The company’s life insurance that I mostly like to use (the same one quoted) is from a very quality insurer. I refuse to use the cheapest insurance out there, since I don’t think I can even put any value on their projections, or guarantee that they’ll be around in ten years. This company has been around since the mid 1800s, so the track record is there.

Also note, that whole life policies can provide a back up in the case that someone becomes disabled and can’t work. Even if you receive disability, it’s almost impossible to keep funding a retirement plan. By choosing a waiver of premium rider (not expensive at all), this company will fund the cash value life insurance policy for you.

Whole life is a great PART of a financial plan, but don’t make it your only part. Finding the right amount and exact type of policy are also important. Please don’t just read any of these comments and just go purchase the next whole life ad you see. Consult a professional (not a salesperson).

I’m not against this strategy – everything is suitable for someone, right? I just think it holds a lot of risks that aren’t very well understood and even less frequently publicized.

Alright, first I’ll clarify, what I meant was people doing retirement calculations when their safest investments were returning 18%. HELL IN TODAY’S INVESTMENT WORLD WHO WOULDN’T TAKE 18% LOL. HELL, I’d take a 9% CD any day of the week, or in fact even a 5% 1 year (not 5% – 5 year).

Second,
“Imagine how different things would be if CD’s had long surrender charges that could erode your original principle and the interest rate might be different year to year. ”

Most CDs have some sort of penalty for invading early. Most are just for interest, but there are some that go after principal. So they may not call them surrender charges, but it doesn’t matter, if they are in fact invading principal.

Third, there are CDs that are callable CDs where the bank can change the rules on you, but I have never seen this advertised.

I am not really sure I understand your position. Are you against the strategy outlined in this post? Do you just not believe Michael (his #s seem really high)? Are you just saying it isn’t guaranteed? Do you think I didn’t highlight the downfalls enough? Are you just anti-whole life?

The bank either pays the interest for the time designated or it folds. Banks don’t have an option to pay less over the specified time if they don’t feel like it.

So yeah Evan, I’d take an 18% CD because my risks would be predictable and easily understood:) In fact, I look forward to it.

I misinterpreted what your point was. There have been a lot of companies that demutualized 100%, and that does screw with your plans. I thought you were saying that you heard of current mutualized companies getting rid of their dividend.

And you are right, Dividends and the illustration I provided (I have no idea who this Michael guy is lol) are not guaranteed. But think about all those people who started investing in 1980 when you could get a CD at 18% lol – and their illustrations.

According to Wikipedia, over 200 life insurers have demutualized since 1930. Individual policy holders have very little say in this decision, even though it may have a significant impact on their long-term plans. Because of the high surrender charges associated with life insurance policies that can last 20 years or longer (and the unpredictability of your future insurability) this creates a unique risk most types of investors don’t have to worry about. Just saying.

Wow you got 43K/yr! That is a great product, there is no need to name any companies here, since I am really not trying to sell anything.

I find that the net return on investment is usually hovering around 4.5% towards the end of the policy (unless you die ofcourse in the first 20 years and then your family’s return is “outstanding” – but you are dead so that’s not that great lol).

Aaron,

Which mutual life insurance company cut their dividend all together? That would make little sense, since there would be ZERO reason to then buy whole life insurance from that company. It would be the nail in the coffin (pun intended, but may have been too cheesy ).

In order for your claim to be correct that actual results have been better than original projections, you would also have to have some original illustrations on hand from back in the day. I look forward to your response.