THE TRUTH ABOUT WHOLE LIFE

FALSE

“Your policy’s cash value can’t be borrowed against until it has built up enough over time.?The amount available to borrow for the first few years in negligible, and it usually takes a decade or so to build up enough reserves to make borrowing worthwhile.”

FALSE

“Takes 10-15 years for policyholders to build enough cash value for a loan."

FALSE

“The truth is you’ll spend a lot more throughout your lifetime on a high premium and may never even see the cash value.”

Mainstream media sources, however well-intentioned, unfortunately don’t fully understand the nuances of Whole Life Insurance Policy and borrowing against them.?Nuances matter and specifically how you structure the policy greatly matters.?Skilled professionals can structure insurance policies in a variety of ways.?Unfortunately, mainstream media sources write articles as if there’s only one vanilla Whole Life Insurance Policy structure.

One example is from a recent Bankrate.com article entitled “Borrowing against your life insurance policy.”?The article states that “Your policy’s cash value can’t be borrowed against until it has built up enough over time.?The amount available to borrow for the first few years in negligible, and it usually takes a decade or so to build up enough reserves to make borrowing worthwhile.”?This is patently false: myself and other investors have borrowed against our policies in year 1 because our policy was properly structured for this purpose. The article assumes that holders have or will have traditional limited pay policies and overlooks high early cash policies that function very differently.?Bankrate.com is not alone in misstating the pros and cons of borrowing against whole life insurance.

?A second example is from a recent Money.com article entitle “What is Whole Life Insurance and how does it work.”?The article states one of cons of whole life insurance as “Takes 10-15 years for policyholders to build enough cash value for a loan.”?Again, this is patently false when skilled professionals properly structure their clients’ policies to be borrowed against.

?A third example is from Celebrity Finance Guru Dave Ramsey who mistakenly said, “The truth is you’ll spend a lot more throughout your lifetime on a high premium and may never even see the cash value.” Again, this is patently false as cash value is guaranteed and should increase.?

* The above does not constitute an offer to buy or sell a security.?Furthermore, this is for educational purposes only and should not be considered financial advice.?Accredited investors interested in learning more should see a licensed insurance professional such as Ethan Gao.