Throughout the next six weeks we’ll be rolling out our top reasons for owning cash value life insurance. We’ll be releasing these posts during our Friday post. Today we start with reason number six on our list, the probate skipping process that life insurance uses when the death benefit is paid.
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(Complete Show Notes Below)
In the 52nd episode of the Financial Procast:
Here we go again, slaughtering sacred cows. Of course, if you followed us for any length of time none of this will come as any great surprise to you.
You don’t have look far and wide to find financial talking heads extolling the virtue of using your 401k to stash away money for your retirement. Frankly, it’s sort of nauseating.
And I suppose I shouldn’t just single out 401ks as being way over-hyped because the same zeal also applies to all other types of qualified retirement accounts. The financial media LOVES these things. They’re always talking about the power of tax-deferral, the “free money” your company gives you…yada, yada, yada.
There’s no doubt a number of people have made arguments against the ownership of cash value life insurance. You don't have to spend a lot much time surfing ye olde' interwebs to find such evidence.
Too many of these arguments are propped up on misinterpretations of the various products that exist–heck even the agents themselves can’t come to a consensus on how things work.
But one of my favorite literal interpretations about cash value life insurance that's used to substantiate the opposition is the fact that life insurance companies keep the cash in your life insurance policy when you die. “You don’t get the cash when you die, the insurance company keeps it!”
They exclaim with sharp disapproval. And most of you who don’t know any better fall for it.
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(Complete Show Notes Below)
In the 51st episode of the Financial Procast:
In a recent article over at ProducersWeb, Roccy DeFrancesco owner of the Wealth Preservation Institute took on the patriarch of all thinks related to infinite banking concept, becoming your banker, bank on yourself et. al.
It seems that Roccy has a bone to pick with Mr. Nash and he highlights several reasons why. Now, we’re certainly no great fan of Nelson Nash or his minions for that matter—not that everything he says is bad or even incorrect. But he (Nash) does sensationalize the concept of using cash value life insurance as an asset, something we just don’t feel is necessary.
If you spend anytime around a traditional life insurance agent/broker discussing which type of life insurance you should own, then you’ve undoubtedly been told to opt for whole (or universal) life over term life insurance. And one of the most commonly used statistics to build the case for owning permanent life insurance over term life insurance is the fact that less than 1% of term life insurance policies ever pay a claim.
Sounds like a waste of money to pay all those premiums to an insurance company knowing there’s a 99% probability that your policy will expire before you do…right?
In fact, the old follow-up point to presenting this statistic to a prospect was to note somewhat glibly, “of course it’s so cheap, when you design a product to almost never work you can pretty much give it away.”
No manipulation in that statement at all (can you feel me rolling my eyes?).
So much time is spent focusing on the slim odds of a death benefit payout probability that most people forget to ask the naturally obvious follow up question:
What percentage of whole life insurance policies pay a claim?
This statistic isn’t widely quoted by life insurance agents, and I’ll propose a theory later on that might shock a few people.
So what’s the answer? A lot lower than you might imagine.
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(Complete Show Notes Below)
In the 50th episode of the Financial Procast:
In today's broadcast of the Financial Procast, we head off into some deep water with a lengthy discussion surrounding retirement income. What is it about retirement that makes everyone think their life is going to magically change? There's really nothing that is going to decrease the importance of your income when you retire.
One of the worst “rules of thumb” that's been perpetuated among the retirement planning discussion is that somehow you should only need about 80% of your pre-retirement income during your retirement.
What? Who came up with that idea?
One of the long-standing criticisms regarding whole life insurance is that fact that distributions are often made through policy loans, which bear interest. The common discussion goes something like, “and you can’t even have your money; instead the insurance company makes you borrow it so they can charge you interest on your money.”
I’ve always found it fascinating that people bring this topic up as a way to rail against whole life insurance. In large part because it’s only about 25% true, but more so because it’s either an intentional or ignorant (intentionally ignorant) way to keep your eyes focused on the magic while the truth is in operation behind the scenes to make the magic happen.
Still though, I did say 25% true and I do mean that. And to give credit where credit is due, the nay-sayers at least got part of it right, and often times they know that one quarter of the argument better than licensed agents do.
So here we are talking once again about the wonders of cash value life insurance. I know, I know…most of you are rolling your eyes in sarcastic disbelief that we could possibly have anything more to say about the subject.
After all, we've written nearly 300 posts at the insurance pro blog and more than a handful have revolved around the use of cash value life insurance. Not to digress but I would like to point out that we often use the terms cash value life insurance and permanent life insurance interchangeably. Just to clarify.
(Complete Show Notes Below) In the 49th episode of the Financial Procast: The Rich Are Saving By the Truckload According to a recent study, those who earn more than $750,000 are saving an average of 37% of their income. That’s almost 3x what they were saving just five years ago. It’s good to be wealthy…right? …
Your average everyday financial guru doesn’t tend to agree with insurance agents all that often, but one area in which they both tend to be pretty in-sync is the subject of disability insurance.
I’ve always found this sort of amusing. Disability insurance is arguably the most important financial product one can own prior to retirement and yet it’s probably the most under-purchased financial product in existence.
Perhaps this has to do with its steep price tag. High quality disability insurance is expensive, and who wants to buy a pricey insurance product that covers a life event we’d all much rather not have to experience? Sound logic be damned, because I’ve heard this one too many times in the past.
Maybe it’s the brutal medical underwriting process that precludes the purchase from an otherwise hungry crowd of potential purchasers? I used to jokingly say, “oh you’ve had hangnails before? Declined.”
Or maybe it’s really because…it’s all a scam.
