It seems that every time I write about whole life insurance and the fact that any positive attributes it may have had at some point in history are gone, someone feels the need to point out what an idiot I am. I take it all with a grain of salt since the stern correction usually comes from someone who sells whole life.

Let’s be real about this issue though. If I couldn’t prove what I assert about whole life, I simply wouldn’t keep pounding away at it. The real truth is that newer, fully guaranteed permanent products don’t rely on huge amounts of your cash to keep the policy glued together. That frees up the extra money to go into real investments.

But, they argue, the cash value builds income tax free. Let me see! Even at the astounding rates that Northwest Mutual claims they will pay on their whole life, 6-7% (most pay around 3%), it still seems to me that long term mutual funds that historically pay over 12% will provide more bang for your buck. But you can’t borrow it they argue! If you’re managing your money correctly and have an emergency fund set up, you shouldn’t be touching your investments until retirement anyway.

Bottom line. Whole life started stinking a very long time ago and, like fish, it doesn’t seem to improve with age. Term insurance or universal life insurance with a no lapse guarantee provide the coverage and the guarantees needed for any portfolio. So, consider the gauntlet thrown. If anyone out there wants to offer a whole life illustration, I will be gladly prove that I can better serve a customer with other products. After all, this is about our customers isn’t it?

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