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10 Mistakes When Buying Life Insurance: Infinite Banking - YouTube
Channel: The Money Advantage
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- Let's talk about the top
10 mistakes that people make
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when they're buying life insurance.
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Now this is not intended to scare you
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and put you in a position of fear
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and being worried about
making the wrong decision.
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What we wanna do is help
highlight these mistakes
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that people make so that you
can use them as a springboard
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to help you make the best life insurance
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purchase decision possible.
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Now the number one thing
that people get wrong
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is that they don't buy
their human life value,
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in terms of insurance.
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What do I mean by that?
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Well, there is an amount that
the life insurance company
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will issue you as the
maximum life insurance
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that you qualify for.
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And that is the amount that
you want to have in place.
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The reason is that if you're
just doing an analysis
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of what you think you need,
based on maybe your mortgage,
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how much loans that you have
that are still outstanding,
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how much it's gonna cost to
send the kids to college,
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how much you think your spouse might need
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to carry on their
lifestyle in your absence,
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those numbers normally
end up falling short.
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And they tend to lean towards
having the minimum required
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to keep your life moving forward,
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or your families life, in your absence.
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You wanna make sure that your
death benefit is high enough
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that if you are not able to live out
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your full length of days in your lifespan,
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and your time is cut short,
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that you still are able to
fill up those wealth tanks
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with everything that you would have put in
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had you continued living
and working and investing,
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so that your family can
continue on that life
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that you're wanting to create for them.
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Now the second mistake that people make
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is not getting the right policy type.
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Now there's multiple types of insurance.
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And we've talked before about
term, universal, whole life.
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What happens here is a lot
of times we swing towards
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what we think is maybe best in the moment
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for various reasons.
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But term insurance is
something that is in force
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for a length of time.
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This is not going to
be your whole lifespan.
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That is something that you
might need to put in place
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if you're trying to get
your full human life value.
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But you're gonna wanna make sure
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that that's not where you stop.
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The reason is that you want a product
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that's gonna be with you
for your full lifespan.
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Now here's a note about
universal and variable
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types of insurance policies,
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and why we do not recommend
them and why we don't use them
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and why I would never have
one on myself or my family.
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With those types of policies you can often
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run into problems where
the illustration shows
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you putting in a certain
dollar amount of premium
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in order to maintain that
policy and keep it in force.
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But the cost of insurance
over time can creep up
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to the point where you actually
need to put more dollars in
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than what was shown in
the initial illustration
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just to keep the policy in force.
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That unfortunately is a really
precarious position to be in,
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especially when you're
facing your 70's and 80's
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and you're looking at the
time span of your life
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where you really need that policy
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to be able to pay out for you.
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So we wanna make sure that
you have whole life insurance.
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Now whole life insurance will be in force
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for your entire life, and
it will build cash value.
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Which is a valuable
component of you being able
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to control your capital
and have access to it
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and really be able to have
a storage tank of money
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that is usable, safe, liquid and growing.
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The third mistake that people make
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when buying life insurance
is they try to save money.
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And I know this sounds like something
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that would be noble to achieve,
to spend the least possible,
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but in this pursuit,
often people end up making
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that completely wrong decision
for the wrong reasons.
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Now if you're just trying to
get the cheapest product today,
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you're gonna buy something different
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than if you're looking at the
best cost over your lifetime.
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Let me tell you something
really interesting.
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If you are young and healthy today,
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you could be in a position
where term life insurance
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could be very low cost,
and you could save money
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by having term insurance for
the shortest span of time,
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say a 10 year policy.
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But what happens when that
10 year policy expires?
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The policy then needs to be renewed,
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and you'll have a higher rate
to pay to keep that in force.
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So if you're looking for
the cheapest possible,
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you're probably gonna cut
corners on human life value
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and not get as much insurance as you need.
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You're probably also going to
get a lower premium product
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where you have less
dollars going towards it.
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But A, it's not building cash value.
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B, it's probably not gonna be in force
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your whole entire life for you.
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And C, you're gonna be in a position
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where you might actually
end up spending more
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over the course of your whole life,
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because term insurance becomes
very expensive to renew.
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If you look at a typical
illustration for a term product,
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and you look at the renewal
rate, and what would be due
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if you kept that same policy
in force after the term is out,
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you will typically find that about age 77
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you will have paid more in premium dollars
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than you would receive in
death benefit for that policy.
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So if you're looking to save money,
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term is not the way to
go if you're looking at
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a big picture perspective
over you're entire life.
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Make sure that saving money today
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is not your primary objective.
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The fourth mistake that people make
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when they buy life insurance
is relying on group coverage.
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Now this might be coverage
that's available to you
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through an employer, and
it's probably very low cost
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per the amount of death benefit you get.
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But a lot of times people
say I have $100,000 policy
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in force at my job, therefor I'm good
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and I don't need life insurance.
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There's several problems with that.
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One, it's typically not portable.
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Meaning that when you leave that job,
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whether voluntarily or involuntarily,
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that coverage does not
transfer over with you.
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Meaning you don't carry it along with you.
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So whenever you leave that employment,
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you no longer have life insurance.
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Make sure that you have your
own life insurance policy,
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that you are the owner,
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that you can carry that policy
with you wherever you go,
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and it's not dependent on an
employer keeping that in force.
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The fifth problem that
people typically run into
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in the mistake that they make
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when they're buying life insurance,
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is that they don't have
the right product design.
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Now this is very specific to
you and what your purposes are
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that you want to accomplish.
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But for instance, if you
are looking at a policy
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that has the maximum early cash value
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and a maximum long term growth,
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that you wanna use this
for privatized banking,
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you wanna be able to invest
your assets and your capital
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by borrowing against the
policy and putting that money
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into other investments that
are gonna cash flow for you.
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Or maybe you also wanna make sure
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that you have some income stream,
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something to rely on in
your later years of life.
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You want to make sure
that you have a policy
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that's designed correctly.
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And most agents unfortunately
are not familiar
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with designing policies
that are meant to be used.
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They're typically looking at
policies that just accumulate,
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that build up a cash value
and a death benefit over time.
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And yes they do stay in force for you,
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however if you wanna use your cash value
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you really need to make sure that you have
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specific elements in place in that policy
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so that you can access,
usually with the right design,
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about 50 to 60% of your premium dollars
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in the very first year, right
as soon as that check clears,
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that you can then borrow against
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and go put to work in
an outside investment.
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The sixth mistake that people make
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is not being with the
right insurance carrier.
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First of all, it needs to
be with a mutual company.
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They need to have high financial ratings.
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That means a Standard and Poor's,
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or Fitch's or A.m. Best
rating of A minus or better.
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They need to have a Comdex
score of at least 80 or better.
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That's a scale of one to 100,
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rating the financial
strength of that company.
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You wanna make sure
that they've been around
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for 100 plus years and
they've paid dividends
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throughout that whole time.
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Meaning that they've
been stable enough to pay
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through the Great Depression
and the Great Recession,
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and they're probably not going
to be failing anytime soon.
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The seventh mistake that
too many people make
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when they buy a life insurance product,
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is that they don't have
the right riders in place.
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Now what do I mean by riders?
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There's specific things that
you can put into the policy
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that will make it perform better for you.
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One of those riders are making sure
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you have paid up additions.
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And this is a key part
of your policy design.
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You also wanna make sure
you have waiver of premium.
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Now this allows the
policy to stay in force
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if you become disabled, lose your income
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and are unable to maintain
the policy premium
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as a result of that disability.
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The policy instead will
continue to progress forward
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and will self fund, allowing you to keep
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that critical life
insurance policy in force
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at the time that you need it the most.
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Now you can also have an
accelerated death benefit rider
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which acts kind of like
a long term care rider,
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and you are able to use that
death benefit before you die
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in certain cases of critical illness.
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You also wanna make sure that
for any term life insurance
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that you do have in force,
which more than likely
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you will need in order to
make sure that you have
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up to your human life value,
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you want that to be convertible.
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That means that at your choosing,
you have convert that over
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to a whole life insurance product.
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And that will then give
you more life insurance,
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more death benefit and more
longevity on your policy.
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The eighth mistake that
I see people making
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when they purchase life
insurance is over analyzing.
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Now this probably also
goes without saying,
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but sometimes we can suffer
from paralysis analysis
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or analysis paralysis.
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And really what happens is we second guess
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our decisions so much or we over analyze.
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We look at illustrations and
we're comparing line by line
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with a microscope and a fine tooth comb,
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and looking to see which
policy's gonna perform better,
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which one is going to
have the better dividends,
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which one's a stronger company,
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and we can really get
into that microscopic view
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where we're not really
being able to move forward.
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What we want to do is be able
to know the most important
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things about the life insurance company
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and the right financial
professional to be working with
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that knows your objectives
and the strategy
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that you're looking to accomplish,
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and is able to carry that forward.
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Now this goes right into the ninth mistake
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that I see people making,
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and it's not buying life
insurance soon enough.
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Almost everyone who buys
life insurance always said
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I wish I would've known about this earlier
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and started it earlier.
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One thing is that you're
able to then build cash value
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and accumulate that
cash value more quickly
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so you're able to use it.
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Another thing is that
you get lower premiums
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when you start the policy sooner.
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You're also gonna be less unhealthy
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and more likely to be healthy,
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so you're rating and your
premium are gonna be lower.
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Now this leads right
into the tenth mistake
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that I see way too many people make.
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And that's because they delay,
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they end up getting into
a position where now
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they do not have the ability
to get life insurance.
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They waited too long and now they're past
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that point of decision.
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And now they have no ability
to get the life insurance
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on their life, but there
is a redeeming factor.
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If you're looking to
use privatized banking
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and high cash value life insurance,
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you can put a policy
on a spouse or a child
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or a grandchild or even a parent,
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because you have an insurable
interest in that person.
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So don't let that potential
un-insurability prevent you
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from putting life insurance in place
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that you know you can use,
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and that is gonna tremendously
benefit your life.
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Hey, I hope you liked this video.
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If you did, click the link
in the description box below
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for more information and don't
forget to like this video.
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in the comment section below
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