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« Money Ethics: What Would You Do with Found Money? | Main | I'd Be Kicking Myself if This Happened to Me »

June 17, 2010

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I recommend you to go back to your advisor for some answers rather than advice.

Ask your financial advisor if he is an insurance salesman. Ask for explanations to be translated into everyday language rather than insurance sales jargon. Ask what the commission from selling that policy will be for the next 10 years. Ask for a printed break out the actual death benefit in 5 year increments until you reach age 100. Ask if the literature showing the outstanding product performance is a sales brochure the issuing insurance company.

These answers will help you decide.

I have dealt with insurance agents disguised as financial planners. They want to sell this as the stable guaranteed no loss part of investing. They seem to show this great improvement over the bond market but I think with your age, you have plenty of time until retirement which could afford some riskier but better performing investment options.

Get some 20 year term for $30-$40 a month and get the rest working for you.

Ok so insurance is for protection and not investing however cash value policies purchased for retirement can work but typically only for the very wealthy and not the average joe. Even so you're looking at what a 3-4% return not counting inflation. Do you think you can beat that else where?

In your scenario you qualify for a ROTH and I assume you have a 401K. Are both being maxed out? If not then you should be doing that first before even considering life insurance as an investment. I pay ~$40/mo for 500K in term insurance and am only a few years older than you. That is 10 times less per month for more life insurance...at $400/mo you can almost max a ROTH which would be a better way to go. Have you gotten quotes on term insurance? If not you definitely need to.

There are too many unanswered questions to make a good call. You need more information lik:

- Why are you looking for life insurance? What needs protecting and how long will it need to be protected?
- Will 20-30 year term work for you?
- Have you covered other retirement scenarios/vehicles with your advisor?
- Have you talked about other protection such as disability?
- Did he show you a projection of the cash value and have you independently compared it to buying term and investing the rest?

If all he is offering is cash value life you need to get a second opinion and you need to make him show you all options not just the one that benefits him the most.

You've already gotten some great advice from the posters above, but I'd like to focus on PMT's first bullet: Do you even need life insurance? You're 26yo; do you have a wife and kids or other dependents who would need the income if you were to pass on? I'm married and significantly older than you, but I don't own any insurance because my wife would be able to support herself if I were to die.

I've always been wary of the bundling of insurance and investment. My general advice would be to keep them separate. BTW, congratulations on already owning a home (with equity) and having 150K in net worth at 26yo.

This is not a financial adviser you are getting advice from.

It is a salesman trying to separate you from as much money as you are willing to let go of.

I recommend that you get another financial advisor or better yet, have none at all. It sounds like a pitch from someone who works at First Command. First Command usually pitches whole life insurance to military folks during the initial consultant. Insurance is not an investment! This is what PMT has said. The best investing tools for retirement are retirement accounts. If these are maxed out, go next to a low-cost index fund that follows the S&P 500.
To clarify a little bit more the advice coming from PMT, let’s say that you are in great health, non-smoker. If so, you can most likely get $400,000 in term life insurance for under $50. Therefore, your family will be protected until you are 56 if you get a 30 year policy. The payments remain fixed. Meanwhile, you have 30 years with $350 per month to accumulate wealth. If you go to a retirement income calculator (it also works for any savings account)such as the one here, , you would realize that $350 per month for 30 years that has an average return of 8% annually comes to over $500,000!
Of course, the difference in the sales pitch of the insurance and my proposal is that the latter takes discipline. The insurance plan is almost forced on you. It's a bill. Sure you can always stop it because it builds cash value but it’s most likely that what you put into it is not what will come back to you when you stop it. So, if you can be disciplined enough to pay a bill to the insurance company, take the same discipline and pay yourself for an even greater gain!

Good cos but ONLY appropriate "if" you are in VERY high tax bracket now AND LATER (28%+ federal PLUS state), you MAX an IRA (Roth if income eligible),you MAX the $$ amount into your 401K/SEP (if self employed), you SAVE $$ on top of that and you have disposable income, NO consumer debt. Then "maybe". People WITH money KNOW how wwell it works. Middle class doesn't understand the role it can play. Good CV insurance WORKS and is a good investment but, you MARRY it for the long term so I doubt for investment purposes you need it now. However, in addition to term life insurance needs if any, some permananent WL insurance is good for final expenses, etc., WHEN you die, needs you can't outgrow and can fund for nickels worth dollars in the future, so for that a small policy like$50K-$100K. SO w/ 16 years of financial planning experience, I'd tell you to weigh carefully!

First Command does not sell NYL of NWM, those are mutual co's w/ captured agents, they ARE good cos though. Permanaent insurance, in it's place IS a good financial value, though often not for retirement. PErmanaent DEATH expenses "yes", cash value works!BTW: FirstCommand is a GOOD co overall though the quality of field force varies GREATLY. Their former "FCR's" offer fee based planning that is negotiable (and should be as commissions are high) but, they have in the field some great knowledge and some VERY poor trained folks too. Same goes for most firms though as it's sell fisrt, service second. Today's computer programs doing asset allocation/modeling and such make the field more consistent and correct though. If you aren't maxing your 401K/TSP ($16K is it now?) PLUS and IRA @$5K PLUS have $$ lefftover and no debts other than a reasonable mortgage, INSURANCE as investment probably isn't right - yet...

A couple of years ago, I bought $750k of term coverage for about $400 per YEAR. At the time I was a healthy male around 35 years old. If you're going to pay over 10x this, there had better be a good reason!

Thanks for all the great responses! This has definitely helped me figure out that this is not something I need to do. BTW Jeff, you asked if I needed insurance. Yes. I do I am married with a one year old... Anyway, thanks again I look forward to more comments.

If you're dealing with a company like New York life or Northwestern Mutual (Or Mass Mutual or Guardian), permanent life insurance is a great way to supplement your retirement. Keep in mind, (mainly to the other posters), that he is being advised to SUPPLEMENT his retirement, rather than just use his 401(k) or IRA. (I would hope that you're combining all three of these vehicles). Northwestern Mutual in particular has averaged over an 8% return over the past 30 years with their whole life product, and that is TAX FREE return if structured properly. You cannot lose money paid to you in dividends, and if you get disabled the company pays the premiums for you. This is a great product from a solid company, and the numbers over the past 150+ years back it up-not just some "salesman" trying to sell you something. The only advice I would give is this: $400/month with a $52,000 income sound like a big commitment. I would possibly look at knocking that down a bit. However, I'll admit that I don't know your whole situation-you and your adviser do.

How did you find this advisor? Unless you have very good reason to trust him I suggest you get a knew one. Unless he has given you very good reasons why this is the best way to fund your retirement with reason that are specific to your particular situation, it's more likely that this is a far less than optimal way to do it with a number of drawbacks (including locking your money into this vehicle for the rest of your life until you die) and a lower return than you could get elsewhere as well as funding a life insurance product from now until you are 90 (which you may only need for the next 20 years not the next 60).

But the real reason he is doing it is likely that it is the best money maker for him. By far, there is not a single product he could put you into that would give him as much commission as a cash value life insurance product. Knowing that, does that make you suspicious of his motives at all? I suspect it does.

Any advisor who is looking out for his pockets before mine, means he aint looking out for my pockets at all. Dump him now!

I would also argue that anyone looking to a message board filled with people who know nothing about your situation but are willing to give you advice that could affect you for the rest of your life may not be the best decision.

It's funny the rep that Permanent Life Insurance has. Over the last several years the people I've spoke with that had big permanent life policies with companies like Northwestern or Guardian are so glad that they have these policies. They tell me that it's the only thing in their portfolios that CONSISTENTLY gains money. They ALL have told me that they wish they had more. I myself max a ROTH each year AND put nearly $700/month into my Northwestern policy. What has my Roth done over the last few years? Nothing! But my life insurance keeps growing...slow and steady wins the race. I started when I was 24, and that will pay off huge dividends in the long run.
If the product was so bad, there is NO WAY that these companies would be as highly regarded and as financially secure as they are.

Take your WALLET and Run AWAY from this "finacial advisor". NOW!
I am 60 with health issues my policy 500K level term costs only 140$ month.
Do some serious reading and don't sign on the dotted line.

Avoid those insurance salesmen masquerading as financial advisers or consultants.They have NOTHING to offer you except products that can earn them a huge commission. If you are unmarried and have no dependents you don't need insurance except insurance that protects your asset or income.
This guy is a salesman. He has the commission in mind and NOT you.

@Barry

What is your rate of return on the cash policy? Most pay around 3%-4% (before inflation)...now what is your ROTH invested in is it a mix that includes equity? Make sure you are comparing apples-to-apples here. Just because your policy grows steadily doesn't necessarily make it the better investment I can get a savings account that will consistently grow at .5% per year but that doesn't mean it is the best place for my money.

You also need to compare the amount actually being invested in the policy vs the amount being paid for the policy which are two different things. Then use this to run your prjections. The $400/mo he is putting into the premium is not all investment...in fact most of it goes to the salesman as a commission in the first year (70%-90%) and then 6%-10% in subsequent years. Include the cost of the policy itself and you're in no way investing $400/mo towards retirement.

As an example I just bought a permanent policy for my 1.5yr old son (I can explain why if interested) and the cash value, w/no additional investments, at age 18 would only be a 2-3K. If I took that $18/mo premium just held it I would have ~$3,700 and that is w/o any interest...doesn't sounds like the best "investment" for me. Good thing I'm not buying it for the investment.

Run don't walk from this "adviser" and find one who has your best interest in mind.

These policies are the most profitable to the Financial Adviser for a reason. I am not an expert on insurance plans, but I have looked into it because of tax reasons (Roth and IRA really arent options for me because of income). For the time being, I have decided to stay away from these plans. There are reasons for these plans, but I cant see any reason from the information you provided to purchase this plan. I would also be very concerned about the quality of the FA providing you advice.

"If the product was so bad, there is NO WAY that these companies would be as highly regarded and as financially secure as they are."

Sorry Barry but that logic doesnt really work. People said the same thing about Madoff 5 years ago. They make a lot of money off these plans at a cost to the policy holder. Your policy will under preform- sorry.

Can anyone explain to me how I would get the "cash" invested in a cash value policy out without going into debt? I never understood that.

(Not the original poster, btw.)

@BPErickson,

You have 3 options,

1. Cash in the policy and take the cash value which means you have no life insurance policy anymore (the worst option because you will get negative returns and the cash value will be far less than the death benefit)
2. You borrow against the policy and have to pay it back with interest, presumably you can just keep doing that and then your heirs can pay it off with the death benefit when you die. But the interest keeps acruing, I suspect more than one person has gotten into trouble doing this.
3. You die - this is the best option as you get the full benefit and any gains, the downside is rigor mortis.

@Barry,

As Tyler said, one reason the institutions are so financially sound is how well these policies perform for the institutions selling them. As far as being highly regarded, one reason might be their financial strength. Another reason is life insurance is not a well understood product so most people don't really know what they are buying. Also they are not robbing you blind. They are just selling you a product that is safe but locks you into a vehicle with no way out for the rest of your life.

They use a very good pitch about how term insurance is wasted but here you get to have an investment and insurance at the same time. My father-in-law sold life insurance (recently retired) and he was just telling me over Christmas that term insurance is the most expensive insurance you can buy. I just have to shake my head when I hear such non-sense. I couldn't really tell him that I thought he was crazy so I told him that the problem I had was most people who need insurance can't afford to buy enough whole life to properly insure. I actually got him to admit that you should probably have a mix a both. Of course every time I have heard him tell a story about a sale (one that he initiated), he sold them 100% whole life. So even though he is not trying to rip a person off, his commission is so much higher on whole life that he is not really interested in suggesting term. He told me one time that term is so competitive that he doesn't make enough money on it to even bother with it.

By the time he is done with a person they are very happy to have purchased this life insurance which isn't "wasted" like term. So yes, he was highly regarded. The policies did what he promised, it's just that the buyers didn't realize that the promise wasn't that great.

You said..."These types of companies are owned by the policy holders so after expenses and mortality are paid the rest is given back to the policy holder." This is what insurance compnies call dividends. They are returning YOUR own money to you! Neat concept huh?!?!

I have a friend that works for an insurance company that is pitching the same idea. Basically she has suggested that I take the extra money that I'm putting toward my mortgage and buy a cash value policy. My mortgage is at 3.25% after taxes while the return on the policy is about 6%. Of course, the first yr and half it doesn't make any money and I guess that's because her commission is factored in there. She has also recommended this as a way to save for college. I have money in a 529 plan and don't like the fact that I have such limited investment options with TD Ameritrade. I'm also only allowed to change the allocations once per yr.

Jeff:

Quoted from your post #4 above...

"I'm married and significantly older than you, but I don't own any insurance because my wife would be able to support herself if I were to die."

Really??? It would not matter if your wife is a millionaire you should take out insurance on you and your wife. Term insurance is cheap insurance for the return an piece of mind you get. Your wife will not be herself for a while after you die, why would you not take the financial burdens of a mortgage, college, daycare, transportation and burial expenses off her plate?

On the flip side, if your wife is a stay at home mom, she should have a policy as well. A lot of husbands make the mistake of thinking that since your wife doesn't bring home an income there is no reason for her to have insurance. I have a question for you then, how much would it cost for someone to watch your kids while you work and maintain the house as well if she were gone? So your wife has an income and you need more insurance than a measly $10k to cover funeral expenses. 10x your annual salary is a good rule of thumb.

IGNORE THE MOTIVES OF THE AGENT IN YOUR DECISION MAKING.

Agents are held to strict guidelines when reccomending products and will only offer you something if it is beneficial to you. Yes, he will make a commision from selling you this life insurance product and it will be more than if he sells you term. In fact, all life insurance products have BUILT IN commisions in the premiums you pay... even if you don't use an advisor and choose an inferior product online, someone somewhere will get a commission. So just ignore that part of it an enjoy the peace of mind that comes from working with an advisor.

Whole Life Insurance is a fantastic investment!
(but it is PRIMARILY a vehicle to provide a death-benefit)

If you look at the very long-term (20-30 years) there is no safe investment that outperforms permanent cash-value life insurane from a mutual insurer (New York Life, Northwestern, MassMutual, and Guardian). These companies post dividends of around 7% on their policies, which is a 8+% taxable equivalent depending on your bracket. True that because of the cost of insurance, true retuns are between 3-4%, but the longer you have the policy the better it looks as an investment.

If you look at the kind of policies that provide paid-up additions (additional death benefit added autoatically) then your death benefit can keep up with inflation. There are policies that after 15-16 years can begin paying for themselves and you no longer pay premiums. The bottom line is, do your homework on the policies themselves and don't focus on the motives of the agents. Permanent Life Insurance is a great financial product, and it may or may not be a great product for you.

I don't understand what you people think that a "financial advisor" is. If a financial advisor doesn't advise people to protect their life/health with things like life and disability insurance, are they really doing what is right for their client? or are they selling what THEY make money off of, which is strictly investments? How can you possibly think of building a solid financial plan without insurance? Make no mistake: EVERYONE in an advisory position is going to make money. Some will make more money up front, and some will make more money over the long run. It's the way that business works.
As to what my ROR is on my life insurance-My policies have averaged just shy of 7% over the past 15 years. My Roth has averaged around the same. I don't utilize my life insurance as an investment, but rather a savings strategy that vastly increases my worst case scenario for my investments. (because I can never go to "0" because my cash value is so high). Everyone is flocking to mutual insurance companies because their products have done so well over the past 150 years. The "total market" approach no longer works as effectively as it used to, and this is why I put money into both the market and my life insurance.
Bottom line is, this argument is completely moot until it comes time for me to retire. If I'm wrong, I'll still have a great retirement as well as a huge life insurance policy to leave as a legacy or to utilize cash value from. If you all that are against permanent insurance are wrong, you better hope that the market is doing great when you retire...because you don't want to be in a position to lose everything.

@Barry

The issue people have is that a financial advisor is supposed to look out for the "best interest" of their clients. When you're talking about an insurance salesman posing as financial advisor or one that is strictly commission there is likely a conflict of interest and the advice may very well be slanted against the client. Fee only advisors are less likely to have this conflict. I have no problem with paying for good sound advice but to recommend life insurance as your retirement vehicle is not good advice. Of course in the scenario we don't have all the information but my interpretation is that the advice may be faulty.

Youre are absolutely correct that insurance is a part of any financial plan but that doesn't mean that it must be permanent. I still contend it is better to max a ROTH and then a 401K before looking elsewhere.

So your ROR is ~7% what type of insurance is it? Whole Life? Universal Life? Variable Universal? I have a hard time believing, doesn't mean I can't be incorrect, that a 7% rate would be guaranteed which means that it is likely tied to some other means of investment outside of just dividends. Outside of whole life variable and universal will have some tie to the market making investing with them no different then investing outside of the insurance policy in terms of ROR.

Cash value policies have their (limited) place in financial planning. They are very much the "slow and steady" piece of your overall portfolio. Personally, I don't think they're a great part of your retirement package, because, as people have noted previously, the rate of return is far below what most other investment choices have averaged over long periods of time.

I'm using the cash value in my policy as a substitute for the emergency cash reserves that would otherwise be kept in CDs/high-yield savings. With Northwestern Mutual, I can lump-sum $10k into my policy and it earns a guarantied 6%-6.5% (and possibly more, depending on the dividend for each year), which kills the sub-2% I was getting through other emergency options.

If I need to access the cash, I take a loan from the policy, which must be repaid with fixed-rate, simple (not compound) interest, and I can use the money for the same reasons I'd tap the emergency fund. Heck, if hyperinflation rears its head, I could take a loan from the policy and do a little arbitrage with a CD or savings account that is earning more than the policy's dividend.

The only things I'm giving up are the FDIC insurance. Well worth the trade-off when the money is with a stable company like Northwestern Mutual.

@ Barry.

I don't care if your life insurance is worth $1 million dollars in cash value. Once you start distributions, then what? You are taking away from your life insurance. And BTW, whatever you take out is a loan in most of the policies.

Ok. So term will also eventually expire. But assuming that you put $350 of the $400 in a mutual fund with only bonds over the policy of a 30 yr term, you will come out much better and still would have had much more insurance in over the 30 years.

What if, after 10 years in, for some reason, you need $10,000? Will you have enough cash value. Let's see, we will have at least $42000 in a mutual fund even if it earns nothing but keeps up with inflation. Our cash value, well, even if it has $10,000 in value, it's a loan that has to be paid but, i'll still have $32,000 in a mutual fund.

It seems pretty clear to me to go with term but, until you make a compelling argument for any other type, I’m sticking to my recommendations.

"My policies have averaged just shy of 7% over the past 15 years"

"which is a 8+% taxable equivalent depending on your bracket. "

Here is the thing, one could purchase insurance of they feel they need the death benefits and then invest the difference in a bond portfolio that would out preform your cash value. Do the math on your own policy and I'm pretty sure you'll find it to be true.

As I said before, these do have a place in a portfolio but its rarely because of their returns or stability. (If you owned an AIG policy you came very close to losing.)

On payment of an FA- yes they all get paid for their services. The issue with these policies isnt that they are getting paid, but that they are being paid so much. The degree of payment can skew the motivation of their advice.

Ignore the motivation for anyone's advice could prove folly. I like to consider the other person's motivation for every piece of advice I receive. (Mr Bloom's motivation to defend these policies is because he bought one!)

@ Romeo

That is not entirely accurate. Any amount he has in cash value is in addition to the death benefit which is a separate part of the policy. The reason why you take a loan rather than a distribution is because loans are non-taxable where as distributions are. Additionally any "loans" against the cash value that are not paid back reduce the death benefit. While that is counter productive to having the insurance the idea is to have a great enough cash value by investing into the policy to be able to use it for retirement w/o affecting the death benefit.

To the original poster, keep in mind that neither myself or anyone else on here knows anything of your financial situation, so any "advice" that you receive should be taken with a grain of salt. However, someone who is aware of my use of whole life insurance forwarded me this link to receive my input. As such, I thought I would briefly outline why I personally utilize whole life insurance in my product mix.

There are a few reasons:

a) It conservatively builds equity at a steady 5%+ growth rate. --- Because of the steady growth I can afford to act a bit more aggressively on my other investment options. Also, when the market tumbles it provides security of consistent growth and helps me to not act too emotionally with my investments.

b) The equity is accessible to me should I need it. --- This is really important to me because I have seen many people who lock all of their money in their investments and then would like money for some reason (be it business opportunities, unexpected debts, or whatever). Unfortunately, because of their ideals, their money is tied up in their retirement accounts and when they access them, they are forced to pay taxes and penalties.

c) Utilizing the death benefit as a retirement asset reduces some of the strain on my other investment assets. --- this is self-explanatory. Life insurance is probably the most efficient way of passing wealth on quickly. I personally know people that have left their heirs' inheritances in CD's and are afraid to touch them. All the while they are short on their retirement assets. Would it not have been wiser to have purchased a whole life policy while they were younger and then never had to worry about providing an inheritance? Then their retirement assets can be used for just that--retirement.


d) The waiver of premium provides security. --- So if I get disabled, I do not have to pay premiums and the values continue to build. My 401(k) does not offer that to me.

Someone mentioned a Roth and asking if it had equities in it...I do not compare my whole life contract to equities. I liken it to a savings account.

And finally, let me be clear that I do not use my life insurance as my investments. In that, I do not use my investments for life insurance either. Swapping the two around is a pretty inefficient use of both tools. Do not double-count your assets. Life insurance is life insurance and investments are investments. I do not care what you do, and I am not prejudiced one way or the other. Furthermore, I certainly am not going to give you FINANCIAL advice: the non-financial advice that I will give you though would be that you should know WHY are you doing what you are doing (whatever you ultimately choose to do).

/JAS

Whole life from a dividend-paying, non-direct recognition, mutual insurance company (NY Life, Northwestern, Lafayette Life, etc.) is a great way to fund a death benefit and augment the conservative savings portion of your portfolio. To call it an "investment" could make discussions simpler, but it really shouldn't be called that.

If you structure it properly, you'll have approximately 83% of your first year premium in your cash value (you do this by MINIMIZING the base policy death benefit and augmenting it with PUA riders). You reach break even at about year six and then you "earn" more than you put in for every subsequent year. In other words, if your premium was $1,500 per month ($18,000 per year), you should see your net cash value increase by about $22,000 in year six (combo of your premium plus dividend).

ONe of the previous posters said he uses his as his emergency fund, which is exactly the right way to think of it (not an investment but a savings account).

The great thing is you can take money out in form of a policy loan and if you have a policy with a non-direct recognition company, the funds come from their general fund and your cash value is only collateral. Thus you earn dividend on teh FULL cash value even while you have use of the money you've withdrawn. If you pay back more than you owe, that's a further way to increase your cash value.

Best of all, you can take policy loans when you retire in 20-30 years and access all the cash value (even the part that exceeds your cost basis) tax free. The IRS would recognize withdrawals over your basis as taxable income, BUT does not know about or tax loans at all. And you don't have to pay the loan back when you are drawing retirement income...any outstanding loan balance is simply taken out of the death benefit when you pass. Your beneficiary gets the rest.

It really is a great SAVINGS account, not investment account.

By the way, recent dividends are more around 5.75% to 6% (the 7% to 8% some other posters are quoting are from a few years back).

To meet the same performance of my policy, over a 25 year period investing the same amount as my premium, I'd have to earn 4.49% after taxes (assuming the policy performs as projected). That's certainly acheivable, BUT I wouldn't get the benefit of the tax free policy loans at retirement.

The Term vs. Whole Life discussion can be, uh, vitriolic. But there are situations where each makes sense. You've got to know what's best for you and make sure this is only PART of your strategy! Think of it as diversifying your savings/conservative investments and keep funding your 401k.

Hope this long string was helpful to some though!

I would think you could do better by buying term and investing the rest.
HOWEVER, there is no guarantee that advice will hold. Over the past 10 years
or so, I bet a lot of whole life policies have beaten a lot of well regarded
mutual funds. The people who are promising you that whole life is always a bad
investment are oversimplifying as much as the insurance salesmen are....
(but I'm sure that if you decide to go with a whole life product, there are
better and worse policies out there. DO find out about costs and commissions.)
Good luck.

Just another quick perspective that no one else pointed out: If part of your plan depends on the success of an insurance company (dividends, interest rates or mortality costs), then your that part of your plan's success runs a type of business risk.

Insurance companies aren't the only companies out there with stable track records, but I would be hesitant to put too much of my portfolio with any one of them. For a little more depth: http://www.freemoneyfinance.com/2010/02/life-insurance-as-an-investment.html

Norman Dacey sounded the alarm 50 years ago on cash value insurance. Cash value is in the best interest of the agent and the company. It is VERY profitable for them.

Rufa Fort, one of the presidents of a top insurance company at the time said "The concept of permanant insurance must be fostered at every opportunity. The conviction that it should arises from the knowledge that permanent insurance is to the advantage of the agent, the company, the industry....", but not necessarily the client. He goes on to say in order to foster more cash value sales, "My own company has based qualifications for recognition, leaders' conferences, prizes, etc., on net annualized sales commisions and increase, rather than on our old volume basis, which permitted term insurance to weigh too heavily in the final result."

So they would penalize agents who were selling too much term insurance by taking away special incentives. Metropolitan made the following statement:

"Metropolitan has made a concious effort to encourage permanent insurance rather than term through reports to policyholders and an adjustment in agency compensation."

These comapnies want to get as much money out of your pockets as possible so they can invest it for their own returns and give you a pittance if anything in return.

All insurance plans are profitable for the agent and the company. Cash Value is the most profitable to the company and pays the highest commission to the agent. How would it be possible for the investment to be more profitable to the company AND more profitable to the client? It's not. Let insurance companies handle as little of your money as possible!

They tell me that it's the only thing in their portfolios that CONSISTENTLY gains money. They ALL have told me that they wish they had more. I myself max a ROTH each year AND put nearly $700/month into my Northwestern policy. And I can use the money for the same reasons I'd tap the emergency fund. Heck, if hyperinflation rears its head, I could take a loan from the policy and do a little arbitrage with a CD or savings account that is earning more than the policy's dividend.

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