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Yes, generally, whole life is expensive insurance with a crappy savings policy built in.


Whole life has it's uses, like to offset taxes on an estate for an heir, or if you plan on getting an awful disease that will make you uninsurable.

Insurance agents talk you into buying it because the commissions are incredible.
 

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It would depend on the terms of the policies but in general mixing life insurance and investment into one thing is not an overall positive.

Life Insurance in general you just need to decide why you want it. A few concerns.

Cover Burial Costs. If you have the cash why not just prepay for it and take care of it now so it is not a burden.

Replace lost income because of your death. If your financial value to your family is the paycheck you draw then you need to have enough to get them through the loss of income. If you reach a point such your are not getting a paycheck (retired) or it is not significant to your family then why pay for life insurance. You have to understand the insurance company is not selling the product unless they are making profit i.e. charge more then it costs after overhead.

Once my kids are grown and on their own and the live on income for my wife is savings and retirement funds if I died I would see no reason to have life insurance. Since the kids are not grown and we don't have enough saved up I have 3X income coverage under term plus what I have saved. Later I will have no use for life insurance so no need for a long term whole life that is sort of an investment policy.
 

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Dave hates whole life. So far, following his program has worked for me. I'll stick with term, and use the savings to continue to work towards TOTAL debt freedom, and to invest in my retirement.
 

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As a reformed life insurance agent.......NEVER BUY A WHOLE LIFE POLICY!!!!! The one exception would be if you know you are going to become uninsureable you can buy a guarantee of future issuance, like planning on becoming a military pilot or known genetic problems in your family.

What you essentially have is a decreasing insurance policy with a savings account with a really crappy rate of return. You can draw a picture of it: Draw a rectangle, draw a diagonal line from top left to bottom right. When you buy the policy you have 100% insurance (top left of rectangle), over time (moving left to right) the % of insurance decreases as the investment (cash value) increases because if you die you only get the face value, not face value plus cash value. Plus if the cash value is yours why can you only barrow it and have to repay with interest???????

Big sells point: at some point your policy is "payed up" for life but that point is when cash value=face amount (bottom right of diagram). You can do the same thing by buying a cheaper decreasing term policy and investing the difference in a true investment vehicle at a much higher rate of return than an insurance policy.

Also STAY AWAY from mutual companies that "Pay a Dividend"; that so called dividend is (according to the IRS) a partial refund of a deliberate overcharge of premiums and is non-taxable. If it were truly a dividend of company profits it would be taxable.

There is a reason insurance companies control a huge percentage of liquid cash reserves in the country.
 

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I have two small whole life policies that I took out on my children when they were born. I knew what the drawbacks were but there are some serious medical issues in thier mothers family that if inherited will preclude them from qualifying when they are older. These policies can be handed over to them with an option for them to get increased coverage no questions asked. So if they do become otherwise uninsurable they will still have a policy they can hold on to.
 

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Insurance companies are like casinos...if they lose, they go out of business.

Think of it this way: If you have a whole life policy for $10,000 then the insurance company is guaranteed to have to pay $10,000. Therefore, they have to make more than $10,000 from you to cover their costs.

In term policies, you are betting that you are going to die, and they have statistics that says you aren't. So, they don't have to make the whole cost of your policy from you, therefore the costs are less. What you have bought is insurance, not a poor savings account.
 

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Discussion Starter · #8 ·
@350 what they told me was that anytime I wanted to withdraw the money I could but any gains would be taxed at whatever tax bracket I fall into. I'm not talking a year from now but 30-40 years down the road. I don't know if you know much about northwest mutual, but that's who I use. So all the money you cash out at the end of the policy you have to pay interest on? They never told me about that part
 

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Threads like this make me laugh. Bunch of yahoos with no experience giving advice on something they really know nothing about, other than what they've heard. LOLOLOLOL

Whole life can have it's place depending on your individual circumstances. Just like you go to a legal professional for legal advice, or an accountant for tax advice, see a licensed insurance professional as to what's best for your individual needs. Get referred to one by someone you trust and respect.
Making these kinds of decisions based on what advice you got on the Internet (or the radio for that matter) is just plain stupid.
 

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Threads like this make me laugh. Bunch of yahoos with no experience giving advice on something they really know nothing about, other than what they've heard. LOLOLOLOL
:upeyes:

Yeah....'cause we're all a bunch of gun store clerks living in mom's guest room.
 

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Threads like this make me laugh. Bunch of yahoos with no experience giving advice on something they really know nothing about, other than what they've heard. LOLOLOLOL

Whole life can have it's place depending on your individual circumstances. Just like you go to a legal professional for legal advice, or an accountant for tax advice, see a licensed insurance professional as to what's best for your individual needs. Get referred to one by someone you trust and respect.
Making these kinds of decisions based on what advice you got on the Internet (or the radio for that matter) is just plain stupid.
I generally agree with you, but asking an insurance salesman if you need whole like is like asking a car salesman if you need a new car.
 

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@350 what they told me was that anytime I wanted to withdraw the money I could but any gains would be taxed at whatever tax bracket I fall into. I'm not talking a year from now but 30-40 years down the road. I don't know if you know much about northwest mutual, but that's who I use. So all the money you cash out at the end of the policy you have to pay interest on? They never told me about that part
F-350 sounds like he worked for Primerica, in which case I guess technically he was an insurance agent, but hardly a professional. Northwestern Mutual is a real quality company, one of the best in the industry. There are two ways you can take cash out of a life insurance policy. One is to "borrow" it, in which case the loan is subtracted from your face amount when you die, and the tax never needs to be paid on it, unless you lapse the policy, or you purchased it with a large single premium and it became a modified endowment contract. The other way is to take withdrawals, in which case you are only taxed on the amount above what you paid in premiums. Same deal if you surrender the contract.

"they never told me that part", because it isn't the case. ;)
 

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I generally agree with you, but asking an insurance salesman if you need whole like is like asking a car salesman if you need a new car.
Not if you go to someone that's a true professional. Stay away from your friend that just got into the business and brings their manager with them. :rofl:
 

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Not if you go to someone that's a true professional. Stay away from your friend that just got into the business and brings their manager with them. :rofl:
The advice I'm dispensing on whole life was given to me by my CFP, he and his father own a company here in LA that manages over $100 M in assets. He is a licensed insurance agent, but only provides referrals to other companies.

I already listed two caveats where WL might be appropriate, incidentally.
 

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Yes, but you blew your credibility with the car salesman reference. ;)
 

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Just been my experience. I had an insurance salesman try to sell me a WL policy I didn't need that would have netted them a five figure commission.
 

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The advice I'm dispensing on whole life was given to me by my CFP, he and his father own a company here in LA that manages over $100 M in assets. He is a licensed insurance agent, but only provides referrals to other companies.

I already listed two caveats where WL might be appropriate, incidentally.
That is precisely where I got the same advice. Mine also sent me out of house, to Zander.
 

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Don't have any or want any life insurance. Put me in a wooden boat off Key Largo and set it on fire. I'm going out Viking style.
 

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I've never heard of Zander.
 

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The reasons people hate whole life are simple:

1. It only makes financial sense for a very few people (mostly for estate planning).

2. It provides little return for the money spent compared to term life.

3. Practically every financial expert agrees that for most of us, it's a bad deal.

4. Insurance agents are constantly hawking it in order to make the fat commissions they earn on whole life vs. term life.

Pretty much anyone who is informed and doesn't sell whole life will tell you it's a bad purchase. You don't have to take our word for it, the internet is full of experts advising against whole life. When only insurance agents love a particular product, you can bet it's a ripoff. :wavey:
 
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