A L Williams popularized the concept of “Buy Term and Invest the Difference” in the 1970’s. When market returns are looking good this concept seems to make a come-back even though it’s flawed with big assumptions.
They say you won’t need a death benefit when term insurance gets expensive. They say your investments will do better than whole life insurance. Maybe, and maybe not.
You want guarantees? Then you want to build a strong financial foundation with guarantees before you invest. Investing isn’t bad, but don’t throw away guarantees for speculative possibilities.
Catch this Special Interview with Alex. Alex contacted our office for some policy reviews after his agent told him “let policy loans pay your premiums.” This started in the 90’s. 20+ years later results are plaintive.
These were (and still are) good policies, but the funding strategy backfired. Policy loans can enable you to take great financial opportunities without giving up guaranteed growth + dividends on your money, and like any good strategy this can be taken too far.
Good rule of thumb for Policy Loans = Make sure you’re always making or saving more money than the interest when you take a policy loan.
Can you use a policy loan to pay a premium if you’re in a cash flow crunch? Of course, just don’t make this your long-term habit. DO make sure you’re always aware of the interest on any and all policy loans that you take.
Plan to review your strategy regularly - about 1x year is a good idea. Contact Life Benefits for a complimentary policy review.
Most public facing insurance companies today are organized as stock-held companies. 🏢 Many mutual carriers have reorganized as mutual holding companies.
What does this mean for you? Example: You get a whole life policy from a mutual carrier. BUT then the contract says your policy was issued by a stock company! You still participate/receive dividends + have voting rights as a mutual policy holder, so what just happened?
No cause for alarm. If you chose a mutual holding company, this is normal. Here’s how a typical mutual holding structure works and what you should know as a policy holder with a company organized in this manner.
Topic #2: What is the 7-pay test?
One of you recently asked a question about the 7-pay test. Today you get the answer + hear why some people intentionally want policies that are Modified Endowment Contracts. And yes, this does make sense sometimes.
Some gurus say you can “make money” by taking a vacation financed by a policy loan, but is this really true? 🤨
Taking a vacation is an obvious expense - there is a cost - at some point you have to make the money to pay for your vacation.
Here’s how to tell the Facts apart from Fluff. Yes, you can “Recover/Offset” money on your next vacation… and it also takes TIME.
Checkout How to Recover Thousands on Your Next Vacation - Article for further info with a numeric example.
When it comes to your Homeowner’s insurance 🏠…
Your answers to these 3 questions could help you save on your premiums in the future.