The Cost Of Whole Life Insurance- If You Get More Money Out Than You Put In, There Is Zero Cost

The Cost of Whole Life Insurance: No Cost If You Get More Than You Put In

If you’re ready to get the best life insurance for the best price, then I’ve got a secret here about the cost of whole life insurance you need to learn about FAST.

A quick secret for success in getting the best life insurance policy: a properly structured whole life insurance policy creates cash value that is an ideal place to store cash. Note: We aren’t talking about your typical, off-the-shelf whole life product. Rather this is whole life custom-designed for Privatized Banking, with maximum early cash value and long-term growth.

The point of this secret is: whole life insurance is tough and enduring insurance, PLUS a knockout savings tool on steroids.

It starts out the gate with high cash value. But you won’t have access to as much as you’ve put in right away. Once you overcome the minor lack of liquidity in the very first years, you reach a crossover point where you have more cash available than you’ve put in. 

Starting at that point, there’s no more cost to you, and every year afterward for the rest of your life is growth.  Yes, there are internal costs to the policy, and we’ll discuss those in a minute, but what matters is how it impacts you.

As a wealth creator, here’s what this really means: as soon as you switch your lens from a short-term to a long-term – dare I say multigenerational life-time focus – whole life insurance becomes the most robust and extravagant savings tool imaginable.

Where Whole Life Insurance Fits in the Cash Flow System

Privatized Banking

Life insurance is great, but it’s not the one and only thing for financial success. Rather, it’s one step in your journey to time and money freedom.

That’s why we’ve developed the 3-step Business Owner’s Cash Flow System as your roadmap to go from just surviving, to a life of significance, purpose, and financial freedom. 

The first stage is the foundation.  You first keep more of the money you make by fixing money leaks, becoming more efficient and profitable. 

Then, you protect your money with insurance and legal protection and Privatized Banking

Finally, you put your money to work, increasing your income with cash-flowing assets.

Why Whole Life Is a Potent Savings Tool

Compared with other savings tools, specially designed whole life insurance gets better growth with a 3 – 5% internal rate of return over a 20+ year timeline. 

Plus, you don’t pay taxes on the growth, as long as you use the policy correctly*, and your heirs won’t pay income tax on the proceeds. 

And, on top of that, you can use your money at any time along the way. 

Even better yet, when you use your money to invest in cash-flowing assets, you also get an external return while you’re building time and money freedom, and this will accelerate your path and amplify your returns. 

Meanwhile, you have a death benefit that’s many multiples over what you put in, so you have a built-in legacy, plus increased income in the future.

Everyone needs to know this because:

1. High Cash Value Whole Life Insurance Isn’t a Cost or an Expense – It’s a Savings Plan. 

It’s a new opportunity to move your dollars from one storage tank (the bank) to another better storage tank (a whole life insurance policy).

2. Whole Life Insurance Values Are Net of Taxes, Fees, and Costs. 

The Cost Of Whole Life Insurance- If You Get More Money Out Than You Put In, There Is Zero Cost

Whole life illustrations don’t disclose the internal costs of the policy in the figures. For some, that creates heartburn. 

However, what’s more important than the actual cost is how it impacts you personally. 

That means that your cash value and death benefit figures have already accounted for the cost of insurance and are showing the true benefit to you. 

Yes, you’re still paying for the internal costs of the policy, which include the costs to run the company, underwriters, actuaries, the nurse, lights, building, etc., agent commissions, and the cost of insurance.

Most of the costs are front-loaded so that as soon as you overcome the lack of liquidity in the first years, they create less friction on your growth.  The cost of insurance, which increases every year, is averaged and spread evenly over the entire timeframe in a whole life policy, meaning it has a level impact on you. 

These costs show up as a lack of liquidity when you put premiums in, but don’t have all of your premiums yet accessible in cash value.  The worst is the first year, with about 70 – 75% of your premiums available in cash value. 

3. Once You Have More Cash Value Than the Total Premiums You’ve Paid, There’s No More Cost to You.

As the cash value accelerates, the gap between paid-in premiums and available cash value shrinks.  It then closes altogether about year 5 – 9 at your break-even point. 

That’s the first year that you have more cash value than what you’ve paid in premiums.  Every year afterward, you’ll always have more cash value than what you’ve paid in, so the felt impact to you is that the insurance no longer has a cost.

4. Whole Life Is the Least Expensive Form of Life Insurance.

You can label something expensive when you pay more than you want to pay for something. 

For me, a Gucci bag is expensive, because I’d rather use my dollars for creating a memory with my amazing family or investing in cash-flowing assets.  A name brand bag simply isn’t useful or valuable enough to me to pay what’s on the price tag. 

Dollars In vs. Dollars Out Doesn’t Require a Value Judgment

The Cost Of Whole Life Insurance- If You Get More Money Out Than You Put In, There Is Zero Cost

However, if I put dollars in and get more dollars out, expensive is a word that doesn’t suit the situation, because it doesn’t even require an assessment of value.

When you look at the dollars of premium compared to the dollars of death benefit, you’re comparing dollars you pay now vs. dollars you get in the future. 

And whole life guarantees you’ll have a death benefit payout that is much higher than the premiums you’ve paid in. 

However, this isn’t true with term life insurance, which rarely pays out because most people outlive their term life policies. 

And because term life insurance is priced for the block of years you have the policy, younger starting ages, and shorter-term lengths it appears the cost is relatively little.  However, if you continued to renew a term life policy throughout your lifetime, you could easily pay more in premiums than you’d get out in death benefit. 

Once your term runs out, the policy becomes annually renewable, meaning the cost of insurance rises every year, and every year, you pay an increased premium to cover it. 

All forms of universal and variable life insurance are built on this annually renewable term life insurance model, with an annually increasing cost of insurance.  That’s why the cost becomes a critical, focal point because in the later years, the costs can become substantial, even to the point of surpassing the growth of the policy and collapsing the policy. 

On the other hand, whole life’s level internal cost, guaranteed growth, ownership benefit of dividends, and guaranteed payout create the stability you need to be the lowest true cost to you for the highest quality life insurance product.

Bottom Line?

For an equal amount of death benefit, you could say that whole life requires the highest premiums.  But when you buy whole life, you’re getting a lot more than insurance.  Committing to whole life insurance is committing to a savings program – the single, basic fundamental that underlies and facilitates every other component of wealth creation.  And it’s the most robust and powerful form of savings we’ve found yet!

Whole life insurance is custom fit to you.  You can put as much in as you want, but no matter how much you put in, in the long-term you’ll have more cash value to use than you put in. 

So, put your savings on steroids by saving as much as you can and putting your savings in the best tool for highest growth, access, and protection.

One more thing. Did you realize this article is just the tip of the iceberg when it comes to your questions about how whole life insurance works! This free Quick and Easy Privatized Banking Guide for Investors gives you the rest of the story… and a whole lot more. Grab it here … and you’ll also get notified when we release our soon-coming Privatized Banking video course that answers all 16 questions and concerns most people have about the risks of whole life insurance.

Success leaves clues.  Model the successful few, not the crowd, and build a life and business you love.

* If the policy is utilized correctly, you’ll never pay tax on the growth and distributions.  The policy is tax-free via loans and withdrawals as long as the policy stays in force and does not become a Modified Endowment Contract.

Rachel Marshall

Rachel Marshall is the Co-Founder and Chief Financial Educator of The Money Advantage and President of Marshall's Insurance and Financial Services. She is known for making money simple, fun, and doable. Rachel has built a team of licensed professionals (investment advisors, insurance agents, attorneys, tax strategists) to help her clients create time and money freedom with cash flow strategies, Privatized Banking, and alternative investments. Rachel is the co-host of The Money Advantage podcast, the popular business and personal finance show. She teaches how to keep more of the money you make, protect it, and turn it into cash-flowing assets.
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