There have been a long line of financial entertainers and celebrities who have jumped on the "I hate all types of permanent life insurance" bandwagon. The gist of all their criticisms has at its core a misunderstanding of how whole life can work.
They tell their followers that investing in equities will create more money than accumulating money in life insurance will create. A closer objective look with realistic assumptions may tell a different story, especially when looking at it from a big-picture perspective.
But as always, you have to evaluate this debate with your particular situation in mind.
Regional Marketing Director, Capital Choice Financial Group,
My company is endorsed by Dave Ramsey so I never get this question since our company only sells term life insurance, mutual funds, and annuities. We first help our families with a financial plan that takes a snapshot at where they are now financially and then we attack their debt including their mortgage. Since most of my clients are underinsured with higher price whole life coverage. We get them the right amount of protection for 20 to 30 years that will pay off their debt and replace an income for the beneficiaries for at least 10 years. Then we look at their present saving and retirement plans and help them to get the most out of their savings program. It's simple!
Business Development Officer, T.D. McNeil Insurance Services, Fresno, California
Life Insurance is always about the number of people of a given age that will die in a 12 month period of time. Every life insurance policy manipulates the same data. Where things change is over the word “guarantee.” The criticism of whole life insurance is that it guarantees conservative growth for the underlying reserve which guarantees a level death benefit in exchange for a level premium. There are several techniques that the companies have used to address this issue for people who want less guarantees and more opportunity to rise (and fall) with the market. These policies rise and fall in popularity based upon market performance. In the end a policyholder is faced with determining who they are going to entrust with their financial future. Market timing then becomes the greater risk as a person must assume the risk that the securities might not have the anticipated value at some specific point in the future—the day that they need it.
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They tell their followers that investing in equities will create more money than accumulating money in life insurance will create. A closer objective look with realistic assumptions may tell a different story, especially when looking at it from a big-picture perspective.
But as always, you have to evaluate this debate with your particular situation in mind.