Whole Life Insurance is bad, right?

Whole Life Insurance is bad, right? Transcript

Chris Bay:

Welcome to the Life Success & Legacy Podcast. My name is Chris Bay, and I’m joined today with the founder of Life Success & Legacy, Mike Everett.

So Mike, today, I want to address one of the questions that was a huge stumbling block for me. When Shawn and I first were introduced to this concept of Infinite Banking and I got a hold of Nelson Nash’s book, Becoming Your Own Banker, and I read it multiple times, there were pieces that really fit and made sense to me. But I had a mental block, and that was because I had been taught that whole life insurance was the worst place in the world to put our money.

Mike Everett:

We hear this over and over.

Chris Bay:

So let’s dig into that. There’s a lot of people out there, a lot of financial people, a lot of financial personalities, that are out in the world that are saying whole life insurance is the worst place in the world to put your money. Why did they say that?

Mike Everett:

Well, if you go and you look at a traditional whole life insurance policy and the way it’s designed, I really would tend to lean towards what those personalities have said, that whole life insurance is a bad place to put money.

But if you go back a couple of generations right now and you think, “Where did people put money before 401ks and IRAs became the traditional place to put money … ”

Chris Bay:

Tax qualified plans.

Mike Everett:

You got it.

Chris Bay:

Before those every came about.

Mike Everett:

I’m going to just tell you. The only place most of those people, and you’re talking about my grandparents and my great-grandparents, they only had one place that they could … Well, excuse me, two. They put it in whole life insurance programs, policies, or they put it under the mattress at home. That’s the only place that they did.

But if you go back and you think like Nelson does, you think long term. Whole life insurance is the safest place you can put your money regardless of how it’s designed. But because of the way in which we go about re-engineering the way the money is allocated in the policy, it’s the safest, best place in the world, and it’s got more guarantees than anything that somebody would put their money in.

Chris Bay:

Yeah, I think from my standpoint, or at least how I was taught to think about money, it’s because whole life insurance may be traditionally designed, which was designed to emphasize the death benefit. You want to pay as little as possible.

Mike Everett:

That’s right.

Chris Bay:

Right? Well, when you look at that and you’re looking at it purely as an investment, that maybe it doesn’t match up to some other things. But honestly, I’ve seen some work out there by some folks, where actually it can even show up to be better than some of the investments that are out there.

Mike Everett:

Well, in Nelson’s book, I’m going to just tell you, he uses a couple of examples, one with the twins and one with the equipment financing. If you look at this over the long haul, I’m just telling you, it outperforms the market. It outperforms inflation.

Chris Bay:

What’s interesting, when we read Nelson’s book, the examples in the book aren’t even designed-

Mike Everett:

They are not.

Chris Bay:

… to emphasize the cash value part, which is how we would design it for people.

Mike Everett:

That’s correct.

Chris Bay:

Why did he do that?

Mike Everett:

Well, the reason why he did that was he wanted to make sure people knew that it would work even if the policy wasn’t designed properly.

Chris Bay:

If it’s designed traditionally to emphasize death benefit-

Mike Everett:

The death benefit.

Chris Bay:

… and pay as little into it as possible, there’s some debate amongst people whether it would be better to do that versus some other things.

But when you start factoring in that a policy could be designed to de-emphasize the death benefit and you could emphasize the cash value portion of it, and then you introduce the whole concept of using it for banking, financing your financing needs in your life, there is no comparison.

Mike Everett:

There’s not. One of the questions that we always ask people right this very minute, “What is more important to you, cash or life insurance death benefit?” What do they all say?

Chris Bay:

Cash.

Mike Everett:

Cash every single time. What if there was a program out there where you could put money in and have access to it income tax-free all along the days of your life. We need cash from right now til the day we die. We only need death benefit one day. We can show you through the program, through IBC, through the policy, that if you did this all along your life, not only would you have access and be able to utilize the cash that’s flowing in and out of your money; but at the time of your death, you’ll end up having two, three, four, five times more death benefit than what you could purchase right now.

Chris Bay:

You know how I would phrase it is, so many of us look at, whether it’s whole life or an investment or whatever, we look at it as an either/or. Really what this is about is a yes/both.

Mike Everett:

That’s exactly right.

Chris Bay:

If you really want to invest in the market or other types of things, you can do that.

Mike Everett:

Yeah, absolutely.

Chris Bay:

But if you’re smart, you’re going to run your money through your IBC system, get all the guarantees that they offer, and then take loans against your policy and go do the stuff that you love to do.

Mike Everett:

Exactly.

Chris Bay:

Yeah. It’s a great question. It’s a hard one in our culture because so many of us have been told that whole life insurance is bad, bad place to put our money. But truth be told, it’s actually the best place in the world to store our money. It’s foundational to a whole financial economic system for ourselves.

Mike Everett:

It is.

Chris Bay:

Yeah. Great discussion, Mike. Thanks.

Folks who are listening, we encourage you as always to go to our website, lifesuccesslegacy.com. If you have not read Nelson Nash’s book, Becoming Your Own Banker, please get yourself a copy of that and spend the time to read it at least once, if not more.