Brad HartI help 7-8 figure entrepreneurs scale faster with AI, masterminds, and results-driven systems | Founder of Optimus & Repurposefully

What is Whole Life Insurance? #lifeinsurance #wholelifeinsurance #learnaboutmoney #howto

Name: What is Whole Life Insurance? #lifeinsurance #wholelifeinsurance #learnaboutmoney #howto
Uploaded: 2022-12-28T23:51:05+00:00
Duration: 1 min
Channel: Brad Hart
Description: Brad Hart explains whole life insurance, arguing that a guaranteed 5% tax-free return effectively equals a 7–8% risk-adjusted return compared with…

28 Dec 2022 · 1 min

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Brad Hart explains whole life insurance, arguing that a guaranteed 5% tax-free return effectively equals a 7–8% risk-adjusted return compared with taxable investments. He notes whole life has existed for ~175–200 years and describes mutual insurance companies making policyholders de facto shareholders who receive dividends. Hart projects that dividends could cover base premiums in about seven years and cover full premiums plus paid-up additions in about 20–22 years, allowing the policy to 'snowball' and pay for itself.

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So let's think about this. If you got a guaranteed 5% return over the course of your lifetime, but it's tax free now, you're really getting a guaranteed 7 or 8% return. So the risk adjusted return is actually sometimes better than the stock market. And you're going to have a lot of people that come to you with different policies that make a lot of sense for their particular lien on things. But here's what I want you to understand. Whole life has been around for 175 years, in some case 200 years. And these companies that have written these policies are basically making you a mutual shareholder in the company. So you're not only getting the returns in your policy, but you're getting the dividends as well. Because in a stock company, you end up only getting paid a dividend when they elect to pay a dividend. With a mutual company, you get a dividend no matter what. So if you started a policy today, in about seven years, your dividends would end up paying for your base premium. In about 20 or 22 years, your dividends would end up paying for your whole premium, plus the paid up additions. So you're gaining money on all that and it's eventually snowballing into something that pays for itself. So by 22 years from now, you could have a policy that continues to pay into itself, continues to grow, and continue.