Life Insurance, Is buy term and invest the rest the right strategy?
First things first: We definitely, without a doubt need to carry life insurance!
If we insure our cars, our houses, our jewels, because we fear losing them and the pain that can cause us to lose them is hard, then we must insure ourselves. The value of our lives is priceless, we are the ones that with our ideas and efforts make the enjoyment of those cars, houses and jewels possible, and we are the ones that provide for our dependents and loved ones in pursue of their well-being and happiness.
Once we agree on the prior paragraph, we come to a decision of which type of life insurance to carry. There are two main types of life insurance: Term life and permanent life.
There is a very strong trend of advisers advocating the popular "Buy term and invest the rest" based in the assumption that buying cheap term life insurance will leave you with a good amount of money to invest in different vehicles to achieve fortune. It is also assumed that at retirement age your children will be self sustained individuals enjoying a good amount of wealth and you will be free of debt and owner of a big fortune.
The problem of this strategy is that it has two humongous flaws. The first one is you do not know when you are going to die so spending money for as little as it may be (is not) in term insurance can result in a complete waste of money.
The second one is, by statistics, the percentage of individuals retiring wealthy in most societies is 10 per cent or less. So, all those advisers including famous entertaining gurus like Dave Ramsey and Susie Orman, are talking to benefit whom with this strategy? The top 10% of the population?
Therefore, what do we, the 90% left of the population do? The ones that make mistakes and perhaps do not learn from them, the ones that when opportunity knocks to our door decide not to open it for whatever reason, do we have a chance to reach a decent retirement?
Yes we do! And it is doing exactly opposite as what the entertaining gurus' advice; we can buy permanent life insurance, which offers the opportunity to grow a cash value.
It has been determined that for the average individual, the need for finance is greater than the need for insurance, and by solving for the deficiency of finance; we get to solve the need for insurance.
It would benefit you to find and read "Becoming your own Banker" by Nelson Nash. Nelson teach us in this great book how a well designed whole life insurance policy can help us to provide protection for our loved ones and grow a retirement fund while at the same time have access to a very efficient tool to propel us in our working years by applying a simple process of financing our own needs.
This simple process is basically straightening our banking position where instead of always being a client of a bank, we can become the bankers ourselves.
As simple as this sound, this change brings tremendous advantages to our economies. This provide us more control on our money, the ability to recapture interest that we are normally paying to banks and financial institutions, and overtime recapture the cost of our purchases.
Let me know how you liked the book.
If we insure our cars, our houses, our jewels, because we fear losing them and the pain that can cause us to lose them is hard, then we must insure ourselves. The value of our lives is priceless, we are the ones that with our ideas and efforts make the enjoyment of those cars, houses and jewels possible, and we are the ones that provide for our dependents and loved ones in pursue of their well-being and happiness.
Once we agree on the prior paragraph, we come to a decision of which type of life insurance to carry. There are two main types of life insurance: Term life and permanent life.
There is a very strong trend of advisers advocating the popular "Buy term and invest the rest" based in the assumption that buying cheap term life insurance will leave you with a good amount of money to invest in different vehicles to achieve fortune. It is also assumed that at retirement age your children will be self sustained individuals enjoying a good amount of wealth and you will be free of debt and owner of a big fortune.
The problem of this strategy is that it has two humongous flaws. The first one is you do not know when you are going to die so spending money for as little as it may be (is not) in term insurance can result in a complete waste of money.
The second one is, by statistics, the percentage of individuals retiring wealthy in most societies is 10 per cent or less. So, all those advisers including famous entertaining gurus like Dave Ramsey and Susie Orman, are talking to benefit whom with this strategy? The top 10% of the population?
Therefore, what do we, the 90% left of the population do? The ones that make mistakes and perhaps do not learn from them, the ones that when opportunity knocks to our door decide not to open it for whatever reason, do we have a chance to reach a decent retirement?
Yes we do! And it is doing exactly opposite as what the entertaining gurus' advice; we can buy permanent life insurance, which offers the opportunity to grow a cash value.
It has been determined that for the average individual, the need for finance is greater than the need for insurance, and by solving for the deficiency of finance; we get to solve the need for insurance.
It would benefit you to find and read "Becoming your own Banker" by Nelson Nash. Nelson teach us in this great book how a well designed whole life insurance policy can help us to provide protection for our loved ones and grow a retirement fund while at the same time have access to a very efficient tool to propel us in our working years by applying a simple process of financing our own needs.
This simple process is basically straightening our banking position where instead of always being a client of a bank, we can become the bankers ourselves.
As simple as this sound, this change brings tremendous advantages to our economies. This provide us more control on our money, the ability to recapture interest that we are normally paying to banks and financial institutions, and overtime recapture the cost of our purchases.
Let me know how you liked the book.