WHY Whole Life Insurance

Here is a bare bones explanation about why I advocate Whole Life insurance.

When a couple retires, they are looking at covering 3 things money-wise.

1.) Having enough money to retire on.

2.) Making sure that money lasts for BOTH of their lives.

3.) Leaving a legacy.

Here is how Whole Life insurance accomplishes that:

The strategy is to buy Whole Life young, with a mind on looking to retirement. As part of a sound financial plan, one should also save for retirement. That money (IRA's, 401k's, VA's) is used during the initial retirement years. This is like being in college again! You have zero responsibility, and complete autonomy. In fact, it is even better than college, because now you have money! Live it up!

Eventually, one of the partners dies (usually, it's the male). Because he bought Whole Life 50 years ago, his wife now has a nice infussing of INCOME TAX FREE income, to compliment the rest of their portfolio.

She lives on that until her death, at which time ANOTHER infussing of income tax free monies passes to her children, grandchildren, or charitiable organization.

Now, the Whole Life insurance made that easy. Because we earned a return on our money, the Whole Life was able to keep up with (and with some companies OUT PACE) inflation. This is why Whole is the perferred form of permanent protection (over Universal Life, which loses cash value later and gets caught in the time value of money).

Compare this to term and invest the difference:

The "money pot" you have accumulate in this strategy must be quite high. You must not only match what we saved in the first scenario, but you must also save enough to equal the death benefit of the 2 Whole Life policies.

Actually, you need to save IN EXCESS of the death benefits of the Whole Life policies, because the Whole Life money is INCOME TAX FREE monies, where as money from an IRA, 401k, mutual fund VA, etc. are TAXED (this obviously excludes Roth IRA's......but how many people retire SOLELY on a ROTH?)

Add in a recession like we are experiencing, and now your target date for retirement is WAYYYY skewed. For those baby boomers who bought WL in the 70's, they still can retire relatively on time, and they have the comfort of knowing they will have two massive infussions of tax free monies at some point, so that "money pot" can be spent more generously.

The term people however, face the prospect of living SOLEY off that money pot, which in last 16 months basically cut itself in half.

You know, in my business, selling Term insurance is easy. Whole Life, however, is worth doing, so I take the time to explain it to them. Sometimes a person has listen to enough Dave Ramsey that they will only buy term and invest the difference. I am more than happy to help them in that goal.

However, when I retire, you can best believe the clients who are uncertain about retirement will have bought term, and the ones how are ready to set sail will be the ones who had the foresight in their twenties to buy Whole Life.

I know not everyone agrees, but for those weighing their options, this are the facts about Whole Life.

Thank you, and I hope that helps,

Andrew Burks

burks85@gmail.com