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Every year millions are needlessly declined for life insurance or approved and paying far more than they need to. For 14 years, I have specialized in turning those situations around and finding the right life insurance solution at affordable rates. I give every client the personal attention they deserve. If you need assistance with your Life Insurance, please call me TOLL FREE at (866) 539-7914 for a free consultation .

6 responses to “Does Cash Value Life Insurance Really Make Sense?”

  1. Investment Advice, Personal and Individual Insurance, Investment

    The Truth About Cash Value Life Insurance…

    The necessity of life insurance today is based around the idea of a family with one or both spouses working outside of the home, and that if one of them dies, the other will be left with financial obligations that will not be able to be met. Life insur…

  2. Whole Life

    I am the owner of the website above. Not sure who posted this here, but I found your site as a referrer on my stats, and thought I’d stop by.

    Can’t say that I agree with the old BTID idea, but then I did run the numbers going both ways before deciding on how to structure my business. I also looked at the real costs and assumptions being made about term insurance and the most common “invest the difference” component – mutual funds. I’m sure you could substitute it with about any financial product there, but you don’t have to.

    You can have whole life products that struggle to make 1-2% over 20 years and then you have some that regularly hit 5%-6% over their 20 year targets with great liquidity and guaranteed paid up in 6-10 years with no assumptions needed. Of course, there’s nothing wrong with putting your money elsewhere either…

    …it’s just that…on the face of it, a guaranteed death benefit, guaranteed cash value, and an IRR net of fees and commissions of between 5%-6% that can be accessed tax-free isn’t that bad. I use those types of contracts regularly, but I won’t make you eat the illustration.

    I’m an independent broker so I’ve seen both sides of the issue. Permanent plans don’t always work. However, I’ve seen more BTID ideas fail for clients who bought into A.L. Williams philosophy back in the ’70s – even when they did save the difference.

  3. David

    Well, that’s just it, your statement is very open ended. My point is, and has always been (if you take the time to read related articles) that when you compare apples to oranges, anything is possible. And, that’s what the popular vision of BTID does.

    You don’t need to see any illustrations from any whole life company to be able to make a fair comparison between investment strategies. After 30 years of investing, it’s also easy to get an effective rate of return before taxes of 5%-6% on the BTID side, even when you started out with a 10% return net of fees – even with dirt cheap term rates. Just add up the total of the contributions made over your typical client’s time horizon, add in what they paid for their term or UL contract, and compare it to the cash they get back.

    But, when you compare a financial product that derives its interest from bonds (whole life) and then compare it to another investment that derives its interest from equities, I can guarantee that I can beat any of your assumptions at a cheaper “cost” by simply changing the risk profile – like you did – for the hypothetical client and beat your mutual funds with stock options, and we could go back and forth all day long.

    You can make the ROI look even better by including the cost of insurance on the whole life side (as it can’t be deducted anyway) and excluding the cost of insurance on the BTID side. I’ve seen Dave Ramsey do that on numerous occasions, though he doesn’t tell his audience that.

    I’m not saying it’s not possible to do better than a whole life contract, I’m saying that – apples to apples – it’s a challenge. And, when people make broad sweeping statements like “whole life is a waste of money”, I know that there wasn’t a lot of hard thinking put into that statement, because it truly depends on the rates you’re getting, the economic environment you’re competing in with your alternative, and whether or not you are making an honest comparison.

    But, then again, at this point I’m shooting in the dark a bit without knowing what your investment strategy is.