Common Myths About Whole Life Insurance

IHP Advisors

Whole life insurance looks deceptively simple: It provides coverage for as long as you live, and it guarantees premiums, cash value, and the death benefit. Whole life insurance companies also typically pay dividends every year, which can be applied to premium payments[…]

Click here to view original web page at www.forbes.com

Life insurance is no stranger to articles talking about their pros and cons. However, a lot of articles talk about permanent life insurance policies. This includes Whole Life.

Whether it’s Whole Life or any other life product there are many myths and misconceptions. The article posted on Forbes goes over those myths and misconceptions in a very unique way. You can find the full article by clicking the link above but here is a summary of the article.

Myth No. 1: Whole Life Policies Do Not Need to be Monitored Due to Their Guarantees

A life policy is a financial instrument. Like any financial instrument, you need to review the policy to see how it’s performing. Don’t leave your financial future to chance.

Myth No. 2 Your Net Outlay Will Remain Level

Following the stewardship in the myth above, make sure you understand how dividends work when used to reduce your premium.

Myth No. 3: Limited Payment Periods Are Always Guaranteed

“While your policy can guarantee the maximum premium required every year, it may not guarantee the number of years of required payments.”

Myth No. 4: Whole Life Insurance Is an Investment or Retirement Plan

I have definitely presented using a permanent life insurance policy as a way to supplement retirement. There are certainly benefits to doing so. However, when the article talks about being wary of sales “schemes” around this concept, it’s troubling.

I do understand the context in which they make the statement. If a life insurance “sales’ person is presenting the options as a retirement account, be wary. Although borrowing money can supplement retirement, it is not the core purpose. It is the main reason why you have “retirement” accounts

Myth No. 5: Policy Loans Are Just Borrowing Your Own Money and Won’t Impact Policy Performance

Just like retirement accounts, the interest earned can change. Whether the insurance company adjusts the interest earn up or down, it could dramatically change the performance of the policy. This goes back to the first myth, you have to review your policy. You need to make sure the policy is staying on track to meet your financial objectives.

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Disclaimer: The views expressed within the above post are the views of the poster alone. Information provided is for educational purposes only and shouldn’t be viewed as a recommendation to buy or sell any particular financial product or service. Depending on your individual situation, the discussions presented may not be appropriate. Please consult a licensed financial advisor and/or tax professional before investing in any financial instrument.

Investing involves risk, including loss of value. Insurance and other financial products and services may be subject to certain terms, conditions, and costs not identified within the enclosed material. Any strategies represented are not guarantees of future performance or success, and may not be appropriate for your situation. Also, do not post any information you do not wish to be shared with others. If you have a matter requiring an immediate attention, contact me at mike@ihpadvisors.info or 801-341-8416.

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