Advice

Advice which may fit you today may not be advice that fits your tomorrow.  Just because a baby needs milk to thrive on today doesn’t mean that milk will make them thrive as a teenager or even as an adult.  In fact, feeding milk to teens and adults can often hinder their overall health. 
The same concept holds true in your financial world.

You’ve been taught to save and spend only what you make.  And that is good financial milk.  But what happens when you need a house and can’t afford to rent but can afford the payments on a mortgage?  Do you live your life under the bridge until you’ve saved enough money?  Of course not! You go out and get a home mortgage and move in!

Or what happens when you need protection for your family but can’t afford the higher premiums that come with a whole life protection plan?  Do you live without life insurance coverage and hope that nothing happens?  Or do you buy some term insurance and replace it with the whole life coverage you really need as soon as you can afford to?

Sadly most agents today would advise you to simple purchase term insurance (or universal life insurance which amounts to nothing more than a term life insurance policy with some fancy frills added to it that end up costing most folks more than term insurance would.)   But term and universal products can’t replace whole life insurance because they are designed placing all risk on the policy owner rather than the insurance company.  Then when you do die there typically isn’t any death benefit left for anybody you might love to ease the pain of your passing or to profit a charity that you supporter while you were alive.   

My good friend Joe recently ran into such an agent who was deceiving his client about the real value which whole life insurance provides.   He wrote a very nice rebuttal to this advice and, with his permission, I wanted to share his response with you today.

“You recently advised that my client cancel and replace his whole life insurance policies.  After looking at your replacement recommendations I found that your best illustrations self-destruct GUARANTEED after age 70.  Such "insurance" is not insurance at all in the classic sense of the word but mere speculation and speculation in the most insidious and dangerous form.

“I realize most proponents of this kind of program would respond with something like...‘The worst-case scenario is not likely to occur’. 

“That may be true, or it may prove to be the worst bit of optimism anyone could ever apply...especially if you're the one who owns the policy or worse yet, if one of your clients suffers from owning such a policy. 

“It is easy to look at illustrations, projections and numbers on a page.  It is much more difficult to console someone who is 75 years old that has just received a premium notice  for 300% (or more) of the original premium because the mortality charges have increased to contractual maximums; or because investment experience has worsened; or because of other factors outside the control of the client!

“Agents who sell this kind of program can and will make a great living...perhaps even millions....but in my view it will be at the expense of the client.

“On the other hand, I know that the contracts I have put into effect over the past 36 years will pay out GUARANTEED!

“You simply cannot make that statement about your program because it is based on the "right" results occurring in the market.  The market that you have absolute zero control over.   And when that market produces anything other than the projections that you have drawn up here...absolute disaster for your client!
“But then again you collect your commission in either case, so who cares, right?”

Being your own banker with the cash values from a participating whole life insurance policy which you own and control can’t be out performed by any other method of financial planning.  If someone attempts to tell or sell you something different;  something that is non-participating or something that is based on market results instead of hard fast contractual guarantees then run, and run fast.  More often than not they are looking for a higher commission and if you are deceived into believing their grandiose projections then maybe you deserve to reap the unintended consequences that can befall you.  The sad thing is that all the folks that I have helped recover from such programs have already lost a lot of money.  And that money as the seed money to their overall wealth can never be replaced.

Think about it for a moment.  Are you still being advised to drink more milk financially?  Do your financial advisors recommend that they or the market control more of your money or less of your money?  Do they trust you enough to try some meat and potatoes instead of the same old milk?  If not you need to find a new financial advisor because those type of financial advisors are earning more money for themself with your money than you are.  If you believe you’re no longer a financial baby then you’re ready for some solid financial food.  Step up to the plate for some good home grown beef and potatoes and call our office today to find out how you can learn to keep your money growing without throwing most of it away.  Learn now how to become you own banker. 

By Tomas McFie