Indexed Universal Life Insurance Is NOT a Get Rich Quick Scheme & I Do NOT recommend Using It To Be Your Own Banker or Infinite Banking (Canada)

To start, I’m a registered insurance agent in Ontario, Canada, who loves what he does, and because I’m active in this industry and learning more every day, I’d like to make sure that my industry isn’t being misrepresented.

Insurance companies DO NOT want to be associated with or confused with “BANKING”. Insurance companies do not enjoy the privilege’s associated with fractional reserve banking

Fractional reserve banking is a banking system where banks are only required to keep a portion of their deposits in cash form for immediate withdrawals. This means that banks need to maintain only a certain percentage of deposited funds as cash on hand, allowing them to use the rest to issue loans. This system helps in stimulating economic growth by making more capital available for lending purposes.

 

I say this, so the reader comprehends, that Insurance companies can not spend or lend money they don’t have on deposit.

Universal Life Insurance, is NOT a scam; it’s a great product for specific groups of people. The insurance industry, in general, is market-driven and when you finish reading this post, you’ll have a better comprehension of actual consumer demand for Universal Life Insurance, which I can argue was likely initially designed to be a less expensive permanent life insurance product.

 

In simple terms, in a market-driven economy, what to produce, how much to produce, and the price of goods and services are mainly decided by the interactions between buyers and sellers in the market. For example, if many people start buying a particular type of phone, manufacturers will notice this demand and produce more of that phone. Similarly, if a product is not popular, companies will stop making it or reduce its price to sell the remaining stock.

The insurance industry falls into regulatory guidelines decided by government, which is one of the reasons why Universal Life Insurance, IN MY OPINION is now better served to higher net worth clients, who can afford the risk.

The Canadian regulatory authorities, have to meet the DEMANDS of Canadian consumers, who may feel as though they’ve been mismatched with a particular life insurance product.

It’s for this reason why Universal Life Insurance ILLUSTRATIONS, can often be misleading. Insurance companies are not Charities and they’re main goal as to be profitability as well SOLVENT, because these insurance companies have been entrusted with capital from their customers to live up to the specifics of their contractual obligations.

It’s not a secret that for some consumers who file a claim with an insurance company, may feel as though they’ve been wronged, because they imagined that the insurance company should be forced to give them(the customer) money, simply because they sent the insurance money for a reason in which the client imagines a claim is warranted.

When Canadian consumers complain to the government about the insurance industry, this can result in political actions of force being used to CHANGE the insurance industry and when these changes occur, in order to prevent themselves from going bankrupt or insolvent, the insurance companies may at their discretion legally change fee structures within the frame work of the insurance contract.

 

Call or text Romone for more information

Contact Romone: (416) 705-0892
You can also use the contact form for more information.

Universal Life Insurance as a lot of different moving parts, and most of these moving FINANCIAL parts have FEES, and so when legal changes are made to the LIFE insurance industry, via the government, any prior FEE illustrations in your insurance policy might be altered. Furthermore the Insurance industry can control stock market activity or central bank interest rate policies.

Life Insurance is a very serious matter, and because of the nature of Universal Life Insurance, people should not confuse Universal Life insurance with Whole Life Insurance.

Whole Life Insurance in Canada is a type of permanent life insurance that provides coverage for the life of the policyholder, as long as premiums are paid.

The only glaring similarities between Universal Life Insurance and Whole life Insurance is that they’re both PERMENENT life insurance products. But if we’re going to a basic comparison, Whole life Insurance is more like an insurance policy with a SAVINGS account attached to it, whereas a Universal Life Insurance policy is more like a Term Life Insurance policy with INVESTMENT account attached to it.

What most people DO NOT like about Whole life Insurance is that the upfront costs are higher compared with Universal Life Insurance as well as Term Life Insurance. But these costs are more expensive, because whole life insurance offers more GUARANTEES on performance.

I like to remind people that the purpose of purchasing life insurance, is LIFE INSURANCE. Term life insurance only ensures you for TERM in your life, so it’s not WHOLE LIFE INSURANCE.

Universal Life Insurance makes up for the shortfalls of Term Insurance, by allowing customer to offset the higher cost of future TERM insurance by investing today within the policy and ENJOYING the protection of Life Insurance.

With Whole life Insurance, the insurance company does the investing for you, which justifies the higher cost of WHOLE LIFE insurance, however with Universal Life Insurance, the transparency of the client investing for themselves makes the upfront cost of insurance cheaper, while leaving the client with option to chose how the additional money can be invested.

Ever heard, buy term, invest the difference? Well, if you buy term insurance and invest the difference in mutual funds for example, there’s no PROTECTION from creditors when you die. Meaning that if you owe money, and you made a lot of money in mutual funds, not only will that money money in mutual funds be taxed at your death, but it could also be confiscated by creditors that you owe debts to.

Meaning that your beneficiaries might get NOTHING from your mutual fund profits. Universal Life Insurance, Life Insurance in general addresses these problems which is why when you imagine Life Insurance, try not to look at it as a basic investment, it’s INSURANCE. This is why Insurance companies charge fees for the work that they do.

 

Term Life Insurance in Canada is a straightforward and cost-effective type of life insurance. Term Life Insurance is popular for its simplicity and lower cost, making it a suitable choice for individuals seeking temporary coverage, such as during their working years or while raising a family, to ensure financial protection for their dependents.

 

Now, the whole schtick of Being Your Own Banker, revolves around SECURITY and Contractual guarantees. There’s nothing fancy about whole life insurance contract. I personally do see it as permanent insurance with a savings account attached to it.

However why a lot of people love “infinite Banking” or “Being Your Own Banker” is because it solves TWO problems at once, which allows for creative financial minds, to use the SAVINGS component of a whole life insurance contract to pay for other things using whole life policy loans.

Now, for many Canadians, they’ll argue that we potentially have the best banking in the world, why not simply ask the bank for a bank loan? Well, two things, first, the banks and other financial entities can turn you down for a loan, and also the bank or financial institution you borrow money from, determines the repayment schedule.

Whole Life Insurance Policy loans, are collateral loans and if you don’t pay them back, the loan amounts will be deducted from whole life insurance policy. Now if this is all confusing to you, this is why should contact Romone to learn more.

 

Call or text Romone for more information

Contact Romone: (416) 705-0892
You can also use the contact form for more information.

Because of the nature of Universal Life Insurance, it can’t make the same contractual guarantees as Whole life Insurance. Universal Life Insurance despite what some will argue is not a scam, it’s actually a great insurance product, because if you’re using it for estate planning or LIFE INSURANCE and you start the plan when you’re young, you CAN save a lot of money in the plan, even if you invest conservatively.

With that said, because the RETURNS in Universal Life Insurance are not guaranteed, borrowing against your plan or withdrawing money from your plan can be very risky, especially as you age, because similar to TERM life insurance, the cost of insurance gets more expensive as you age and if you withdraw too much money from your universal insurance plan, you’ll end up with financial problems, people in whole life insurance never have to worry about.

With whole life insurance, once you make your FIXED payments, YOU’RE insured, Universal Life Insurance, doesn’t have fixed payments, while it’s cheap that’s the time you’re supposed to invest, so that as you age, when the cost of insurance goes up, you can pay the higher premiums with ease, or have your investments pay your insurance for you.

When done correctly Universal Life Insurance is a beautiful Insurance product, and it’s one of the best ways to ensure yourself if you’re over 70 years old, no longer qualify for term insurance, have some capital stored away and you’re looking address your estate planning needs.

Universal Insurance helps a lot of if you’re a savvy investor. Sure some could argue the insurance is still pricey, but that’s because you’re not valuing what Life Insurance does.

So when you look at Universal Life Insurance as PERMENENT LIFE INSURANCE, you can see why a lot of wealthy people use it, because, for example if I inherit a lot of money, Universal Life Insurance, would be a good TAX SHELTER for this money also a good way to pass an inheritance to my heirs.

Permanent Insurance (Whole Life and Universal Life Insurance) is part of ESTATE planning, I’m writing this post because some people are imagining Permanent Life Insurance as a get rich quick scheme.

I want to lead the charge in getting rid of this “get rich quick” notion in the Life Insurance industry. It’s life insurance, and Universal Life Insurance is VERY important to the life insurance industry. We need this product, and it’s especially important for people who will learn about life insurance later in life.

I personally know quite a few people, who thought that term insurance would be cheap and AVAILABLE to them for cheap when they turned 85, and only learned about the limitations of term life insurance after speaking with me.

Without permanent insurance, people who are not rich at 65, may find themselves in bad financial situations. So for myself this is why I take the integrity of my industry very seriously.

 

Personally I would NOT buy Universal Life Insurance for “infinite banking,” but if I were doing estate planning, depending on the age of the individual and their individual needs, Universal Life Insurance is much CHEAPER alternative to getting Permanent LIFE INSURANCE.

What is permanent insurance? It’s not longer worrying about being DENIED coverage.

In some instances instead of looking at life insurance as getting rich, you should be looking at getting the best PERMENENT life insurance coverage for the best price. Sorry to say, but for some people it’s too late, for them to “Be their own personal banker”, but they can at the very least, potentially find some discounts on their Universal Life insurance by investing in SAFER investments in their policy.

It’s for this reason why Universal Life Insurance can be better than Term Insurance, because again, it’s permanent insurance, at the very least now you can’t be denied coverage.

Numbers aside, Life Insurance is providing the policy holder more than just money, it’s providing you a service, not legally available in any other industry. Insurance money can not be confiscated by creditors, so your beneficiary doesn’t have to worry about debts you owe being taken before they can receive the money you left to them.

So even in the event you die with debts owing, your loved ones, the beneficiaries of your Universal Life Insurance Policy, can feel some of the love you left them in the form of CASH.

So to all in the insurance industry trying to minimize what we do as insurance agents, please stop it. There is no “us” verses “them” in Life Insurance, there is no such thing as a one size fits all Life insurance policy. It all depends on the individuals and their individual needs.

“Be Your Own Banker” using dividend-paying whole life insurance is a financial strategy where you use a whole life insurance policy to accumulate cash value over time. Here’s a brief explanation:

1. Policy Selection: You purchase a dividend-paying whole life insurance policy. These policies not only provide a death benefit but also accumulate cash value and may earn dividends from the insurance company.
2. Cash Value Accumulation: Over time, your premium payments build cash value within the policy. This cash value grows on a tax-deferred basis.
3. Borrowing Against Cash Value: Once you’ve accumulated sufficient cash value, you can borrow against it. This loan is tax-free and you set your own repayment terms.
4. Using Funds: You can use these funds for various purposes, such as financing a purchase, investing, or as an emergency fund, effectively acting as your own bank.
5. Repayment Flexibility: Unlike traditional loans, you have flexibility in repaying the loan. However, unpaid loans with interest can reduce the death benefit.

This strategy requires careful planning and consideration, as it involves leveraging a life insurance product for financial needs beyond just the death benefit.

If you’re in business, like I am, I’ll tell you from experience, that I love Whole Life Insurance, if you know anything about R. Nelson Nash and infinite Banking, he didn’t even initially use a customized whole life insurance policy, when he stumbled on the concept.

What I came to learn from Infinite Banking is that the financially DICIPLINED individuals finally have a secure method to save money. What most people don’t like about Whole Life Insurance is the high cost, this is where the DEMAND for Universal Life Insurance comes in.

So it’s easy to see why, some insurance agents who prefer selling Universal Life Insurance to their clients imagine it as a superior product. But in the end you get what you pay for and R. Nelson Nash never included Universal Life insurance in his infinite Banking strategy, because he knows in life insurance there are no SHORT CUTS.

Life insurance will NEVER be a get rich quick scheme, but just because some people are falsely representing my industry, don’t allow that to detour you from purchasing life insurance in Canada. Term Life Insurance, Whole Life Insurance and Universal Life Insurance all have their place in the Canadian market place, contact Romone Porter if you require any assistance with your life insurance needs.

 

Call or text Romone for more information

Contact Romone: (416) 705-0892
You can also use the contact form for more information.