How Complex Is Dividend-Paying Whole Life Insurance?

Some financial advisors say whole life insurance is complicated, and that “you should never invest in something you don’t understand.” … Then they try to sell you stocks, bonds, mutual funds, and EFTs that most laypeople can only begin to truly grasp!

Dividend-paying whole life insurance is so simple an average 10-year-old can understand the concept in 10 minutes. We’ll prove it to you now …

The Simplicity of Dividend-Paying Whole Life Insurance

The concept behind a dividend-paying whole life insurance policy is extremely simple. It’s based on five easy-to-understand ideas:

1. Your Risk Is Minimized by the “Pooled Risk” Approach of Insurance

This timeless concept is at the foundation of all forms of insurance. In its simplest form, policy owners pay an insurance company a relatively small sum of money in advance. This is called a “premium.” In exchange, they are covered for a potentially much large expense later. In this case, they receive an agreed-upon amount to cover the costs and loss of income related to the death of the insured, which is called the “death benefit.”

2. You’re Guaranteed to Have “Level-for-Life” Premiums with a Whole Life Insurance Policy

The insurance company realizes that there’s a slight chance that an insured individual might pass away after just one premium payment is paid.

That risk is very slim, but the flip side of the coin is that the older you get, the greater your chance of dying within the coming year. Nevertheless, a whole life insurance policy is designed to last your whole life – regardless of how long you live.

Term life insurance deals with this by raising the premium periodically to cover the company’s ever-increasing risk. This can ultimately make the policy so expensive that the policy owner is unable to pay for it, and all too often the coverage of a term life insurance policy ends without any death benefit being paid at all.

Many people have observed that paying the premium for a policy for years and then not receiving any benefit makes that term life insurance policy extremely expensive.

Whole life insurance takes a different approach. The insurance company knows how much premium it will need to receive for your policy, assuming you live an average lifetime, and it spreads that amount out evenly. Thus, your premiums are guaranteed never to go up.

And you don’t have to pay extra for this guarantee.

In fact, you will never receive a letter from the insurance company that issued your whole life insurance policy that says, “We are experiencing increased costs, and we will be passing those additional costs on to you. Your new (increased) costs will be …” That is guaranteed never to happen – at least not with a whole life insurance policy.

3. The Cash Value of Your Whole Life Insurance Policy Is Guaranteed to Grow with “Every-Year Consistency”

A portion of each whole life insurance premium payment is automatically credited to a savings component (called the “cash value”) of the policy. This cash value grows each year by a pre-set and guaranteed amount. Having access to this cash value – during your lifetime – is just one of the living benefits of your whole life insurance policy.

You will know the minimum guaranteed amount of your cash value account at any time in the future. These amounts (guaranteed in writing, by the way) are all listed in a chart your insurance advisor will give you before you decide to purchase the policy.

4. Dividends Give Your Whole Life Policy “Shot-in-the-Arm” Growth as They’re Paid

If the insurance company you purchase a policy from is owned by stockholders, then the stockholders receive the profits the company earns.

However, if your company is in essence owned by the policy owners (these companies are called participating or mutual companies), you share in the profits. The profits paid to you are called dividends.

Dividends are not guaranteed, but … some participating companies have paid dividends consistently every year for over 100 years – even during the Great Depression. These are the companies Bank On Yourself Authorized Advisors recommend.

Dividends are great! And even though they’re not guaranteed, every single Bank On Yourself-type life insurance policy ever written by a Bank On Yourself Authorized Advisor has paid dividends every year.

You could take those dividends in cash and spend them – and that makes perfect sense when you’re taking income from your Bank On Yourself-type life insurance policy in retirement.

But aside from that, savvy policy owners tell the insurance company to use the dividends to purchase additional coverage. (Hey, it’s more death benefit without a penny more out of your pocket!)

And when your death benefit grows, your cash value grows, too, in the most efficient way possible.

5. Whole Life Insurance Policies Are Chock Full of Guarantees to Protect You

A dividend-paying whole life insurance policy comes with guarantees that cover every component of the policy, except the payment of dividends (see above). And the insurance company is required by law to keep enough reserves on hand to back up those guarantees for every single whole life policy it issues.

  • Your coverage is guaranteed for life. It cannot be cancelled (as long as premiums are paid, of course. And remember, your premiums won’t go up!)
  • The company guarantees that the death benefit will never decrease
  • Your cash value is guaranteed to increase each year, and each year’s increase is “locked in.” It’s not subject in any way to market risk
  • If you need cash for any purpose, you are guaranteed the ability to borrow against your cash value, at competitive rates – and you can recapture that interest back into your policy as you pay back your loans. You don’t have to fill out a loan application, and your request cannot be turned down
  • You’ll have guaranteed income tax-deferred growth of your cash value every year, and you can take tax-free retirement income, under current tax law
  • The policy’s guaranteed death benefit will be paid income tax-free to the beneficiaries, under current tax law

All forms of life insurance have some guarantees, but only whole life insurance gives you all those guarantees

In addition, with a whole life insurance policy, the insurance company assumes the risk of poor investment performance. With every other form of permanent life insurance, you – the policy owner – assume that risk. And when you assume that risk, it means you’re agreeing that if the insurance company’s investments don’t pay off as well as planned – or if their costs are higher than they expected – you will make up your share of the difference – out of your own pocket!

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How to Find out More About Bank On Yourself-Type Dividend-Paying Whole Life Insurance Policies

Get Your FREE Report!

Get instant access to the FREE 18-page Special Report that reveals how super-charged dividend paying whole life insurance lets you bypass Wall Street, fire your banker, and take control of your financial future.

In this article, we’ve shown you the five simple concepts on which a dividend-paying whole life insurance policy is based. We’ve also reviewed the guarantees the insurance company makes to you when you decide to purchase a whole life insurance policy.

It’s really that simple. … Of course, if you’re someone who really wants to dig deeper, there is more you can learn. For example …

If you’d like to learn even more about dividend-paying whole life insurance, take a look at the comprehensive online Consumer Guide to Life Insurance. You’re welcome to browse. We prepared the Consumer Guide to Life Insurance just for inquisitive learners like you!

Learn How Super-Charged Dividend-Paying Whole Life Insurance Can Help You Reach Your Financial Goals and Dreams – Without Taking Any Unnecessary Risks

If you want to discover why Bank On Yourself-type policies outperform other types of whole life insurance policies, download our FREE Special Report, 5 Simple Steps to Bypass Wall Street, Beat the Banks at Their Own Game and Take Control of Your Financial Future.

While most term life insurance policies are relatively similar to one another, dividend-paying whole life insurance policies can be customized to meet very specific needs and objectives – your specific needs and objectives.

And that’s why your next step is to find out specifically what a Bank On Yourself-type whole life insurance policy can do for you and those you care about.

To learn how a custom-tailored Bank On Yourself program can help you reach your financial goals (there’s no cost or obligation), request your free Analysis. You’ll be referred to a Bank on Yourself Authorized Advisor – a life insurance agent with advanced training in this concept – who can answer all your questions and, when you’re ready, get things moving.

The Most Important Lesson Learned from the Government Shutdown: Americans’ Finances are Fragile

The longest U.S. government shutdown in history laid bare an uncomfortable truth: Americans aren’t saving enough and the majority of us have no rainy-day fund to protect us when the inevitable you-know-what hits the fan.

More than 70% (!) of all types of employees at all income levels surveyed live paycheck to paycheck and said they’d have difficulty meeting their financial obligations if their paycheck were delayed for just one week! That’s according to the 2018 “Getting Paid in America” Survey by the American Payroll Association.

This explains why, after missing just one or two paychecks, we heard so many heart-breaking stories from government workers who weren’t being paid or were furloughed. For example… [Read more…] “The Most Important Lesson Learned from the Government Shutdown: Americans’ Finances are Fragile”

How Much Money Do You Need to Save for Retirement?

People need to save between 10% and 17% of their income if they plan to retire at 65 but are putting away only 6-8% of their income, according to a new study by the Stanford Center on Longevity. That’s only half of what they should be saving.

What percent of your household income are you saving? It’s important to be brutally honest with yourself because a shortfall of the magnitude most Americans will experience means more than just not being able to live the retirement lifestyle you dreamed of. It may mean…

  • Having to choose between putting food on the table and the medical care you need
  • Not being able to afford to pay for heating and air conditioning
  • Having to rely on the charity of your children
  • Foregoing travel and even life’s little luxuries

I doubt you worked hard all your life so that you can scrimp and sacrifice just to get by in retirement.

Fully 60% of U.S. households are at risk of not having enough money to make ends meet in retirementeven if they cut back to spending just 75% of pre-retirement levels – according to a 2018 study from the Center for Retirement Research.

The Rule of 25 for Determining How Much You’ll Need to Have Saved

[Read more…] “How Much Money Do You Need to Save for Retirement?”

October 2018 Was Among the Most Volatile Month for Stocks in 118 Years

October was one of the most volatile months for the Dow since 1900. Back then, we were hopping on the first electric buses in New York City and enjoying a new kind of sandwich called a “hamburger” in New Haven. And, we were piling onto an early “Loop the Loop” roller coaster on Wall Street.

Fast forward to October 2018… and enter the Zero-G Inversion Coaster. The Dow fell by over 1,000 points in two days. The S&P 500 dipped in and out of correction multiple times. The Nasdaq plummeted 700 points mid-month, soared over 300 points the next week, and then tumbled back down over 500 points toward month-end. It comes as no surprise that the Fear Index also hit a 3-month high.

It wasn’t Halloween that spooked the markets last month…

Investors had plenty to fear with trade wars, tariffs, rate hikes, Fed policy, underwhelming earnings, slumping housing data, and political partisanship run wild. And as the sugar high of tax cuts, low interest rates and low inflation wears off, there’s a pervading sense that we’ve reached some sort of flashpoint.

What keeps economists up at night? One very sobering question:

What if This Economy is “as Good as It Gets”?

[Read more…] “October 2018 Was Among the Most Volatile Month for Stocks in 118 Years”

Setting the Record Straight on What Bank On Yourself Is – and Isn’t

There are a lot of misconceptions about the meaning of Bank On Yourself. Some folks think it’s just glorified whole life insurance. Others think Bank On Yourself is merely the name of a book.

So, the Bank On Yourself team has created two separate articles. The first explains what Bank On Yourself is, and the second explains what it is not.

What Bank On Yourself Is

Our article on What Is Bank On Yourself? explains that Bank On Yourself is a safe wealth-building strategy – one that puts you in charge, by showing you how to fire your banker, bypass Wall Street, and take back control of your finances. That’s the meaning of Bank On Yourself in a nutshell.

But the article also discusses the benefits of the Bank On Yourself concept. We explain that Bank On Yourself is also the name of our company, and the words “Bank On Yourself” are in the titles of two New York Times best-selling books by Pamela Yellen.

What Bank On Yourself Is NOT

[Read more…] “Setting the Record Straight on What Bank On Yourself Is – and Isn’t”

Why You’ll Lose Money in the Market Even When You Invest Rationally

In his 1865 poem “If,” Rudyard Kipling famously wrote, “If you can keep your head when all about you are losing theirs … yours is the earth and everything that’s in it.”

That’s a big “if” at the moment. Let’s face it; few people are “keeping their heads” right now.

We’re drowning in a reactionary stew where everything from an exchange of ideas to a “taper tantrum” seems to cause a convulsive panic in the stock market.

And even if you don’t lose your head, you can STILL lose your money! Here’s why…

Admittedly, October has always been a devilish month for Wall Street. Black Tuesday was October 29, 1929. Black Monday was October 19, 1987. And the crash of 2008 happened on October’s doorstep on September 29, 2008,  when the Dow dropped over 777 points. On October 10 of this year, the Dow dropped 832 points – the third-worst point drop in history.

These are the days of falling acorns and Chicken Littles! It’s in this climate – despite historically low unemployment, robust GDP, and soaring consumer confidence – that 800-plus point sell-offs are even possible.

The problem is not just the prevailing concerns about high debt, trade wars, and rising interest rates; it’s the collective uncertainty and reactionary group-think over which we have no control.

Contagion Has Become the Wild Card Enemy of Wealth Accumulation

[Read more…] “Why You’ll Lose Money in the Market Even When You Invest Rationally”

Flat Earthers and Blind Faith Stock Market Bulls – What Do They Have in Common?

They are the ultimate conspiracy theories – the beliefs that the earth is flat and that economies are not cyclical.

The Flat Earth Society (a movement that is active and growing today) finds the notion of a horizontal earth far more plausible than a round planet perched on an axis. To their members, gravity is an illusion and objects are not pulled down, but rather continually accelerate upward.

Adopting this notion requires one to reject all prevailing scientific wisdom and research. And despite centuries of empirical evidence, some Flat Earthers believe that one could literally walk off the end of the world.

Those who think the current bull market will continue to rise without a crash or major correction are equally illogical. Despite generations of economic theory, Blind Faith Bulls have sunk most of their net worth into equities on the unquestioning belief that stocks will climb unabated.

Flat Earthers and Blind Faith Bulls Share a Common Suspension of Disbelief…

[Read more…] “Flat Earthers and Blind Faith Stock Market Bulls – What Do They Have in Common?”

Inside Mayer Rothschild’s Secret Counting House: How to Live Like the Rich Do

Ah, to be of the privileged and cultured class – butlers, trust funds, planes, yachts, and race cars. What’s it like to have all that money? Dudley Moore, in the 1981 film Arthur, a comedic flick about a cavorting socialite and heir to a massive fortune put it most succinctly – “It doesn’t suck.”

Wealth Doesn’t Just Happen

While it certainly helps to inherit millions, according to Forbes, an astonishing 67% of the world’s billionaires, made it on their own. And the majority started out as either middle class or downright poor.

Likewise, most of America’s wealthy didn’t win the lottery or inherit their money. Many current millionaires have earned their fortunes in tech, finance, fashion, and media, while prior affluent generations took advantage of the rapid advancements of the industrial revolution by investing in railroads, oil, steel and land.

Mayer Amschel Rothschild, the founder of one of the world’s most storied banking dynasties, was an orphan from a Jewish ghetto in Frankfurt. He went to work at 13 with little formal instruction in money or finance and taught himself the intricacies of collectible coins.

John D. Rockefeller, the oil tycoon and America’s first billionaire, grew up middle class. His father was a traveling salesman who sold a tonic and elixir called “Rock Oil” that he claimed cured cancer. The younger Rockefeller went to work at 16 as a bookkeeper earning 50 cents a day.

The forefathers of these influential families shared common traits of hard work, discipline, and principled investing.

Their rise to power and prosperity was neither haphazard nor accidental. Rather, it was part of a careful plan that involved the strategic growth and preservation of wealth

[Read more…] “Inside Mayer Rothschild’s Secret Counting House: How to Live Like the Rich Do”

When Will the Next Market Crash Occur… and What Will Cause It?

I recently promised to answer two questions we’ve been getting…

When will the next market crash happen? And what will cause it

As the physicist Niels Bohr noted,

Prediction is very difficult, especially if it’s about the future.”

But here are five things we do know…

  1. Last month we entered the longest-running bull market in history, at 9½ years
  2. No bull market has ever made it to its 10th birthday
  3. The second-longest bull market was the dot-com-fueled rally of the 1990s which caused investors losses of nearly 80% when it flamed out
  4. While there’s no guarantee this bull market will crash before it hits its 10th birthday in early 2019, we do know that, historically, the longest-running bull markets go out “with a bang, not a whimper”
  5. As the experts who study behavioral finance note again and again, we humans have an enormous capacity for forgetting the lessons and pain of past crashes, and most people will be as woefully unprepared for the next crash as they were for the previous ones

Let’s Look at What Will Cause the Crash…

There are a number of things brewing that might trigger the next collapse. Take your pick: [Read more…] “When Will the Next Market Crash Occur… and What Will Cause It?”

3 Key Ways You’re Underestimating Your Retirement Costs

Take a moment and think about how much savings you’ll need in retirement.

Write that number down.

Now here’s a reality check: That number is probably low.

Not because of your math skills, but because most people underestimate what their costs will be in three critical ways.

A new study found that 37% of retirees say their overall retirement cost estimates turned out to be low.

And when it comes to healthcare, 44% of retirees said they’re facing higherx costs than they expected. (Source: 2018 Retirement Confidence Survey by Employee Benefit Research Institute)

Three Ways You’re Probably Underestimating Your Retirement Expenses…

#1. Assuming you’ll spend less in retirement than when working

[Read more…] “3 Key Ways You’re Underestimating Your Retirement Costs”