How Insurance Works

Is Whole Life Insurance Better than a 401K for Retirement?

hi Rafael here and once again
thank you for tuning into my video today I want to talk to you about something
that has been frustrating me a lot recently mainly because it almost
happened to me in the past and I’m sure if you’re a young doctor or in the
healthcare field it’s probably happened to you if you’re not in that industry
I would still watch the video because I’m sure you know someone who
has been trying to sell your product like this and that in the past or will
try to at some point in your life but basically the question for the video is
going to be is a whole life insurance policy better than a 401k and we’ll talk
about better in the terms of retirement now the reason for this question is
because I was talking to an ex colleague of mine that wanted some input on
entering the financial services field they had the opportunity to try to help
people with their credit and their debt management and I mean I was really
excited because that’s actually what I’m trying to do and they pointed me to a
website which would be the the company they would be working for and I’d say
right off the bat look I do not agree with this philosophy essentially what it
was they would have to be selling whole life insurance products now when I
started networking for my firm back in I guess almost a year ago when it
first launched almost every single networking event I went to was hosted by
one of these insurance salesmen touting this credit repair business and I mean
look to be honest with you it may work but the problem is that you’re still buying a
whole life insurance policy so what ended up happening was the conversation
turned personal and this person said well look I have a whole life policy do
you think it’s it’s bad that I make a mistake and I said look I really don’t
know yeah but let me ask you a question you have a 401k or do you have an IRA
and they said no they don’t and I go well where did you get this policy well my
CPA sold it to me and my CPA told me that this is better
than a 401k for my retirement and so hold on a second
better than a 401k yeah so then I asked it was a CPA working for this company
that you work for is that sure enough they were so you know it ended up
looking like it was a multi-level marketing scheme but now
the purpose of this video is not to talk about that but to really answer
the question is the whole life insurance policy better than a 401k especially for
retirement like the CPA told this person now in my
honest opinion I’m going to say no and there’s a lot of reasons for that but
right off the bat when you buy a whole life insurance policy there’s a
nice fat juicy commission that’s being taken out then there’s ongoing fees and
then the rate of return is not going to be nearly as good as what you get in the
market and when you start accounting for inflation
all these factors in the end of the growth it’s not going to be
anywhere near what you could have had if you investment into the market now again
there’s a lot of factors that can determine that we can go into a
bear market for the next 10 15 years and maybe a whole life policy will
outperform that but in most cases you’re better off putting your money in a 401k
and an IRA before you even consider buying a whole life policy so this
almost happened to me almost four or five years ago my wife and I were
expecting our first baby our son who we dearly loved and we were looking for a
life insurance policy and an insurance salesman came out to the house
said okay you know we were looking for Term but then the upsell came and said
oh look well the whole life policy you can do this as this cash value and the
death benefit of all these these turns and honestly at that point I really
didn’t know a whole lot about this so we almost bought it luckily I
had the mindfulness to reach out to an advisor at the time and they said look
you don’t want to be doing this for the same reasons this person
probably shouldn’t have bought one but basically if you are looking
for an insurance product life insurance like I was you the best suggestion
is to really get a term life policy because they’re a lot cheaper but
they’re still going to cover you for what you think you’re going to need and
the reason for doing that is because let’s
say you have a 20 year policy that you want a million dollars
coverage the thought process there is that if you are maxing out your 401k and
this is where you have to really be diligent about saving and investing if
you’re maxed out your 401k and contribute to an IRA but if you’re doing
that and you’re compounding that over 20 years and depending what the market does
that should cover over the $1,000,000 at the end of that time frame which means
that that term life policy you’re still alive hopefully it’s going to lapse but
you have enough in your retirement to take place of what this whole life
policy would have been doing now forget these analysis there there’s all these
pretty numbers they’re gonna tell you that it’s it’s gonna do that but and if
you don’t have any retirement at all then it’s probably not for you if you’re
first out of school probably not for you but again every situation is different
everyone’s needs are different so you really should be talking to someone to
see what’s nice to talk to someone talk to someone who does that have a conflict
of interest because there’s no incentive there but really ask
them okay do you think this is right for me and they’ll hopefully give you the
right response that’s gonna be in your best interest now if you want to reach
out to me please do so I’m on pretty much the major social media platforms
LinkedIn Twitter Instagram Facebook and YouTube actually this video is gonna be
hosted on YouTube it’ll be hosted on some of these other networks as well
hopefully you learn something curious to hear your take have you ever been
approached by an insurance salesman to buy one of these policies did you buy it
and if you have any other questions please feel free to reach out
and I look forward to hearing from you

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