Suze Orman Weighs In Her Opinion On Life Insurance Term vs Whole Life Insurance.flv

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[flanker2020]

@prieto3men2 there are also other risks to consider with the whole life policy. for instance, the 6% IRR only (likely) is achieved if you keep making payments for ~30 years, and, because of the effects of compounding, the majority of the IRR occurs in the last 10 years or so of the policy, so if you take a whole life policy for 10 years and drop it, your returns will be practically zilch. you have to commit to get the "investment" returns. again, it's a risk management tool not an investment

[flanker2020]

@prieto3men2 is what do you want to do with your money? if you sandbag against risk too much, then you have little for retirement. on the other hand, if you take all risk, then you could lose it all. also, note that the IRR from northwestern was the highest in the industry. the IRR from another company, especially one which is structured as a corporation such that dividends on your premium investment go to shareholders rather than back to you, could be a pathetic ~3% over those 30 years.

[flanker2020]

@prieto3men2 for example, over the past 50 years or so, the dividends on whole life policies were like 6, 6, 7, 5, 8, 8% etc. -- very low volatility, whereas an index fund fluctuates all over the place with the market. Also, will the index fund provide insurance coverage for you between now and retirement? Nope. the point i'm driving at is that a whole life policy is not SUPPOSED to be an investment like suze orman whines about. it's a risk management tool. the only question is what do you

[flanker2020]

@flanker2020 when i was working at northwestern mutual, the IRR was ~6% assuming current dividend rate of 5.85% on a $400k whole life policy held for ~30 years. Over the past 20 & 30 years, an index fund generated ~7% effective annual return each year, barely outpacing the whole life policy, but wait! can an index fund be transferred to posterity tax free? will you retire in a "2008" year when suddenly it tanks? the volatility on whole life policies is almost non-existent.

[flanker2020]

@prieto3men2 i used to be a financial rep. selling life insurance, and i have almost a ph.d in finance (about halfway before i left for industry instead), and i can tell you that both thesoulofashark and suze are displaying ignorance on the issue of term vs. whole life. the central measurement of importance is the internal rate of return (IRR) on the growth of the cash value in a whole life policy. that's how you can really compare the "investment" performance of a whole life policy to invest.

[prieto3men2]

So putting your money in a saving account on a whole life insurace policy is better that investing it right? Even if the client has to borrow the thats on that account money at a higher % rate? Or why dont you say that the money is never yours. And you are calling suzie a moron. Dude i thing you are the moron!!!!