+ Reply to Thread
Page 1 of 2 12 LastLast
Results 1 to 16 of 17

  1. #1
    Join Date
    Jan 2009
    Posts
    63

    Buy term and invest the difference is a scam!

    And it really is.

    Uneducated and ill informed legions of Amway want to bees parading around the country touting this very bad advice.

    They are (or were not) insurance professionals or financials planners. Instead, they were blue collar by day, self-declared saviors by night.

    Oh yes. I remember them.

    They sure helped a lot of people, didn't they?

    I say NO to Neo-A L Williams followers.

  2. #2
    Join Date
    Jul 2006
    Posts
    7,767

    Re: Buy term and invest the difference is a scam!

    there are some words that frighten me . . . i try to run away if i can . . . AMWAY . . . Mormon Missionaries . . . Magazines . . .

  3. #3
    Join Date
    Jul 2005
    Location
    Northern, California
    Posts
    16,985

    Re: Buy term and invest the difference is a scam!

    Quote Originally Posted by gazzettee View Post
    And it really is.

    Uneducated and ill informed legions of Amway want to bees parading around the country touting this very bad advice.

    They are (or were not) insurance professionals or financials planners. Instead, they were blue collar by day, self-declared saviors by night.

    Oh yes. I remember them.

    They sure helped a lot of people, didn't they?

    I say NO to Neo-A L Williams followers.
    Why is buying term and investing the difference a bad thing?

    AL Williams is long gone, (Now it's owned by CitiBank, & is called Primerica) but at one time ALWilliams became the #1 insurance provider in America, passing Prudential, in the 80's & 90's.

    The concept of buy term & invest the diff. made sense to many at one time or another. What's changed?

    Just curious. Please clarify...

    Kerry Hein
    As long as it is acceptable for a person to beLIEve that he knows how god wants everyone on Earth to live, we will continue to murder one another on account of our myths. ~ Sam Harris, 'The End Of Faith'
    ~~~~~
    Christianity demands the crucifixion of the intellect.
    ~ Susan Kierkegaard

  4. #4
    Join Date
    Jan 2009
    Posts
    63

    Re: Buy term and invest the difference is a scam!

    Quote Originally Posted by ohein56 View Post
    Why is buying term and investing the difference a bad thing?


    The concept of buy term & invest the diff. made sense to many at one time or another. What's changed?

    Just curious. Please clarify...

    Kerry Hein
    There is nothing wrong, in theory, to buy term and invest the difference.

    However, for most typical Americans, traditional Cash Value life insurance policy has a "forced savings" aspect to it: that is, you must pay the entire premium and on paying it you have both the life insurance protection and your cash value build up.

    On the other hand, the buy Term and invest the difference approach requires the discipline to devote the same total cash outlay in two directions. If you break down and pay the Term life insurance premiums but not the contribution to the IRA, the whole logic of this plan breaks down.

    Finally, as I have stated elsewhere here on these threads, Whole Life Insurance over the long haul produces a respectable return ( around 5% ) and has features such as the ability to stop paying premiums and obtain loans. Then there were th lucky ones who were in a company that demutualized and received stock or cash for their mutual policy, drastically increased their real yield.

    Those who bought term in the last 15 years and invested the difference in the stock market are now sitting on a zero return at best and quite probably a negative return. At the same time, their term insurance policy has gone up in price.

    I think buy term and invest the difference is going to be a thing of the past; just like stated income and AR mortgages, it got people nowhere.
    Last edited by gazzettee; 02-25-2009 at 03:58 PM.

  5. #5
    Join Date
    Jul 2005
    Location
    Northern, California
    Posts
    16,985

    Re: Buy term and invest the difference is a scam!

    Interesting.

    Thanks for the advice & tip.

    The worlds definitely changed in the last year or so. It's a whole new ball game now.

    Out with the old, in with the ?, we'll see...

    Kerry
    As long as it is acceptable for a person to beLIEve that he knows how god wants everyone on Earth to live, we will continue to murder one another on account of our myths. ~ Sam Harris, 'The End Of Faith'
    ~~~~~
    Christianity demands the crucifixion of the intellect.
    ~ Susan Kierkegaard

  6. #6
    Join Date
    May 2007
    Posts
    5

    Re: Buy term and invest the difference is a scam!

    There is nothing wrong with either whole life or term life. Neither is a "scam." They both serve different purposes and both are useful for certain people in certain situations. What a person needs to make sure of is that he or she is buying a decent policy from a decent company. If you buy a bad policy, I guess it could be considered a "scam," but that's where research comes in.

    Term is a death benefit only policy. No one should go into it expecting it to be an investment. It is designed for people who need protection to cover a mortgage, dependents, or spouse for only a certain period of time (hence the "term"). It mostly comes into play for a young couple with children and a mortgage, where if one or both parents were to pass away early, the family would be in dire straights financially. Many of these young couples cannot comfortably afford the premiums on a whole life or UL policy, so term offers them protection. Sometimes you can do a "half and half" policy with half term and half whole life. It allows the couple to have a high death benefit with the term while still owning a policy that builds cash value. Some couples eventually drop the term if they can afford to go with all whole life. Some don't because they don't believe in or need the cash value aspect; they are only looking for a temporary death benefit.

    Whole life is much more complicated unfortunately. There are so many policies out there, and unfortunately a person can be taken advantage of if he or she is not careful. There are A LOT of unscrupulous insurance agents out there. You need to check the guaranteed minimum interest rate as well as actual historical interest rates to get a sense of what the policy is paying in terms of interest. The comment about whole life being a "forced savings" plan is correct; many people are not disciplined enough to buy term and invest the difference. I look at whole life as being similar to an annuity; not the greatest interest rate, but not much risk either; you're pretty much guaranteed some rate of return on your premiums. In this market, that may not be such a bad thing. In a booming bull market, your 4-6% may be a bad thing. It just depends on your objectives and risk tolerance.

  7. #7
    Join Date
    Jan 2009
    Posts
    63

    Re: Buy term and invest the difference is a scam!

    Quote Originally Posted by deskjockey View Post
    There is nothing wrong with either whole life or term life. Neither is a "scam."
    Well put.

    What agents are supposed to do is give their clients a needs analysis and provide them with a suitable policy.

    There are too many uneducated and greedy people "trying insurance"; looking only to make a lot of money.

    A person should be in the business because they like the industry and sincerely want to help people with their insurance and financial needs.

    These people really need to find a harmless outlet to "pursue their dreams" and should stay the hell out of the insurance business.

  8. 07-07-2009, 08:41 PM


  9. #8
    Join Date
    May 2009
    Posts
    39

    Re: Buy term and invest the difference is a scam!

    Quote Originally Posted by gazzettee View Post
    There is nothing wrong, in theory, to buy term and invest the difference.

    However, for most typical Americans, traditional Cash Value life insurance policy has a "forced savings" aspect to it: that is, you must pay the entire premium and on paying it you have both the life insurance protection and your cash value build up.

    On the other hand, the buy Term and invest the difference approach requires the discipline to devote the same total cash outlay in two directions. If you break down and pay the Term life insurance premiums but not the contribution to the IRA, the whole logic of this plan breaks down.

    Finally, as I have stated elsewhere here on these threads, Whole Life Insurance over the long haul produces a respectable return ( around 5% ) and has features such as the ability to stop paying premiums and obtain loans. Then there were th lucky ones who were in a company that demutualized and received stock or cash for their mutual policy, drastically increased their real yield.

    Those who bought term in the last 15 years and invested the difference in the stock market are now sitting on a zero return at best and quite probably a negative return. At the same time, their term insurance policy has gone up in price.

    I think buy term and invest the difference is going to be a thing of the past; just like stated income and AR mortgages, it got people nowhere.

    There's 10-15-20-25-30-35 year term policies out there, there's level term to 65...

    And zero returns over the past 15 years? are you joking? try saying 7%-8% and some funds are still +10% (the agressive ones)

    I feel sorry for the people you're "helping" because you're just trying to justify your high commissioned product when you know for a fact buying term and investing the differance is better.


    And hold on the forced savings in the policy... ok so after year 1 I want my money fromt he savings... WTF? I HAVE TO BORROW MY OWN MONEY IN THE FORM OF A LOAN!?!?!?!?

    Wait, but what if there's surrender charges? That means I probably can't get any money for 5 years... But you told me I'm saving my money!!!!

    ok what if I cancel it then to get my money? OOOH SNAP! you charge X amount and keep a chunk of the "savings"

    hhhmmm what about if I die? Well depending on the death benifit THE CLIENT HAS PICKED (they never pick it's picked for them) You Might get the savings, oooorrr you might not, chances are, you won't.
    Last edited by BJJMTF; 07-07-2009 at 08:49 PM.

  10. #9
    Join Date
    Apr 2009
    Location
    SW Ohio
    Posts
    15

    Re: Buy term and invest the difference is a scam!

    Of course it's not a scam. It's a concept, not a company.

    It works well for most. Others like the WL approach.

    Personally, I have always purchased term and plowed the "difference" into Roth IRAs, 401K and now...the Roth 401K.

    And of course, if your 401K matches...make sure that's the first thing you do.

  11. #10
    Join Date
    Jun 2009
    Posts
    18

    Re: Buy term and invest the difference is a scam!

    "And zero returns over the past 15 years? are you joking? try saying 7%-8% and some funds are still +10% (the agressive ones)"

    Really, have you factored in the -40% over the least few years? This is why you don't understand the values of guarantees in permanent policies.

    Just for fun, assume you had $1000 invested at 7.2% for 10 years. You, the teacher of the Rule of 72, should be able to figure out how much money you have. Now, in year 11, you lose 40%. What's your total return? Don't bother trying to answer the question, but FYI, it's WAY less than you think. A 5% guaranteed return would've been MUCH better, especially when it also will continually carry a death benefit.

  12. #11
    Join Date
    May 2009
    Posts
    39

    Re: Buy term and invest the difference is a scam!

    Quote Originally Posted by Primericaisbad View Post
    "And zero returns over the past 15 years? are you joking? try saying 7%-8% and some funds are still +10% (the agressive ones)"

    Really, have you factored in the -40% over the least few years? This is why you don't understand the values of guarantees in permanent policies.

    Just for fun, assume you had $1000 invested at 7.2% for 10 years. You, the teacher of the Rule of 72, should be able to figure out how much money you have. Now, in year 11, you lose 40%. What's your total return? Don't bother trying to answer the question, but FYI, it's WAY less than you think. A 5% guaranteed return would've been MUCH better, especially when it also will continually carry a death benefit.

    yes I have factored all that in... Infact I'm sure you can find the good funds are around 7-8% ours have been, so iuno what your problem is... Maybe WE ALL should get garunteeded WHOLE LIFE INVESTMENTS and then borrow our money. and pay back the interest we earned!
    Last edited by BJJMTF; 08-07-2009 at 09:52 AM.

  13. #12
    Join Date
    Jun 2009
    Posts
    18

    Re: Buy term and invest the difference is a scam!

    Quote Originally Posted by BJJMTF View Post
    yes I have factored all that in... Infact I'm sure you can find the good funds are around 7-8% ours have been, so iuno what your problem is... Maybe WE ALL should get garunteeded WHOLE LIFE INVESTMENTS and then borrow our money. and pay back the interest we earned!

    Ok, show me 5 funds that YOU know have who have averaged "+10% (the agressive ones)" in the last 15 years

  14. #13
    Join Date
    Aug 2009
    Posts
    8

    Re: Buy term and invest the difference is a scam!

    But if market value will again lose then what will happen?
    So tell a plan which is applicable in both cases.
    The Latest News Relating to Nigerian 419 Fraud From Around the World.
    Nigerian 419 Fraud News

  15. #14
    Join Date
    Nov 2007
    Posts
    253

    Re: Buy term and invest the difference is a scam!

    Sell the NEED PEOPLE

    OR GET OUT OF THE BUSINESS


    I just got placed $250,000 of term on a 30 something for around $20 a month from JNL.

    I am working on a couple of whole life case now.

    Get the point.

    Sell insurance. Help people. Too much for you dumb asses?

  16. #15
    Join Date
    May 2009
    Posts
    39

    Re: Buy term and invest the difference is a scam!

    Quote Originally Posted by Primericaisbad View Post
    Ok, show me 5 funds that YOU know have who have averaged "+10% (the agressive ones)" in the last 15 years

    You're a financial professional, I'm 100% confident you can find them.

  17. #16
    Join Date
    Oct 2008
    Posts
    454

    Buy term and invest the difference is a scam!

    Primerica is not the way to go. The "crusade" is dead. A.L. Williams had its place in time and in my opinion, was a wake-up call to the way that insurance is sold. But we are no longer in 1977. Or 1987.

    Let me repeat, the crusade is dead. The Buy Term and Invest the Difference crusade is dead. It's irrelevent. It had its day. It no longer applies. It now is just one of several strategies that can be used. Gone are the days of insurance agents only selling whole life to people that cannot afford it. Most professional agents know that adequate coverage is paramount and many times, term insurance is used to make sure that adequate coverage is attained.

    Most professional agents also know that assets need to be protected as they build, and that changes in life occur. They understand wealth accululation, taxes, and liability.

    While the "theory of decreasing responsibilty" may be somewhat true, the application of overpriced term insurance and an IRA does not adequately fill that void. As assets increase (and liabilities decrease), tax burdens increase, so does the liklelyhood of bad health and tax issues. Life insurance is an effective tool to overcome these issues, and when planned and applied properly, will address the needs of a changing financial and health scenario.

    The fact that Primerica only sells one product, in their opinion, the "right" product is crazy. But it's their marketing plan and it's legal, so whatever. I question the ethics though. Remember, these people have very little insurance and tax training and they are replacing policies, permanent policies, that may have been in place for years. Some with surrender charges. Then the primerica agent takes the cash value less surrender charge and places it into a qualified plan that they don't intend on using until retirement?

    So much for the Rule of 72. I hope they factor that surrender charge, which was not even needed, into the overall rate of return. Grrr.....

    I'm not saying that replacement of permanent insurance is never warranted.

    Did I mention the crusade is dead? The "build your own MLM insurance business" is dead. No longer unique. Also, no longer viable. No training, just an unlimited supply of kool-aid. And just like any MLM, they push you to sell a single-overpriced product (because it's the "best" of course) to everyone you know. It's overpriced so that it can pay all of the levels of the pyramid. They cannot sell competitive term insurance and be successful mlm "entrepreneurs".

    Please sell Amway instead. Or Avon. Or Pampered Chef. Or host a candle party. All of these are fine for MLM - if you like overpriced soap developed by the Amway Scientists.

Similar Threads

  1. What is the difference between whole and term insurance?
    By Insurance Information Online in forum Insurance Scams
    Replies: 0
    Last Post: 05-26-2014, 04:47 AM
  2. www.razorpay.com is a SCAM, DO NOT INVEST!
    By buddhanot in forum Mail Order Scams
    Replies: 0
    Last Post: 06-17-2012, 09:47 AM
  3. Invest-gold is scam.
    By geleren in forum Mail Order Scams
    Replies: 3
    Last Post: 07-16-2007, 11:38 AM
  4. Mutual Invest.com is scam
    By geleren in forum Mail Order Scams
    Replies: 2
    Last Post: 05-29-2007, 08:01 AM
  5. Invest-x.com is scam?
    By reojionline in forum Mail Order Scams
    Replies: 4
    Last Post: 11-14-2006, 01:50 AM

Tags for this Thread

Bookmarks

Bookmarks

Posting Permissions

  • You may post new threads
  • You may post replies
  • You may not post attachments
  • You may edit your posts
  •