6 Deceitful Ways Whole Life Insurance is Sold

Do you get an uncomfortable feeling in your stomach when you are sitting in front of a whole life insurance policy?

Do you feel like not all the truths were laid out before you?  Can you not pinpoint the exact nature of what feels wrong?  Maybe this article can help you.

Here are 6 lies often told when whole life insurance is sold:

1. The policy comes with a savings account.
2. The policy has guarantees on your investment.
3. The policy provides a tax free retirement.
4. The policy provides a fixed cost of insurance.
5. The policy allows you to avoid probate and estate taxes.
6. The policy pays out the death benefit and the cash value when you die.

Why are these considered lies?  According to dictionary.reference.com, a lie is "a false statement made with deliberate intent to deceive".  So how are these statements deceitful?

Would the money in a savings account be kept by the company if you were to pass away?  Would the money in an investment account be kept by the company if you were to pass away?  The tricky part here is that people focus on the word guarantee rather than the word investment.  Should a loan really be considered a tax free retirement?  The tricky part here is that the death benefit of a life insurance policy does pass tax free to the beneficiary.  Although the premium may look fixed, the cost of insurance is going up and may even vary depending on the performance of the separate account.  If you would not have to pay probate or estate taxes without a policy, should you really be told that the policy allows this?  Once a policy is issued, you can read the contract to check various cases and what happens with the death benefit and cash value.

This post was reposted from http://finlit.biz/life-insurance/6-deceitful-ways-whole-life-insurance-is-sold/, originally written on February 10th, 2013.