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5 Myths About Whole Life Insurance Debunked

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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 November 22, 2021

Thanksgiving: It’s About The Simple Things

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Thanksgiving: It’s About The Simple Things

Thanksgiving, a day of pure gluttony, football, and possible uncomfortable situations with family members that you may or may not like. Oh, yeah, and the whole “know and reflect on what it is to be thankful and grateful.”

During the holiday season many people forget what this time of year is bout and are too worried about getting the “early-bird” deals on Black Friday and making sure that they have the perfect gifts for their loved ones. I am sort of a “Grinch” when it comes to the holiday season, mostly because of that mentality by many of the poeple around me.

But instead of being grinch-like this holiday season, I decided to simplify things and get back to what this time of year is actually is about; being thankful for what I have and what I can give.

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Simplify

I’m not a “minimalist” in any real sense, but in the last few months the talks of Patrick Rhone and others have got me to rethink my stance. Can you really have too much stuff?

Absolutely.

And with all that stuff comes the burden and the weight of it on your back.

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If you feel that the things around you are out of control, maybe it’s time to simplify and be thankful and grateful for what you have and use. Here are a few things that you can do to simplify:

  • You know those gadgets in the drawer that you said you were going to sell? Well, time to get the listing on eBay and sell them. Or, send them to a place like Gazelle. Even if they are old and won’t get money, you can at least recycle them.
  • Get rid of things you don’t need. Like old books, clothes, tools, etc. Have something that’s been laying around forever with no use? Donate it to a charity or church. If you aren’t using it, someone else could be.
  • Find your productivity tools and stick with them. Use tools and gadgets that serve multiple purposes so you can simplify your tool set.

Be Mindful

You don’t have to be a master Buddhist or meditator to be mindful (although, it can definitely help). Being mindful comes down to being cognizant of the present and not keeping yourself in the past or future. It’s about living in the moment and being aware of yourself and everything around you. It’s just being.

Without getting too “California” on you, it is super important to be mindful during the holiday rush. Rather than worrying about the things that you forgot at your house on the way to relatives or thinking about the next stop in your endless holiday travels, just breath and think about what you are currently doing.

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Spend the time with your family and friends and don’t crush the moment. Try not to concentrate so hard on getting the perfect photo of the “awesome moment” of the day and actually miss the awesome moment.

Being mindful over the holidays will help you be with your families, friends, and yourself allowing you to enjoy your time.

Reflect

As the year is coming to a close (yes, it really is that close!) it’s a great time to start reflecting on what you have accomplished and what you haven’t. Within the next few weeks we will have a more throrough reflection article here at Lifehack.org, but reflecting every now and then over your holiday break is a great way to see where you have been doing well in your life and where you need to improve.

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Reflection shouldn’t be used to “get down” on yourself. Reflection should be used to take an honset inventory of what you have accomplished, how you handeled situations, and what you can do better. If you journal everyday (a daily form of reflection) it may be a good time to start going over some of the things that you have written and start to put together a year’s end journal entry. I mean, how else will you write your autobiography?

But, seriously, reflecting on yourself makes you aware of your successes and faults and helps you plan and make goals for the coming year. It makes you a better person.

So, while you are stuffing your face with bird, stuffing, and mashed taters’, remember that the holidays are much more than the superficial things. Use this holiday to become a better person.

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Featured photo credit: Libby Penner via unsplash.com

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