Should you buy forward and invest the difference?

One of the most pervasive pieces of financial misinformation spewed out by financial experts over the years is the venerable and repeated mantra:

“Buy on time and invest the difference”

You’ve probably heard it on TV, from some rich blonde financial entertainer who has no idea how real people live.

Maybe your mom or dad passed it on to you because they heard it somewhere.

Your insurance agent, plumber, hairdresser, or fishing buddy might be true believers in the logical fallacy of buying term life insurance and investing the difference.

When you dig a little deeper, you inevitably run into some major issues that a “buy forward and invest the difference” strategy doesn’t address.

For example:

• Most term policies advocated by financial “experts” do not increase the level of the death benefit during the life of the policy. This means that there is no remedy for inflation. (and I think inflation is bound to be much higher in the future!).

best selling author (bank in yourself) Pamela Yellen did the math and worked it out: a $250,000 20-year policy, adjusted for 4% inflation, it will have lost 56% of its value!

Even policies that include an “increasing benefits rider” may not grow at a rate that beats the demon of inflation.

• The possibility of future ill health. Some term policies are written so that if your health deteriorates during the policy term, your renewal rates increase. If you don’t renew and try to find coverage elsewhere, you may find that you can’t insure yourself, at ANY price.

• You can invest the difference fairly easily, but you can’t “time the market” or accurately predict how much money will be in your account when it’s time to withdraw. In reality, most people never get that far. The “reverse the difference” part just doesn’t happen.

The types of accounts that are best for most people are those that allow them to always know exactly how much they have at any given time. The vast majority of people simply don’t have the time or training to play the market to their advantage. Even if they have the right skill set, the stock market can be a very harsh and unforgiving lover.

With the right kind of cash management account, built around a dividend-paying whole life insurance policy, there’s no need to worry about timing the ups and downs of the stock market. When you need your money, it’s there, available for you to use with no strings attached and no penalties.

Proponents of “Buy Term and Invest the Difference” generally know nothing about these specially designed whole life policies, since there are only a handful of insurance companies that write them.

Whole life policies that pay special dividends contain special provisions that are different from traditional whole life. Any adviser assisting clients with these policies must be fully trained.

Equally important, advisors must also be willing to forgo the usual high lifetime fees to make the plan work for their clients.

Advisors who build Bank on Yourself or similar plans for their clients to help finance large purchases or prepare for retirement are passionate about the concept, not the fees. If it was just a case of them pushing their whole lives to make more money, there are other types of whole lives that would be much more lucrative.

Policies used in self-funding go far beyond regular whole life policies in both complexity and purpose.

When evaluating whole life-based plans, financial gurus fail to take into account the enormous amount of money customers can save on interest and fees.

By financing your big purchases yourself (like your car), you avoid having to pay thousands of dollars in interest and fees.

To be clear, I think everyone who can afford it should have as much life insurance as possible.

Term IS a great way to get more coverage for less money, and if you can get it, you should have it. All life insurance, in essence, is term insurance.

However, the main reason to get one of the specially designed whole life policies has little to do with the death benefit.

Instead, the idea behind these policies is to provide you with a savings vehicle that provides growth, stability, and security in stark contrast to the ups and downs of the stock market.

Plus, you’ll be able to pay YOURSELF the interest you used to pay others when you borrowed from banks or loan companies, allowing your account to grow at a much faster rate than a normal lifetime…

The permanent insurance you also get is just the icing on the cake…

If you are looking for a stable, secure and guaranteed way to manage your cash, without risking your wealth on Wall Street, then you should look into this system.