTF does a physician get to spew this craziness! HOW MUCH DID YOU MAKE PERFORMING YOUR LAST SURGERY??? THE AVERAGE COMMISSION FOR WHOLE LIFE SALES IS ABOUT 750 DOLLARS!!
Actually thats not what he said, he said people who recommend wholelife policies are usually salesman of the product. It's like asking what kind of car is the most reliable and a chevy salesman obviously says chevy and then refers you to his dealership. You mention conflict of interest in other comments while making several comments championing whole life policies.....as a whole life salesperson.
@chessguy1993 I sell every type of life insurance, not just whole life. That's hilarious if you think that the average agent ONLY sells whole life, lol. Again, that's based on this weird hyerfocus on what commission is going to be made from the policy. It's upsetting that people can't open their ears to at least hear how and what the policy can do for them and their family because the thought of someone getting paid handsomely for one of the hardest jobs out there is just too much for them to handle, smh.
@@latreces464 Okay, but which policy do you get paid the most for? Whole life or term? Where in my comment did i say I think agents only sell whole life? Try again. It's well known in sales of any kind, but especially in financial products, that the agent is often going to try and sell you whatever they get paid the most for. That's just how it is. Agents have a fiduciary responsibility to the beneficiary to act in the beneficiaries best interests, but a lot of agents do not adhere to that. Go talk to a financial advisor at a bank and see how many of them try to push you into the most expensive, highest fee mutual fund (usually ran by their own bank) because they get the highest commission from that fund.
@chessguy1993 I'm sorry your world is filled with people who take advantage of you. Most people research what they need before contacting an agent and, therefore, are not easily misled. Don't put that victim hood on everyone else. Seems like you really think agents are out here selling 1 million dollar policies to people who only need 100k according to the needs analysis, smh. Tell me the story of the last business that cheated you, cause they hurt you badly🥺. Scenario: If someone 65 years old calls me for term insurance, but it would not be the best policy because of their age, you think I am offering whole life just for the commission, right? The fact that the term insurance premiums will skyrocket 10 times the price when they go to renew has nothing to do with my whole life recommendation, right? Just the commission... that's all that matters. Wow.
@@latreces464 A lot of agents do operate in this manner. The fact you're pretending they don't is the real display of naivete here. I work in Medicare sales and it's pretty much notorious for agents putting people in policies that don't make sense/ misleading people on benefits to get a sale. Financial services are also notorious for shady practices/misleading information. It doesn't mean every single agent does it, but if you're really advocating that people listen to every single agent/advisor that they talk to because they have your best interests at heart then you just need to stop it. The fact you're trying to project some kind of "victimhood" mentality onto me or gaslight me into silence for speaking the truth about ALL sales practices regardless of industry tells me what I need to know.
And to sit here knowing the crisis level of health related costs in this country, an industry that you, sir, have aligned yourself with, is beyond gaslighting. It's just plain cruel. Some of us are not in it for the money just like some doctors and are not in it for the money.
No one is misrepresenting themselves as a CFP!!! You have to be certified by the state to carry that title. Life insurance agents do NOT present themselves as CFP ' whereas the person referring you probably called them that. Also, you would be hard pressed to find any agents that sell "only" whole life insurance. They will have a myriad of products that they can sell.
CFP's aren't regulated by states
@@buttmanu I sincerely thought they were. I stand corrected.
My brother and his wife were almost sold a whole life by a "friend" exact same scenario described in the podcast. My brother and his wife were making combined ~40k a year.
@@betterhomesnc2437 they would be better with a term policy in this scenario IF they are under 50 and have no health issues.
So again, pay attention. He said: "This is not unusual for my audience of physicians." He is NOT speaking to everyday Americans citizens. Reading from a script the whole time. Is it a conflict of interest if you need a new yacht so you recommend a surgery or procedure that might not be needed?
Great video, very detailed and through explanation of whole life insurance. Thank you!
Hint: us agents don't have a problem creating a minimum non mec premium policy for our clients if that is the strategy they're going for, regardless of the commission amount, smh. Your focus on the commissions we make (mind you, we are in the field of SALES) is irritating.
Neither of you has life insurance 😂😂 And you have dependents😂😂 Again, listening to folks who are not in your tax bracket will get you in trouble. When it's said and done, he is probably panicking because people are leaving the stock market for safer investment vehicles, which products like whole life and Index Universal Life can do. Accumulation IUL policies can outperform the market in a lot of cases because some are based on the S&P500, which has averaged an 8.19% return over the past 20 years. No losses in market downturns.
Why would they need it? I have term but I also have significant real estate holdings. I only have term because I work in an extremely dangerous career field. My real estate holdings will pay my family significantly more in the long term.
@Better Homes NC that's the thing. No one is forcing anyone to get whole life insurance .If you can self insure, fine. If you have a term policy, fine. Just understand how the term policies increase exponentially as you get older, and you must be in great health to qualify. Congratulations on your accomplishments, but the average American citizen doesn't have hundreds of thousands of dollars in assets to pass on. Whole life is a great way to accomplish this.