The perils of trusting experts regarding whole life and term insurance

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The whole life versus term life insurance debate has “experts” opining in both corners. Most of these so called experts are hired guns helping insurance companies sell their policies.

This leads to a lot of bad information being disseminated. Financial entertainers on the radio and TV often refer to whole life as a bad investment for anyone. The easiest way to dispute that would be to show how much whole life insurance is owned by largest banks in the world or people such as Warren Buffet. They don’t buy it without understanding how much commission their agent gets paid, they just believe that the value they receive from those professionals is worth the costs. There are “experts” on both sides of the term vs. perm argument and most of them do not care about doing what’s best for their audience. They are salesmen trying to sell a product come hell or high water.  I could provide loads of articles that are all 100% sure that term is better than whole life for you, and just as many that are 100% sure that whole life is better than term for you.

The problem with all of these articles is that term is the better choice for many people, and whole life is the better choice for others.  I am an analytical person so I’ve spent hundreds of hours analyzing numbers from many companies and reading many “expert” opinions on the subject. I can’t answer the term versus whole question for everyone but I can say this: If I had 3 children and was working hard to put food on the table each month like many of Dave Ramsey’s listeners, then I would probably purchase term insurance. If I had a much higher income than I needed to live, or a large amount of liquid assets, I would educate myself more on whether or not I should have term insurance, whole life insurance, or both. The best way to do that is to talk to more than one person in the insurance and investment business, and find one who you judge to be trustworthy and competent. If you came to the internet looking for your answer, I would suggest you talk to someone in person.

 If I had a serious illness,  I might be more inclined to follow the treatment course my doctor gave me, than the treatment course recommended to me by an article posted on WebMD, or the advice of all the hypochondriacs posting on the comment boards of WebMD.

Please understand that claiming whole life insurance is better than term life is much like saying that a banana is better than an orange. Do not get caught up in all the insurance partisanship. Do your own objective research and be leery  of “expert advice”

 

 

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3 comments on “The perils of trusting experts regarding whole life and term insuranceAdd yours →

  1. Peter Magni did a great job of proving whole life insurance is a better overall choice than term. He stated whole life policies have a living benefit with a tax sheltered cash account. This means you pay NO tax on any gains until you retire. Sort of like an IRA, but with independent death benefits to your wife. Term life does NOT have this.

  2. Your article seems to say that you can not say for sure whether Whole or Term Life insurance is better? I cant think of a scenario where term life is a bad choice. A friend just switched from Whole and agrees. I don’t understand why it even exists. Term covers all bases for single folks and married couples. I am sure there is a reason it is around, but do not know anybody who has it. Nobody at my job has it and I work around about 500 people who share these kind of things with their colleagues.

  3. Noticed an advertisement introducing Ryan M Vance as sales marketing director for Taylor and Associates in Roswell NM. They are a provider of insurance and financial services.

    A fundamental truth that everyone should know about insurance sales is that there is no direct relation between how the coverages are explained by salesperson and whether or not a claim will be honored by parent insurance company. Salesperson gets their cut at the time of sale of policy and has NO INFLUENCE on whether subsequent claims are honored. This is similar to the BS that one has to tolerate while a car salesman is going through his sales pitch and then what kinda deal the financial guys actually come back with.

    Also have you ever wondered why financial planners don’t just use all their financial knowledge on their own personal investing RATHER than charging 2% to invest other people’s money? If financial advisers charge their clients 2% on investment recommendations that return 5%, then adviser gets 2% and client only gets 3%.

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