Whole Life Insurance

Key Elements to Maximizing a Whole Life Insurance Policy

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Whole Life Insurance is a product that has been used by banks, corporations, and the wealthy for centuries.  Many have heard great things about it, but when presented with a Whole Life policy, the numbers look awful! Most Whole Life Insurance policies have $0 cash value in the first two years of a policy. Many Whole Life Policies described as “High Cash Value Policies” carry ~50-60% of your contribution in the first year and take 7 years just to break-even. While this is much better than the basic Whole Life policy – with $0 in cash value initially – it is unattractive to many and  far  from what banks, corporations, and wealthy individuals offer.   

Then we have a true high Cash Value policy. If you have a policy set up in this manner, you will see the following:

  • Immediate access to Cash Value 
  • 80-90% Cash Value of your contribution in the first  year 
  • Positive Cash Value between 3 to 5 years in most scenarios
  • Strong long-term Cash Value

We’ll refer to this as a 10/90 split.  This entails allocating 10% of your contribution to the Insurance Premium and 90% to your PUA rider. The 10% premium is the minimum many insurance companies will allow one to carry. Another way to put it is that a company will allow us to pay 10X our premium into a policy per year. The main purpose is that it allows one to maximize the short- term and long- term growth of a policy.  The article “How Can a High Cash Value Policy Benefit You?” will show you how a Whole Life insurance policy can benefit you!

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