Whole Life Insurance Explained
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- Опубліковано 31 лип 2024
- The purpose of Whole Life Insurance is to provide coverage for your entire lifetime. Traditionally, Whole Life Insurance is a consumer demanded product that offers more than just a death benefit by permitting the policy holder to build equity in the policy.
This is a comprehensive video on the workings of Whole Life Insurance, particularly Participating Whole Life Insurance.
Watch + Learn how a policy is designed, how Paid Up Insurance is created, how Cash Value is accumulated, and the difference between loans and withdrawals. Learn about dividend options, non-forfeiture options and what makes a policy participating or not.
Something you want to avoid is mistakenly turning your policy into a taxable Modified Endowment Contract. You'll learn all about this as well.
You can use the Cash Value in your Whole Life Insurance policy with a strategy called The Perpetual Wealth Code.
The Book Prescription for Wealth details how to setup a self financing system similar to the concept of Infinite Banking or Bank on Yourself.
You can get Prescription for Wealth on Amazon or on our website (links below)
Prescription for Wealth Book:
PDF Download: www.life-benefits.com/prescri...
Audiobook download: www.life-benefits.com/prescri...
Paperback Book: www.life-benefits.com/store-d...
Great job in explaining whole life insurance. I've been a broker for over 5 years and I learned a lot of great information from you - you simplified it well in your presentation so that it was easier for consumers to understand the advantages of different components within a whole life policy. I need you as my mentor! :-) Thank you - job well done!
I've learned a lot about whole life insurance from your video. Thank you very much.
Thank you for taking this time to make such an educational and informative video. If the spreadsheet or powerpoint presentation was larger, it'd be better the eyes since I'm watching on my smartphone. Otherwise, I found your presentation to be very helpful. Thanks again. 🤝 Keep up the excellent work! 😎
Your illustrations makes this the best video i have seen on UA-cam on this topic!!! Thanks.
Thank you for the informative comprehensive overview!
Good video! This is one advantage of whole life.
great knowledge about life insurance policy
Very informative and understandable.
Excellent presentation. I love it! Thank you
yooooo I need you as a mentor! I learned so much, great video. Thank you.
@Andrew H lol 😳
@Andrew H when you surrender the policy, it will become taxed because the IRS will consider this income. That is why you should take out policy loans. Loans are NOT considered income. The interest of loans from the policy can vary from each insurance company. Maybe 5-7%. You will know what that amount is when you purchase insurance. Whatever the percentage rate is for the loan, it will remain the same no matter the amount you borrow. There are no hidden fees. Hope this helps. I'm just a viewer researching.
@@Lovely-ff7uv you're also able to borrow that money and reinvest it to make an additional % elsewhere thus potentially earning money on borrowed money, all while your money in the policy still grows.
HI. It seems like you are practicing Infinite Banking Concept 40/60 split. I like the presentation, i think it would have been helpful to some if you had included when taking out a loan the non direct participation of the loan and how it still growing tax deferred as if the loan was never made and made whole once the loan is paid off. Maybe that's in another one of your videos. Good luck. Love the channel.
Great presentation,I have my infinite banking system and you explained it better,much better than my agent.
PLEASE switch that over. IMMEDIATELY. You are losing money through infinite banking- i can send you my email if you'd like to learn more
@@paulkhoury8329 Paul is 100% correct. Infinite Banking is a scam.
well explained thank you
Great
Nice perfect, beautiful 😍 thanks for the info.
I can get 30 year of term life insurance paying a death benefit of 750,000 USD for a monthly payment of 50 USD for a grand total of 18,000 USD payed during the life of the policy. lets say I invest 700 a month during that time for 30 year at a low return rate of 6%. If i die during that term my wife gets more money than what the whole life policy death benefit would provide. If I don't I would retire on 703,160 USD and yearly I put in less than what the whole life policy cost at 9,000 total versus 10,000.
You mention both Term Insurance and Whole Life Insurance which are two separate types of policies. From your comment we're unclear whether you are advocating investing over purchasing any type of life insurance, or whether you’re in favor of purchasing Term insurance in conjunction with the investment.
Assuming you could get a consistent 6% rate of return on your investment without any losses, investing might work better for you than purchasing Whole Life insurance. However, you also have to remember the death benefit of the life insurance would pay regardless of where you are in the 30yr period.
In your example, the Term policy costs $50/mo. If you paid the first premium and (God forbid) were to die the next day, your wife would receive $750,000. This would be a 15,000x increase on your premium dollar.
In regard to the investment, you are counting the amount you would be able to retire on after 30years of investing. The Life Insurance gives security during those 30years of investing, providing a guarantee in case something were to happen to you… a fact no wise investor would wish to overlook.
With who?
Best information I've come across..thank you..
Great video on adjustable life insurance, not exactly a whole life policy. My question is that on the web I've come across places that say if I call up my insurance company I can exchange the cash value into the death benefit. So essentially, when I'm about to pass on, I can almost double my death benefit leaving very little cash value, since the insurance company takes that cash value anyways. Is that true? I can't find anyone talking about that on UA-cam. Thanks.
Cash value is merely the surrender value in a whole life policy. It is calculated on the amount of paid-up insurance you already own. Trading in your cash value for more insurance coverage isn't a logical option because you would have to withdraw your cash value which would surrender the amount of your existing insurance coverage.
In a Universal life insurance policy, the cash value is the accumulated value minus any surrender fees, interest or premiums due. Thus, the cash value in universal life policies is excessive premiums which have been paid and/or interest earned with has NOT been used to purchase any coverage.
Trading this cash value in for a higher death benefit may or may not produce a higher value over all for beneficiaries of the policy depending on the age of the insured and when the "trade-in" of cash value for coverage takes place.
As you may know, the older you become the higher premiums become on universal life policies because of the the underlying term insurance universal life insurance policies are built on. Therefore, the cost to purchase additional coverage may be way more than the amount of your cash value. This would make any additional coverage less valuable than the cash value itself which is included in the payout amount to the beneficiaries of the policy.
Hi, can you elaborate on what you meant with a changed tax status right after someone switches to a reduced paid-up addition? Thank you
Maria,
The tax status of most policies we design is "non-taxable". This has to do with the IRS guidelines for MECs (Modified Endownment Contracts).
When someone changes their policy from premium-paying to Reduced Paid-Up (RPU), there can be a tax status change. If the IRS' MEC guidelines are violated when the policy is changed to RPU (usually because a policy is too young when the RPU status is initiated) the policy will change tax status and become "taxable". When a policy becomes taxable, the growth of the policy is taxed when the cash value is accessed.
This video would be better if the charts you presented were larger and you were smaller.
Hello, great video. Thanks for doing it. Would you recommend a couple of Life Insurance companies that supports all the points mentioned
We represent several different mutual insurance companies who have good products. The insurance company we write with depends on the needs of each individual. After speaking with you about your current financial situation and your financial goals we would be able to recommend a company and design a good policy that will work for you.
@@McFie-Insurance will he be dealing directly with the insurance company or will it be a middle man kind of deal
Thank you for your video. I dl’d the book! Good stuff !
So where do we go? What company do we buy insurance from. I want to buy from this woman
👍🏼
We can't see these slides.
Awesome video
Thanks for the feedback. Comments like yours make us happy to know we are providing helpful content. Regards.
What is a good whole life policy that I could start with ?
Hi Verdell,
We customize each whole life insurance policy based on the current financial needs, health and affordability of each person. To design you a good whole life insurance policy, please give our office a call. After understanding some more specifics about your current situation, we will be able provide you with a good whole life policy for you.
I have term life insurance through my employer and a universal life policy through my union. Is it logical to be paying into both? I'm having trouble deciding whether I should cancel my universal life policy, mainly because they try to scare people into keeping by saying stuff like "once you cancel you can't get it back," and my union rep says this life insurance is only offered once to employees, so once it's gone it's gone for good. The one positive thing I can think of is that there's accumulated cash value, so if I cancel my policy I'll get the cash value and will be able to put that money into different use. Should I go ahead and cancel it?
Galloe - we would be happy to look at your insurance with you and let you know if it's a good idea to keep it or if you can get something better. Please give our office a call 702-660-7000. Look forward to assisting you
All you need is term. Stay away from cash value insurance.
With whole life that has accumulated $200K in cash value. At death of the insured, will the bene receive both the cash value AND death benefit?
There is a good explanation and visual example of how this works in this video: ua-cam.com/video/h2Bu9eamYcE/v-deo.html
No, your family only receives the death benefit. Just one of the many reasons that trash value insurance is a scam.
Thanks for asking that question because I was wondering that myself
They will not receive the cash benefit. The company will keep the cash value for themselves🙈
why is the cash value less than the Single Premium at the start of the policy by 15k?
because the first several years, the cash value is straight commissions for the sellers. It's a scam.
What is the average age of the participants? If the average age of participants is increasing to a worrisome level then dividends might start heading down? Pls clarify.
The insurance company takes overall age of participants/insureds into account when calculating insurance rates. Mortality age and rates are also part of this equation. Here is a video that explains a bit more about how dividends work: ua-cam.com/video/PihzA2STbZs/v-deo.html
Do you have any companies you would recommend?
We represent several different mutual insurance companies who have good products and good track records. The insurance company we write with depends on the needs of each individual. After speaking with you about your current financial situation and your financial goals we would be able to recommend a company.
So is it better to take a loan, than to withdraw?
Policy loans allow you access to the policy's cash value without have to surrender a portion of your death benefit. When you take a policy loan you also have the opportunity to repay the loan and have access to the money again, similar to a line of credit.
When you access money from a life insurance policy via withdrawal, you are surrendering a portion of the policy. This makes the policy smaller, reducing future cash value and death benefit potential. Policy withdrawals cannot be repaid.
Sometimes it makes sense to make withdrawals. For example, if a policy were established for the purpose of providing income support during retirement, and not providing a legacy or death benefit for a loved one, withdrawals could be a good way to access the policy's cash value.
It is important to know when withdrawals are taken from a policy, taxes will be due on any amount greater than total premiums paid into the policy.
Is it correct when the person owning the policy dies, only the Death Benefit is paid to the Beneficiary. What about the Cash Value? Who gets the cash value?
George, the answer to your question is in the QUESTION OF THE WEEK video today: ua-cam.com/video/h2Bu9eamYcE/v-deo.html
A key difference you'll notice is although the term "Cash Value" is used with both whole life policies and universal policies they mean something completely different.
A whole life policy with a good design will work well for you now and in the future, while building a legacy for your loved ones simultaneously.
@@McFie-Insurance Thank you!
@@georgejoy9979 The short TRUTHFUL answer is the insurance company keeps it.
How does the cash value increase. I’ve had life insurance for years and the cash value is still 0. What an I missing?
Hi Shraunbone,
Without seeing your specific policy here are a couple reasons your cash value may not be increasing:
1. You may have a Term policy. Term policies do not develop cash value. Term policies have a low premium for a high amount of death benefit but they are meant to be used as temporary policies... 10, 15, 20 or 30 years.
2. It could be a Whole life policy without any riders that has not reached the point of generating cash value. The type of policies we sell have a Paid-Up Additions rider attached to the policy that allows them to accumulate cash value in the very first year. Traditional Whole Life polices would not be sold with this rider and could take 3-10 years to start accumulating cash value.
We would be happy to give you a policy review on your existing policy and help you know what's going on. Please contact our office: team@life-benefits.com or 702-660-7000
@@McFie-Insurance Which shows why whole life insurance is even more of a scam. Hence, it takes years to develop any significant cash value because the first several years of CV payments are direct commission for the salesmen. When the client/victims dies, the insurance company KEEPS all the cash value.
why do death benefit and cash value have to equal each other when the policy matures?
Hi Gabriel,
By definition whole life insurance has to have the cash value equal to the death benefit at maturity. It's just the way the product is designed to work. Maturity usually happens when the insured reaches age 100 or 121, depending which mortality tables were in use at the time the policy was written.
One question I need to be clarified about:
Is "Paid- up additions" is the same as "Riders" ?
"Paid-Up Additions" is not the same as "riders". Riders are attached to a policy similar to training wheels on a bicycle. There are many Riders available to attach to a policy. The Paid-Up Additions rider is one of them.
Other riders include:
Waiver of Premium
Chronic Illness
Terminal Illness
Term Insurance
Children's Insurance
Etc.
Paid-Up Insurance happens naturally in a whole life policy. The older a policy grows, the more Paid-Up (Permanent) Insurance the policy will have.
As a policyholder you are allowed access to the cash value of this Paid-Up Insurance. Paid-Up Additions adds to the Paid-Up Insurance of a policy. We use the Paid-Up Additions Rider to create access to cash value in the early years of a Whole Life Insurance policy when the Paid-Up Insurance is relatively small.
@@McFie-Insurance hello. I would love to start with a whole life policy. My name is ray- 773 592 8696. Please call after 3:30pm cst
@@rayg409 Don't get a whole life policy. It is a scam.
When you were describing dividend options, your first discussion was on using the dividend to purchase and additional death benefit. And later, you discussed paid-up additions, which actually do the same thing. Perhaps I missed something, but why are you discussing these as different options and they are actually the same?
Thanks for your question, you are right that they are the same thing. The term paid up additions is just a little bit more specific because the additional death benefit you are buying with your dividend is "paid up" (think: paid off)
Just buy term life insurance I and put the rest of your money in a employer’s matching Roth 401(k) and put money in a savings account instead of borrowing your own money
This is good advice. You don't need to hand over all your hard earned income to an insurance company when you can just invest it yourself.
I'm learning 😌 a lot, but I'm still lost... I guess I need to keep learning 😕
Prince,
Glad to hear you’re learning a lot. Where are you getting lost? We may be able to point you to additional resources that will make learning easier for you.
@@McFie-Insurance the video is good. However, the viewers can NOT see the chart. Which makes it harder to follow. Please redo/update this material. You are good at this. Keep going.
So what happens to the cash value once I die
James, here is a video explaining what happens to the cash value of a whole life insurance policy when the insured dies: ua-cam.com/video/h2Bu9eamYcE/v-deo.html
The insurance company keeps it. Scam.
Since the insurance company is always reducing your death benefit by the amount of money "borrowed", they are always paying you the difference between what they are going to pay you, and what they would normally have to pay you. In other words, the longer you live, the less benefit you get at an ever increasing rate. If you live to the police end-of-life, you get nothing; the insurance company keeps your money. From an actuary standpoint, this is a huge profit for insurance companies. If you would have just saved the money at 0% interest, you would have saved more than the death benefit between the ages of 20-60, using their example.
This is not the true nature of insurance. If this were any other type of insurance, like car insurance, were one to get into an accident, after a deductible, and a small premium hike for a few years, the remainder of the full liability would be paid using other policy holder's money.
Why not just invest the money in index funds rather than giving your money away to and insurance company.
Hi Miguel,
You certainly can invest money in index funds. However, the idea of just "giving your money away to an insurance company" when you purchase life insurance is not accurate.
If you purchase a Whole Life insurance policy, your premium dollars will be purchasing a death benefit the insurance company will pay to your beneficiaries when you die (you would not get this protection by investing in index funds).
In addition to the death benefit, a well-designed Whole Life insurance policy will also accumulate guaranteed cash value which is available for you to borrow. Overtime this cash value can greatly exceed the total premiums paid. Although we hope investments in index funds would create a return, nothing is guaranteed with an investment. So once again, cash value accumulation is not something you are guaranteed to get by investing in the index.
If you purchase a Term policy, you are paying for a death benefit and, in some cases, the right to exchange the Term insurance for Permanent coverage in the future.
If you purchase some kind of UL policy you will initially have a death benefit but UL policies are usually guaranteed to lapse sometime between the insured's age 50-85.
We don't recommend UL policies because the guarantees are bad and unless you die before the policy lapses, it's often just a way to give your money away to the insurance company.
To better understand how these insurance products work, check out this video: ua-cam.com/video/q7QmPQvRIgE/v-deo.html
Good points. Or if you want less risk, a balanced portfolio of stocks and bonds is better. Personally I don't really see the point in whole life since term is such a good option for those with dependents and there are far better options for saving for retirement or leaving a legacy.
Diversify
How do my money earn cash ( dividends , cash benifits, death benifits) 🤔 how
Hi Torri, This is a great video to watch in order to understand these questions pertaining to whole life insurance. Dividend options are specifically covered starting at 8:42
I'm 56, is this something may too late in my life to start?
Hi Rick, 56 is definitely not too late to start. Obviously, the sooner you start the better results you will get. Please let us know how we can assist you!
702-660-7000
team@life-benefits.com
I have a term, and they keep trying to get me to switch it over for almost double the payment
Hi Mantiscity,
You probably have a convertible Term insurance policy. At some point the level Term premium will be over and the premiums to keep your coverage inforce will go to insane levels.
If you convert your term insurance to permanent insurance you will avoid the jump in premium at the end of the level Term period. The policy you convert to will have a higher premium because it will be some type of permanent coverage, not term.
If you want to keep your coverage after the level term period is over it may be good to convert the policy. HOWEVER, please make sure the policy they want you to convert to is a whole life policy, not a universal policy. Universal policies tend to lapse in later years leaving you no coverage and nothing to show for the premiums you’ve paid.
We would be happy to look at the proposed policy for conversion with you if you’d like.
NOTE: If you don’t want to keep the term coverage after the level premium period is over, simply ignore the requests to switch over and make sure you stop payments to the policy after the level period is over.
@@McFie-Insurance Thank you so much for the response. My problem is, I do have a 30 year term. For me to convert someone of that to Whole, my payment would double. I just don’t think it’s worth it to double my payment.
@@mantiscity The idea around converting term insurance to whole life is to transfer the insurance from being temporary (expiring after 30 years) into permanent coverage (insurance that will last your whole life). From a premium perspective yes, the whole life insurance is going to be more expensive than the term. But the whole life insurance will also generate cash value.
If you're not going to want insurance after the 30yr period is up, and you don't want any cash value, there is no need to convert. If you will want insurance after 30yrs is over, converting it to whole life (and yes, paying a higher premium) will allow you to continue the coverage beyond the 30yr term.
Have you ever seen a whole life illustration that shows how the policy generates cash value? You're welcome to call or email us and we'll be happy to show you what one could look like. Although the premium is higher in whole life insurance to begin with, whole life insurance actually ends up being less expensive than term insurance over the long run because of the cash value growth.
@@McFie-Insurance thank you for explaining it
Don't you dare switch that term policy to whole life. You're right, the premiums they will charge will be (at least) 20 times more than term and they keep your cash value. Keep the term and invest the difference. Don't listen to these low life salesmen trying to get you to switch.
Eye chart much?
Can't read your chart 🤔🤔🤔
There was one piece of important information it didn’t even shown… what is the price of the insurance portion of the policy?
There is a difference from insurance portion and investment portion of the premium.
this is what this company doesn’t want you to know. They hide that information buy showing what they like to call premium hiding the investment portion and insurance portion. This is very misleading
Cole,
Thank you for your comment. You asked "what is the price of the insurance portion of the policy?". This is covered in detail starting at 1:33 and continuing throughout the video. 2:13, 5:49, 8:34, 26:14 are a few timeline references where you can find the price of insurance, or premiums, discussed in this video.
You also mention what you call the "investment portion" of the policy. This leaves us scratching our heads since whole life insurance, the topic of this video, has no investment portion whatsoever.
Perhaps you are referring to universal products, an entirely different kind of insurance? You may like to check out this video explaining the different kinds of insurance products and how they work: ua-cam.com/video/q7QmPQvRIgE/v-deo.html
Dave Ramsay has left the chat. 😂
This video verify what Dave Ramsey was preaching about; whole life insurance policy is a horrible investment lol.
@@tongl274 how?
@@tonylopez2044 Whole life insurance cost 20 times more in premiums than term and they keep your cash value when you die. Scam.
@@astroman30 that's what the loans are for. instead of taking a big IRS taxed income deduction. the company takes 5-7% and you have your tax free money. if you took out the whole thing it would be a taxed income causing a massive loss. basically like withdrawing your IRA early taking huge tax penalties. the big thing is the policy is not taxable and you put in say 10k and get 50k in return more than doubling your investment. so yeah you can withdraw anytime but the idea is to not do so; just like a retirement program. except the money is not taxed if you need it and withdrawing is going return you more compared to what the IRS will charge.
@@geronimo5537 BORROWING against your own money only to lose all of your cash value to the insurance company, and you think this is a good idea?
Life insurance shouldn’t be this difficult!
😢
I will never buy from this whole life sellers and IUL sellers ever again they don't even review policies to their clients because they know its a big ripped off they even show non guaranteed crap just to hook their clients off. and not only that the cost of insurance go so high that it will eat up your cash value until it turns into ZERO, but anyways clap clap with their big commissions. If you guys an average person like me who buys this kind of stuff my advice is the moment you receive your policies review them thoroughly and consult an expert.
Preach!!
They need life death accelerated , critical accelerating, chronic accelerating, terminal accelerated, living benefits til they death before 100 year old,
What happen if they don’t die after 100 year old
Policy expires 100 year old
Please don't buy whole life insurance. set me back from achieving financial goals and is never appropriate with few exceptions (like if I had owned a huge farm that my kids would inherit, or for "keyman" insurance for my company). I lost $50,000 after 7 years into my whole life policy and couldn't keep up with the premiums, and that is $50,000 I could have invested or used to pay of my med school debt.
Rikki,
Sorry to hear you had a bad experience with life insurance. The whole life insurance policies we sell are designed to break even (have the same amount, or more, cash value in the policy than the total amount of premiums paid) usually between years 8-12. So when you mention your $50,000 loss in year 7, it sounds like the policy was not designed well.
To see more on how a good whole life policy should perform, check out this blog post: www.life-benefits.com/overcoming-evil-with-good/?inf_contact_key=961974c8961f165f28d1050718e9b87c680f8914173f9191b1c0223e68310bb1
Note in year 10 the policy has more GUARANTEED cash value than the total amount of premiums that have been paid into the policy.
You mention whole life insurance may be valuable for "keyman" purposes. You are right, but even for "keyman" purposes it should be designed well.
Whole life insurance works best over time. It's very name, whole life insurance, is meant to last for ones "whole" life. At Life Benefits we design and sell insurance based on two principles: Affordability and Comfort. The premiums HAVE to be affordable and they have to be comfortable.
It sounds like both these principles were violated in your case, resulting in a financial loss instead of the laying of a strong, sustainable foundation.
Rikki, you're absolutely correct, sir. Whole Life insurance is garbage. Don't EVER buy it. Please warn others.
@@astroman30 yeah dude, sucks to be me :( I have been trying to warn people but unfortunately this stuff is still sold inappropriately. Very hard to fight the insurance and financial advising industry against selling this stuff as it is so profitable for Wall Street, and us citizens are no match for how wall street pays off our elected officials :(
@@Jacksonking456 You're exactly right. That's why I'm on here fighting the good fight. You'll see me on a lot of these youtube pages bashing those who push this garbage. It warms my heart when I hear feedback from potential victims thanking me for the warnings.
YOU WANT ME DEAD GUESS WHAT PAY YOUR LIFE INSURANCE I CAN'T BURY YOU OR PUT YOU IN THE GROUND SOME FOLK'S NEEDS TO BE CAREFUL OF WHAT THEY SAY PAY YOUR LIFE INSURANCE
Scam,
If you’re a beginner in this space, do not watch this video. Terrible explanation, don’t get all the comments saying this was helpful. Must be bots or co-workers of this lady. Video was all over the place.
Also, whole life insurance is a scam. Term is the only form of life insurance anyone should be getting. Use the difference in premium payments to invest in the S&P 500. You don’t need the LI company “investing” it for you
Is this a joke? Got to be😕
Whole life insurance is a scam. That's all you need to state.
astroman30 how come is a scam ?
@@calebarcalebar3768 They promise you a "cash value" savings, but when you die, the insurance company keeps it.
astroman30 IF NO ONE CLAIMS IT THEY WILL KEEP IT
astroman30 I HAVE KIDS AND NEED IT FOR THEM , I DONT WANT A INSURANCE THAT WILL CEASE WHEN I AM STILL ALIVE, AND GET NO BENEFIT FROM IT
@@calebarcalebar3768 First, turn your CAPS off. Second, stop acting like a victim. Yes, the company keeps the CV only paying the DB in a WL policy. If you can afford the high payments of whole life, you can afford a funeral.
good lord take some voice and public speaking classes