Comments on: Reasons to Buy Whole Life Insurance

By: David

David — Fri, 29 Jan 2010 20:46:59 +0000

You can custom tailor whole life policies to build cash value quicker than you think and not have it become a MEC. You can use this cash value as your own bank….instead of paying someone else the interest (read finance company) you pay yourself the interest. Thousands of people do this already and they are better off financially. Proper use of Whole Life, that is set up correctly, can literally save people mounds of money over their lifetime. And it can be used as self completing plan…..ie if you become disabled no 401k is going to pay for the funging…..transfer wealth to heirs, charities…as mentioned above. In fact if people knew the secrets of whole life you could buy it in a vending machine and there would be know need for agents.

By: Evolution Of Wealth

Evolution Of Wealth — Mon, 21 Dec 2009 00:08:41 +0000

In terms of loans with regards to cash value I think it is important to bring up non-direct recognition. This means that when you take a loan the amount of the loan is not directly deducted from your cash value. This allows the full amount of cash value (loan amount included) to continue to participate in dividends. This would eliminate the biggest expense of a 401k loan, opportunity cost.

By: Michael @ The Life Insurance Insider

Michael @ The Life Insurance Insider — Mon, 18 May 2009 18:56:53 +0000

I too get upset when I hear people saying whole life insurance has no purpose or even Dave Ramsey’s claims that it is a rip off. First of all a product that is designed for a purpose does not inherently rip people off. The agent who sells it for the wrong reason or the company that has hidden fees rips people off, but whole life insurance is term life insurance with a really long term. If you have long term risk to insure and someone sells you a 20 year term policy with rates that skyrocket after the 20th year then that is a ripoff. Yeah, I said. Term insurance can be a rip off too.

By: My Journey

My Journey — Mon, 18 May 2009 16:03:26 +0000

DDFD,

Depending on the company you are working with, return of premiums can be guaranteed after 10 or 12 years. So even if you want to walk you can.

By: DDFD at DivorcedDadFrugalDad

DDFD at DivorcedDadFrugalDad — Mon, 18 May 2009 14:09:37 +0000

@ Ryan depends on who you have it with . . .

There will be interest on the loan, but it is usually more favorable than borrowing from a 401(k). 401(k)’s usually have limits on loans and they must be repaid or they are considered distributions. Life insurance loans don’t need to be “repaid,” the outstanding loan is simply deducted from the death benefit payment.

Finally, it should be understood that significant cash value takes a few years to build.

By: My Journey

My Journey — Mon, 18 May 2009 13:07:38 +0000

DDFD,

I couldn’t agree more with you, but when writing this post, I wanted to give ALMOST bullet proof reasons as to force people to think outside the box when they hear that all whole life is evil.

By: Ryan

Ryan — Mon, 18 May 2009 11:30:07 +0000

DDFD: I would be careful there, as there are usually fees involved with cash withdrawals.

By: DDFD at DivorcedDadFrugalDad

DDFD at DivorcedDadFrugalDad — Mon, 18 May 2009 11:15:01 +0000

Whole Life insurance also provides a pool of emergency cash that can be borrowed against if you have built up enough cash value.