There's an old saying: "Investments make lousy insurance and insurance makes a lousy investment".
@rileyyandell3505
4 жыл бұрын
Lyle G I agree. Both have their place
@teamsmizmo5200
4 жыл бұрын
It’s true, but irrelevant. The net amount at risk in whole life insurance is the insurance. The cash value is the savings/investment portion which pays off the insurance (which is why these things endow). If you think about how it works, it’s not lousy at all. It does exactly what it says on the box. What people don’t like is the difference in hypothetical projected returns between an equity fund and a whole life policy. When someone tells you you could earn 8% in the stock market, it’s an excellent excuse to save less money than if your projected return is 2% - 5%. In both cases, the returns are projected but are treated as if they were either guaranteed or “reasonably certain” to happen. That is not the case but once you bring it up, it’s anchored in a person’s mind.
@gavinl4388
4 жыл бұрын
You’re listening to people who can’t even run the numbers right. They never mentioned the death value of the whole life policy at the end.
@rileyyandell3505
4 жыл бұрын
Gavin L this is a valid point. As the cv increases, so does the db
@sanakiddy2883
4 жыл бұрын
@@gavinl4388 the scenarios considered are both examples living till the expiry of the policy
@Erika2
4 жыл бұрын
Another name for what Tamera did in this video is BTID: Buy Term, Invest the Difference. Term insurance IS cheaper since there is no investment component (where there are fund managers in place to manage that, and of course there are fees, like in Tia's case). Awesome video, you killed it in the commercial Philip! 🤣
@TwoCentsPBS
4 жыл бұрын
Lolz. Thanks!
@farmerboybill
4 жыл бұрын
Tia and Tamera, huh? 90's kids for sure.
@TwoCentsPBS
4 жыл бұрын
DUH
@CueBeanKa
4 жыл бұрын
Math checks out
@Evan-pr3bf
4 жыл бұрын
Bet gen z kids think it's a doja cat reference
@wikum3
4 жыл бұрын
Sister Sister 🙌
@thesourlemon4058
4 жыл бұрын
I thought that was a doja cat thing. Well I am a gen z
@bensmith807
4 жыл бұрын
One thing they forgot to mention in this video is that salesmen and saleswomen for whole life insurance will approach you as a "financial advisor" and then they recommend a whole life insurance policy as part of their investing. When I met up with a whole life insurance agent I was under the impression that he was going to show me how to better my financially position instead of just trying to sell me on something that I didn't really need.
@rodribrito
4 жыл бұрын
My mom was on the verge of buying Whole Life Insurance, which included an "attractive" payout after some time has passed. I literally only had to make some simple math to realize that it was worthless. Mom didn't buy the policy.
@rnunez2496
3 жыл бұрын
What math did you did exactly?
@ricardoalvarez5585
4 жыл бұрын
The Sister Sister reference killed me. And Australians are scam artists. Got it lol
@soloxcan
4 жыл бұрын
Definitely wasn't Australian
@kenmc5690
4 жыл бұрын
@A G Maaaate. Trust me. It wasn't an Aussie accent. A bad attempt - yes.
@AlexanderRafferty
4 жыл бұрын
Australian accents are notoriously difficult for foreigners to imitate, so he did a decent job.
@kenmc5690
4 жыл бұрын
@@AlexanderRafferty just need to talk with your teeth closer to keep the flies out!
@Bantallas
3 жыл бұрын
I didnt
@jimjones6901
4 жыл бұрын
Thank gosh this video took a turn towards the end! I was thinking this was in support of whole life at first. Another thing about whole life policies is that your beneficiaries typically won't receive the cash value of the policy if you die during the term (it usually ends at 100 years old, so it's technically not even whole life) and will only receive the death benefit. The cash value goes right back to the insurance company you bought from, meaning you just paid for really expensive life insurance. And one other negative is that you often have to pay interest to the insurance company if you withdraw from your cash value. Most people wouldn't be willing to pay interest to a bank in order to withdraw money from your checking account until it's replaced, so it doesn't really make sense to do it for the cash value portion of whole life insurance either. Awesome video!
@richardburchett
Жыл бұрын
I wish they would have mentioned that.
@theguyintheback4714
4 жыл бұрын
This channel motivates me to pay off my student loans.
@theguyintheback4714
4 жыл бұрын
Erik Not as bad as my friends, I owe $30,000.
@jez5855
4 жыл бұрын
I recommend you watch Dave Ramsey, he'll light your butt on fire until you pay off that student loan.
@sayakutube
4 жыл бұрын
Everything you see around should motivate you to pay off your student loan.
@alexejnovak8693
4 жыл бұрын
@Erik , bruh, 24k p.a. is a very good wage in Czech republic. That's why many Czechs go to Eastern Germany, because it's cheaper and salaries are higher. Even in Sachsen 🙂
@alexejnovak8693
4 жыл бұрын
@Erik , ja, Sie (die Deutschen) sind besser als wir. Immer besser
@ThePlainBagel
4 жыл бұрын
Great video guys, definitely something people should watch before sorting out their finances. Cheers!
@mycro2767
3 жыл бұрын
Hey! It’s the plain bagel!
@imagine7964
3 жыл бұрын
Hey! It’s the plain bagel
@CC-tl3zs
3 жыл бұрын
Hey! It’s the plain bagel!
@bicycleninja1685
3 жыл бұрын
Have you tried putting sour cream on the bagel?
@AForEh
2 жыл бұрын
Is it bay-gul or bah-gul
@telezon7206
4 жыл бұрын
You guys are actively changing peoples' lives for the better. I hope you think about that if you have a rough day. Thanks for sharing your two cents with us.
@jcflores4656
4 жыл бұрын
I subscribed to you guys channel a few months ago, and I always loved your information! Today when I saw the title of this video I was very intrigued. As an insurance agent my self, I felt that this video is where I could test you guys knowledge, and see if you really knewwhat ya’ll were talking about. I have to say I AGREE with this video. I always educate my clients before I offer them any insurance, similar to the educational approach of this video. I will make sure to show this video to my associates and clients. Keep of the good work. This channel and Dave Ramsey’s are my favorite Financial KZitem channels!
@TwoCentsPBS
4 жыл бұрын
Thanks Dimensions -- you're one of the few insurance agents that wasn't peeved by this one! I also sold insurance for years, and I know ALL the arguments of why WL "isn't a scam". Our job is to educate, and offer as unbiased a view as possible. Glad we didn't get the facts wrong, thanks for watching!
@miles9922
4 жыл бұрын
Every time you say "whole life" and "investment" in the same sentence, I cringe. It would result in an insurance producer losing their license in most/all states.
@producerhat
3 жыл бұрын
Exactly. The two are exclusive and this guy is incorrectly putting them in the same category and misguiding so many people
@producerhat
3 жыл бұрын
Exactly. The two are exclusive and this guy is incorrectly putting them in the same category and misguiding so many people
@alexhoward9031
4 жыл бұрын
I sold life insurance for a year. I spent the summer researching what type of return you can expect and what type of competition is out there. A couple points -it is nearly impossible to get accurate data if you are the public. I am convinced they design these policies so you do not research them. -Only two companies that I know of sell whole life insurance that I could consider to be honest and pay a REAL dividend. 99% of companies that do sell this are scamming you. -The 99% of companies who sell Whole Life quote a huge dividend like 10%. BUT they take out expenses of the company from YOUR dividend. Most companies pay that 1-2% you were talking about. -Lastly it is Tax free if you the consumer pays for your policy. Not tax deffered which is only if a business pays for it. Oh! One last point. Having some whole life insurance is good for market dips when you are retired. But please talk to a financial advisor about this. Overall great video and you got the main points!
@stewartcharles
4 жыл бұрын
Alex Howard what companies were they?
@alexhoward9031
4 жыл бұрын
@@stewartcharles I worked for Northwestern Mutual and they paid the highest only matched by USAA. But your representative is a huge component of this as well. You can easily get taken advantage of.... Its very complicated but something you should look for is Additional Premium. There is a lot of circumstances but if your whole life policy does not have additional premium you may be taken for a ride. Whole life policies come with large commissions however additional premium is almost nothing and is beneficial for the client. Look for it as a gage for trust. If you really want to get into it nearly all whole life policies should have a plan in place to hit that limit before it turns into a MEC or modified endowment contract. Make sure it MECs before you retire. You shouldnt have to worry about life insurance payments when you are pulling from your investments. If you want more info let me know. I no longer work in the industry so I do not have any conflicts of interest
@stewartcharles
4 жыл бұрын
Alex Howard Thanks for the response. I asked because I was curious in what you've seen. I've actually been a financial planner at NM for about 10 years now. I'm a little surprised to hear that USAA's IRR was matching NM or beating any of the other major mutual companies. I agree that it depends on the advisor (I made a recent comment on this video). The piece about average rate of return being at 2% is not even the case for average mutual companies.
@inhawaii4941
4 жыл бұрын
My whole life pays 0% id be happy with 1-2%
@Rendereason
4 жыл бұрын
I totally agree, the advisor has to set up a policy that will pay him less if he does Additional premium (we call it OPP or paid up additions) and that maximizes the clients’ money and reduces the commission. You must have a trustworthy advisor to get these rare policies.
@AnotherVoiceless
4 жыл бұрын
Can you make a part 2 that goes into borrowing from this Whole Life Insurance rather than a normal bank? Say they both take the same loans out that are the average loans that people take. And then include the age of average death to see how the return on the $500,000 fits in since 1 expires. Maybe even start from age 30 and go to 80ish. And also show a chart of when investment in 1 overtakes the other (if at all)? That would be awesome.
@This1That0
4 жыл бұрын
Well, the probably don’t want to emphasize being able to use the cash. Where 401k , and IRAs are only meant for the time spent after 59 1/2.
@skydive0207
4 жыл бұрын
Borrowing money from yourself and paying interest is never a good idea. Any money borrowed plus interest is taken off the face amount in the event of a payout of the face amount.
@swirlingboredom
4 жыл бұрын
This video would have helped me 2 years ago before I got a pushy "financial planner" that practically forced whole life insurance on me. After a lot of work I managed to cancel it. Hopefully this video can help other people make more informed decisions than past me.
@travis1240
4 жыл бұрын
An insurance salesman and a financial planner are NOT the same thing.
@Picwajzzz
4 жыл бұрын
why did you cancel it?? Im in the process of learning how to get one the right way
@christophersuchy3632
3 жыл бұрын
@@travis1240 Lots of FPs sell shitty life insurance. They aren't mutually inclusive, but they certainly can be one in the same in many circumstances
@theAppleWizz
3 жыл бұрын
@@Picwajzzz did you not learn anything from the video
@amalaysian1514
3 жыл бұрын
5:34 I have one small question about these numbers. The final value of their policies should neither of them die is as shown in this timestamp. However, Tia's policy never expires so that death benefit of $500,000 is guaranteed to be paid as a result. Hence, if say both of the sisters die at aged 70, then wouldn't the $500,000 death benefit payout bump Tia's life insurance value to $774,077 vs Tamera's $619,780, making the whole life policy quite worth it for their dependents or descendants?
@saminyang09
2 жыл бұрын
I could be wrong, but I believe the cash value is given to the insurance company upon your death. Your beneficial will still receive the entire death benefit though, the 500,000
@jtsmelik1574
3 жыл бұрын
Becoming a financial advisor in the next few weeks here. Michigan. I definitely make sure to do my research on term life insurance. I love this and it motivates me to not only learn but make sure I’m doing what’s best for my clients. The money will come if I’m putting their needs first.
@theonecandlestickmastery
4 жыл бұрын
Back in time, when they offered me this kind of insurance, I kindly refused because I didn't trust a legal entity to own my money for such a long time... probably wrong reason, but definitely right choice :) Thanks Two Cents, I just stumbled upon your channel and I love it!
@addanametocontinue
4 жыл бұрын
I got convinced to sign up for whole life when I was like 20 years old. The agent did not mention that a portion of my monthly payment was not going into the investment aspect, but rather to fees. He made it sound like the entire payment was going towards an investment account. Sure, ignorant of me to think that, but he made it sound like it was a no-lose deal, so I bought it. Cancelled a year later when I saw my first annual summary and how much was going to fees.
@sG_Chimera
4 жыл бұрын
David Tran this is a foolish cancel depending on the company. Whole life insurance is like owning a house you pay the mortgage/fees upfront and you end up with liquid asset in the end. With New York Life for instance you pay fees for about four years coming from your premium and once that clears it goes towards the cash value and death benefit growth. Basically you bought a house at full price and then sold it at a third of the price a year later. Not smart
@travis1240
4 жыл бұрын
@@sG_Chimera yeah but obviously he was sold something he didn't want or need, by an unscrupulous agent. Should have gotten his money back IMO.
@sG_Chimera
4 жыл бұрын
Travis Nelson i think the agent must have done a poor job explaining that. But the investment piece is there. It’s a guaranteed growth and it should have been apparent in the illustration that the CV would take a couple years to accumulate.
@Russ-od2yy
4 жыл бұрын
My wife and I just did term until our house is paid off incase one of us died and had to take care of the kids we wanted to be financially secure. Took the extra money and throw it in investments every month instead, no need for whole life, once kids are old enough and homes are paid off its no longer needed really.
@Will-jg2zs
4 жыл бұрын
Short answer: Yes Long Answer: Hell Yes
@JazminBautista
4 жыл бұрын
Sequency especially if you have kids
@82ayalaj
4 жыл бұрын
Though long answer, it can benefit some, but not most
@dakrow707
4 жыл бұрын
I've seen companies show that the death benefit increases along with the cash value. And what about the direct recognition vs the indirect recognition when it comes to borrowing from a policy?
@Georgije2
4 жыл бұрын
Thanks for this enlightening video :) Some guy actually tried to sell this kind of insurance to me last year and i don't even have any dependents
@TwoCentsPBS
4 жыл бұрын
They do it all the time -- that's bold!
@quahntasy
4 жыл бұрын
*Love Tia and Tamara* Back to 90s are we
@matthew8153
4 жыл бұрын
Quahntasy - Animating Universe Cha cha cha chia
@samaraisnt
3 жыл бұрын
theyre still alive.
@tinmanslickgreasy999
4 жыл бұрын
STAY AWAY FROM WHOLE LIFE INSURANCE AND MLMS...…..
@channell11
4 жыл бұрын
True. With an MLM, look at how the money is made. If it's made by selling products, you might be okay. If the real money is made by getting people to sign up and pay membership fees, training, or buy large amounts of inventory up front, then it's likely a racket.
@WingChunGungFu
4 жыл бұрын
MLMs yes, Whole life, incorrect.
@seanahern6472
4 жыл бұрын
Sister sister
@JazminBautista
4 жыл бұрын
Seán Ahern 😂😂
@liax.6776
3 жыл бұрын
I've been looking for life insurance for myself recently and talked to an agent who was adamant about whole life and said she even had a whole life policy herself. I could tell it was a total sales pitch but decided to hear her out, and it was basically everything that was stated in this video - premium never changes, you'll be covered your ENTIRE life, dividends.... But I'm glad I did my own research beforehand, because when I reinvest the difference, I know it'll be worth more than the whole life policy in the end, AND I feel like I'm on track for a retirement savings so I don't have to depend on a whole life insurance policy. Great video!
@Tgogators
6 ай бұрын
That’s why I almost always avoid talking to an actual sales agent of insurance. They almost always round up.
@dhavalchheda1626
4 жыл бұрын
Did a mistake when I was a kid. Never again. Recently, a salesperson was trying to force life insurance as "investment" and it really irked me.
@heinaye3594
4 жыл бұрын
What mistake? Whole Life would actually make a lot of sense when you're younger.
@dhavalchheda1626
4 жыл бұрын
@@heinaye3594 Hein Aye we bought it for my mom and me when I was very young. It was a cash value whole life insurance. Turns out the premium was very much higher for me as well as my mom. If I would have taken the term insurance then my coverage would have been very high as compared to the coverage whole life insurance provided. To my knowledge, plans we were offered were all the ones which would give you the money back with some interest over the years (cash value) and the salesperson told us that it was an investment and we would get back high return and we should buy it because of money that we will be returned was way higher.
@heinaye3594
4 жыл бұрын
@@dhavalchheda1626 ahhh gotcha. Sounds like it was a dishonest insurance salesperson. In general though, you can lock in a cheap premium for whole life when you're young and you can potentially stop paying premiums in your 30's or 40's with paid up premiums.
@thedarkside3178
4 жыл бұрын
Let me guess it was HDFC bank lol..
@willardSpirit
4 жыл бұрын
Look into reverse mortgages too! It seems sketchy af
@mrescutcheon
4 жыл бұрын
I was in the mortgage business for awhile and 98% of the time, reverse mortgages do NOT make sense for the client. There are far better ways to utilize debt if you absolutely have to.
@SamianHQuazi
4 жыл бұрын
Nice earrings! By the way, what happens if I don't get any life insurance and stick to just index funds until old age? My dependents can use the value of those funds when I'm dead to cover their needs, anyway, right, so there's no point for insurance?
@TwoCentsPBS
4 жыл бұрын
Thanks! I take my earring game seriously. And you're correct. Your family can do whatever they want with your estate. But life insurance can basically tide you over until the time comes where your built-up wealth means you're self-insured and your dependents will be fine. We're personally not there yet because we're young, and so since we have a kid, we have term life for the next 30 years, by which time we probably won't need life insurance anymore.
@andrewgutmann9432
4 жыл бұрын
SamianHQuazi The point of insurance is risk management. If you live to old age, then yes, your plan will work. If you don’t live long enough for your investments to grow, then your dependents are in a tough spot if you don’t have any life insurance.
@ksmoothy28
4 жыл бұрын
@@TwoCentsPBS i like you guys stuff but this one is very one sided and not good enough research. I'm a cfp and i have whole life... Wait for it.... For the investment, not life insurance. Not for everyone but even if i don't make commission, which i don't now. I still wouldn't single out whole life only cuz it's whole life.
@LuisAdventures
4 жыл бұрын
I wish this video was around a year ago when I decided to purchase a whole life insurance policy! I'm going to look into canceling it now.
@nedsdeclassified
4 жыл бұрын
I work in the insurance business, I rarely recommend whole life, and tell to safe and invest the difference.
@JazminBautista
4 жыл бұрын
Eric Ortiz I believe everyone has their own opinion on each insurance! Love yours
@mrescutcheon
4 жыл бұрын
But term and invest the difference can and does work for people. One thing I’ve noticed in my short career, is that my younger clients all say whole life is terrible and they would rather buy term. And then the older clients will say they regret buying term and wish they bought more whole life lol. That’s not to say whole life is the only or best insurance to buy, but it is an interesting observation to think about. I guess it just proves that one size does not fit all.
@rockford717
Ай бұрын
invest the difference - in reality people buy meme coin, NIKOLA, ARKK, NVDA at all time highs and lost their principal
@Vaughnfriday
4 жыл бұрын
I made a call to Dave Ramsey about this. The video is called Aunt and Uncle $5,000,000 mistake. I couldnt talk my aunt and uncle out of it, but showing a video of Dave Ramsey talking to me about it sure did. One thing you forgot that I think is important is people with whole life think their dependents will receive the cash value along with the policy. Thats false, the insurance keeps the cash value, they only get the policy.
@jeremyed9507
4 жыл бұрын
Depends on the policy.
@kevinjohnstone2911
4 жыл бұрын
The cash value is the face amount. What are you talking about lol
@jeremyed9507
4 жыл бұрын
@@kevinjohnstone2911 Cash value and death benefit are two separate things and in some cases a policy would pay both.
@kevinjohnstone2911
4 жыл бұрын
@@jeremyed9507 Same shit, different mask. Cash value is only used for emergencies and never for leasure
@kevinjohnstone2911
4 жыл бұрын
@@jeremyed9507 leisure
@MasterFallenHero
4 жыл бұрын
Liscensed financial advisor and insurance agent here. You're onto something with the commission bit, like a lot. But I would also point to policies for young people and children. The premiums are often inexpensive the younger you are. That's why I would have loved to have heard a bit on the insidious side of "grow up" policies for small children/babies. Personally I think whole life can be a viable option for retirement in the right set of circumstances for the right person under the right balance of premiums to payout. But undercutting that, usually it's not.
@danielshen5349
4 жыл бұрын
Love your channel 2cents. I am glad there is at least one other pro-whole life insurance policy person here. I got a whole life policy mainly because of the protection if gives you from creditors. I work a job where there is a decent chance I am going to get sued one of these days. Earning 7% on zero dollars = zero dollars at the end of the day.
@nickkazmierczak5965
4 жыл бұрын
Jedidiah Young for the right person whole life is a good option, typically the younger you are the more time you have to pay into it, when I worked with it we never treated it as an investment, more so as a savings plan. People get fussy with slow growth when it can be a stable asset that takes a long time to grow.
@MasterFallenHero
4 жыл бұрын
@@danielshen5349 it has to be for the right combination of cost/reward. Term life as a strategy means you might be rewriting policies frequently (once every 10 yrs). Cash value is not the main selling point it's a secondary strategy. The main thing I see is locking in a good rate and helping people get set with their financial future. It's not a silver bullet but it's a good tool.
@Rendereason
4 жыл бұрын
Yes it is. I have designed children policies that often are difficult to keep from MEC’ing just because the returns are so high early and cash value accumulation is also high. I like to always illustrate the ACTUAL rate of return, and when designed properly you get high 4% low 5% close to MECing. A 1000/mo (150k total contribution) 15pay starting age 1 gets 2.5mil in retirement at age 65. If they wait another 15 years at age 80 they will have 4.5 mil. At this point it makes more sense to have annual cash value surrender/loan of about 100-125k/year (65 to 70), !tax free! which is not a bad retirement, even accounting for inflation. It is in fact several times more than what you’d get from a similar contribution from Social Security. The highest return policies are 5-pay but it also requires a lot of free cash, this is why the wealthy park some their money on these for their children. But again it’s life insurance with living benefits. Not a replacement for investments.
@JenniferYanez1
4 жыл бұрын
@@MasterFallenHero It also largely depends on the company offering the product. I was surprised at the average return of 2%. Mutual companies pay more into the cash value. I also think its not made to be compared to the market. It's a lower return with less risk. I think it's safe to say that with an expected higher return, you can expect a higher risk. They should have compared this to a CD or High Yield Savings account
@ellendykstra2368
4 жыл бұрын
Holy....that is information I did not know. I thought I might get some money after my tern life policy is done but no. Thank goodness I'm learning it now. It just pisses me off because with a little self-control I could have put that money in a savings account and got a better return. I'm also pissed because a few years ago I called to stop or at leased reduce my policy and they said no, to both. Thanks.
@gizroc
4 жыл бұрын
You guys didnt talk about the capital gains tax on that index fund investment. There's no tax on the life insurance policy.
@jasonvansteenwyk5984
4 жыл бұрын
They also jumped from a risk-free vehicle to a 100% market risk vehicle. Apples and oranges.
@jasonvansteenwyk5984
4 жыл бұрын
@Exoplanet Research Yep. The death benefit is tax-free, while estate taxes can run up to 40 percent. Once the estate tax provisions of the TCJA sunset, we're back down to a much lower exemption. Ouch.
@jasonvansteenwyk5984
4 жыл бұрын
The other thing these guys totally miss is how these policies are actually constructed in the field. For example, hardly any 20 something is ever going to be sold a 500,000 pure whole life policy. It's going to be something more like a $50,000 permanent death benefit and a $450,000 term rider, which allows the policy owner to put a lot more premium in, up to the MEC limit, to build cash value much faster. After x number of years, the term goes away (as does the cost of continuing that term insurance) but the cash value, including a bunch of dividends paid along the way (if it's a participating policy) will support a much higher permanent death benefit than the 50,000... and continuing to earn dividends tax free, which can be withdrawn tax free if you no longer need the life insurance. That and you can exchange it for a lifetime income annuity if you like without having to pay capital gains tax (or ...if it's in an IRA, ordinary income tax). I don't think whole life policies are for everybody. They're frequently oversold. But for people in high tax brackets, with illiquid estates, estate tax concerns, probate concerns,or asset protection concerns, they can be terrific. These are people a lot of 20-something and 30-something financial reporters who never sign the front of a paycheck don't understand, and aren't writing for.
@ksmoothy28
4 жыл бұрын
@@jasonvansteenwyk5984 I'm sure the no one watching this video will have estate tax problem tho lol. Very very few do. Even if you're rich enough. Your death benefit is in your gross estate so it'll get taxed at 40 percent unless you have ILIT...
@jasonvansteenwyk5984
4 жыл бұрын
@@ksmoothy28 Expand your thinking. People watching this video are unlikely to have an estate tax problem NOW. However, they may well have estate tax concerns (and asset protection concerns) 25, 30, 40, 50 years from now. After their term insurance has expired, and they have a successful business, a comfortable home, maybe some other rental properties, accumulated stock, etc. And who knows what the estate tax exemption will be then... especially the way younger voters are breaking for Sanders. If that trend continues, we may well have a very low estate tax exemption at some point in the future. Meanwhile, yes, your death benefit would be in your gross estate IF you own the policy in your own name. But people with estate tax concerns are going to use ILITs. Meanwhile, trusts can't own IRAs. So you can't move any wealth in your IRAs, etc. out of your estate. It's trapped there. Don't get me wrong... I'm a YUUUUUUGE fan of term... especially with shorter terms, like 1 year and 5 years. (People selling 10-20 year term on a BTID concept don't quite understand their own system, or they're trying to goose their commissions, too). I'm also a HUUUUUGE fan of index investing. But people in high tax brackets, with successful businesses, significant real estate, real asset-protection concerns, etc. are playing a different ballgame than W-2 folks working jobs... even if some of those jobs pay pretty well. It's a different mindset. A lot of online content and financial journalism doesn't get that. What's good advice for a schoolteacher isn't going to be great for the guy who owns a chain of tire shops, a general contracting company, or a good-sized farm, and vice versa.
@hoppinglark
9 ай бұрын
When exiting the military. We were required to take classes about applying for jobs etc. One of the “teachers” literally told us to get Whole Life Insurance because: “you’ll get the benefit at age 72, with term you get nothing at age 72” Luckily I saw the difference in premiums and dodged that bullet
@jerodfrank6419
4 жыл бұрын
Sad part of this video is that they left out that Tia has probably around $400-450k of death benefit over the top of the cash value. However, if you buy whole life to have your cash value compete with investments, you are doing it wrong and will be disappointed, which they do address. Lastly, IRR on good WL policies are typically 3-4%. So higher than shown, but do not compare with long term investment returns.
@olandir
4 жыл бұрын
So I've been considering Whole Life insurance but not for the investment opportunity, but for the Infinite Banking Opportunity (I invest in other ways). So I really wished you could have elaborated more on whether that aspect of it was a good idea. Would taking out a loan against your life insurance to buy things like cars or other large ticket items be a better source than a standard loan and are there any downsides to it. For me, the whole life wouldn't be an "investment" arm so much as just life insurance WITH a savings account attached. If I'm already putting $500 in savings a month (using your example) wouldn't it be worthwhile to use a whole life insurance as a savings arm instead of an investment arm?
@TheBlueQuasar
4 жыл бұрын
olandir No. If the savings is your money, why would you have to take it as a loan? Buy cheap Term and invest the difference in a Roth IRA. Also with Whole Life there is only one pay out.... either the death benefit and the insurance company keeps the cash or you get the cash which likely has about a 2% return and the policy is canceled. If you borrow from it you have to pay it back with interest either way. If the idea of taking money out of your own savings account and it being treated as a loan with interest seems stupid, Whole Life is exactly that.
@whitey6317
Жыл бұрын
its not worth it at all. invest in realestate if you want take a shot at the silverbullet. you can take out loans based on the value of your real assets.
@ChristopherJohnsonArtist
4 жыл бұрын
Allianz in Mexico keeps pushing this type of "investment" here. And the commissions are very confusing and hidden toward the back of the brochure and divided up as several hard to calculate fees which of course the sales person doesn't mention. I've been approached several times and realized that the commissions were very high and the returns (pre fees) were not any better than a relatively safe investment that I could use at a fraction of the cost that would be available in the short term without cancellation fees. It is really sad how they mislead people by hiding that information and making it confusing.
@LifeInsAdvisors
4 жыл бұрын
Nice job! In my experience working with people, I've found that most people with a whole life insurance policy were underinsured as they couldn't afford the proper amount of life insurance. Term life insurance provides the coverage people need at an affordable rate. Most term policies offer a conversion privilege should the insured become sick and need coverage beyond the initial term.
@multimeter2859
5 ай бұрын
Unless you get a policy with a high PUA, which essentially boosts the amount of coverage you get over the term of the policy.
@NuSpirit_
4 жыл бұрын
Watching this I'm surely glad I went for simple life insurance for €40/month rather than (something like) whole life which in my case was "only" €50/month first year but in 40 years I would end up near the €400/month range (and how would I be able to afford that when in 40 years I'd be pensioner? And no I didn't calculate the price further that was enough for me). But the idea of investing the difference seems like a good choice :)
@channell11
4 жыл бұрын
Term life is the same for the whole term-then it can go up, because the original premiums were based on your risk during that time frame. That's why you select a term that lasts until it is no longer needed to pay off debt or take care of descendants-then you drop it.
@LooseArrowBoy
4 жыл бұрын
I'll need to look into this now! I have a 100k plan with New York life and pay $100 a month. My parents put me on it when I was 18 as a forced savings kind of deal. The thing is they were able to pay my brother's and my college tuition (500k) without taking out loans. They just took out their cash value from their life insurance plans. I was promised after 11 years that my cash value would be greater than my total contributions, which I don't know for sure so I have to check. It seems to look like a glorified savings account with benefits, so it might not be so bad if you treat it as a high interest savings account. Thanks for the info I will definitely look at what my plan truly offers!
@MonNoir
2 жыл бұрын
I also have a 100k plan through New York and it's a great plan... Your parents were smart and obviously have real experience that contradicts this video
@thomasgruver3495
Жыл бұрын
So did you look into that plan? Is your cash value higher than what you paid in? To me it also feels like a high interest savings account. But one that pays out my family when i die tax free. I also have 401k and IRAs, but those will be taxed heavily if I died and they were passed on to my kids. I'm considering a small policy as a tax efficient way to pass on money to my kids.
@Mike-01234
Жыл бұрын
They could have done the same thing just putting money into a cash account invested in a mutual fund and gotten a term life policy at 20 times cheaper. That is exactly what the video showed happens. Term life is 20 times cheaper then whole life. The investment makes 2% while a S&P 500 index fund will make 7-10% over long term.
@LooseArrowBoy
Жыл бұрын
@thomasgruver3495 I actually ended it this year. The cash value almost broke even with the premium cost and the additional deposit ($67 prem, $33 addition). After 11 years the cash value was only about 11k and I paid in 13k. If I were to have invested that 100/month in the SnP in the same time frame I would have 22k (real market change). If hypothetically I did get a term life it would be about $30/month for 500k coverage. Investing the $70/month I would have still come out with 16k at the end. Anyways the $100 I'm saving now goes to my investments and savings. I'm only 29 and have no need for life insurance. It only matters if you pocket the difference. If you're not investing it, you may have been better off having the whole life insurance plan. My parents aren't financially savvy, but know the importance of saving money. On their whole life insurance plans they missed out 140k between the both of them if they had term life instead. Honestly they likely wouldn't have invested the extra savings anyway.
@LooseArrowBoy
Жыл бұрын
@blastman8888 in about 11 years my cash value was only about 11k and I contributed 13k between the prem and the addition. If I got term and invested the difference in the SnP in the same time span 2012-2023 I would have 16k. I didn't even need life insurance at 18, investing the $100/month would have been about 22k now. Anyways I canceled, the insurance agent pushed very hard to have me keep it and tried to get my parents to persuade me. I looked at my parents' accounts, and they missed out on about 140k if they just got a term plan instead.
@izzy4reel
4 жыл бұрын
Thank you thank you thank you for this video. I'm a consumer bankruptcy attorney and I have so many clients who have been hard-sold super expensive whole life insurance policies that they really don't need. One thing that surprises a lot of my clients is that life insurance is not meant to insure against your death, it insures against lost income relied upon by dependents in the event of your death. That's important because a lot of people without dependants don't actually need any life insurance. It tends to blow people's minds when I tell them this. Thanks for spreading financial wisdom to the masses.
@logged67
4 жыл бұрын
🤣 bankruptcy attorney??? You mean you charge a fee to people who already can't afford any more??? Are you 4REEL???? Hello again Izzy, I sell life insurance and when people are criticality injured, get chronic ailments or are terminally ill and in need of a check I give them one through life insurance. Not your scam that just slaps on another fee for them. Ouch you're not ready for the heat 🔥
@izzy4reel
4 жыл бұрын
@@logged67 I offer people debt relief under the US Bankruptcy Code approved by Congress and overseen by judges appointed by the president of the United States. They typically pay me about $2000.00 to wipe out thousands and thousands of dollars of debt. They don't need to be as smart as life insurance salespeople to understand that it's a good deal. I don't know if I can take the heat, but I know that you haven't turned on the oven.
@adityavkul
3 жыл бұрын
One thing I guess you guys are missing that Tia still has death benefit of $500k against Tiamera who has nothing as a death benefit to protect the beneficiaries. So basically Tia still has approx $774k while Tiamera has approx $650k. If Tiamera decided to continue with new Term policy at the age of 70, she might need to pay lefty monthly premium. Also, for me and my wife, we both pay $1800 annual whole life premium and we are 29 years old. We would need to pay it until next 20 years which would be total $36000 each and we are getting $41000 cash value at that time (death benefit is always there). Cash value would increase as the years pass on and beneficiaries are protected by death benefit. What do you think about this scenario and did we make good choice to go with whole life insurance against the term life insurance? Amazing video and keep it up!
@astroman30
3 жыл бұрын
Simple question: What happens to all that cash value when you die?
@csmathguy
4 жыл бұрын
Two cents, love the videos, keep making the great content! I personally love my whole life policy, we use it primarily as our emergency fund now. There is a lot more information about whole life than cover by this video. For example I wouldn't buy a whole life policy but a CUSTOM whole life policy. It also depends on what you do with the dividends, are you buying Paid-up additions, taking the distribution, using it to pay premiums? Whole life is NOT for everyone, but it can be helpful to some. A lot more involved than can be covered in a 7 minute video. Note: I do not sell insurance or financial products of any kind. Just pointing out there is a lot more to consider about whole life. I would agree it is not really for purely investing, but is another potential useful financial tool.
@TheBlueQuasar
4 жыл бұрын
Zachary Hayes Paid up additions is extra insurance purchased from your overpayments from previous years. These “dividends” are not profits from the company. If they were you would be taxed on them. Instead life insurance companies use the name “dividend” for the refund you get from being overcharged then they trick you with that wording to use your refund to buy more insurance which is called paid up additions, And if your agent didn’t tell you, when you die the money in the Cash Value is kept by the insurance company. Whole Life is a bad way to have an emergency fund.
@MultiverseAsheville
3 жыл бұрын
You’re spot-on. This video is absolutely correct, but very reductive. It’s like how I feel about Dave Ramsey: he gives great advice, but it’s too reductive to be the right advice for everyone listening. It would be like a doctor prescribing medication to an entire audience.
@julietibbetts9262
4 жыл бұрын
Oh my gosh I'm so happy this came up in my recommended. I was at a loss for words as to how to explain this to my husband but. Now I can just be like, "watch this! This! Thisthisthis!"
@TwoCentsPBS
4 жыл бұрын
That's why we're here, Julie!
@stevenbudnick1252
4 жыл бұрын
Please Julia this youtube is very generic and takes nothing about the persons needs wants and desires. Did they mention that over 92% of term policies never get paid out as a claim? If this person was a licensed salesperson they would be fined for calling Life Insurance an investment..Just my two cents. Plan carefully. Something is wrong here. If this is what you are using to make BIG decision for you and your family, your making a big mistake.
@producerhat
3 жыл бұрын
Or have an actual professional explain it instead of a KZitemr
@Ipromakeup
4 жыл бұрын
I’ve been working in the insurance industry for several years and started with a life insurance company. What I find shameful is “experts” using their personal opinions to sway people one way or the other. This was not an objective view. It was merely another opinion that as usual fell short of the full picture. Both term and whole life insurance serve their purpose depending on the circumstances. The reality is not everyone can afford to buy term and actually invest the difference. The other issue I find ridiculous is only acting as if there’s only the options of term and whole life insurance. There are multiple types of term insurance as well as permanent insurance that consumers should be educated about. In the end, a decision should be made based on the circumstances including but not limited to affordability, age, health, family situation (do you have small children?) assets, liabilities, and final expenses. I often recommend a combination of both depending on these variables. Bottom line, speak with someone who can offer more than opinions based on their own views and experiences. Find a trusted advisor who’s has the ability to understand you personal circumstances and advise accordingly with your best interest in mind.
@haidweng7948
4 жыл бұрын
i hope u doing better,that sound rough
@colin1818
3 жыл бұрын
A "financial adviser" that is recommending life insurance as an investment is likely not an adviser. They're a salesman.
@elykdogg
4 жыл бұрын
Wouldn't there still be a significant advantage in interest rate savings by borrowing from your cash value for major purchases like cars, houses etc?
@xionpentagast
4 жыл бұрын
You have to pay it back
@randellcornell4579
4 жыл бұрын
I’m an insurance agent and this is the kind of video that some of my prospects run across before they get to me. First of all let me set some things straight. There are sleazy scumbag insurance agents that are trying to sell anything they can no matter how good or bad that particular product is for the client they are selling. The that happens normally is because the agent is new, incompetent , or just a flat out lying curr dog. They are selling what ever makes them the most commission. Those guys/gales don’t generally last more than a few months to a year. These are the agents that give so many of us a bad name. I care about the long term effect on my clients. I have written policies on people when they retire and now 20 years later I’m writing policies on their children who are retiring. That doesn’t happen when you lie or screw over your clients. This is the one thing that drives me crazy about people in the video and Dave Ramsey to whom has been mentioned many times in the comments. Every bit of the statements in this video are absolute facts. This is great if people are purchasing life insurance at a young age when they are healthy and middle class. What about the scenario these two and “Dave Ramsey “ are not considering. There is a large segment of the population that buys the term and spends the rest. They spend it on cars, entertainment, gambling, alcohol, drugs, and many other wasteful no return on their money items. Then they are approaching 65 or they are on disability and haven’t saved a dime. Now they are living on a very small amount of income. If they die they don’t want to leave that burden to their family. Then they call someone like me and they’ve listened to “Dave Ramsey” or these guys in this video and they want to buy term insurance. They don’t have a lot of discretionary money. They don’t own a home. They live pay check to pay check, but yet they want to leave their children $100,000 or more when they die. Then I have to give them a reality check. They smoke like a train and they are 120lbs overweight. They take 15 medications one quarter of which are narcotics and they expect $100,000 of coverage for $50.00 a month. I spend more time bringing these folks back to reality then actually selling them a small whole life policy. Which just happens to be the very best product for that person. Term life, universal life, variable life, and the dreadful whole life are all great products, but only when sold in the right scenario. The information in this video is accurate, Dave Ramsey is correct, but they are considering all aspects of our society. There are just certain segments of the population that are not going to prepare for the future very well. When they get to that place where their earning power has diminished, their health has deteriorated, but they still need to prepare so they don’t leave that burden on their family. I sell all kinds of insurance heavily leaning on Life Insurance, but I sell the right product to the right client at the right time. People see video’s like this or listen to “Dave Ramsey” and they think if they buy Whole Life they are getting screwed over. I’ll tell you this, I’ve never once had a beneficiary upset with me because I sold their family member a small whole life policy. They were just glad they had something rather then depending on a chicken dinner or gofundme page to take care of those final expenses. Also, anyone that sells whole life insurance or any life insurance as an investment is doing it wrong. P.S. The reason Dave Ramsey says whole life is a terrible thing to buy is because in his early days before he was the big “Dave Ramsey” he world for A.L.Williams pedaling policies. A.L.Williams now Primemerica preaches to its agents and its clients “ Buy Term and Invest the Rest! ‘ that’s where his idea comes from, but it’s very short sided and not very well thought out. Don’t get me wrong Dave Ramsey is a smart guy, but on this one he’s not taking into consideration 80% of Americans. 80% of Americans spend more than they bring home everyday and are kicking that can down the road. Just my two cents. 20 years selling all kinds of insurance. I’ll tell you the truth even when sometimes it’s gonna sting a bit. You’ll be better off for it and your family will be damn happy I healed up that mirror and showed them their reflection and they saw who they really were. God Bless has
@astroman30
4 жыл бұрын
You left out the part that the company only pays out the DB upon death while keeping the cash value.
@TheGrumblGrumbl
4 жыл бұрын
They keep whatever one you don't pick. True though that you only get to pick between the cash value or the death benefit
@mrbrigham
4 жыл бұрын
As a CFP(R) professional myself, I would agree with most of this video FOR THE INTENDED AUDIENCE otherwise there are a few problems. I don't like that this demonizes what should be a healthy part of some people's financial lives. Also a mark was severely missed with the investment returns comparison - with one being after tax and the other before, also an "average return of 7%" can mean so many different things in application when considering sequence of returns. Insurance sales really can be sleazy but when you have a good CFP(R) guiding you it can be 180° difference and be the absolute best thing for the person's scenario. That's my two cents. Lots of respect for Philip and Julia
@TwoCentsPBS
4 жыл бұрын
Hey Brigham -- thanks for the respectful approach and your thoughts. As a CFP myself (not bothering with the trademark, lol), I don't think you're right about that. Assuming you have ANY gains in your WL above basis, the gains are taxed in both. Worth noting, a DB would be tax-free with the WL, but then your cash value vanishes -- poof! A huge problem w/ WL as an investment we didn't even touch on. 7% is a pretty safe long-term growth assumption for someone in their 30's investing for decades down the road, don't you agree? See you in the comments soon! -- P
@fugerep
4 жыл бұрын
I agree. Life insurance isn't an investment product at all. It's just a place to store cash safely and efficiently without the ups and downs of the market. I think it should be the first asset people get in life honestly. It's a responsible thing to do especially when one has a family. I also have heard that comparing any life insurance product, even a dividend paying whole life policy to an investment account with an index fund isn't a fair comparison? Should advisors be marketing life insurance as an investment? Again, I was taught it's just a great place to store cash. Mr. CFP, are you teaching your clients to save $$ first? That's what I remember mine teaching us a long time ago. Emergency funds and such? Where are they putting it? Savings account? Losing money there since banks only pay .10-.25 annually on those things right? Certificates of Deposit don't work either because they aren't as liquid and you get penalized for early withdrawal in most cases. What's the next best liquid savings vehicle you can recommend to us?
@BunkMasterFlex77
4 жыл бұрын
Northwestern Mutual will be the first dislike.
@rileyyandell3505
4 жыл бұрын
BunkMasterFlex77 I’m a Northwestern Advisor. I actually love it! I may show it to my clients. The only thing I will say is if you run the numbers using our policies (lowest cost of insurance in the business) it’s much more comparable. Plus, I never recommend it as a primary investment. Merely as a compliment to investments. It makes a great alternative to other fixed income assets (bonds or cash) and is especially useful for reducing market exposure. (No downside risk.)
@ksmoothy28
4 жыл бұрын
@@rileyyandell3505 but you guys selling a long paid whole life tho. It's no good compare to short paid...
@sald7485
4 жыл бұрын
Riley Yandell Not all NM advisors are like you... and at the end of the day it’s a bad product in my opinion
@miles9922
4 жыл бұрын
@@ksmoothy28 in defense of Riley, NM has custom built, qualified whole life policies that are paid up in as few as 7 years, and pre-packaged whole life policies that complete payments in as soon as 10 years.
@ksmoothy28
4 жыл бұрын
@@miles9922 i know but I'm saying most reps only sell traditional whole life.... Mostly due to higher commission ;)
@miklorr
4 жыл бұрын
wait, you guys didn't go over the tax deferred stuff. how do the taxes work?
@TheBlueQuasar
4 жыл бұрын
Taxes are paid on earned income when withdrawn from the cash savings. There’s a bit more to it but the basics are that if you make money, you get taxed when you cash out.
@mehulsanthosh2888
4 жыл бұрын
@Two cents I am in the process of getting my life insurance license, the video is on par and accurate but there are reasons why agents suggest whole life compared to term. Whole life is a permanent policy like the name suggests its covered for your whole life unlike term in which companies stop covering you past 70 or 80 years apart from paying high premiums. And yes you might get high return if you invest the difference but the thing is that most clients lack the financial discipline to consistently invest the money every month to see the compounding effect to work, how we tailor insurance policy to the client is only after doing a financial assessment and finding out their needs and money habits.
@InvestedLifestyle
4 жыл бұрын
Thank you for this video, this also applies to variable life insurance but its worse since they transfer the risk to the insured. Term and Invest are the best!
@priceless2353
4 жыл бұрын
The commission for the agent can be greatly reduced if set up properly, but that requires the purchaser to be very educated on how it works. Infinite banking is as good as it sounds - so long as you do your homework.
@mroberts566
3 жыл бұрын
You didn't mention the worst thing about the whole life policy that Tia bought. Let's say she dies when she's 69 years old. Her beneficiary receives the $500,000 death benefit as agreed, but the $270,000 investment cash value that she built up in her account is lost. The insurance company gets to keep it. This, in my opinion, is criminal.
@astroman30
3 жыл бұрын
You're 100% correct, sir.
@mroberts566
3 жыл бұрын
@@dakotadak100 So you think Tia's beneficiary, in this example, would receive $770,000? You're wrong. The beneficiary receives $500,000.
@mroberts566
3 жыл бұрын
@@dakotadak100 Semantics. They're owed whatever the agreement says they're owed. I'm not saying they're violating the terms of the agreement, I'm saying the agreement itself is ridiculous. Tia paid about 10 times (or thereabouts; I don't feel like watching the video again) what she would have paid for a term policy with an equivalent death benefit because she understood that there was some amount of money that's hers as some sort of "investment." That's why she bought it; there's no other reason to buy whole life. But when Tia dies, the "investment" is gone. If everyone understood this, no one would buy whole life.
@justincoffman4508
3 жыл бұрын
@@dakotadak100 couldn't have said it better myself! There is tons of misleading information in this video!
@zeebhimji602
4 жыл бұрын
Another thing that life insurance agents typically forget to disclose or at least from what I have discovered is that whole life insurance wont pay the cash value ("investment" portion) amount if the policy holder dies which basically makes all the extra amount paid in useless and makes having a life insurance and investment plan combined incredibly ridiculous. Stick with term insurance and invest the rest... just dont forget to do the investing
@iecivil
4 жыл бұрын
Love the way you RUN THE NUMBERS. I had thought that the full life insurance would've been good until you calculated the difference in appreciation from term life insurance. Thanks
@falconeagle3655
4 жыл бұрын
What a great advice, never would have thought that. However i doubt the 7% dividend on index fund.
@TwoCentsPBS
4 жыл бұрын
For context, the average annualized total return for the S&P 500 index over the past 90 years is 9.8 percent, so we're paring that back.
@The.Dude.Abides.
4 жыл бұрын
FalconEagle It’s not a dividend, it’s growth of 7% factoring in both up and down years and if you look at any chart showing the US stock market over an extended period of time you will see 7% or more.
@chriskuhr9325
4 жыл бұрын
Dividends aren't free money like everyone seems to think they are.... If a company pays out a dividend its net revenue is lower which is factored into the stock price. a 7% dividend is the same as 7% growth or a 3 dividend and 4% growth etc., it's the same thing. Dividends can also be lowered or cut in a recession so it's not 100% guarantee.
@matthew8153
4 жыл бұрын
Two Cents So you basically subtracted the 2% for inflation to keep future dollars equal to current year dollars.
@The.Dude.Abides.
4 жыл бұрын
Chris Kuhr Dividend payments are not the same thing as the growth of the stock. Dividend payments are a way to reward shareholders in a direct way rather than relying on potential growth plain and simple. Also, dividend payments are taxed as income if you choose to take the payments rather than reinvest then back into the stock.
@rdix2501
4 жыл бұрын
What always keeps me on the fence with WL and investing the difference from a term into stocks comparison is they are not the same. A mutual company WL portfolio is mainly made up of bonds. I have been thinking of doing term and bonds instead.
@spencerlook8485
3 жыл бұрын
Yeah that is an actual fair comparison.
@josealtamirano8030
3 жыл бұрын
I heard this from Dave Ramsey as well, the way I’ve made sense of it is as follows: term life insurance is an umbrella you buy while you build you home incase it rains in the process. Full life insurance is a tent you buy when you have no intentions of building a home and you want something to protect you from the rain. Some how this just makes sense yo me.
@MultiverseAsheville
3 жыл бұрын
Well, or if you have conditions that prohibit having Term, such as being older or having certain medical issues.
@amitt713
2 жыл бұрын
Most insurance companies like Massmutual have required sales goals for whole life insurance to keep your job. So advisors are routinely threatened with termination if we don’t sell enough whole life insurance. To get around the conflict of interest and fiduciary standards whole life insurance companies will lobby politicians. It should be illegal to force whole life insurance sales to keep your investment clients and your practice. Only the general agents who technically own the policies that the advisors sell make the money. It’s a scam buy term invest the difference.
@astroman30
2 жыл бұрын
Beautifully stated
@highgaugedesign
4 жыл бұрын
It is working out well for me because I got it when I was young. Not the best when it came to investing but I kept up with my payments. I was able to help my mom consolidate her debt using the 5.5 percent rate. My payments are only $70 for 100,000 payout.
@ahmedmattan1507
4 жыл бұрын
"The first book on investing I've ever read" let me guess, richest man in babylon.
@TwoCentsPBS
4 жыл бұрын
Worse, actually. "Millionaire by Thirty"
@Picwajzzz
4 жыл бұрын
Whats wrong with Richest man in Babylon?
@BesomeTV
4 жыл бұрын
I canceled one after three months once I learned the pay out at 65 was halved!
@suphaflyhigh
3 жыл бұрын
Primerica literally sells Term Life insurance with rider benefits included and you can get a separate mutual fund investment.
@qwerty_and_azerty
4 жыл бұрын
Something I’m wondering is if you don’t have a tendency to budget and make sure to save money every month, maybe you’re better off with whole life insurance. At least that way you’re saving a little, rather than not at all
@TwoCentsPBS
4 жыл бұрын
Then set up an auto-draft into a mutual fund. It's just as easy to cancel, and easier to set up.
@qwerty_and_azerty
4 жыл бұрын
Two Cents good point
@bsm6776
3 жыл бұрын
What about single premium whole life? I think it’s still a pretty good deal
@EarlyDawnTravels
4 жыл бұрын
Love you guys!!! This is such a great video. Someone from NYLife tried to rip us off. Our new advisor told us exactly what you suggest in this video. Invest the different and when your term expires you’ll have a lot more in retirement savings so if you die your family can use that $!! Genius. But I do plan on living to 100+. 😉
@shakthianjanananayakkara6528
4 жыл бұрын
From what I've heard, Insurance Premiums are tax deductable. If you buy term life and invest the difference outside of a some kind of a Retirement Account, you'll probably only be able to deduct the $52 in this case for a month. I'd like to know if Whole Life would make any sense for a person on a high tax bracket/ high tax state ?
@nesarag9546
4 жыл бұрын
3 years ago my life insurance agent was pushing for whole life with investment option. It had crazy per month premium and she was selecting random mutual funds without explaining expense ratio and other fees. Luckily I had one month cancellation option. I canceled it and bought 30 year term life insurance to protect my family with way less premium money. Thanks for explaining it
@jbthefirst960
4 жыл бұрын
I have a small whole life that I bought young. I see it as a safe estate planning tool and a part of my safe retirement investments. My premiums are no where close to the example and I carry a lot more term until I'm able to self insure.
@g5realestate280
3 жыл бұрын
What you are doing is the most important social service I have ever seen
@thattannerguy856
4 жыл бұрын
Probably the best video yet on this channel! I recently had someone talking to me about this and personally felt it sounded scammy
@reza.valianton
4 жыл бұрын
Yoo, i was working at life insurance agency, what they say is true. That's why i quit, they teach me to lie to people.
@astroman30
3 жыл бұрын
Good on you. It shows you have morals and a general care for people. God bless you.
@natka8181
3 жыл бұрын
My coworker bought this as an investment strategy, as recommended by her agent, and keeps encouraging me to it too. Glad I watched this first!! Thanks a bunch! I learned from it
@astroman30
3 жыл бұрын
It's a scam.
@MichaelSparks
4 жыл бұрын
You might want to study the car buying process cash vs IBC in the book. Over your lifetime you will give up $700,000 in opportunity costs to finance companies. The Infinite banking concept is a cash flow management system, not a product.
@cancel.lgbtq.6892
4 жыл бұрын
This channel should be mandatory in every high schools.
@technical19d34
4 жыл бұрын
Isn't this what Primerica does, only with a multilevel marketing structure?
@TheBlueQuasar
4 жыл бұрын
Technical 19D Yes, Primerica does it the right way.
@mdachelis7
4 жыл бұрын
I really wish my 99-year-old (Navy Fighter Ace war hero) grandfather watched this 60 years ago. He OUTLIVED his WHOLE life insurance policy! He had the worst of all worlds - his premiums continued to rise over 60 years to $10k/month last year and he never read the fine print that the whole life policy expires after 99 years of age. He just wanted to guarantee his family would get 1 Million dollars when he passed...he paid more than 1M in premiums alone (not to mention opportunity cost of ANY other investment over 60 years). We bet on him living another year and let his policy lapse, meaning the policy will have zero payout when he passes. It feels illegal and immoral, but apparently ending whole life policies at 99 was common back in the day because they never expected anyone to live to 100. The honorable companies changed the active policies, and the sleazy ones didn't Keep up the amazing work. You two are the heroes we need but don't deserve!
@rileyyandell3505
4 жыл бұрын
Dean Achelis I think he had a universal life policy. (Market exposed) You can’t outlive whole life. If you do make it to 100, most policies will mail a check in the amount of the death benefit. You need to do some digging. You may have some money owed to you guys.
@MichaelSparks
4 жыл бұрын
Then he didn't have whole life. Whole life endows and you get the entire death benefit at the end if you are still alive, of which you would have to pay tax on any gains over your costs basis. Your grandfather most likely had universal life which isn't the same thing, though many advisors try to call if whole life, but it's not.
@davidbefort2139
4 жыл бұрын
I agree that whole life insurance is NOT an investment. If someone is selling it as an investment they are probably trying to sell you some lousy policy like Indexed Universal Life or some variant of the sort. However, if I watch this video and take it at face value I have to assume there is only one way to structure a whole life policy and only one result: 2% return. I'm confused, because when I look at my Inforce illustration from a mutual life insurance company for my dividend-paying cash value whole life insurance policy, I see that in year 7 I pay a $20,000 premium and my guaranteed cash value grows by $23,000. And if I look at year 20, my guaranteed cash value grows by $13,000 over and above what my premium is that year. And if I fast forward to age 70 (like in your video example), my guaranteed cash value grows by more than DOUBLE of what I pay in premium. And that's only what I'm guaranteed. I haven't even mentioned what it would be with dividends included (which have been paid out every single year since 1905 from my mutual life insurance company). Oh, and my death benefit has grown to $2.8M by age 70, even though it started at only about $600k. Since term life insurance policies only pay out less than 2% of the time, and assuming I live to be at least 70, I think my heirs will be pretty happy with their old man for receiving $2.8M income-tax free. And if I live to be 85, the $4.5M income-tax free inheritance they receive will be even better. So I'm assuming my policy was probably designed a little bit different then the generic one you used for the video? I forgot to mention that I have taken loans against my cash value for multiple investment opportunities that never would have been an option for me had all of my money been tied up in my employers 401k. In fact, I'm earning a 340% return on my latest investment because I'm using the insurance companies money to invest with and not my own. In fact, I can still invest in the stock market if I want to with the same money I pay into my policy premiums. And I might actually by some stocks right now since the market took such a hit...good thing I have tens of thousands of dollars available to me so I can strike on those investments! My point in all this: everyone should really do their own research and not take all of their advice from a single source. That goes for me too. I know a lot, but more importantly I know that there is a lot I DON'T know. Which is why I'm still watching videos on youtube and reading dozens of books every year ;)
@UserNameAnonymous
3 жыл бұрын
Another thing about these life insurance policies: nobody ends up keeping them. 1/3 of people surrender within the first 5 years. Something like 77% of people surrender by year 20+.
@manujohn99
4 жыл бұрын
They still did not answer the question "Is Whole Life Insurance a Scam?"
@mantasreika
4 жыл бұрын
Decide for yourself, you got the numbers in front of you
@hpdpco6634
4 жыл бұрын
Its not a scam. You still get to earn profits. Its possible that you earn more profits from conventional life insurance IF you invest that amount that you saved on index funds. IF.... (unfortunately 90% of people wont do this and would just spend their savings on iphones)
@broomemike1
4 жыл бұрын
The insurance isn't a scam... They pretty much said that at the end. It's just a very niche product which is sold by scammers to those who aren't well served by it.
@manujohn99
4 жыл бұрын
@@mantasreika This video is not to decide for myself, its for answering the question that they bring-up but they didn't answer it...............stumphead
@manujohn99
4 жыл бұрын
@@hpdpco6634 Ok........
@donttalktomeyoureannoying8736
4 жыл бұрын
Do you guys want us to rely on GoFundMe for a funeral then?
@matthew8153
4 жыл бұрын
Lana's Daydream That’s tacky
@neosupreme7971
4 жыл бұрын
I get it that many insurance salespersons are grimy, though what would be a proper solution just in case me or my family needs it.
@SuperSpecies
3 жыл бұрын
Wtf, why? Gofundme is for losers, may as well go begging on street corners.
@Mford1212
4 жыл бұрын
Tia has 200,000 tax free that she can collateralize so her 200,000 keeps growing at 4-6% even is she takes out loans against the policy. If she does this in retirement she has income that does not increase her total taxable income. She could have set up a policy that only required her to make 5-10 payments so even though the policy never expires she does not need to pay for her "whole life". The value of her account can never go down. She also has half a million dollars that will go to her beneficiary tax free. Tamara has 600,000 that she has to pay tax on so really she has $400,000. As she spends the money she stops getting a return on the money spent. The vale of her account can go down. She has also taken on a risk called sequence risk. If the market has a few bad years in the beginning of her retirement it can significantly reduce the amount of income she will have for retirement. The order in which she gets her returns can add to the depletion of her account. Neither account by itself is going to be enough to get the sisters through their retirement. But if Tia uses her financial tool while she is alive to be efficient in paying for the major costs of life it will open up funds for her to put into a second account. Tamara doesn't fully understand this and she can never use the money in her account to be efficient in other areas or else she risks not maximizing the return her chosen account can provide.So Tamara goes through her whole life thinking she has made the right choice because her account will have a bigger number on her retirement day. Little does she understand, like most people using her method, that bigger number does not equal more money to use in retirement.
@truerthanyouknow5978
4 жыл бұрын
My husband and I just entered our 40s fretting over not having a life insurance policy in place. Thank you for sharing this insight. We're late in getting our act together, but just in time to start making smarter financial decisions.
@Rew123
2 жыл бұрын
Nowhere in this vid did they say you shouldn't have life insurance. Get it together.
@rdubitsk
4 жыл бұрын
Not sure it's reasonable to use stock market as reinvestment for term life. First 7% is rather generous, it's also subject to tax every year. The whole life is implicitly an investment in usually a highly rated insurer. If you were to invest your term v whole life savings in a high grade bond you would get much less than 7%. Likely 2-3% at best pretax. Important to consider however and you are correct in your general direction of analysis, and it got me thinking.
@krissifaith6709
Жыл бұрын
If my company pushed us to sell any kind of whole life, I would not be able to sleep at night.
@teabagfc
4 жыл бұрын
That accent in the commercial though...
@manuelcastillo5999
4 жыл бұрын
Great breakdown on how most life insurance policies don't produce that much money. I had recommended term life to people getting out of the military while they're waiting for turn 59.5 years old in order to get their IRA payout without a penalty. That way their families are secure in case the worst thing happens. If your spouse has a secure income then you can negotiate down how much coverage that you would need in order to pay off a mortgage or whatever outstanding debt one may have. Life insurance policies should be thought of as protection not as an investment. There are way better instruments for making money than a life insurance policy.
@michaelweinstein1260
4 жыл бұрын
Securities license series 7, 63 and 66 holder as well as licensed P&C, Life, Health & annuity agent here. I only partially agree with you because you are making a blanket statement. You are basing your claim that Tamera will make 7% in an index fund. That is where my problem is. While the fund will return on average 7% you did not take off the fees and taxes which will probably bring the return down to 5.5-6% annually. Then there is market volatility. If Tamera would have turned 70 in 2008-09 she would have seen her investment drop 40% and not recover for 6 years. She probably would have sold her investment at the low as so many did. That is why the average investor only sees a 2.5% return because they have their emotions in the investment. Tia would have lost nothing. Tamera would no longer have a life insurance policy because it would have expired and Tia would still have her full policy with the full cash value. It all comes down to the clients “risk tolerance”. Whole life insurance carries very low risk. Buy term and invest the rest has a moderate risk. You have to understand the client and make recommendations accordingly. Many people would have a risk tolerance that would make the whole life policy more attractive. I find a blend of whole life and buy term and invest the rest works for many of my clients. Some, who are more aggressive we skip the whole life portion, the ones who are risk adverse a blend of whole life and bonds work. Each client has a different risk profile.
@ObiJuanKenobi0_0
4 жыл бұрын
I have term through my work benefits because it’s super cheap and so many of my coworkers confuse accidental with term life insurance.
@TyBroTheActor
3 жыл бұрын
Think about getting coverage outside of work.
@naimahabdullah-gulley4405
3 жыл бұрын
Happened to me when we went to a financial advisor. My husband and I just had our daughter. The insurance premiums were so high. After we did that maybe a year or two, we canceled and got 20 year terms for us. Because our kids are young, they automatically have whole life. Working on paying off debt so we can invest accordingly.
@marvinrosado87
3 жыл бұрын
well thats a horrible advisor. im an advisor and anybody with young children, just starting paying a mortgage term is always better. insure just incase and diversify in 401k, 403b 457 get the free money aka company matching and if youll have extra and want to tax diversify invest in a roth or custom whole life where you dont pay your whole life and keep a death benefit and grow faster cash value. and o yea buy one stock a month
@whitey6317
Жыл бұрын
dude what are you thinks. shaking my head at this comment I wish you had someone to teach you. Cancel every single policy asap its not worth one more penny
@jamiegaskins3687
3 жыл бұрын
I’m a licensed agent, whole life is a total scam. My company provides much cheaper term life insurance and helps you invest which is a much smarter alternative. If that’s not what your agent is telling you to do they don’t have your best interest in mind.
@This1That0
4 жыл бұрын
The 7% average return in your comparison, is that through lump sum or dollar cost averaging? Id wager its through lump sum and that is not a typical investment technique employed by the masses seeking financial advise.
@cohenmarioman
4 жыл бұрын
Whole Life Insurance is not an investment .. and shouldn’t be sold as one. In the state of FL it’s illegal to sell it that way and any agent can lose their license.
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