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February 11, 2024 at 6:57 pm #91250Lucas
I’m looking to open a whole life insurance policy with the purpose of increasing the cash value.
Any idea of which life insurance to chose or any broker I can use to compare?
I’m 27 years old and living in NYC.
Thanks in advance,February 11, 2024 at 6:58 pm #91251Keffus
You’re young avoid cash value insuranc, buy a 35 year term policy and get a mutual fund. You’ll have way more money liquid vs if you went the cash value route.February 11, 2024 at 6:59 pm #91252Robert
I don’t understand why everyone on this page shits all over whole life policy’s. It’s all about your individual situation and where you want and need coverage and benefits. Whole life policies structured correctly can be just fine as investment vehicles. Especially if you are a high income earner and want some for those benefits. Now are they the best, maybe not, can’t say for an individual person.
Just because Clark Howard doesn’t endorse something.
Doesn’t make it bad for everyone.February 11, 2024 at 6:59 pm #91253Nicholas
Don’t do it. Its a scam, you can build “cash value” way better than any insurance company will do for ya.February 11, 2024 at 7:00 pm #91254Dimitry
Can someone explain to me why Whole Life has negative connotations attached to it?
I knew nothing about it, until I started working in the industry last year, and personally I think it’s amazing. Obviously depending on your age.February 11, 2024 at 7:00 pm #91255Drew
Most people should absolutely avoid whole life insurance policies.February 11, 2024 at 7:01 pm #91256Dan
Listen, this is a strategy that can technically work. But here’s the deal – it comes at a significant cost. These policies generally take about 8 years for you to break even, and that’s only if you get adequate blend of death benefit with cash value. There are all kinds of tweaks to get more out of your policy sooner but then you basically don’t have insurance at that point. The opportunity cost of doing this is extremely high.
These are oversold as if you being able to borrow from yourself (really the insurance company becomes your own bank with your cash value merely being the collateral) but the only peeler that I’ve come across that really benefits from this strategy, especially for real estate are those who are putting $100K to $300K into them every year.
These people have such a high net worth that whole life insurance makes sense because they’ll likely have to pay estate taxes when they pass away but my guess is that that’s not a concern for you.
At least not today. My recommendation is to be very leery of the people selling these. I’ve met with 9 of them so far and about three of them I actually respect because they knew their stuff. Two of them told me that I shouldn’t do this because I’d be better off doing what I’m doing.
The huge truth is that they get a massive commission if you take out a policy regardless of if it actually makes sense for you financially while they focus on selling you a concept that really won’t work out that great unless you’re high net worth and have enough extra money coming in every year after maxing out better investment options that you don’t know what to do with it.
There’s my take on that. Good luck
Further recommendations for you: Life insurance questionFebruary 11, 2024 at 7:02 pm #91257JoAnn
Terrible product ~ not recommended- get a term policy.February 11, 2024 at 7:02 pm #91258Derrick
I, personally, have been turned down for Term over the past 5 years so my only option IS whole life for final expenses because investment money isn’t where I’d like it to be and therefore would like it to continue to grow after I’m gone.February 11, 2024 at 7:02 pm #91259Adam
Stay off the insurance sales man TikTok’s on “infinite money hacking”.
You will be FAR better off and have more flexibility to get a term and invest that money in a brokerage account if you want more flexibility of access vs retirement accounts.February 11, 2024 at 7:02 pm #91260Michael
Look up what happens to the cash value when you die. Buy a term policy and invest the difference in the stock market through 401K/IRA/Brokerage.
You will be self-insured before you know it.February 11, 2024 at 7:03 pm #91261Louis
Cash value life insurance is a bad product unless you have a serious health condition, need life insurance for a broke spouse or kids, and can’t qualify for term.
If you want to grow money, doing it through insurance is horribly inefficient.February 11, 2024 at 7:03 pm #91262Brian
Do not get a whole life policy. Get a term policy. Whole life is the worst investment you could ever make. Your return on investment is actually negative and whole life is more expensive than termFebruary 11, 2024 at 7:04 pm #91263Kareena
I understand the high fees and lower rate of return with WL compared to index mutual funds, what I would like to understand is it worth it for ultra rich that have already maxing out retirement plans and they are on edge of being liable for estate taxes if they die? do high fees and lower return make up for the fact that heirs would get tax free insurance money?
Tax free is huge benefit if someone is effectively paying 50% in taxes despite using all legal tax reduction strategies since their income could be millions of dollars each year.February 11, 2024 at 7:04 pm #91264Kyle
Unfortunately with you being in NY your options are severely limited. Most companies will not work in NY due to the regulations and costs that are added. Any company you find, be sure you research their ratings with the reporting companies to make sure they will stand behind what they offer.
There are always a ton that trash LI as a tool but most of the time they do not fully understand how to properly use it.
Make sure you find someone that is willing to educate you and share the good and bad sides. If you have questions, get a second opinion to compare.
Be comfortable with the numbers and don’t be sold by someone painting a rosy picture.February 11, 2024 at 7:04 pm #91265Thuy
I don’t recommend buying life insurance unless you have someone depending on to you.February 11, 2024 at 7:05 pm #91266Allen
Are you maxing out all your tax-advantaged accounts already?
Whole life is like a Swiss army knife… Tries to be life insurance and an investment but doesn’t do either one as well as other options.
Would you use a Swiss army knife to cut down a tree or would you grab a full size saw instead?February 11, 2024 at 7:05 pm #91267Anne
I was tricked into buying WL insurance when I was 24. I finally got out at 34. It makes me sick to think how much more money I would have if I didn’t let some sleezy “financial advisor” lead me down that route. Waste of money.February 11, 2024 at 7:05 pm #91268Patrick
IMO about the only benefit of whole life is it forces you to invest/save. If you have the will power i would suggest term life with an understanding you will invest the difference in premiums into more suitable investment vehicles.February 11, 2024 at 7:05 pm #91269Neka
I would advise this only if you could max out that policy. Example if it’s $140k over 7 years to max then make sure you reach that amount in that time.
If not fees start eating into what you are making causing it even longer for you to break even. Then eventually it won’t even be worth itFebruary 11, 2024 at 7:06 pm #91270Gina
Do not purchase Whole Life, it’s not an investment, except for the person selling it to you. You need to meet with at least 2 reputable financial advisors not an insurance sales representative. Educate yourself on investing, read a few books, talk to successful family and friends about what they invest in.
It won’t be WL.
Additionally, consider: Do you think paying for whole life insurance is a good idea?February 11, 2024 at 7:06 pm #91271Kevin
Smart Decision! You must go with a mutual insurance company, and never a stock insurance company… best are Guardian, Penn Mutual, Mass Mutual. The policy design is most important.. you should be asking for a 10/90 design (10% base insurance & 90% cash value).February 11, 2024 at 7:06 pm #91272Hunter
The only person to make money with a whole life policy is the salesman.