Do You Need Permanent Life Insurance?

[@BenFelixCSI]

Have you purchased permanent insurance? Tell me about it in the comments!

[@twitchellmartis]

Hi Ben...fairly new to your videos..love your content...have you heard about world financial group...I have recently purchased/invested in a universal life insurance with them with a premium of $300/m It has 500k death and 100k critical illiness and riders coverage.... The details of the interest Option Selection are below: imaxx Canadian Fixed Pay Index 25% 7.000% for 71 years Fidelity NorthStar® Index 25% 7.000% for 71 years U.S. Large Capitalization Total Return Index 25% 7.000% for 71 years U.S. New Technologies Total Return Index 25% 7.000% for 71 years Total 100% Side Account 0.500% Marginal Tax Rate: 53.53% for 71 years...I am a 29 year old single guy living in Ontario...I dont know if this is a good investment... What questions do I need to ask the agent to get a better understanding of this coverage? Please help m kinda lost...any kind of help would be very much appreciated

[@BenFelixCSI]

Hi Twitchell, I do not have enough information to give you any advice. As far as I know, WFG is focused on selling commission-based products. Here are some questions that will help me to give you some more information: Questions for you: are your RRSP and TFSA maxed out? Do you have dependents (spouse, children etc.)? Are you taxed at the highest marginal tax rate in Ontario (meaning that your income is > $220,000)?

[@Swwooosh]

Twitchell Martis how much of your premium goes towards the cost of insurance and how much goes into your investment? Check the MER for each of your funds and compare it to the MER of the same fund outside of your policy. Did you know that there is a 2% insurance premium tax in Ontario and since your investment contribution is included in that premium your investment portion of the premium is also taxed 2%? Do you know if that $300 is going to cover your premium as long as you hold the policy? Some times it won’t, because the cost of insurance continues to increase as you get older and then they will start taking the extra cost from your investment. Have you looked at getting term insurance? Price it out for a 25 or 30 year term, though I have no idea how long you might need the insurance coverage (note: you don’t need life insurance forever if you are saving properly). Subtract the term cost from the $300 and invest the difference each month at say a 6 or 7% rate of return and see where you end up after 25-30 years. And if you want critical ins, factor that into your calc. Oh and if you look at your policy, if you die your beneficiary probably only gets the life insurance or the investment but not both.

[@jahmarkirk2899]

Who do you recommend permit insurance for single people?

[@danielpullara5888]

Ben Felix Hey Ben, love the content. I recently purchased a 5-pay permanent life insurance policy which I will be overfunding just below MEC limits for the duration of my premium payments. I plan on using the cash value as an opportunity fund via loan if the American economy enters into a recession over my lifetime. This was my decision over putting 100% of cash in a S&P 500 index fund from the start of my investment (it’s more like 50/50 now). I know your not a big fan of market timing but I also saw your video on the Stieglitz paradox so after some considerate thought I believe this to be a reasonable approach. I’m curious to know your opinion.

[@Adalric30]

"When you die, your ability to generate income ends immediately." - Ben Felix. I tease, but I really laughed out loud at that one.

[@BenFelixCSI]

Haha . These are facts.

[@pgoeds7420]

@@BenFelixCSI - Mostly true as even seeing Lenin is free.

[@RK831]

Working income, that is. An estate can also generate dividend and interest income after death.

[@ZenoxDemin]

Life insurance is comparable to buying puts on your own life. You can choose the strike and date, premium will follow those. Great video as always Ben!

[@BenFelixCSI]

That’s a great way to think about it!

[@toonnaobi-okoye2949]

When Ben drops a video, I drop everything and take myself to financial school. Thanks for the great content as usual Ben! This is one of those areas I am currently investigating so I appreciate your clearly communicated thoughts.

[@BenFelixCSI]

Thanks for watching and for the awesome comment Toona!

[@harrisc42]

Hi Ben - love your videos (just need to learn all those Canadian acronyms!). I purchased a permanent life policy after a long time considering my options. My agent was an advocate for that policy but was not the classic "pushy" salesman. I made him earn his commission! What sold me is that we structured my policy so that it has accelerated care benefit. That means I can access my death benefit while I'm alive in order to pay for long-term care. This was especially important for me because I watched my Mom lose almost all of her retirement savings paying for my Dad's long-term care. It's an expensive policy, no doubt, but I get to take advantage of all the other benefits you described (cash value, guaranteed benefit, tax-free income source in retirement, etc.) PLUS the peace of mind that my family's finances will not be impacted if I should need long-term care.

[@BenFelixCSI]

Good perspective. Thanks!

[@BeChickaboom]

I got a limited pay-20 policy of $100k coverage for $45/month when I was 25. I did the math an was satisfied with paying a total of $11k and be done paying after 20 years while maintaining my coverage forever.

[@Theegoaat]

Not bad you should have also got a term policy being that you were so young it would have been cheap. You could get half a million payout for about 20 bucks a month.

[@marcolivierarsenault]

Did buy a Permanent life Insurance, after couple of years and some finance learning later, I made the math and realized it was better for me to buy term insurance and invest the rest. Why I did this, pushy salesmen, that got me in is speech,

[@BenFelixCSI]

Thanks Marc-Olivier! Classic story.

[@dowjones746]

The salesmen made/make more money on permanent vs term... Yes is better term vs permanent and like Marc-Olivier said you invest the rest !

[@dowjones746]

Plus with permanent you have a cash option. But in you die they do not give you the cash + the amount of you was insure. Ex: 100 000$ and you have 5k in cash value if you die you receive only 100000 not 105 000$

[@OPAyo]

I totally agree with you. I have the same term life

[@zoraster3749]

I got a 30 year term when I was ~32. It was extremely cheap for significant coverage. Go with term and invest what you save over a whole life policy and you’ll probably have as much as the whole life policy was worth sitting in your investment account when your term insurance expires; if not more.

[@astroman30]

Exactly.

[@MaritsaDarman]

What company did you go with?

[@zoraster3749]

@@MaritsaDarman Prudential

[@glsmith20]

Ben did a great job wrapping this topic up on the podcast. Worth the listen

[@BenFelixCSI]

Thanks Grant! That was episode 13 if anyone is looking for the episode rationalreminder.libsyn.com/the-rational-reminder-podcast-episode-13-living-through-the-financial-crisis

[@Softwarecom]

This is the third video I'm waching on this concept and I think I just understood from your explanation. It's very hard to understand how you can pay an insurrance company, get interest on the money put and take the money out as long as you pay it back with the interest... Wired. Thank you so much for your time and for sharing.

[@SynThenergy]

I think the best method is to "ladder" policies as needed. I have a 10, 20, and 30 year policy. as eash policy expires, the payout decreases. This is good considering that household assets will increase steadily each year (as long as goals are met)

[@BenFelixCSI]

Good strategy.

[@leowufinancial]

Hi, Ben, Like to watch your video. I am an insurance agent. And I bought whole life insurance for myself. Based on what I know, most of the insurance guys buy whole life insurance for themself. The idea is simple, I don't need to worry about insurance after 20 years when I paid up the premium. My family gets paid fast whenever I die. And the dividend the insurance company paid out is fair enough. 5%-6% is not a high return for sure, but not everybody could do 10%+ each year. So if you don't want to take too much time to manage your investment, a 6% return is acceptable, at least you don't need to worry about losing money. I do agree that young people actually shouldn't put too much on insurance. I believe Insurance is only 10%-15% of the portfolio, but the fun thing is a lot of young people who immigrate to Canada is from a wealthy family. They may not have a high income, but they do have a lot of money. Their parents give a whole life policy to them as a gift. But I guess the real feature they love is the creditor protection.

[@FrankRudner]

Purchased permanent for bene is my spouse vice versa ....as more budget stability for a set amount, I already had universal before I married bene spouse* we still have a mortgage* we took term life, bene are our young adult children and as they grow and build there lives it will be easier if our budget requires us to reduce the policy amounts. Happy I found your channel, very interesting 👍🏻😉

[@rakelblujeans]

Is a permanent insurance policy considered a good tactic to hedge against retiring in an economic downturn?

[@grantmaxted1160]

Thanks for a great review of the topic. 80% of people who buy permanent life insurance drop it at some point because life changes and they can't afford it, or regret buying it in the first place. This just shows how grossly oversold this product is due to the insanely high commissions the insurance salesman get for it compared to the much more appropriate term insurance that most people need, assuming they need life insurance in the first place.

[@BenFelixCSI]

Wow. Do you have a source for the 80% figure or is that a ball park estimate based on experience? Id love to have a source for that.

[@grantmaxted1160]

This is American data, but Canadian stats are likely similar. It also is whole life, so universal life is likely a bit less as some policies the premiums can be stopped after 20 years or so, but from the point of view of investment returns universal and whole life are just as bad due to the excessive fees far overwhelming the much touted tax deferral benefit. www.whitecoatinvestor.com/the-statistic-whole-life-salesmen-dont-want-you-to-know/

[@BenFelixCSI]

Thanks. Great information in that post.

[@riceball777]

95%+ of term policies people out live the term and loose the insurance due to the price going up 10x. It’s a overpriced product That guaranteed to pay out vs a cheep product that most likely won’t pay out.

[@BenFelixCSI]

I don't think term insurance is overpriced. It serves a purpose for people who need it for a period of time. It is a pretty rough deal if you need to pay renewal rates though.

[@RJGPG]

I have term life with convertiblitly to whole. Keeps premiums cheap relative to premiums but I do have an option in the rare chance I would become non-insurable in an event such as cancer.

[@TPOANME]

I almost got perm because the POSSIBILITY of a return. But because i dont know how it works, theyre investing practices, i couldnt heck and make sure anythung was owed to me. I have no doubt they would flip my money, i had no known way of getting what was owed to me. Just holding it in there like a bank would leave my premiums devaluing for me; while theyd have free money to play with.

[@IceManUserName]

@BenFelix I love your podcast and youtube videos. I agree with you- I purchased a whole life policy over 20 years ago, the returns are not stellar. and what I did not know at the time of purchase- is that the cash value is not in edition to the face value of the policy the cash value will be deducted from the payout. so I'm basically covering myself with my own cash value. since your doing such a tremendous job educating us with fact-based advice. what would you advice the people that have already purchased a WL policy and have paid in a substantial amount of money into it, what parameters can we use to help us decide if we should continue to keep this policy or simple cash it out.. the sunk cost fallacy has a very strong effect on me.. keep us the great work Iser Steinmetz

[@harryle3189]

Sometimes you don't have to optimize every step in your life. If you have already bought it (for valid reason in the first place), just continue doing so for peace of mind. Sure you may get lower return but that's not always the case. Think of depression and market volatility, it's possible that your insurance can out perform your investment.

[@IceManUserName]

@@harryle3189 Thanks for your replay. Harry, it does look good at times like this.

[@Manofsteel519]

Ben. I read on of your articles in the globe and mail about buy debt vs paying off your own. Ie putting money into bonds vs paying off your mortgage. Are you going to make a video on that topic? Stuff like that gets a lot of people thinking. Which I believe is one of the best things that your channel accomplishes

[@BenFelixCSI]

Thanks Dave. That video has been recorded and will be out in the coming weeks.

[@jackiechandc]

Great video Ben, but I'm not big fan of term life insurance. I compare it to renting versus buying a house. Yes term is cheaper but at the end of the term your rates skyrocket so much that you end up giving it up by the time you are 50-60 years old and you have nothing to show for it. I have a whole life 20 with an investment portion that I bought that is paid off over 20 years and the value of the policy increases each year. The longer you live the more the value of insurance (ie. At age 40 its worth $100K, age 59 $159K, up to age 90 $480K). I only pay for 20 years and the rates and value are guaranteed. The best part of it is that its all tax free to my beneficiaries. I understand how some people that don't have dependants might not need insurance but its part of the tricfecta of insurance, financial investments and housing.

[@BenFelixCSI]

Thanks jackiechandc.That’s a fair preference to have. I guess my question would be why do you still need life insurance at age 50 or 60? I get that the cash value builds up, but if you had invested those premiums in an aggressive portfolio they would be expected to grow faster than insurance cash value, even after tax.

[@jackiechandc]

Ben Felix I agree but to me its all a part of the big picture. I still have a financial portfolio and real estate investments too. Its all about having a good diversification and the insurance can be both useful throughout my whole life. Everyone I've known that have bought term have regretted it once they became 50-60 years as the premiums can jump to $400-$600 a month. Its just the same philosophy I have with real estate as there's nothing to show for it in the end. Sure you can put it all in a portfolio and do better but this way in don't but everything in one basket.

[@BenFelixCSI]

That’s a very fair point. I agree. Nobody at age 50 or 60 will be upset about a paid up whole life policy.

[@dowjones746]

Yes but now with the tfsa if you had put the same amount/price of the premium in a good mutual fund/etf you will have the same cash and it is tax free also you can cash it out when you want. With rrsp/resp/tfsa/cash account you have all the options to save money. For the perpective to not put everything in the same portfolio ok but give your money to a insurance cie and waiting the end to cash out not for me!

[@friedec3622]

The problem with insurance is not the seller guy, commissions, or prices. It's bankruptcy, corruption, and the company hire high grade lawyer to not pay. Just like my experience, car insurance refuses to pay because the incident can be avoidable if I'm not parking in that parking lot.

[@TamunoOpuboCooksCookeyGam]

Subscribed. Term makes much more sense for me, but it was nice to be reassured by good, neutral information.

[@ybc8495]

if you are already in highest tax bracket it is woth to buy pl insurance, if you paid you house TFSA max RRSP max and have million in cash account.

[@ReasonableHuman1]

Thank you Ben for explaining this concept!

[@LegionKilo]

10x income on a term insurance policy is a great start for insurance.

[@derekbrown5123]

I did permanent life insurance at 25. It was cheap and would gain money over time and have a guaranteed payout. Term you can pay for for years and get nothing at the end, if you're alive. I got permanent as a foundation and as an diversified investment, also it forces me to save. I'll get term for items like home purchases, car, kids in school, etc.

[@jaypark6960]

If you do have the discipline to save the difference, please don't get permanent life insurance. The difference in cost is beyond ENORMOUS. Remember that for cash value policies, the cash value usually gets ABSORBED by the insurance company when you die (truly insane). Your family only gets the lump sum payout. Not to mention that for the first 1-3 years (even 4), the insurance agent gets 80-100% of your premium as commission. That's right, you're funding your agent's BMW!

[@astroman30]

Good luck with BORROWING against your own money.

[@honey13185]

Hi, any suggestions on permanent life insurance companies that are reliable ?

[@MotionInMotion1975]

Super clear. Thank you Ben.

[@niranmojo]

Thanks Ben. Glad to see you have a video on insurance. I’m planning on being an insurance agent with Sun life.

[@davidwalker5274]

It sounds like you're assuming the reasons an insurance agent has for selling coverage is purely financial on their part. That may be true of some but doing a proper needs analysis and helping the client pick what best suits their need should be the primary goal. If my client is satisfied with their choice and it meets their need, that is my goal. I prefer to educate my clients and encourage questions. I hate buyer's regret as it reveals that I didn't do my job properly and perhaps didn't meet their need.

[@briandouglas8311]

Buy term invest the difference

[@tioswift3676]

What happens if you lose youre investment, and your term ends? Then you’re f_cked.

[@robobrain10000]

@@tioswift3676 Ye, but you can make that same argument for the other side. What if your insurance company goes under and they can't pay?

[@dowjones746]

Hey Ben, Will be Nice to have a video on segregated fund. Why because after whole life insurance topic segregated fund is the second investment product of insurance salesman.

[@BenFelixCSI]

I was thinking the same thing. I’ll add this to my list of upcoming videos. Thanks!

[@dowjones746]

Hey, I found : S&P500 ZSP.TO ETF 0.09% MER vs segregated fund files.ia.ca/-/media/files/ia/placements/en/ecoflex/ecoa-fu180p.pdf 2.6% to 2.97% MER FOR THE SAME S&p500 😳 yes they give you a insurance but.........

[@BenFelixCSI]

Yikes! That is terrible.

[@shadowrealm7858]

@@dowjones746 iShares NASDAQ 100 Index ETF (CAD-Hedged)

[@shadowrealm7858]

@@dowjones746 or iShares Core S&P 500 Index ETF

[@tylerkoebbe8742]

Ben, What is your take on a properly structured IUL?

[@CornerG]

Sorry I’m a bit late to the party. Have you taken the premium costs and payout of an insurance policy and compared the net return to that of a traditional investment? Ie, is it better to simply invest the money and liquidate the investment at time of death? Or are there preferential factors I’m ignoring, like tax treatment? Love the show and podcast. Thanks!

[@Markjohn91]

Hi Ben! Great video as usual, I appreciate the work you guys do at PWL. Raymond Kerzerho taught one of my finance classes on capital markets during my undergraduate degree at McGill. Recently I earned my IQPF designation and learned that universal life insurance is generally only tax-efficient after all registered accounts are maxed out and all debts are paid off. What are your thoughts on this?

[@BenFelixCSI]

Nice work! I would definitely not look at universal life insurance until registered accounts are maxed out and debts are paid. Even after that I would be hesitant to add in universal life insurance except for some very specific situations. Tax efficiency does not always result in wealth maximization. For example, UL may be tax efficient, but low returns, high fees, and costs make it difficult to outpace low cost equity index funds even after tax.

[@cg2079]

What about if you leave in outside of USA?

[@danieltrinidad6188]

Hi Ben, thanks for the great video! Just wanted to know your thoughts on getting life insurance when youre in your mid-20's when you currently have no dependents in order to lock in a "good" rate? As I have heard being younger means lower premiums.

[@BenFelixCSI]

Good question Daniel. I think doing this could be a good idea for permanent insurance, but I also think that most young people will not have a need for permanent insurance. For term insurance, if you buy a 10-year term policy before you actually need it, it might be up for renewal (premium increase) by the time you need it. If you buy a 20-year term policy to cover a need that might arise in 10-years, you will be paying 10 years of premiums for no reason. Even if you get a lower premium, the extra 10 years of premiums hurts. The real argument for purchasing insurance before you need it is that if you fall ill between now and when you need insurance, then you might not qualify for the insurance when you need it. Buying it when you're healthy might make sense, but only if you are sure that you will have an insurance need in the future. Buying insurance without a need just because you can probably does not make sense.

[@dowjones746]

The broker will tell you sure take it. But with my knowledge max your rrsp/resp/tfsa or just put money in a cash account! The power of saving/compound interest. If something happend if if if ... If you have no kid/wife or mortgage in my book you do not need this.

[@BenFelixCSI]

Agree.

[@RK831]

Doesn't permanent life insurance have a huge tax benefit?

[@amoryilymixvlog]

Permanent life insurance good for your life time secure

[@navqwertyful]

Does it make sense to have permanent insurance for someone who has maximized TFSA and RRSP contribution and want to invest money to grow tax free in permanent policy?

[@danielleon5074]

It’s imperative to have an equal balance amongst the three buckets of money: taxable accounts, tax deferred accounts, and tax free accounts to bring your income tax bracket to a bare minimum in the distribution years. Not all accounts are created equal when it comes to taxes. Permanent life insurance can be a great add on to your overall financial strategy. For most people who save in the tax deferred bucket through 401(k)’s or IRA’s, they’re simply creating a tax time bomb being where we’re going with higher tax rates in the future. Life insurance can help insulate you from rising taxes because of the preferential treatment it receives from the government.

[@jessevanslyke7254]

I have bought a participating whole life 20 pay. Dividend option to purchase additional paid up insurance. The reason I did was after reading the infinite banking concept be Nelson Nash. I would be curious to know what is your opinion on his ideas?

[@carriermodulation]

There are several mechanisms for borrowing from your brokerage accounts/Retirement Accounts/Investment Trusts without them being a life insurance policy. I don't know about this particular method but if the idea is just borrowing against your investment equities there are ways to do that for sure without life insurance. Insurance companies do not have magic wands and use mundane equity and bond investments to power your policy, so assuming you live a few years into the policy(life insurance policies are really great if you die quickly) I don't see anything magical that an insurance company can do that a brokerage cannot, but they will definitely cap your returns make make them less liquid and more opaque. They may also make investment choices that you wouldn't agree with if you were given input. Also, look at insurance stocks like PRU and their free cashflow and growth, they are doing WELL, and where is that money coming from?

[@astroman30]

BORROWING against your own money, and you think this is a good idea?

[@marcxie]

Thanks for the great video, Ben! If I'm not mistaken, Life Insurance premium is not tax deductible in Canada. However, I'm not sure if insurance payout will be tax-free or not. Could you please advise? Thanks!

[@BenFelixCSI]

In general life insurance proceeds are tax free in Canada.

[@shadowrealm7858]

If you deduct the premiums....the benefit is taxable...

[@ybc8495]

@@shadowrealm7858 where r u live?

[@michaelmontambault6230]

For higher income families buying permanent life insurance is a smart idea. Taking money from a Pre taxed IRA and moving money through a permanent life insurance is a smart idea. Smart way for people at retirement to put dollars and avoid RMD’s at age 72. Yes you could move money into a safer portfolio to avoid the downshift of the market, but even the bond market and also a 50/50 bond to stock portfolio has been down. Having money tied to the Market and receiving a 5%return on your permanent life insurance through northWestern mutual is a smart idea in my opinion. Why have all your eggs on the roller coaster of the stock market when you can create safe dollars through leveraging permanent life insurance? Reduces the risk of selling your assets at a lose during a market drop.

[@carriermodulation]

How does Northwestern Mutual make the 5% to pay you every year? Magic? How is their balance sheet doing, are they losing money on paying out so favorably to their clients? What is the average annualized return of the S&P 500? If this return would be reduced by say 2% on average for the next 20 years, what would the total return difference be between that an a 5% yielding instrument? If you failed to invest into VOO for 5 years due to financial hardship but didn't sell any shares, what would the maximum impact be to your investment? How about to a permanent life insurance policy?

[@astroman30]

Higher income families should seek an estate attorney instead of going out and buying a stupid whole life policy.

[@Azel247]

Did not buy because I'm all alone so no one benefits from my death

[@alexkonyves4079]

Hey Ben, thanks for your videos, they are a great source of info and I often tell my friends about your channel. Question: I have no dependents, but when I purchased my condo I had to buy life insurance that would pay off my mortgage in case of death. Wondering if I should just make a Will that covers any costs to my largest asset instead of paying a monthly premium. I also understand that I pay the same amount no matter what the remaining debt, so over time I am getting less bang for my buck...thoughts? Thanks, Alex.

[@BenFelixCSI]

Hey Alex, it's great that you enjoy the videos! Why did you *have* to buy life insurance? Did the lender require it?

[@alexkonyves4079]

Ben Felix correct.

[@BenFelixCSI]

I have never heard of that happening. If they require you to have insurance I would go and buy your own term policy as opposed to buying it from the lender. You should not have to assign any assets to the lender in your will because on death the equity in your home should be sufficient to pay off any remaining mortgage debt. I would double check that it is a requirement, and if it is it probably makes sense to buy your own policy. But definitely double check that they are requiring it.

[@oavnetwork7722]

@@BenFelixCSI wow that is something to think about in the future thank you Ben

[@mikewashburn844]

The bank can request that you have insurance...they just cant tell you to have it through their channel...that is why its always good to own a private term insurance contract even before you purchase a home( to protect against insurability)

[@rajeshbhayana2934]

Thanks! Can you do one on dividend centric ETFs for canadians?

[@BenFelixCSI]

Hello Rajesh, I might not cover that topic because I do not think that dividend investing is a sensible approach for most people. I did cover the topic in general (not specific ETFs) in this video kzbin.info/www/bejne/b5uZdXykdrKAl68

[@MP-ep3dx]

How about those who are being impacted by the CCPC small business deduction. My accountant thinks I may need to buy Corp owned whole life insurance. I already have a 60/40 portfolio so I realize this would be counted as part of my fixed income. Thoughts of a better strategy than whole life insurance?

[@grantmaxted1160]

My 2 cents worth - I think buying swap based ETFs (income converted to capital gains) as your passive income approaches $50k, an individual pension plan, and working less so your active income tax rate is not impacted as your passive income rises above the $50k limit are better options. Ben, do you know of any other strategies?

[@BenFelixCSI]

Hi M P, I do think that the new passive income rules mean that you *need* to buy whole life in your corp. Like Grant mentioned you could look at swap based ETFs if you are bumping up on the passive income limit and the small business limit. However even those I am hesitant to use (we do not use them in client portfolios at all) because of their relatively poor diversification and the potential for regulatory changes eliminating the structure. I understand the tax argument for buying permanent insurance in the corp to reduce passive income but you also have to weigh the cost of insurance and cost of liquidity on assets in the policy. An IPP can help a bit by giving you more registered room (if you’re over age 40). Presumably you’re already maxing out your personal registered accounts. I think the reality is that under current legislation it is harder to defer income tax with a corporation once you are above the $50k passive income limit. Trying to find ways around that will likely lead to additional risks and costs.

[@MP-ep3dx]

Thanks Ben & Grant! I will be looking into whole life insurance soon. I have already maxed all registered accounts. I was about to buy HBB but opted for ZDB instead for my bonds. I also decided against IPP since I will already need to deal with my RRIF RMD in due time. But absolutely agree, Grant’s options are great for many people. I will triple check my liquidity needs and will likely end up with a portfolio with more equities but I will be okay with that. Thanks again for your reply Ben.

[@watsss]

Hey Ben, What are your thoughts for high net worth individuals ($5 million) looking to save on taxes using permanent life insurance with a cash value or investing component . They have already maxed out their TFSA and RRSP accounts and looking for a new strategy. Your thoughts are greatly appreciated! Love your videos!

[@BenFelixCSI]

That is an excellent question watsss. I would not assign high net worth a specific dollar figure. I think it's more important to think about net worth relative to expenses. If you have liquid assets far in excess of what you will ever need to spend to cover your expenses, then a permanent policy can be an interesting piece of the fixed income allocation. The liquidity aspect is important because accessing capital in an insurance policy is not as flexible as a bond index fund. I think it is reasonable to expect that something like a UL with a guaranteed return or a participating whole life policy would beat fixed income held in a HNW taxable or corporate account. Even with the tax advantages, I do not think it would be reasonable to expect an insurance policy to outperform equities, so I would not replace equities with permanent insurance. The implication of this is that if we add in permanent insurance to the asset allocation, it reduces the amount of fixed income in the investment account. The resulting portfolio appearing more aggressive may have psychological implications for the investor. In general I am not using permanent insurance in most cases. It's really more of a preference thing for the client. For example, if someone wants to guarantee that they will leave a specific amount, then that's great.

[@watsss]

Ben Felix Thanks! Keep up the great work!

[@francescoalberga7627]

I’m 21 and I have a whole life insurance policy that costs 1400 dollars a year which I pay half and my parents pay til I’m 25. It is a pay 20 policy so I will have guaranteed life insurance by the time I’m 41. Is this the right thing to do or should I just invest in a globally diversified fund and pay for insurance at a later time in my life?

[@BenFelixCSI]

I wouldn't have told you to buy it when you bought it, but now that the policy is almost paid up it's probably best to keep it.

[@francescoalberga7627]

@@BenFelixCSI well i bought it last year so i still have 19 years to go. I only got it cause my parents are paying for half

[@BenFelixCSI]

@@francescoalberga7627 ah I misunderstood initially. It looked like you would be done paying at age 25. I think my comment remains the same. I wouldn't have told you to buy it, but if you stop paying now you will lose all of the money you have put in so far.

[@Swwooosh]

Francesco Alberga get the same amount of coverage in term insurance for the longest term you can. If you are healthy and don’t smoke it should cost less than half of your current insurance. Just make sure your parents still give you the $700 each year until 25 and invest the $1400 - cost of term properly until age 41 and you will most likely be in a better position than sticking with the permanent insurance (check out bens podcast/KZbin and his PWL associates Justin Bender’s KZbin channel and Dan Bortolotti “the Canadian Couch Potato for investing ideas). BEFORE CANCELLING the whole life, check for any kind of cancellation fees or surrender charge, sometimes it may make sense to just stop paying premium.

[@astroman30]

Cancel that policy and buy term. Whole Life is a rip-off.

[@victoria19853]

The insurance agent try to push permanent life down my trough I told him I want term nothing else. Nobody can tell you what to do with your money take charge of it. 😁

[@tioswift3676]

Because permanent usually makes the most sense. 85% of people have their term policies end, and $$$$ straight to the insurance company. At least with whole, someone is guaranteed to get a check, and it’s not the insurance company.

[@victoria19853]

@@tioswift3676 hears a question for you why would you do a whole live and barrow your own money at interest ?that’s pretty stupid to barrow what is yours at interest seems like the insurance company’s got you good and making $$$$$$ of you. At least with a term you or who ever, gets paid went the person dies. Keep in mind that the value you build in a whole live insurance policy will corrode, away due to inflation so there’s no gains.

[@tioswift3676]

@@victoria19853 - term insurance terminates. If you don’t die during that period, the insurance company gets ALL of your money over the 15-30 year term, and you get nothing. Whole life WILL pay out the death benefit when you die. Would you rather guess when you’re going to die? Or not worry about it and sleep well knowing when lever you die, you’re loved ones will get a check?

[@hey3xz]

i like the tax-free money component, continuous growth at a certain policy age break point. versus mutual funds, 401k (non-roth) that are taxable. it's another bucket, plus a bonus of extra $ to loved ones in the event of death.

[@astroman30]

What part of "the insurance company KEEPS your cash value" do you not understand?

[@hey3xz]

@@astroman30 I see you could be employing a different strategy in your investment approach and hope you do understand yours in totality

[@astroman30]

@@hey3xz Oh, I do. I invest in 401K and ROTH IRAs where I get to KEEP my money unlike the cash value in a crappy whole life insurance policy.

[@hey3xz]

@@astroman30 ah, the conventional approach. if you're here to tell me what works for you and what doesn't, then i hope it works for you the most return to your buck. lol

[@astroman30]

@@hey3xz Not just for me, dear, for everyone. Whole life insurance is a scam. The insurance companies are not allowed to call them "investments." That should be a big red flag to consumers.

[@muffemod]

I don't have a family....

[@arjunsatheesh7609]

Do You Need Permanent Life Insurance? "When you die, your ability to generate income stops immediately but your family's expenses do not stop." Ah!... I see. *Goes and buys life insurance.

[@davidcarson7855]

since I don't have kids--my nephews/heirs will benefit more from my investment

[@shawnfrank5303]

Hello uncle Dave, remember me !!

[@astroman30]

Whole Life insurance salesmen are about as useful as Time Share salesmen....garbage.

[@tioswift3676]

Dumbest comment I’ve ever heard in a long time, and proves you have no idea what you’re talking about.

[@jacobmartinez6848]

Am I the only one who thinks this guys sounds a heck of a lot like Barack Obama?