The video below was on feed, and it appears to be chopped, but it was posted by Dave Ramsey’s organization; I just want to make a few quick points on it.
It’s on thing to recommend temporary insurance(Term Insurance), to someone who is struggling financially, but it’s entirely different to compare Whole Life Insurance to mutual funds. People purchase life insurance for SECURITY, for the death benefit in case the worst happens!
Mutual funds are purchased primarily for capital appreciation. However, a person’s death could occur during a market downturn, and mutual fund gains are taxable at death. When people die, their assets are considered sold at death, and this is a taxable event.
Life Insurance, for the most part was designed for ORPHANS, people who lost their loved ones, this is one of the reasons why money put into life insurance contracts are not taxable to the beneficiaries.
I fully comprehend the “buy term, invest the difference” mentality, but canceling a whole life insurance contract and purchasing mutual funds is the dumbest thing I’ve ever heard.
In Canada, we have Segregated Funds, which are similar to mutual funds, except that with SegFunds, at least 75% of your initial principal is protected from market correction. I personally would never recommend selling a whole life insurance contract for SegFunds, let alone mutual funds.
Mutual Funds depend on market conditions and they’re taxable, mutual funds and whole life insurance shouldn’t even be in the same conversation. People are unaware that Infinite Banking revolves around Whole Life Insurance.
Not everyone qualifies for bank loans, or loans from financial institutions, some people especially in the United States, want nothing to do with Banks, having a whole life insurance contract, helps a lot of FINANCIALLY RESPONSIBLE people with their financing needs.
From what I understand, Dave Ramsey’s schtick revolves around helping people get out of debt, which is fine, but he needs to be more responsible with his sound bites. Personally, I have Term and Whole Life Insurance. I’m a huge fan of Paid Up Additional Insurance because, for a lot of people, the problem with Whole Life Insurance is the expensive premiums.
But on the flip side, the worst part of term insurance is that you’ll be uninsurable when you need Life insurance the most, which is after 65 years of age. Paid additional insurance solves a lot of problems when explained correctly by a Life Insurance professional.
From my understanding of Dave Ramsey, he hates debt in all its forms, and he’s typically dealing with people who have financial problems. So, his one-size approach appears to revolve around getting people out of debt and turning them into prosperous investors.
Dave is rich, and what he says makes a lot of sense if you’re as rich as he is, but if you’re poor or you’re broke and you have dependents, canceling a whole life insurance policy in exchange for mutual funds is STUPID.
If you have dependents, you should definitely consider whole life insurance sooner rather than later because the longer you wait, the more expensive TERM and whole life insurance will get. The reason Whole life Insurance exists, by the way, is because Term insurance fails to address life insurance needs for people over 65 years old.
Once you reach 60 years old, you’ll notice your term life insurance premiums getting a lot more expensive…that’s why Whole Life Insurance was created in the first place.
Term insurance revolves around being there for you when you’re least likely to die; Whole and Universal Life Insurance are PERMENENT Life Insurance products. With Whole Life Insurance, the costs never change, and the insurance company can’t cancel you, meaning you’re guaranteed a payout as long as pay your premiums. Furthermore, the insurance company will often find ways to help you even if you can’t make your whole life insurance premiums because permanent life insurance has levers, known as savings and policy loans, to help people who might be having a financial rough patch in their lives.
When you have whole life insurance, you no longer have to worry about QUALIFYING for life insurance, which is a big deal, that most people never think about until they’re uninsurable.
This is something I take very seriously because I want people to stop looking at life insurance as something everyone qualifies for at any time; that’s not how life insurance works; some people are uninsurable today, and they would have been insurable yesterday. One bad situation can destroy a person’s insurability.
With term insurance, after your insurance expires, you have to reapply, and if you have a disease or the insurance company doesn’t like your current health, your term insurance premiums might be higher than my whole life insurance premiums when it’s your time to renew. Nothing in life is guaranteed, including mutual fund returns.
Life insurance and mutual fund returns should never be thought of as one of the same; they’re entirely different financial products that serve two entirely different purposes. Personally, I’d buy an ETF before I’d even consider purchasing mutual funds.
Please, people, do not sell your whole life insurance for mutual funds. I will say that Infinite banking is not for everyone, but being that infinite banking revolves around Whole Life Insurance, be wary that infinite banking is not an investment; in fact, a lot of the people involved with infinite banking are also investors.
There’s no such thing as infinite banking vs. mutual funds; if you’re truly wealthy, you should be able to own a PERMANENT life insurance contract and invest in mutual funds(if that’s what you want to do). Part of the infinite banking schtick is to use policy loans to pay off other debts or use policy loans to invest.
Unlike a term life insurance contract, a permanent life insurance contract can be used as COLLATERAL. Policy loans from insurance companies are collateral loans. The collateral is your life insurance contract. To learn more, you can contact me using the information provided. I think I wrote way too much in this post; I just wanted to make sure people don’t make bad Life Insurance decisions.
In closing, Mutual funds should never be confused with Life Insurance! Life insurance is a lifesaver for orphans; mutual funds will never be that because nothing about mutual funds is GUARANTEED; the stock market can crash, and it could crash the day your dependents need the money the most.
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