Life Insurance is NOT an Investment

Life insurance is not an investment, the purpose of life insurance is to protect your loved ones in case of your premature death. The reason I am writing this short blog today is due the constant question which one is better Whole Life or Term Life? The best answer I can give is it depends. I do I have a problem with "gurus" who give their "infallible truth" about term insurance being the only way to buy insurance.

I understand that whole life is not the best option for everybody but neither is term life insurance. For example, if you purchased a ten year term, ten years ago and develop some medical condition and can no longer afford insurance then you wont be able to get a new policy. However, if you have a whole life policy then it doesn't matter as long as you continue paying your premiums. Life insurance is NOT a one size fits all solution. Ask any over 60 year old right now how the "Buy Term and Invest the Rest" strategy worked for them around 2008. Most of them right now sit with no insurance, since most of them are now uninsurable, and their investment portfolio are valued at a fraction of what it once was. In addition, they are not able to sell their home to cover the devaluation of their investment portfolio since the real estate market is still so low in the United States.

Both types of policies have advantages and disadvantages. There are never any absolutes in life and that is why it is important to discuss your specific situation with your personal financial services professional, who can in turn help you find the right product for your situation.

The problem is that most people listened and are easily impressed by “experts.” We drool for the "As seen in Oprah" type of "experts". Unfortunately in today's society we consider someone who who utters quick and "authoritative-sounding" responses to our questions as an expert. Most people consider a "know-it-all" as an expert. However, people forget that it is all marketing. It is about selling and it works. That is why we are willing to pay hundreds even thousands of dollars to attend the seminars organized by these "gurus". The question we all must be asking is, Is the "expert" giving advice that helps his listeners or advice that sells? If the "expert" gives advice that does not sell, no one listens.

We must come to a different understanding of what defines an expert. Many times the best expert is the one that is willing to say "I don't know". However, I don’t see too many of that type around nowadays.