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Achieving Financial Security with Whole Life Insurance

February 01, 202417 min read

LIFE180

LIFE180

Achieving Financial Security with Whole Life Insurance


This article is a written adaptation of the video you can find on the LIFE180 YouTube channel.

The five problems whole life insurance solves

Whole life insurance represents a powerful asset, yet it often remains clouded by misconceptions. In this article, my aim is to delve into the five distinct problems that whole life insurance can effectively address within your financial landscape.

In today's world, characterized by heightened uncertainty and unpredictability, individuals are increasingly seeking efficiency with their finances. It's crucial to recognize that whole life insurance serves as a foundational asset, offering solutions to various needs at different stages of life, provided it is utilized correctly.

In this article, I'll discuss the five problems that whole life insurance can potentially solve for you. I hope to provoke questions from you as you read along, and I'm committed to engaging with every comment you leave. Please take the time to share your thoughts in the comment section below. I'm dedicated to engaging with each comment personally because I believe in taking responsibility and serving my audience directly. Your feedback is invaluable to me.

The Problem With The Current Financial System

Now, let me be clear from the start. Whole Life Insurance may not solve five specific problems for everyone, but I believe that for the majority of individuals, it holds true. You'll be able to discern where it fits into your financial landscape and where it may not.

My objective is to simplify this concept and effectively communicate its relevance. I aim to cut through the financial confusion that many face, as I struggle with the conventional approach to personal finance in our country. There's often a prevailing notion that you must delegate your financial success to professionals like financial advisors or fiduciaries, but I believe in empowering individuals to take control of their financial future.

I firmly believe in what I call the five F's of life: faith, family, finances, fitness, and freedom. When we consider our finances, it ultimately boils down to seeking freedom. After all, isn't that the essence of retirement? We work tirelessly for decades with the goal of achieving financial independence by the age of 65.

The traditional path typically involves education, employment spanning 40 or 45 years, diligent investment, and the hope that by the end of this period, we'll have amassed enough wealth to sustain our desired lifestyle indefinitely, thus attaining financial freedom.

Unfortunately, a staggering 95% of individuals in this country reach retirement age without being able to sustain their standard of living. What's even more concerning is the pervasive health crisis we face, exacerbated by the toxicity of our environment and the contamination of our food.

Many fail to take sufficient responsibility for their health and lead intentional lives, resulting in a situation where they may not be healthy enough to continue working when they reach retirement age, even if they need to. This dual challenge of financial instability and declining health underscores the pressing need for individuals to prioritize both their financial well-being and their health throughout their lives.

So, the aim of this article, and I apologize for my passionate delivery, is to emphasize a point that might come across as a bit abrasive to some. However, I genuinely believe it to be true. I believe that each individual is intelligent enough and holds the responsibility to take radical accountability for the outcomes in their life. This conviction is what drives my passion for what we do.

One of the reasons I deeply appreciate whole life insurance is because it compels you to evolve into the person you need to be in order to achieve the life you desire. I understand this might sound like a bold assertion, but it resonates with me to the core of my being. I genuinely believe it to be true, and it's the reason behind my fervent advocacy for what I do.

Life Insurance Is More Needed Now Than Ever

Now, let's dive into the reasons why life insurance is essential. Firstly, Life Insurance serves as a vital tool for protecting your business interests, especially if you have business partners. A key person policy ensures that your partners' interests are safeguarded in the event of an unexpected loss.

Secondly, for individuals with families, marriage, or children, life insurance provides invaluable financial security. In fact, even if you're planning to have children in the future, securing life insurance early on can be advantageous as it locks in your insurability and provides peace of mind for your future family.

One aspect I consider crucial is obtaining life insurance for our children. Unlike term life insurance, which isn't typically available for children, securing a policy for them enables us to build cash value over time. By doing so, we're not only creating an asset for them but also locking in their insurability, along with various living benefits, cash accumulation, savings options, and even college planning alternatives, all within a single account. This consolidated approach packs significant power and benefits for their future.

So, when considering life insurance, it's evident that there are various options to explore. Life insurance typically falls into two main categories: term insurance or whole life insurance. Within the realm of term insurance, there are several types to consider, including cheap term, living benefit term, and convertible term policies. Each type offers distinct features and benefits, so it's important to carefully evaluate your needs and objectives before making a decision.

When evaluating these three options, it's crucial to recognize that they are not all created equal. It's essential to understand your goals, objectives, time frames, and how each option fits into your overall financial plan. This level of clarity is paramount in making informed decisions.

Whole Life Insurance Is A Great Emergency Fund

Now, onto the second issue that whole life insurance addresses for individuals: the Emergency Fund. I often pose a simple question to people: Do you believe you should have an emergency fund? Unsurprisingly, most respond affirmatively because denying the need for one suggests a reluctance to embrace adult responsibilities. The real question then arises: If you acknowledge the necessity of an emergency fund, where do you intend to keep it? For many, the default response is a savings account.

Currently, savings accounts are quite attractive as they offer high yields, with interest rates ranging from four to five percent in some cases. If you haven't already taken advantage of this opportunity and your funds are sitting in a savings account, I would strongly recommend considering this option at least temporarily. However, it's essential to view this from a long-term perspective. Historically, savings accounts have tended to underperform inflation, presenting a significant drawback.

Furthermore, it's important to note that any interest earned on savings accounts is subject to taxation. Additionally, there's no assurance that the current high interest rates will remain constant; in fact, there's a growing trend indicating that interest rates may soon decrease. Given the likelihood of an impending recession, many experts anticipate a downward trajectory in interest rates.

So when we look at this, the key question emerges: Where is the optimal place to save your money for an emergency fund? My firm conviction is that a carefully structured whole life insurance policy serves as the ideal choice. I'm aware that many individuals may challenge this perspective, questioning why they should place their emergency fund in a whole life insurance policy. However, I believe this option offers returns akin to bonds, with tax benefits similar to municipal bonds, and liquidity comparable to money market accounts.

Many may question, "Why would I choose this, Chris? If I lose my job, I don't want an account that demands payments and adds stress. !What if it lapses, leaving me with nothing?!

Well, that concern arises if you've structured it improperly. The key is to design the policy with a lower base and higher paid-up additions. While this structure may not suit every policy, it's crucial for one intended to serve as an emergency fund.

Leveraging a whole life insurance policy as an emergency fund can yield long-term internal rates of return within the policy, typically ranging between 4% and 5% based on current rates. If interest rates continue to rise, this figure may improve further. While interest rates remain stable or decrease, the return is likely to remain consistent.

Yet, in the long term, it's important to understand that whole life insurance rates of returns, internal returns after all expenses and fees, are likely to outperform inflation. In addition to providing money market-like liquidity, they offer superior tax benefits compared to savings accounts. Moreover, you'll receive additional benefits such as life insurance coverage, as discussed earlier. This approach enables each dollar to serve multiple functions simultaneously.

Ultimately, when we discuss the concept of an emergency fund, what exactly constitutes an emergency? It could range from losing your job to encountering a disaster at your home, being involved in an accident, or facing a medical emergency.

Unfortunately, it could even include the possibility of death. While it's a topic no one likes to contemplate, it's essential to acknowledge that such situations may arise, leaving behind spouses and children, or even orphaning children if both parents pass away simultaneously. In such dire circumstances, it's challenging to imagine a more significant emergency than that.

Having your money in whole life insurance as an emergency fund embodies what I term a "self-completing plan." This approach ensures that your desired outcomes will materialize when needed, regardless of whether you're present to witness them.

When considering this from the perspective of an emergency fund, saving in a whole life policy offers a viable alternative. The cash value inside the policy provides money market-like liquidity, which is highly accessible. While there may be a slight reduction in liquidity compared to a savings account, the benefits you gain in terms of life insurance coverage far outweigh this trade-off.

With life insurance protection for your children and the inclusion of a living benefits rider, you gain additional security. This rider allows you to access the death benefit if you become critically, chronically, or terminally ill, providing financial support for medical treatments while you're still alive.

As I reflect on these considerations, it becomes evident why I chose to invest in a whole life insurance policy. I once had a policy tailored specifically to cover my medical expenses, and to this day, I maintain that policy, having acquired it some time ago. Faced with a decision, I had to weigh my options: either commit to a traditional health insurance plan, which came with a hefty monthly premium of five or six hundred dollars and a high deductible, or opt for a whole life insurance policy at a more affordable rate, around a couple of hundred dollars a month. Not only did the latter provide a death benefit, but it also offered valuable living benefits.

Those living benefits I could have access to on a tax-free basis if I became diagnosed with any kind of cancer, which is the reason that I wanted the other insurance in the first place. And so when you look at that, the insurance company would just give me a check tax-free that I could use in whatever way I wanted.

I often recount the story of my father-in-law, who was diagnosed with stage four pancreatic cancer. Despite being given a 90-day death sentence, he had access to multiple six figures for alternative treatments. Remarkably, these treatments have kept him alive for over three years.

Most people are unable to access the coverage my father-in-law did because insurance typically doesn't cover the treatments he underwent. This illustrates the true power of a comprehensive emergency fund, which, in my opinion, must be able to address various types of emergencies that one may encounter in life.

So, that's the second point I wanted to emphasize, even though it's a lengthy one, it's incredibly important to me.

Whole Life Insurance Provides More Control Over Your Medical Care

The Medical Care alternative is precisely what I just covered. When discussing an emergency fund, it's crucial to include provisions for medical care, which are encompassed in the living benefits of a whole life insurance policy. Moreover, it's essential to recognize that as we age, the likelihood of needing some form of care before passing away increases significantly, especially if we live into our 70s and 80s.

Regrettably, many individuals neglect to consider long-term care insurance when they are younger. Consequently, by the time they give it serious thought and it becomes a priority, the costs have escalated significantly. For most people, it becomes prohibitively expensive, presenting a significant barrier to obtaining coverage.

From that perspective, placing our money into a whole life policy offers all the benefits I've discussed thus far. Additionally, when you reach retirement age, the policy will be there for you. If you haven't faced any serious illnesses or medical issues by that point, and you're still in good health in your 70s and 80s, you'll have access to the death benefit.

This can serve as a valuable alternative for long-term care, which is an incredible benefit, particularly when you consider the exorbitant costs associated with long-term care insurance if you delay obtaining it.

To me, this aspect is one of the unsung heroes of these products, and it's one of the reasons why I always emphasize the importance of combining and stacking them throughout different phases of life. From the beginning, you obtain life insurance to protect your family, while simultaneously building an emergency fund to safeguard against unforeseen circumstances.

Then, as you approach retirement, having access to these living benefits becomes extremely powerful, providing additional reassurance and support during your golden years. It's comforting to know that you have a financial safety net in place, offering protection and flexibility as you navigate the challenges and opportunities that come with aging.

Whole Life Insurance Is A Great Bond Alternative For Retirement Income

Now, also in Retirement, what happens is you get this volatility buffer, bond alternative. Look around. We had, in the last several years, a couple of years where the market went really negative. And we've also had a couple of years where the bond market got crushed, right? Because of increasing interest rates, the bond portfolios have gotten absolutely annihilated.

So for the first time in our world, the 60-40 portfolio for retirement income planning has gotten decimated because of the fact we have never had two consecutive years where stock market performance has been flat or negative and bond market performance has been negative.

It's happened for the first time in history and so what's happening now is that people are discovering that whole life insurance in retirement, the cash value, is a great bond alternative because it's going to get you those bond-like returns and you're going to have the money market like liquidity.

And when you tap in for all the other things that it's going to do for you, once again, I think you're probably starting to see, this is a way that we're getting each dollar to perform multiple functions. It's really powerful stuff. And so that's really amazing.

Whole Life Insurance Should Be Your Opportunity Fund

And then, another crucial aspect to consider, albeit mentioned last, is its function as an Opportunity Fund.

I'm particularly fond of the concept of an opportunity fund. In fact, if you've ever come across my book, "Cashflow Hacking," you'll notice that it revolves around the strategy of utilizing and saving within your whole life policy, starting with your emergency fund and continuing to save beyond that initial stage. As your emergency fund grows, it naturally transitions into an opportunity fund.

And this opportunity fund should be allocated toward acquiring cash-flowing assets. That's precisely why I authored my book, "Cashflow Hacking." If you haven't had the chance to read it yet, I highly recommend it. Simply follow the link below to claim your free copy of the book. You'll only need to cover the shipping and handling fee of $8.95, and I'll take care of the rest, ensuring it's delivered to you promptly.

Cashflow Hacking - Free Copy

If you prefer not to provide your information for the free offer, I encourage you to visit amazon.com directly to purchase the book. It's available for $20 there. Whether you choose to obtain it through the free offer or purchase it from Amazon, the key concept remains the same: utilizing whole life insurance to build your opportunity fund. By then investing this fund into cash-flow producing assets, you can begin to build your wealth effectively. It's an incredibly powerful strategy.

In conclusion, these five strategies illustrate the versatile utility of whole life insurance in addressing a spectrum of life's challenges. Whether you're safeguarding your family's future or preparing for unforeseen emergencies, the importance of financial security cannot be overstated. Even if you're currently without a family, establishing an emergency fund remains crucial. Regardless of your situation, the universal need for stability underscores the necessity of strategic financial planning.

I firmly believe that each of us bears a responsibility to take control of the outcomes in our lives. It's a principle that guides my financial decisions, such as abstaining from investing in the stock market, I currently have no funds allocated to stocks. While this approach may not suit everyone, I advocate for aligning your investments with your values and beliefs.

This philosophy guides my business endeavors, I prioritize investing in my own intellectual property and real estate ventures. In fact, it's this principle that led to the launch of our private equity fund, the Cashflow Hacking Fund.

If you're an accredited investor seeking investment opportunities that align with your values and beliefs, I encourage you to explore our fund. Simply visit cashflowhacking.com to learn more. Please note that the Cashflow Hacking Fund is exclusively available to accredited investors, and it's crucial to understand this distinction.

By the way, becoming an accredited investor isn't as challenging as many perceive, although it's more stringent than some might expect. Essentially, to qualify, you must possess a net worth of at least one million dollars, excluding the equity in your primary residence. Alternatively, you need to have an annual income of at least $200,000 for two consecutive years, with the expectation of maintaining this income level in the subsequent year.

To gain a better understanding of these criteria, feel free to explore further. Currently, we're actively engaged in an exciting project located in the Dominican Republic. I believe it's something that would pique your interest. Take a moment to check it out, I'd be honored to provide you with more information.

Once again, what resonates with me deeply about this approach is its foundation in personal responsibility. I firmly believe that each of us bears the responsibility to shape the outcomes of our financial lives, to ensure that our money reflects our values and beliefs. It's about becoming the individuals we need to be in order to lead the lives we desire. Unfortunately, I think many people struggle with this concept, and I am passionate about helping them navigate this journey.

I may have come across a bit fiery at the start, and for that, I apologize if it was too intense for some. Nevertheless, I'm genuinely passionate about what we're discussing here. I truly love what we do, and if you have any questions or comments, please feel free to share them in the comment section below. I'm eager to engage with you and provide further insight.

If you're interested in learning how to implement these strategies for yourself, I invite you to click the link below to schedule a clarity call. During this call, you'll have the opportunity to connect with a member of our team, or perhaps even myself. While I do speak with a few individuals randomly each week, availability is limited and appointments are scheduled on a first-come, first-served basis. So don't hesitate to take advantage of this opportunity by setting up a clarity call today.

Clarity Call

Anyway, I hope you found value in this discussion. If you did, I would greatly appreciate it if you could like and share this content with others. I believe the message we've discussed here is incredibly important, and sharing it in Facebook groups or through other channels can help reach more people who may benefit from it. Thank you for your support in spreading this valuable information.

Wishing you a day filled with blessings and inspiration.

NN

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