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I really appreciate your comments! So what are the downsides of a whole life policy? It can't all be pros and no cons, right?

• bcheung 11y ago
  The downsides are: 1) It can tie up cash flow. If you don't make the minimum payments your policy can "eat itself" until it lapses, at which point you lose that money. That being said, there is a large degree of flexibility when designing policies. Set the minimum low and contribute more. Fall back to the minimum when times get hard. If you are further into the policy it can self-fund (basically the dividend payments can cover the premiums and then some). At that point, you don't need to continue any money whatsoever to continue the policy. Most people still contribute money though since it is effectively free interest. 2) It has high load in the beginning. It typically requires 7 years just to break even. The first 3 years you typically will be losing money. It's only designed for long term. 3) You have to be able to qualify for insurance. If you can't you can insure someone you have an interest in parent, child, spouse, sibling, nephew, etc. You're basically trading a little bit of flexibility with your cash flow in the beginning. If that money is going to be going towards investments anyway though, it really is a good strategy. Also, you can always take out a loan against in the policy to invest in something else. If you have a decent investment you're actually getting increased leverage. See this video for how this strategy can be used with real estate investing to get much higher returns: https://www.youtube.com/watch?v=cgK_dOIesZo https://www.youtube.com/watch?v=cgK_dOIesZo