No. Done. Shortest blog post ever.
I guess it’s not that simple, but still I think the answer should almost always be no. The older the policy is, the more likely the answer should be no.
Even the poorly designed standard whole life policy with no riders is still worth having many years in.
If you refuse to keep paying on it, you should at least strongly consider using your reduced paid up option to reduce the death benefit until your cash value is enough to pay off the whole thing so you don’t continue getting charged for it.
When your time is up, I really don’t think that your heirs will be sad that you kept the policy.
That goes for pretty much any age that you pass on. There are probably people out there that are sad about getting a life insurance check, but I don’t remember hearing of any.
OK, so a long time ago people just kinda assumed it was a thing you do to get whole life insurance. Of course you do. Why wouldn’t you? All the same reasons to buy it back then are still the same now, except that blending is a thing now and whole life is an even better deal.
Then came along some people that wanted to push some mutual funds, the kind that charge you loads and management fees. Primerica, the multi-level-marketing company kicked this off. Their spiel was to get cheaper Term insurance and invest the rest of the money in mutual funds. Plenty of “personal finance gurus” latched onto that. At least now most of them are suggesting low cost index funds instead of really expensive mutual funds.
Except, that is, when they aren’t. Some of those gurus, whose names might sound a lot like Rave Damsey, are still suggesting you buy the high load high management fee mutual funds when you invest the difference. They usually profit on the buying term portion too. The gurus often have the name of a good investment company selling just those things on hand, one that is quite often paying them in one form or another.
That’s just the big names, though. Plenty of people bought into that. Now everybody seems to think that the wisest thing to do is to buy term and invest the difference. To be fair, it’s not a bad alternative after you cut as many fees as possible out of the investment side.
Still, you should not figure yourself to be some kind of genius for doing this. Buying term and investing the difference at best makes you trendy and at worst makes you the gullible sort that easily falls prey to one liners with the shakiest of rationale.
This just in, anyone who completely defines your financial strategy with a one liner may not, 1) be giving you the information you need to make an informed decision, and 2) have your best interest at heart.
Why Do We Fall For The One Liners?
It’s greed. That’s all it is. They downplay the heck out of all that you are giving up and they promise you a whole lot more upside than they can really deliver.
If it sounds too good to be true, it probably is. That’s what people say, right? Except not when they are talking about their own products.
How about this one: If all you have is a hammer, then everything starts to look like a nail. In personal finance guru speak, “If you are getting paid to sell term and investments, then that’s best for anyone who might want to be your customer”.
All it takes is greed for us to throw away all of our financial plans. Ask anyone who gave Bernie Madoff money.
Stop listening to one liners.
If you don’t understand the benefits of what you are throwing away, then don’t throw it away.
If you don’t understand the drawbacks of what you are getting instead, then don’t change your plan.
Sounds simple enough, right?
I would hazard a guess that the above advice would stop 90% of people from selling their whole life and buying into the whole BTID philosophy.
What Are We Really Talking About Here?
Buy Term and Invest the Difference Pros
It’s catchy and maybe you get more money in the end.
Buy Blended Whole Life With PUAs with a portion of your assets
It would take days of research to begin to learn all of the benefits of doing this.
Rules of Thumb
A rule of thumb is a mental shortcut designed so that people don’t have to think very hard or do a lot of mental heavy lifting. It’s a whole lot easier to say BTID than it is to do a serious analysis. It’s easier to dismiss a product completely based on a non-analysis than it is to actually do the analysis.
From the guru’s point of view, it doesn’t even really matter if they are giving you good advice. They don’t have that much of an interest if you succeed anyway. Especially not if they are selling books and you already paid. If they were paid a percentage of your assets based on their advice, they might tell you a completely different thing.
We don’t know. We just know we have the system we have now where their interests may align with yours or they may not.
One thing for certain is that at least a few gurus are pretty wishy washy about the whole thing. One whose name sounds like Uze Sorman may have made a lot of her money selling Whole Life insurance and now that she is getting paid by companies to sell something else her opinion on the merits of whole life are completely different.
Either she gave bad advice to all the people that made her, or she is giving bad advice to everyone now that she has already been made. Which one is it? Your odds are 50/50 if you go with the strategy she happens to be pushing today.