Whole Life Insurance — The Greatest Scam in the Universe!
Avoid Whole Life Insurance plans.
I had a financial adviser one time. He recommended me to sign up for Whole Life insurance. At first I had mixed feelings about it, but he used his high pressure sales tactic to get me to sign up. I should of been wiser since he was pure commission based. I now realized I made a mistake to get one.
Whole life is basically life insurance with a savings plan. It sounds good because it makes you save, and it earns about 6.5% APY tax free. You also earn dividends later on. Sounds great doesn’t it?
The problem with whole life is that it sucks a lot of money out of you every month. You’re basically paying for the premium, commission, and the stupid forced savings. Besides, if you’re disciplined with your finances, you don’t need a “forced” savings. Unlike a normal savings account, you can’t really dip into your forced savings for emergencies in the short term.
For a young person with no family, this plan really sucks. Even with a family, this plan sucks. The premium you pay is super high. You could’ve used that money to invest in something better. It’s also a golden handcuff. The “rewards” of your forced savings don’t really show until you save for like 40-50 years. If you do need life insurance, term is so much cheaper and better.
It’s probably decent for high wage earners who need another retirement account after maxing out their 401k, Roth IRA, and other investment accounts. Or if your one of those people that need a “forced” savings because you’re so undisciplined. Otherwise, avoid whole life insurance at all costs. Don’t make the same mistake as me.
Stumble it!
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