Why does America hate whole life so much?

[Rob Lion]

People sure confuse FE commission % with actual whole life commission %.

 

[toolbelt]

The odd thing about term is that the people who market it as BTID leading to financial independence also post memes about 90% of Americans living paycheck to paycheck, in essence confirming that insurance needs will far outlive a term policy. Lets face it, as wealth grows, people upsize their cars, upsize their homes, upsize their tvs, upsize their cellphoens, upsize their lifestyles. In addition, kids are hanging around the nest into their 30's or more.

 

[toolbelt]

Robert Barney, you are right on the money with your analysis. The reason the life insurance industry pushes whole life (and its variants) is one word "CASH." That's why whole life commissions can be 75% to 125% of the first year premium when term is, what, 15% or 20% with miniscule renewal commissions.

What good does a $10,000 whole life policy do for a young parent's family when the same premium can buy 6 figures worth of term insurance?



Absolutely.

While selling Whole Life may be more profitable for the selling agent, Term is much more profitable for the insurance corporation office. Its quite the contradiction for termites to call WL a ripoff when, corporate wise, term generates more profits.

 

[BNTRS]

I don't think Americans hate whole life insurance as much as you might think by watching that video or by reading the comments on a video.

https://theinsuranceproblog.com/whole-life-insurance-study-2020/

The couple that made that video have a fee-only advisory service so they have an incentive to cast doubt on the competition. He is no longer licensed to sell life insurance, but when he was, he held appointments with maybe two companies that sell whole life insurance, neither one a top pick at least for participating whole life insurance.

Like a lot of them, their limited experience somehow makes them experts. It's convenient when you have something else to sell them. I'm being dismissive I know, but when your arguments against whole life are as derivative and cursory as that video it's difficult not to be.

Lastly, don't underestimate the number of Primerica agents who lurk the comment section of YouTube. Remember they have the largest "career" agency force in the country, albeit part-time.

 

[Allen Trent]

Full disclosure: I'm remembering commission rates from decades ago when agents were threatened with termination for writing term insurance. I had no idea that the life insurance industry had done a flip-flop.

Please contact Dave Ramsey & all the others that also dont realize this is the case currently. Permanent products will likely continue to have pressure to have lower compensation with the expense ratio pressures & extremely low interest rate econonomy causing math problems for carriers

 

[DHK]

Like a lot of them, their limited experience somehow makes them experts.

When one's licensing bestows the title of "fiduciary"... somehow it makes them an expert with their opinions. Kinda funny when one actually looks at an ADV Part 2 where insurance is an outside business activity and fiduciary duty only really extends to securities selection and advice.

CFP not only requires fiduciary duty in ALL areas (so now you're holding yourself out to the public and SUED as such), but they are weak in how life insurance works anyway.

 

[Allen Trent]

When one's licensing bestows the title of "fiduciary"... somehow it makes them an expert with their opinions

For some, they put the douche in Fiduciary

 

[ATM]

While selling Whole Life may be more profitable for the selling agent, Term is much more profitable for the insurance corporation office. Its quite the contradiction for termites to call WL a ripoff when, corporate wise, term generates more profits.

So where do you get this idea that term is more profitable for the company?
I do not agree.

 

[fed up]

So where do you get this idea that term is more profitable for the company?
I do not agree.

Most Term policies do not pay out. They term out and all premium collected has been mostly profit or bonus's for insurance agencies and companies. Whole life policies pay death benefits

 

[DHK]

So where do you get this idea that term is more profitable for the company?
I do not agree.

If less than 2% of all term policies pay a death benefit (because they are actuarily designed to NOT be in force when you die)... the insurance company keeps all the premiums paid. As long as anticipated death claims are far less than total premiums being collected and invested, it's a great business.

Also, if people ONLY want term insurance, they're setting themselves up to "pay the curve" rather than "funding the box". If they want to pay the curve... all power to them.