My wife and I are participating in the Dave Ramsey Financial Peace University. I have to admit that for all that I have been blessed with, great financial management skills have not been part of the package.
Dave Ramsey is a no nonsense kind of guy when it comes to getting your financial life together. If a person could put his philosophy in a nutshell, it would be to have enough money saved and readily available for emergencies, get out of debt, save for retirement and be generous in your giving.
Many people believe that they have the first and third objectives well in tow with whole life insurance. They have been led to believe that whole life insurance, with it’s cash value accumulation feature, is a savings or retirement plan. I suppose one could argue that if it builds cash, it has saved money. The problem is, when you compare it with buying term insurance and truly saving or investing the difference, or buying non-cash value universal life and saving or investing the difference, the ugly truth floats to the surface.
Whole life insurance is truly a life insurance vehicle that is meant to enrich those involved. Unfortunately, those involved are in this order as far as the enrichment (cash value) goes. First of all is the insurance company. Next is the insurance agent. Last, and yes least, is you.
There should be no mincing of words when it comes to whole life insurance. It is not a savings plan. It is not a retirement plan. It is not even a good way to provide permanent insurance. I have heard all of the arguments to the contrary and I have heard the NW Mutual agents make their well rehearsed pitch for the life saving attributes of whole life. It is pure bunk. The only reason a life insurance agent would sell whole life is, pure and simple, their own enrichment.
Bottom line. If the need is life insurance, buy pure, unadulterated life insurance. If the need is savings or retirement, put your money into pure, unadulterated savings and retirement vehicles. A wide guy once said, “Don’t use your life insurance for savings, and don’t use your savings for life insurance.”