Podcast Episodes

For a number of years Dave Ramsey's 12 percent assumed rate of return has been a mainstay of the radio hosts's case for the average American to invest in the stock market.  He believe that this strategy yields the best path to prosperity.

Many have taken Dave's suggestion at face value while others–like us–raise an eyebrow at this seemingly outlandish suggestion.

You can get a 12 percent rate of return by investing in the stock market? Hmmm….I guess but it sort of depends on what stocks you are investing in exactly.

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In our practice, there's often a discussion that develops around the idea of universal versus whole life insurance and we know this sacred battleground for many of our colleagues. Indeed people do have choices which as we all know can be a good thing and a bad thing all at the same time.

Something that happens for us very often as we discuss with our prospective clients the idea or using life insurance as an asset, leveraging the cash value accumulation to create retirement income, et. al.  is a certain degree of “analysis paralysis”. I think most people are familiar with the concept but I'll clarify briefly.

For us, it just means typically that people get a little hung-up on which type of policy is the right policy for them. And we are certainly not making light of the decision. Many times our clients are making a substantial financial commitment that will continue for some time well into the future. Not the sort of decision someone makes without a fair amount of consideration.

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Getting the right financial advice is important and the truth is that average financial advice is really for average people.are so many financial media outlets present and they are more than willing to throwout generic financial advice. Additionally, there are countless bloggers that offer up what we might refer to as “boiler plate” financial advice.

You know the sort of thing I'm talking about:  make maximum contributions to your 401k, contribute to a Roth IRA, spend less than you make (that's pretty good advice actually), don't run up excessive consumer debt via credit cards, use qualified plan contributions to reduce your taxable income and the list goes on. Now, not all of this financial advice is bad. It's just no-risk type of advice for anyone that wants to discuss issues surrounding personal finance.

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The financial crisis of 2008 was over nearly five years ago but recent research shows us that investors are still having a really hard time finding the balance between performance and safety.

Today we have a barrage of statistics showing us that investors are still not quite sure they should be back in the stock market or investing at all following the financial crisis back in 2008. As you’ll see the numbers from the two surveys are bit disconnected from reality, however, that’s pretty consistent with our anecdotal evidence of investor psychology over the last few years.

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There's so much bad advice that gets passed around the life insurance industry that sometimes it's hard to point out the real stinkers. But today, we're zeroing in on the misguided direction that some self-appointed life insurance gurus have been spewing into the world over the last few years.

What's the bad advice?

Well it actually stems from the intention of people really wanting to take advantage of using cash value life insurance to build wealth.

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There is certainly no shortage of self-appointed financial “experts” making the rounds in the financial media–television, print and on ye olde interwebs.

But we think something everyone should consider before relying on the advice of these gurus.

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For all of the joking around we do in this episode, we actually like disability insurance a lot.  What we're a bit annoyed with is the fact that there are a great many agents, insurance marketers and insurance companies that love to talk about the underserved disability insurance market.

Now, they base that on the fact that so few people actually own an individual disability insurance policy.

But is the market really underserved?

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Since the inception of universal life insurance in the late 1970’s, the whole life world has felt threatened and rightfully so. Universal life insurance boasted a myriad of benefits that improved upon many of the drawbacks that long plagued whole life insurance.

And the one argument the whole life insurance champions have long leaned on is the guaranteed aspect of whole life insurance vs. universal life insurance.

But does this angle really work for whole life insurance? Conceptually it makes sense. And the guaranteed column is guaranteed. But practically speaking does this argument matter? And if it doesn’t, does this spell trouble for whole life insurance?

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Today we're going to talk about regulation. Now, we're never in favor of MORE regulation…let's be clear on that. But, we do think that the life insurance industry needs to do a better job of policing itself.

If we don't, regulators will intervene and that won't be pretty for anyone. It's a bit of an anomaly in the financial services world to have products that aren't subject to any standard of suitability.

Annuities have a large degree of suitability guidelines to follow when it comes to the appropriateness of the sale.  The securities industry has even more.  Life insurance has none.  And we mean NONE.

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Holding onto a life insurance policy because you want to recapture the premium you’ve paid into the policy is playing exactly to the insurance company’s hand.  The reason they love to have so little cash surrender value in early years, is related to the thin margins they pull from a life insurance policy at this time.

There’s a lot that one misses out on if they allow themselves to fall for this trap.  The opportunity cost can be substantial. 

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