In whole life/cash value policies, upon death, why does the cash value go to the company and not the

Also if you want to get at the cash value, why do you have to borrow your own money from the policy at 6- 8%? It would seem that I would be better served keeping my money under my pillow.

Why does the whole life industry play such a shell game with peoples money? Also the way these policies work is not my opinion but a matter of record.

In whole life/cash value policies, upon death, why does the cash value go to the company and not the family?payday-advance

Its because life insurance companies fear they won%26#039;t be able to pay out huge claims in the future. So they take your cash value when you die.

The problem is that life insurance companies force their agents to not reveal the whole truth about the cash value. Instead, they tell their sales team to sell cash value as a tax-deferred investment in which the insured can use at anytime. This is how they typically sell it:

%26quot;Let%26#039;s say you are 30 years old. 10 years later, your cash value is worth $16,000. One of your kids is going to start college, so they can use the money to pay for college. When you reach age 60, your cash value grew to $50,000 and you can use the money for retirement. Since you have two kids, that means you need two policies! Oh yeah, did you know that your cash value grows tax-deferred? That mean you don%26#039;t have to pay income taxes on it!%26quot;

You see, the life insurance agents don%26#039;t sell life insurance as a way to protect your income in case you die. They sell it as a way to accumulate wealth. Many people don%26#039;t know any other alternative investment plans such as Roth IRAs or 529 plans. They are relatively new concept and its only matter of time until every working citizen has a Roth IRA. People would soon find out that cash value is not the best way to save for long term goals and would buy term insurance instead and invest the difference.

There%26#039;s only one company out there that sells term insurance 100% of the time and help clients invest the difference. That%26#039;s Primerica. Primerica has many old clients. For example, one of the client bought a 20 year term and 30 years later, she has over one million dollars in her retirement account. If you look at a cash value policy, there is no chance that it will ever grow to one million dollars since most face amount of cash value policies are $100,000. Your cash value will never grow larger than the face amount. If it did, the policy will stop covering you and pay out the cash value to you. Of course, this won%26#039;t happen until you reach age 100.

In whole life/cash value policies, upon death, why does the cash value go to the company and not the family?

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Educate yourself about life insurance here: http://finance1o1.blogspot.com %26quot;The truth is what insurance agents don%26#039;t want you to know!%26quot; Report It

|||There are two types of value in a whole life policy, cash value, or death benefit. Cash value is also a form of savings, for eg, if a person wants to terminate the insurance(while alive), this is the money that he will get back. However, if he doesn%26#039;t cancel the insurance and dies, the family gets the death benefit, which is higher than the cash value in any case.

Whole life policies act, first and foremost, as a form of protection, followed by a lesser extent, savings. It is therefore, discouraged to borrow against your own savings, which is why nobody will borrow against their cash values. You would be better served if you keep your money in the bank/get a CD/invest in mutual funds.

It is not a game. Perfectly intelligent people buy life plans for their own reasons. However, it is your choice to select a term/whole life plan.|||First of all, keep in mind that a whole life policy is NOT a savings plan. Think about it. A whole life policy is a permanent policy promising to insure you for your entire life regardless of the time frame or your health. If you tried maintain an annually renewable term policy beyond age 80, the premium would likely be prohibitive. The cash value helps to average out the premium over your life expectancy to an affordable level. Whole life policies are not expensive, they%26#039;re just actuarially fair.

As far as the cost of borrowing from your cash value, keep in mind that while you%26#039;re paying interest on the withdrawal, it is a loan that is not actually being removed from your cash value. That amount is still growing at roughly the same rate as the loan interest. It is more or less a wash. So if you do use your cash value as a savings function, you are effectively withdrawing savings pretty much tax free. It%26#039;s a good deal.

Throw in dividends (not guaranteed, of course), and the pot gets even sweeter. Usually, dividends are capable of paying the premium at about the 12-15 year point. This is why, if you%26#039;re young and healthy, it is often cheaper (in terms of total premium outlay) to purchase a whole life policy rather than term. Another alternative may be a universal life with a no-lapse guarantee.|||Well, the whole idea of a life insurance policy is to sell it as an %26quot;investment%26quot; to people who are NOT investment savy. Sometimes it%26#039;s sold as a %26quot;forced savings plan%26quot;.

The bottom line is, I%26#039;m sure it could acheive a financial goal for SOMEONE, but it%26#039;s not the best product for most people.

Unfortunately, when most people buy life insurance, they don%26#039;t have a financial goal in mind, and they don%26#039;t have an exit strategy (two crucial things you have to have, if you%26#039;re in an %26#039;investment%26#039; mindset) - they%26#039;re buying it for the sake of buying it, so they can say they have it.

And I%26#039;d rather see someone with need buy whole life, than go without - but I don%26#039;t sell it myself, I%26#039;m a term kinda gal.