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5 Myths About Whole Life Insurance Debunked

5 Myths About Whole Life Insurance Debunked

The older we get, the more we want to make sure that we’re financially set for later in life. I have car insurance and renter’s insurance, but I’ve recently delved more into insurance options and learned all about whole life insurance, which I didn’t even plan to look at! Whole life insurance is a permanent life insurance policy that remains in play for the entire duration of the insured’s lifetime. Once the insured has passed, the policy is guarantees that the insurer will pay death benefits to the policy’s beneficiaries.[1] Turns out, there are so many myths and misinformation out there and they are so well-known that I was buying into them without even realizing it, and I was not getting the whole story.

I did some digging and found some of the most common myths people perpetuate when talking about whole life insurance. Prepare to be debunked!

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Myth 1: It’s really only death insurance.

While whole life insurance does pay out to cover burial costs, which can be very expensive, it can also replace the income of the deceased person, meaning that the money paid out in the estate can actually cover missed wages and potential earnings. This can make the grieving process a tiny bit easier because the mourners aren’t worrying about how to pay the mortgage. It can also ensure that a working mother who died unexpectedly left money to cover her kids’ care.

Myth 2: Whole life insurance isn’t an asset.

It’s not just an insurance policy that you can never touch, it is an asset, similar to a place to store liquid cash. Once your policy gets some cash value built up, its annual rate of return is higher than most savings accounts and money market accounts! You can both withdraw money from the policy like a checking account withdrawal, and you can also borrow against it and leave the liquid cash in place.

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Myth 3: You can’t borrow against whole life insurance.

You can borrow against it at a significantly lower rate than bank loans and you get a higher return. You also retain your cash value in the policy, because you are not removing liquid cash from the account, but borrowing against it. You can use that money for any reason and are not penalized like you be if you removed money from a 401(k) before being 59 and a half.

Myth 4: You don’t need it if you’re single or have no kids.

Actually, the sooner you start building up your cash value, the better. You may not have beneficiaries now, but you might in the future, and if you started putting $100 per month in your whole life insurance policy 10 years before you had kids, you will already have nearly $12,000 in cash value built up. That money isn’t just for when you die, but can enable you buy a home sooner, borrowing at a lower rate than banks, or allow you to take time off to be with the kid you just had, or other opportunities for you to enjoy your life.

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Myth 5: It’s unnecessary and too expensive!

According to recently published Busting the Life Insurance Lies, “One dollar paid into your whole life policy can actually perform seven jobs at once: pay the premium, build up cash value, create a waiver of premium rider, install the initial death benefit, provide the ability to leverage cash value through loans, increase the death benefit, and enable Paid-Up Additions.”

This money is cash value dollars, which allows you to access and use the money as needed with no penalties for early removal, like a 401(k), you get a much lower interest rate and can borrow against it, and you get a higher interest rate on cash than in savings or money market accounts, and it also continues to gain value to pay out your potential earnings and burial costs after death.

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There are a lot of myths to be busted and lies floating around about insurance. Keep doing research, make sure to speak to expert advisors, and ask questions. Whole life insurance is specifically made to help you throughout your whole life!

Reference

[1] https://www.metlife.com/individual/insurance/life-insurance/whole-life-insurance.html

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Last Updated on January 21, 2020

The Best Way to Create a Vision for the Life You Want

The Best Way to Create a Vision for the Life You Want

Creating a vision for your life might seem like a frivolous, fantastical waste of time, but it’s not: creating a compelling vision of the life you want is actually one of the most effective strategies for achieving the life of your dreams. Perhaps the best way to look at the concept of a life vision is as a compass to help guide you to take the best actions and make the right choices that help propel you toward your best life.

your vision of where or who you want to be is the greatest asset you have

    Why You Need a Vision

    Experts and life success stories support the idea that with a vision in mind, you are more likely to succeed far beyond what you could otherwise achieve without a clear vision. Think of crafting your life vision as mapping a path to your personal and professional dreams. Life satisfaction and personal happiness are within reach. The harsh reality is that if you don’t develop your own vision, you’ll allow other people and circumstances to direct the course of your life.

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    How to Create Your Life Vision

    Don’t expect a clear and well-defined vision overnight—envisioning your life and determining the course you will follow requires time, and reflection. You need to cultivate vision and perspective, and you also need to apply logic and planning for the practical application of your vision. Your best vision blossoms from your dreams, hopes, and aspirations. It will resonate with your values and ideals, and will generate energy and enthusiasm to help strengthen your commitment to explore the possibilities of your life.

    What Do You Want?

    The question sounds deceptively simple, but it’s often the most difficult to answer. Allowing yourself to explore your deepest desires can be very frightening. You may also not think you have the time to consider something as fanciful as what you want out of life, but it’s important to remind yourself that a life of fulfillment does not usually happen by chance, but by design.

    It’s helpful to ask some thought-provoking questions to help you discover the possibilities of what you want out of life. Consider every aspect of your life, personal and professional, tangible and intangible. Contemplate all the important areas, family and friends, career and success, health and quality of life, spiritual connection and personal growth, and don’t forget about fun and enjoyment.

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    Some tips to guide you:

    • Remember to ask why you want certain things
    • Think about what you want, not on what you don’t want.
    • Give yourself permission to dream.
    • Be creative. Consider ideas that you never thought possible.
    • Focus on your wishes, not what others expect of you.

    Some questions to start your exploration:

    • What really matters to you in life? Not what should matter, what does matter.
    • What would you like to have more of in your life?
    • Set aside money for a moment; what do you want in your career?
    • What are your secret passions and dreams?
    • What would bring more joy and happiness into your life?
    • What do you want your relationships to be like?
    • What qualities would you like to develop?
    • What are your values? What issues do you care about?
    • What are your talents? What’s special about you?
    • What would you most like to accomplish?
    • What would legacy would you like to leave behind?

    It may be helpful to write your thoughts down in a journal or creative vision board if you’re the creative type. Add your own questions, and ask others what they want out of life. Relax and make this exercise fun. You may want to set your answers aside for a while and come back to them later to see if any have changed or if you have anything to add.

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    What Would Your Best Life Look Like?

    Describe your ideal life in detail. Allow yourself to dream and imagine, and create a vivid picture. If you can’t visualize a picture, focus on how your best life would feel. If you find it difficult to envision your life 20 or 30 years from now, start with five years—even a few years into the future will give you a place to start. What you see may surprise you. Set aside preconceived notions. This is your chance to dream and fantasize.

    A few prompts to get you started:

    • What will you have accomplished already?
    • How will you feel about yourself?
    • What kind of people are in your life? How do you feel about them?
    • What does your ideal day look like?
    • Where are you? Where do you live? Think specifics, what city, state, or country, type of community, house or an apartment, style and atmosphere.
    • What would you be doing?
    • Are you with another person, a group of people, or are you by yourself?
    • How are you dressed?
    • What’s your state of mind? Happy or sad? Contented or frustrated?
    • What does your physical body look like? How do you feel about that?
    • Does your best life make you smile and make your heart sing? If it doesn’t, dig deeper, dream bigger.

    It’s important to focus on the result, or at least a way-point in your life. Don’t think about the process for getting there yet—that’s the next stepGive yourself permission to revisit this vision every day, even if only for a few minutes. Keep your vision alive and in the front of your mind.

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    Plan Backwards

    It may sound counter-intuitive to plan backwards rather than forwards, but when you’re planning your life from the end result, it’s often more useful to consider the last step and work your way back to the first. This is actually a valuable and practical strategy for making your vision a reality.

    • What’s the last thing that would’ve had to happen to achieve your best life?
    • What’s the most important choice you would’ve had to make?
    • What would you have needed to learn along the way?
    • What important actions would you have had to take?
    • What beliefs would you have needed to change?
    • What habits or behaviors would you have had to cultivate?
    • What type of support would you have had to enlist?
    • How long will it have taken you to realize your best life?
    • What steps or milestones would you have needed to reach along the way?

    Now it’s time to think about your first step, and the next step after that. Ponder the gap between where you are now and where you want to be in the future. It may seem impossible, but it’s quite achievable if you take it step-by-step.

    It’s important to revisit this vision from time to time. Don’t be surprised if your answers to the questions, your technicolor vision, and the resulting plans change. That can actually be a very good thing; as you change in unforeseeable ways, the best life you envision will change as well. For now, it’s important to use the process, create your vision, and take the first step towards making that vision a reality.

    Featured photo credit: Matt Noble via unsplash.com

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