My wife and I were walking through Cesar's Palace we are both well dressed and then a stylish woman approaches and asks us 'if we'd like a voucher for the fine dining restaurant;' I said sure as long as we don't have buy a time share or Whole life ins. She laughed and walked away
If a guy you had 2 classes with in Highschool suddenly reaches out to you like you’re best friends, wears a suit all the time, and proudly calls himself a financial advisor, RUN!!
I am afraid what "may" have happened here is the caller' son (who is 23) was sold this policy by one of his friends who recently graduated from collage and got a job with an insurance company. Sadly the friend who sold him the policy will most likely drop out of the insurance company because s/he won't earn enough in commissions selling insurance. Worse, if the friend quits working for the insurance company too early, s/he may have to pay back all or some commissions s/he earned. It should be illegal for any company to sabotage young people (both employees and customers) in this way. Yet it happens here in America. EVIL.
Verily, it is with a heavy heart that I read of the misfortune that may have befallen the caller's son, and the deceitful ways of those who lead him astray. In the eyes of the Lord, it is indeed a lamentable circumstance when the young and inexperienced are enticed into agreements that may lead them down a treacherous path. Such actions, driven by the pursuit of profit at the expense of the well-being of others, do not align with the teachings of compassion and righteousness. Let us remember the words of our Savior, who said, "Blessed are the merciful, for they shall obtain mercy." It is a call for all to show kindness and empathy, especially in matters involving the vulnerable. May we pray for the young one and hope that they find guidance and a righteous path to follow. As for the actions of companies that engage in such practices, it is our duty to seek justice and fairness, for it is written, "Learn to do good; seek justice, reprove the ruthless, defend the orphan, plead for the widow." May we work together to ensure that such injustices are rectified, and that the youth of our land are protected from harm.
You’re right but you also have to use discernment. I remember at 18-21 being involved in different investment products and MLM they always want you to bring in your friends and family. Outside of a job recommendation don’t take financial advice from someone who can’t show you they’re financially benefiting from the actual product or service their soliciting to you.
Whole life insurance policies were big in 1990s. We had a couple of friends working for insurance companies that were selling whole life policies. The problem is that people get dazzled, then pressured or guilted into helping s friend "get established" in business; and they do not research the actual product they are buying into.
@@user-mv9tt4st9k In verily, thou speaketh of times of old, when whole life insurance policies were much sought after. As it is written, "A prudent man foreseeth the evil, and hideth himself; but the simple pass on, and are punished." (Proverbs 22:3). Yea, many were led astray, being enticed by the dazzling promises of worldly gain or by the weight of obligation towards their brethren. It bringeth to mind the teachings of the Apostle Paul, who wrote to the Ephesians: "That we henceforth be no more children, tossed to and fro, and carried about with every wind of doctrine, by the sleight of men, and cunning craftiness, whereby they lie in wait to deceive" (Ephesians 4:14). Thus, it behooveth every soul to seek after knowledge and wisdom, yea, to "study to shew thyself approved unto God" (2 Timothy 2:15). Moreover, in the restored gospel, it is made known unto us that "It is not meet that I should command in all things; for he that is compelled in all things, the same is a slothful and not a wise servant; wherefore he receiveth no reward." (D&C 58:26). So it is, that men and women must take upon themselves the responsibility to discern, research, and choose wisely in their temporal affairs. In sum, it is a lamentable thing when the children of men, being caught in the snares of the world, make decisions without seeking after the knowledge and wisdom of the Lord. But as the scriptures do teach, there is hope and redemption for those who repent and turn their hearts unto the ways of righteousness.
@@Brooklynwayz - That's so true! There are so many people out there trying to sell us something to help us 'get rich quick', but they clearly hardly have any money themselves!!
Thanks for informing the public Dave. I was ignorant in my 20's and wasted almost a decade of payments for life insurance payments to "You're in good hands". When I finally wised up, closed the account and cashed it out I barely got $5,000. Also it took months to get paid the money. I only get term life insurance now. Things like this should be taught in public schools before you get into the workforce.
I totally disagree! Buying whole life insurance is a method of wealth building...for the company selling it. Companies have made billions selling these products and are not much different than selling cars or Brooklyn Bridges.
I dont agree with Dave on everything but I have always 100 percent agreed on his explanation of whole life. Its a ripoff, the benefit is none and the cost is astronomical
The fact the parent was telling the son to invest and save for his future while also not knowing what an index fund is, presents the parent as part of the issue. (‘Very well meaning, but part of the issue) You don’t a kid in a car and say “drive kiddo.” You tell that kid the how and the why, and if you don’t know yourself, you learn first then pass that information on.
No, the parent was thinking a mutual fund and a 401k were similar products. If I was the son, and my parents had such a deep misunderstanding of how investments worked, I wouldn’t listen to them either.
You want life insurance, get a term policy. My wife and I are moving and wanted to reduce risk if something bad happened. We each got $1 million dollar policies for 10 years for less than $100/month. The goal is to be debt free with a million dollars in the bank before the policies expire. At that point our daughter will also be through college.
Ya well - that was our plan too. Just wait until a disability or illness comes along like it did with my wife. 5 brain tumors, 3 brain surgeries, and 93 rounds of brain radiation later, I can tell you we would have been s.o.l. with the coverage Dave is pushing. She is uninsurable otherwise and now we have lifetime life insurance with increase options and building cash value that the insurance company is funding on her behalf. I will never have to pay another dollar for her retirement or life insurance fund. Not gonna happen with a plain ol term policy. Most term policies do not make provisions for things when they don't go as planned - disability is a super-high risk between ages of 40-60. My wife became totally disabled 8 years ago at the age of 47. Thanks to a proper life & disability insurance plan, she will never have to work another day in her life - tax free disability benefits and tax free retirement check. Oh and - she has long term care insurance as part of the whole plan too - something I darn near had to use on her this past year when she woke up one day unable to walk and spent a month in the hospital.
@@russdenneyyou waited until your wife had brain tumors to check out life insurance? That's like waiting until a tornado rolls through your neighborhood to look at house insurance. Term life insurance doesn't/can't drop you for getting sick so your wife would've been covered when the diagnosis came in and likely for 20-30 years after as well.
@@mistere5857 My apologies as I failed to capture the entirety of our situation within the confines of a youtube comment. No - we didn't wait. The point I was trying to make is we bought a life insurance plan that had guaranteed increase options, becomes totally paid up in the event of disability, and converts to whole life in the event of disability - and the insurance company pays the premium from that point on. So, in my wifes case, I can increase the amount of life insurance she has every 3 years without medical underwriting, the insurance company pays the premium and, accordingly, the policies are building cash value for her retirement - which is accessible tax free at any time. We also purchased own-occupation disability insurance. She worked in healthcare as a respiratory therapist. Because the she is unable to do that job, she gets. tax free check from the insurance company every month. I have nothing against term insurance - I own an insurance agency and 90+% of what I sell is term. The problem with Dave's advice is that it is incomplete. It does not account for the substantial % of people who will become disabled during their working years and have their savings plan cut short. Another problem with Dave's comment is the it contradicts his other advice to purchase long-term-care insurance - which is usually (but not always) needed in your elder years. A 20-30 term policy that gets someone to ~60 years old is pointless - you have to use a lifetime product to make sure the long term care coverage is in place at the elder years. Most life insurance companies offer an LTC rider on their permanent products (including WL, UL, etc...) at no additional charge. You can't use a temporary product (term) to cover a permanent need. Almost every standalone long term care insurance carrier has left the market because they were losing mountains of money - making a life insurance plan with LTC rider one of your only options. Yes, the IRR on WL is not great - but it's not designed to compete with the stock market (some agents promote that BS). It is designed to protect one's income against death, disability, and long term care - the cash value is a side benefit in my opinion. All of this should be part of a bigger plan.
I work in property and casualty insurance and speak to young people about our industry. I go on and on about the life insurance industry and crappy products
It's so weird. My step mother, who passed acouple of years ago, was still receiving commissions at age 85, for whole life that she sold when she was 40. So think about that for a moment.
the main buying point of whole life insurance for a lot of people is the fact that the insurance will never expire and is guaranteed to pay out whenever they die. This is a very import fact epically important for older senors that buy whole life insurance
@@user-mv9tt4st9k life insurance is never taxable for the beneficiary. It is only taxable if the insured cashes out the policy and the case value is higher than the total amount of monthly premiums paid which almost never happens.
@@riceball777 well people who buy whole life and end up with no money certainly aren’t helped by making monthly payments into an account with poor return instead of just saving the money
I love how you take your time to educate your viewers we all strive towards financial stability and a better Life. It is easy to achieve this through the right investment, by living frugally and budgeting. I'm grade I learnt early in life to work hard for financial freedom
Even though I engage in investing, I feel disheartened by my lack of expertise in assessing the performance of individual companies and determining the optimal timing for stock purchases. The erosion of my financial reserves due to inflation adds to my concerns. At this point, I require precise market trajectory information, but I find myself unsure about the appropriate course of action.
I have been contemplating pursuing that approach myself. I currently hold a substantial number of stocks, but their value has begun to decline, leaving me uncertain about whether to hold onto them or sell.
I wholeheartedly concur, which is why I opt to entrust the day-to-day decision-making to an investing coach. With their specialized knowledge and extensive research, it is highly unlikely for them to underperform. Their expertise is centered around harnessing the asymmetrical potential of risks while also employing measures to safeguard against unfavorable outcomes.
My ex friend does this, thinking all millionaires got rich this way. My dad taught me finances while I was in school, which made me believe that what my friend was doing is a scam. Today, he is 2 months behind his morgage with no savings and a bad insurance plan while I am making 6 figures, have 70k in my 401k, and have a 20k in savings. Makes me feel grateful for my dad.
Only mildly related because he mentioned it for a brief second; not a single person I’ve ever spoken to has said “airline miles will get me rich”. It’s a straw man argument and he knows it is but he continues to use it because it is the ONLY argument he has against credit cards. Every single person I’ve talked to that understands how credit works says “well I’m going to spend the money anyways so I might as well get some sort of benefit from it”. No one believes they’re getting rich off of it.
Graham Stephen, who does use credit cards, has a far more interesting argument on things like this that Dave occasionally busts out: is this fee cents on the dollar really worth your time and mental energy? Could you just be making more money thinking about something else? I use credit cards and find active enjoyment in tracking my little perks, almost like a little hobby, but this is at least something to consider.
@@kevincarbone6831 his logic is completely flawed on that. He used to say, years ago, that was the case with ALL “plastic”. And he’s right, science has proven that. But now he only says it about credit cards conveniently around the same time he stopped pushing cash as the main way you should be paying for everything. Regardless, if that is his argument, then he should just flat out stop lying by saying people are trying to get rich off of CC points in an effort to falsely strengthen his argument. Additionally, the same studies that have found cash to activate the pain receptors in the brain have also found that, for some people, seeing a bank account number rise and/or fall hurts more than cash does. Almost like you should use what works best for you financially instead of demonizing one over the other. Dave has a ton of great stuff and I’ve been following him for a long time, but his argument against credit cards is weak and continues weakening as the years go on.
I hear ya. When I was an agent, I sold whole life and UVL for a time. I left for a much more respectable career as a 'manager' at a strip club. I could then at least face myself in a mirror.
A bad whole-life policy is a bad policy (unless it is the only thing someone has). A well-structured WL policy is a great tool, depending on what you are trying to achieve. To say otherwise is a quick and clear indication of one's ignorance of the topic.
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That's absolutely false. I wrote myself a Mass Mutual policy with $10k in paid-up additions and have instant access to right at 90% of the cash. Mass Mutual also pays very high interest rates.
Why are people so obsessed with “borrowing against” their investments. Why not just invest and let it grow? What are you needing to “borrow” for if you have extra money that you can invest?
The $250K house across the street is going to sell for $50K, CASH. I have 60 days to find a mortgage and return the money to the IRA account. Do you remember 2009 when car dealerships were liquidated for 50%. $25K for a $50K car, CASH. I have 60 days to find a Loan and return the money to the IRA account.
It's not an "obsession" with borrowing against. It's a question of opportunity cost, a question of where to keep your capital while you're deciding what else to do with it. (You can put the same dollar to work more than once at the same time by borrowing against an asset rather than selling it.) So what to do with your extra money? Do you stuff it in your mattress? If so, you won't lose dollars, but there's a cost - you lose purchasing power to inflation and risk total loss if your house burns down. Do you instead put it in a savings account? That's safer (can't burn down) but the cost is nearly the same as stuffing it in your mattress. So just by holding your cash where it's "safe" there is a real cost - interest you are not earning. Even though the number of dollars (your balance) doesn't change and you may feel like you haven't lost any money, in real terms, the purchasing power of those dollars drops significantly. Purchasing power is what's relevant, not the number of dollars. So if not your mattress or savings account, where? Investments, as you said. You've got qualified retirement accounts, obviously, which is a great place to park money to protect it from inflation, but those accounts bring severe restrictions on how and when you can access those funds, and they are subject to boom-bust cycle risk. Maybe you put some of it in non-retirement (taxable) brokerage accounts where it can grow with the stock market but remain easily accessible. Of course this also brings boom-bust cycle risk, but you can access it without penalty whenever you like. But how do you access that money and at what cost? If you've got $30k sitting in a brokerage account growing by 8% a year and you decide to use that money (either for consumption or investment) how do you do so? Sell those stocks? That's 8% (compounding) you are no longer earning (not to mention paying taxes on gains), so in real terms, you are "paying 8% to use your own money". So it should be clear that there is ALWAYS a cost associated with using your own money. This can't be avoided, it can only be minimized. This is where "borrowing against" comes in to play. If Dave thinks people don't get rich by leveraging assets, he's delusional. If your investment is growing at 8% a year, instead of selling it at a cost of 8% (lost opportunity) you can keep it growing at 8% while borrowing against it for, say, 6%. That reduces your actual cost from 8% to 2%. Same with a house. You build up equity and choose to "borrow against my home equity" to fund home improvements, college, cars, consumption. This lets you access those funds without selling the house and losing out on all the future gains in market value. For people who like whole life, it's very similar to a house. You're buying a death benefit (which you pay off over many years and has a large upfront cost of acquisition, just like a house), and as you pay it off, just as a house, your equity in the death benefit grows. While you're alive you can borrow against that equity, much like you'd borrow against your home equity, or borrow against your stock portfolio, so that the asset can keep growing while you put it to work elsewhere.
I have a WL policy: paid $10k in and immediately had $9.2k in cash value (for emergency fund purposes) earn 5-7% dividends each year and have a $395k death benefit. It’s muuuuch better than letting your emergency fund sit in a money market.
@@JavaPoweredZombie Mass Mutual. I just checked my exact numbers: I paid $10.5k up front, $9.2k cash value. It was immediately paid up, so there was no premium needed, but I chose to pay $100 per month for another 10 years.
I had the opportunity to sell whole life policies, but I said that they’re terrible and I would not sell them. Get your series 6 and 7, then sell term policies.
It's crazy kids will take financial advice from a random 60 second video from a no-name stranger, but not people you can look up to see their credentials
I've noticed with TikTok that popular videos share very specific mannerisms and cadence of speech to sound like they are an authority on the subject. And the more wrong they are, the more confident they make themselves sound. It's like the perfect formula to make people turn off their brains and trust whatever they hear, and it creeps me out to be honest when I hear videos of people talking like that.
Here is my favorite investment, a Roth IRA, I deposit the money, I see the money and can use it to buy stocks, mutual funds or just leave it. I am shocked the life insurance industry still exists, before the Internet I totally understand, but after the Internet why is it even legal. That is the real question, how is it legal, why can't I legally bet on a sports team yet people are allowed to sell this crap?
At least with a Roth IRA you can withdraw up to your contribution amount tax free at any time (? I think? I'm Canadian so have access to a TFSA which is even better than a Roth IRA). There is no need at all for a whole life policy, like you point out it exists in a time when everyone already has access to much better products entirely.
Sadly I no longer qualify due to income. I found out the hard way when doing my taxes. Maker sure you qualify for the income limits before investing in a Roth.
If some one learned about whole life by reading what whole life is they would come to the same conclusion. I knew about whole life before I ever heard of Dave Ramsey and the whole life industry had been dying for about twenty years until the last couple years.
It's even worse than that!! You can borrow from a 401k too. And when you pay it back, the interest you pay on it goes back to yourself, not your 401k manager. So whole life insurance's benefit of borrowing from your "investment" isnt even special. It already exists in better forms.
Wow. Not sure how whole life works in the USA, but it seems really bad. I had a whole life policy with a saver option. I cashed it in to get the downpayment for my home purchase and it was a blessing. Just saying that perhaps it works differently in other countries. 🇹🇹
Big difference is that you take the money you put into the policy and invest it into etfs/mutual funds instead you would have WAY more money like an insane amount
@@jimroscovius He's getting 1.2%, plus when he borrows his own money he PAYS interest. Savings he's getting 4.5 % deposited back into his account which by definition is "compound interest"= Compound interest is the addition of interest to the principal sum of a loan or deposit, or in other words, interest on principal plus interest. "Dumb idea". And with Bidenomics, the stock market is returning negative returns. Another "dumb idea".
@HighCountryRambler I agree with you on savings accounts. He'd be better with this. That's where my emergency fund is. I also have another savings account for things that come up.
@@jimroscovius I was in mutual funds for 20 years, got tired of paying the fees. Let Fidelity "manage" my IRAs and did worse. I'm in bonds, stocks with some mutual funds. And currently down almost 10% from when Biden took office. If it weren't such a pain selling corporate bonds Id be back in mutuals.
Not all whole life works the same way. If you get it on children it builds and yes there is interest to borrow but you don't have to pay it back on the extra dividend earned
This is a sincere question...I don't use any type of insurance as an investment or borrowing tool, including life insurance. I still don't see the problem with a permanent policy. Term expires, and you have to renew it at higher rates at that current age. Permanent policies stay the same. My husband has had a medical event and is now uninsurable. If I didn't have a permanent policy, we would be out of luck. Doing the math...even if I paid on this for 50 years (which we won't by the time he were to pass), it would still pay out more than double what my premiums have been. I have paid auto and home insurance my entire life and have never used those insurances, and they don't build any cash value either. I understand the idea of taking the premium and investing it. That's a bigger conversation than this forum, and I can argue timelines there. Dave's position doesn't address insurability, or the fact other insurances don't build either. So I truly ask: What am I missing? In my particular situation, I'm not seeing a downside. Please help me understand. Thanks.
Mutual funds have ridicules fees, which in some cases are more than whole life policies. And the average whole life policy makes allot more than 1.5%. And term life only pays out 2% of the time. And Dave is strawmanning the argument on whole life. It does not make people rich, rich people buy it for investment purchases, not to get rich, but to stay roch.
What is the UK equivalent of whole life insurance? It's not something I've ever thought to buy. What's even the point of it? I don't even have regular insurance. Does adults need this (no kids, no debts, no mortage, etc)? How is it a good financial decision?
Im confused...So full term life once you die they take your savings? Well i outlived my term this, so how is that bettet? They pay out the insurance to beneficiaries right?
Yes to your first questions. The second question, your life insurance is meant to protect your family if you pass by replacing your income. If you run the numbers by having a term policy and investing what you would pay for a whole life, you would have much more money overall.
A term policy costs about 5% of what a whole life policy costs. If you die, either policy pays the death benefit amount. However, a whole life policy also has a savings account basically that builds up in it... that's why it costs 20 times more than a term policy, this savings account is used to make the whole life policy 'permanent' where it lasts after the term would have ran out, on the term policy. By combining about three differnet products into the whole life product, they have hidden tons of fees and commissions, if you seperate the whole life policy back out into the three policies that it provides, it's muuuuuuuuuuuuuuuuuuuuuuuuuuuuch cheaper and better. Also when you die, they pay the death benefit, but don't pay the savings account, they keep it! So a better way to do the same thing, is to get a term policy, and save 20 times what you spend on the term policy (!) in a mutual fund, by the end of the term policy if you're still alive, you will likely have more in the mutual fund than the payout of the term policy would have been, and you can keep that for the rest of your life, it will continue to grow and will go to your family when you pass. You come out something like 5 to 10 times better financially if you just save the extra premiums you would have paid in a whole life policy. By bundling it all together, it confuses the consumer and middle class people who think they're intelligent fall for the scam. Similar to the bitcoin scam, if you don't understand it they insinuate you're just not smart enough, when in reality the reason you don't understand it is because it doesn't make sense.
Good advice, Dave Ramsey. Term policies are better, and you can convert them to permanent life if you outlive the policy. However, every 5 years after 50, it goes up. It's still better than the whole life to me.
Yes whole life, reverse mortgage, please read fine print before you sign! I use points, I don't expect to get rich but like with my Ebates money, it's "free". I'm buying things I would want, paying it off that day or week and getting money for Xmas gifts. I don't expect riches and NO ONE says that. Dave does to make it seem dumb to use them instead of saying "Most of you wont pay it off and get in debt".
@@dudeorduuude5211 and when I had a job working with many very affluent men and women, they use the “heavy” credit cards lol. I could do bicep curls with some. Many perks with them
I have thought about calling The Ramsey Show re: while life insurance with LTC attached. We are in our 60’s and have whole life insurance ( yeah, it sounded good at the time) but if we got rid of it, we’d lose our LTC. Has anyone else had this issue?? If so, what did you do?? I’m at a loss.
How much does it pay on LTC? There was a caller the other day that wanted to keep their policy for that reason. The policy says it will pay 1500 a month for a certain number of months. Problem is, that's only a fraction of LTC costs. I think the average is about 6000 a month for a nursing home.
@@Fishouta 2K per month and we were thinking more for home care. I just don’t know what to do! Ha. But thank you for your answer. Do you know what day it was that the caller asked? Was it a call of the day or their 2 hour show? Either way I’ll look for it. Again, thank you.
When I was 18, my step father got me a $100,000 Whole Life policy. At the time (1991), Whole Life was better than Term. Why has that changed? At 50, I still have the policy and I pay the yearly fees every November. How would I be able to change this policy into a Term?
Really you should surrender the policy for any cash value in it then get with someone on writing you a new term policy but really look at how much you need to pay of your mortgage and how much you need to pay off other debts and kids college and all that... then the rest start adding to your roth
I have a WL policy simply to leave the proceeds to my daughter when I pass away. But every day I'm second and third guessing another strategy to leave her a lump sum in excess of $100k. I don't see myself having that kind of liquid savings and investments. But still I'm rethinking WL every day.
Take your premiums and put it into a 529 plan for her college instead. She can switch it into a roth ira for her retirement if she doesn't use it for college later on... really life insurance is for if you die early but most likely you won't so investing is the way to go
term is great for people that actually save and invest and build wealth. But for most people that live their whole life pay check to paycheck and retire with no money they are better off paying into a whole life policy vs a term policy.
I know of at least three people who died before 60 and had whole life policies and they saved their families a lot of money in burial expenses, and also one paid off the house and another had $250,000 to will to the family. So, they aren't bad if you are using them as burial money or if you actually die early. They were a blessing for these folks.
The insurance period is crappy. Insurance is good until you pay off your house and get an emergency fund. Term life money is also gone unless someone dies. Whole life is even worse.
Did not turn out well. He ran out of money, policies collapsed because he borrowed against them. Died broke and in debt. Blew threw 190,000 to pay the policies. Terrible for the family. Stay away from whole life. Life insurance is to replace income, term is cheap. I knew a lady in late 20s who had a million dollar term insurance. She died in a car wreck. Her husband and kids taken well care of. Term is the better way to go when young. When your old conserve your principal you have accumulated. Don't spend it on life insurance premiums to make an insurance agent rich.
Don’t people get whole life policies so that they can have a paid off insurance policy and be done with it? People buy term when it’s cheap and they don’t die. Then when they get old it’s too expensive to buy term so they go without insurance and then Go Fund Me becomes everyone’s insurance. Term will get too expensive the older you get. Of course the thought being everyone has made their “ millions” and are self insured at that point but I’d guess very few get there because nobody earns enough to do it.
@@jbara7499 not licensed and New York has specific regulations but I don’t mind talking and reviewing your policy or giving tips on how to go about it.
It’s very very simple: your rate of return on a whole life policy is hot garbage. He will have a LOT more money in the future - a LOT - in any other instrument. You can borrow against your 401k anyway, not that you should. And with a mutual fund, you just have the money and don’t need to borrow. Just tell him he can borrow against those other instruments, though he shouldn’t, he’ll he end up with far more money.
The wisest thing that should be on everyone's mind currently should be to invest in different streams of income that don't depend on the government. Especially with the current economic crisis around the world. This is still a good time to invest in gold, silver, and digital currencies (BTC, ETH....)
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Wow actually thought I was the only one trading with Mrs Evelyn Elizabeth Sheridan!. she currently manages all my funds too and she also provides webinars on how to trade perfectly without losses, I don't have much to say about her but I'll advice newbies to place their trades under her services
Yes... in a way when you "borrow" from your own savings by withdrawing from your savings account you are in essence paying interest (i.e. the lost interest you'd have been making leaving it in your account earning 4% or whatever your bank pays) but then with a whole life policy you pay extra interest on top of that!!? Insanity - and it preys on those without financial literacy.
Yes, they keep your accumulated money invested if you pass, BUT the death benefit always exceeds the amount they put in, so there isn’t really a loss there other than “opportunity cost”. I’m not saying it’s a great product, I’m just saying there are pros to it that aren’t addressed here. You also lock in the same rate for the rest of your life. Term rates increase as you get older, and eventually you become uninsurable. So unless you’ve built enough wealth to cover your own demise, you are unable to obtain insurance in most cases when over the age of 70. What do you do at that point when you are uninsurable? Just food for thought.
No they do not keep a dime of "accumulated money" when you die. Full stop, this is not true. Cash value is not a side investment account. It is nothing more than your EQUITY in the death benefit while you're alive. When you die, your equity instantly becomes equal to the face value, and that is what's paid out, minus (for obvious reasons) any loans you may have taken against your equity before you died. I don't understand why this misconception is so prevalent, aside from ignorant people like Dave Ramsey spewing this misinformation every chance he gets.
Do these insurance companies specifically prey on young adults? I remember being pitched whole life when I was about 20 (66 now). Didn't take me long to do some basic math and figure out who was the winner on that deal. I decided to stick with my change jar and a savings account.
Of course they do. Young adults with enough money at 23 to buy a small product become whales over the course of their life. In the case of life insurance they’re very very profitable. In the case of their advisor, their wealth increases drastically over their life and they become massive customers. Plus they tend to not know anything yet. Great sales method.
am i the only one who sees the absurdity of shilling a monthly payment subscription to a budgeting app for people who are trying to be frugal so they can get their finances in order? any good bank has a financial tracker and budgeting app as part of their system for free, or you could just use a piece of paper, or notepad on your computer.
Dave forgets that when you borrow money at the bank and you have savings in that bank you are also borrowing your own money and youpay the bank a 10% interest or even more. And your money is growing at 1% per year
My father had one whole life policy .. thank god he told me about it at only 3 months in. I convinced him to go there now and cancel it. He cancelled it out of fear, and he still doesn't understand how they work.
The guy is so young, just get out of this policy, he hasn’t paid that many premiums yet. He doesn’t need life insurance yet if he doesn’t have a wife or family. And once he needs it, buy term life, lots when you have a family, less when they’re grown. And maybe none when everyone is gone .A whole Lot cheaper. Leaves you a lot of money to invest. I would never sell whole life and I am an agent. Like Dave says, terrible product.
