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Old 11-24-2008, 02:50 PM   #1
davericher20
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Not what people think.



Life insurance.

Yaaaay!!!!!!!

I know, shitty subject and it's gonna take a while to read but if you keep reading you'll learn something and WILL save a TON of money by doing the right thing from now on with where your money is going.

I've been in the industry for over 5 years now and it still makes me sick to my stomach when I sit down with hard-working families and see them getting taken to the cleaners.

YOu have 3 kids, a wife, mortgage, credit card debt, and so on........
If you die, is your company gonna continue to pay your salary to your family? Of course not.
So you need life insurance to cover your expenses, Immediate and long-term.

So you go to the "financial" guy your family has been dealing with for years and he pushes (and will push) something called "Whole Life Insurance," or "Universal Life Insurance." But there's another kind that they won't push, it's called "TERM Insurance"

An agent normally comes to your house or you go to them and they will be your financial advisor, taking care of your retirement, your kids education and your life insurance.

101- premium = what you pay for the insurance

face amount = what your family will get if and when you die.

Lets say I'm a 30 year old non-smoking male with no health complications.

With a whole life Policy My Premiums will be for example $200.00 per month for $200,000 of coverage/face amount.

with Universal, it's roughly the same.

With Term Insurance , I can get like $800,000 for $200.00/month for 20 years.
If I only wanted $200,000 of coverage then it would be something stupid like $90 a month.

WHy so expensive for the other ones?

You ready to shit yourself?

In the other policies there is an "investment"

The investment works like this.

I'll make it easy.

You walk into your bank, you go to your manager and say, I want to open an account with you and put away $100.00 a month. Bank manager says ok, sign, here, here and here. Bam! All done! see you later.

2 years goes by and you see a snowmobile you really like, so you decideto buy it, "I have $2,400 in my account becaue I've been putting away $100.00 a month for the past 2 years so I will take my OWN HARD-EARNED money and purchase this lovely snowmobile."
You go to the bank.........There's no money in the account.
You ask the manager...."WHERE THE **** is my money?"
Manager says "oh, sorry, it all went to fees. It was in the contract, didn't you read it?

The money that was going towards the investment portion is kept by the company for a MINUMUM 2 years. I've seen it as high as 23 YEARS! and it was for a kids education plan!

Okay, if you're not pissed off yet..........here's the second part.

It only grows at a 1-4% Rate of return...........barely keeping up with inflation.

If that doesn't disturb you either.........

You've had this policy for 10 years now, you've passed the stage where they kept your monthly contribution and your money has started growing a bit.

Lets say you have $10,000 in your "investment"

You need a new furnace, or a pool, or you want to go to Vegas and Blow it all, doesn't matter. It's your money and you want it.
You can withdrawal $10,000 from your account, but...............................

















you have to pay it back?????
WTF?




Yep, and they'll charge you 6% to upwards of 12% interest to pay it back.



And say you die while there's a loan outstanding? They'll deduct the balance from your Face amount.

So if you had $200,000 of life insurance, and you withdrew $10,000 from your "investment" and died in a plane crash on your way to vegas.........Your family would get $190,000.

Sooo, it's your money, and if you want it you have to BORROW it?

doesn't make sense does it?

Actually sounds like a rip-off?

If those didn't disturb you..............................I think this one might.


In that same policy...............You've had it for many many years now, and you've managed to save $30,000 in this "investment" part of your life insurance.

You finally die.

You had $200,000 of life insurance

and you had $30,000 in this "investment"














HOw much should your family get?


Well obviously they should get $230,000.........................right?











nope.


the company keeps that. They keep the $30,000.

















If that doesn't make you sick there's something wrong with you.






And guess what.



80% of NOrth American Familes who have life insurance own this shit and don't even know it. Cause they trusted the guy who pulled up in a BMW and wore a nice suit and talked very good and smiled alot. They trusted him/her.

DO you ever think in a million years the company/agent is going to disclose how it works? Hell no!


Whats the alternative?

Term insurance, and investing in good solid equity mutual funds. Hell, Put your money in a frickin money market account and you'll still be ahead.

You have kids, wife, mortgage, car loans, credit cards, lines of credit etc.......and you don't have anything saved? You need life insurance.

You take care of your family while you're alive, why should that change after you die?

If you make $50,000 a year, you need $500,000 of life insurance so your family can draw off of that money and replace your income, or you can do less it's up to you. BUt withdrawing 10% evry year should theoretically not touch the principal because the market averages that every year, long-term.
If you have a mortgage of $300,000 you need $300,000 of life insurance. or less, it's up to you.

But do you need life insurance for your whole-life?

Absolutely not!

In the early years, you have alot of responsibility, but not alot saved, so you need to insure the discrepancy.
In the later years you have less responsibility, but you have alot of money saved. So you don't need insurance anymore.

Lets put it this way, if you had debt totaling $500,000 but you had $350,000 saved up.............you only need life insurance for $150,000.

If you have $250,000 and 15 years left on your mortgage, Insure it for that amount and length of time, when the balance goes down adjust it to match.

Maybe I'll get into it later, but Mortgage insurance, credit card insurance and accidental death insurance is a crock of shit compared with personal life insurance.


BUt the thing I love most about this.

I have EVERY single third-party financial expert backing up what I say.

They will all say the same thing.

Buy Term and Invest the difference.

Do your own research.....................but don't be an idiot and go to your nearest freedom 55 guy, or your Clarity guy asking about it.

Go to Chapters and go to the financial section take ANY book off the shelf and skip through to the life insurance section and I guarantee...........that they will alllllll say the same thing.

Here's a few.

9 steps to Financial freedom - Suzy Orman
Wealth without risk for canadians - Charles Givens.
The Wealthy Barber - David Chilton
Personal Finance for Canadians for DUMMIES
ABC's of Making Money.
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Old 11-24-2008, 03:03 PM   #2
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^ A nice rant that is definately worth reading. Thanks for giving everyone the heads up.

I have a 20 year term policy to cover my mortgage. I pay like $23/month.
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Old 11-24-2008, 09:46 PM   #3
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interesting article, thanks!
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Old 11-24-2008, 09:52 PM   #4
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that's good reading - i have a term policy for 200/year as part of PEO.
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Old 11-24-2008, 10:35 PM   #5
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I was taught to go term ins when I started in working fulltime. Pay out only when you die, just like car insurance. Whole term is what makes the insurance company profitable. They spin it to the point they will invest on your behalf since you'll be too busy with life and not invest properly.
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Old 11-24-2008, 11:25 PM   #6
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hey maybe you can help me out with something.
currently my family has a large loan as we are doing some major renovations. Its roughly about 150,000$ in loan. Now the company is insuring my dad for 2% of the outstanding loan. Its quite high, but my father has high blood pressure, etc, and so thats probably part of the reason why it is as high as it is? Or are we just being ripped off? Could looking for insurance with another company- getting a term insurnace as you put it, be more beneficial to us? The thing is he is over 50 and would I guess be an at risk client considering the fact that he has high blood pressure, etc.
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Old 11-24-2008, 11:45 PM   #7
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^^ High blood pressure is a big deal but it's manageable. It would result in a higher premium yes. 2% though? That's $3,000.00 a year for $150,000 of life insurance? UNless he is a smoker and there's some other health issues, that's alot of money.
I would have to sit down with who is being insured and take a look at everything and give you a quote then.
It doesn't hurt to shop around.

I would be more than happy to do that for you. PM me.
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Old 11-25-2008, 12:04 AM   #8
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Quote:
Originally Posted by slemmer View Post
I was taught to go term ins when I started in working fulltime. Pay out only when you die, just like car insurance. Whole term is what makes the insurance company profitable. They spin it to the point they will invest on your behalf since you'll be too busy with life and not invest properly.
Yep, and what they really do is take your money and invest it in the market the very next day making their 12% and cutting you a cheque for what they guaranteed you. Just like GIC's
When you walk into a bank wanting to invest money, Here's what they ask you.
"Are you a risky type of investor? Or do you like to keep your money safe?"

What do most people say?

I like to keep my money safe,

Then the bank says, well GIC's are perfect for you, and they're guaranteed!

guaranteed to fail.

Then they take your money the very next day and invest it into the market making 12% and cut you a cheque for 3%........

It's your civic duty to do your own research. Noone is going to take care of you but YOU.

All I do is present the facts from both sides and let my clients decide which is best for them. It's great.

But Life insurance companies have caught on..........On the front of the policy it will say "TERM" but when you open it up it has a cash value which means it's universal. Because universal is term, with a cash value attached. Tricky tricky. I've sat down with a few families that were adament they had term, cause that's what they asked for and that's what the policy said. But people don't know how to read an insurance contract. I didn't even know how to read one till I was trained.....it's all lawyer jargon bull****. And when we opened them up there it was, cash values.

Another option they sell is what's called "paid-up life" Where you only have to pay your premiums for 5 or 10 years, and the policy pays for itself because of the "dividends" haha.
What the client doesn't know is that all the company did was jack the premium up 600% (not kidding) so they get their money up-front.

for example if a normal policy was $100.00 a month, and you took the paid-up option, the premium would now be $600.00 and it would be paid-off in 10 years because of the companies dividends! Think of it! You never have to pay for it again! No Worries!

Liars.

Is there an investment attached to your car insurance?

NO.

Would you ever get one?

NO.

WHy is there one attached to Life Insurance?
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Some people have serious track experience from the cruise, so what is fast to you, isn't fast to them.
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Old 11-25-2008, 09:35 AM   #9
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Nice write up sir, definately a eye opener.
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Old 11-25-2008, 09:55 AM   #10
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of course banks and insurance companies are businesses,they allowed to charge what they want at any rate they want,look at the obscene interest they charge on credit cards and "handling charges".Insurance is the biggest scam on the amount you actuallly invest,there been so many books regarding the insurance agencies and how they are very very close to government departments that many deemed criminal.Most people know little about the policies they sign except the monthly payment and pay out during a accident.Most brokers are vague about the details.My dick H broker is trying to up my death premium since my dividents is off setting my monthly payments so hes trying to make me buy more even though I told him three times its enough.To make manner worst when I withdrew a small portion of my balance out he listed it as a "loan" which it wasnt.The interest was low but the moron told the company I was borrowing the money not withdrawing it.It took three months to correct it..
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Old 11-25-2008, 12:30 PM   #11
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Yeah, it's a Universal Life Policy.

The investments are supposed to do well, and in return pay for the premiums.

BUt 70% of those are policies are YEARLY RENEWABLE! that means every year your premium goes up. So you don't notice it, but the premium eats away at the investment and the policy ends up collapsing on itself. It's like it was designed to fail. We see alot of those too. And when you get sick, and you can't afford the $900/month premium you're screwed cause you can't get insurance anymore, you're sick. I've seen it happen close to a half a dozen times. It's horrible.
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Old 01-05-2009, 09:30 PM   #12
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has anyone talked to their agents yet?
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Old 01-05-2009, 11:39 PM   #13
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I've got both whole life and term - Took the whole life because there was a scare that I might be diabetic and before I was diagnosed, I wanted to be sure my premiums wouldn't sky rocket. My agent is close friend. He has been in the financial advisement business for over 20 years with a thriving practice. For knowledge sake, he's partnered with Manulife Financial.

All of those situations above DO NOT apply in all cases.

I DO NOT have to pay ANYTHING above my premiums. There is no INVESTMENT portion unless I want it to be one.

I DO NOT have to pay anything to get my money back (that I pay in VOLUNTARILY over and above my premiums). I pay about $60 more than my premiums a month, as I want the interest on my premiums to eventually pay my premium.

The 1%-4% return rate is for money that's UNMANAGED. My agent can manage my money in my policy like an investment portfolio. He can invest the overage into any funds, money market, etc. I can make much more than 1%-4%.

I have NO LOAN on my policy. Anything above my premiums that has been paid gets paid back, with it's gains, on top of my $250,000 policy.

My agent NEVER pushed whole life. I had term setup with him and then my circustances changed. There is a history in my family of diabetes and when it was thought that I MIGHT have it, he said, let's make sure you don't get screwed later. Luckily all my tests were negative - but there is a chance in the future that I will get it, a fairly strong one.

As for the reducing amount of life insurance needed - yes that's true - HOWEVER - with my policy - in about 10 years, I will stop having to pay for it as my interest will cover my payments. I like the idea of giving my children a nest egg when I pass on. My father's done the same 30 some odd years ago when he got all his insurances setup. This is STRICLY a personal choice.

My premiums are NOT yearly renewable. Something my agent and I made sure of as if my circustances changed, my coverage and cost could change with it.

Yes there is a difference in premiums between term and whole life. I pay about $14 a month for $250K term and about $50 a month for an additional $250K whole life. I've kept the term for now as in 10 years, I will most likely not need the additional $250K and will let that slide. If I wanted to keep it, it has an option for renewal with NO medical exams as they have already been done.

From talking with my agent about all this a while ago, this method of insurance selling is quite old school and many agents don't sell this type of insurance that Dave talks about now.

I'm not saying that you are all wrong, but at the same time, you aren't all right either.

Anyone looking at insurance needs to talk to a few people before making their decision as well as taking the information you receive and thoroughly processing it.

It's a tricky business - Dave is right in saying do your research - but know there is more than what is being written here.

Primerica tried to "sell" me on this method years ago. I'm sorry, but I just don't trust Primerica - something about them screams hoaky to me.
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Old 01-06-2009, 02:24 AM   #14
Jim .E.
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I pay $13.25/month for $250k with TD bank for Life insurance. That's pretty much all I know about it.
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Old 01-06-2009, 08:57 AM   #15
MiroE36
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i can't believe how many of you have life insurance.... kind of sad... your wasting your money
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