And I unfortunately see it all the time. That is what inspired me to write this short article: so that I could help others before they make this costly mistake. For the price of buying me a beer, you can potentially save thousands of dollars.
The people who make this mistake may be losing $10,000 or more and don’t even know it. That estimate is on the low end of the range for some of the policies I review. One client recently had committed to a policy that was going to lose about $90,000 of his money over the first 10 years of the policy! That’s outrageous. He didn’t know it was happening and, frankly, I don’t think the agent who wrote the policy even knew the damage he had done.
I’m sure those agents mean well, but designing a policy for maximum cash value is not as simple as you might think. Most agents sell death benefit protection, not cash value accumulation.
Life insurance is a powerful financial tool, but understanding what is going on under the hood is an integral part of making sure that the client is not wasting their money on a policy that does not meet their needs and, worse, may cost them tens of thousands of dollars in unnecessary fees and commissions.
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No Rendering of Advice: The financial content in this document is provided for your personal education. It is not intended for trading purposes, and cannot substitute for professional financial advice. Always seek the advice of a competent financial advisor with any questions you may have regarding a financial matter. Information in this document is not appropriate for the purposes of making a decision to carry out a transaction or trade nor does it provide any form of advice (investment, tax, or legal) amounting to investment advice, or make any recommendations regarding particular financial instruments, investments, or products.
The sole purpose of life insurance is for the death benefit protection. Any other benefit is ancillary.