You've been lied to. Santa's real? No, I'm talking about life insurance. What's up
everybody. I am Jaspreet Singh, and welcome to the Minority Mindset. You ever
heard the saying: one person's trash is another person's treasure.
Well, that's especially true when it comes to your money. Are you saying that
my money's trash? Some people hate the idea of owning real estate while other
people have used real estate to get rich. Some people hate the idea of the stock
market while other people have used the stock market to build insane amounts of
wealth. And some people get completely screwed over with life insurance while
other people know how to use life insurance the right way. That's why, today
I'm gonna be going over the seven biggest myths, lies, wrongs, you've been told
about life insurance. But, before I get into that, make sure you hit that thumbs
up button below and subscribe to the Minority Mindset YouTube channel, that
way, you don't miss our new financial education videos, every single week, and
hit that little notification bell too; otherwise, YouTube won't let you know
when our new videos are released. Myth number one: All life insurance is
the same. Uh, wrong. You have term life insurance, whole life insurance, universal
life insurance, variable life insurance, variable universal life insurance, fixed
expense insurance. You get the idea. And to keep things simple, I'm going to be
focusing in on term life insurance and whole life insurance today. The way term
life insurance works is this: You buy a short term life insurance policy. It
might be for a period of 10 years or 20 years or 30 years or whatever—you get to
pick the term—but you buy their short term policy, and then you are going to pay
your life insurance company every single month, and then if you die within that
term. So, if you buy a 30-year term policy, and you die within those 30 years, your
family will get a big check. If you don't die within that term, you and your family
get nothing. With whole life insurance you are going to pay into this life
insurance policy for the rest of your life whether you live for another five
years or another 85 years. It doesn't matter. You're going to make a payment to
your life insurance company every single month until you die, and then when you
die, your family is going to get a big check. And this brings me
to myth number two: Whole life insurance is better because your family gets a
guaranteed check. Wrong. If you know how to use your money, if you are a healthy
30 year-old guy, and you want a 1 million dollar life insurance policy, you could
get a term life insurance policy for 1 million dollars for under $30 a month at
the time of me recording this video. But, if you wanted a whole life insurance
policy which means you get a guaranteed payout, well, now you're not going to be
paying $30 a month, you'll be paying something closer to $850 a month
for the same 1 million dollar policy. With whole life insurance, it's so much
more expensive because you are asking your life insurance company to take this
money and invest it for you because you want them, you're asking them, you're
telling them, to pay your family money when you die. And this brings me to myth
number three: Life insurance is a great investment. Wrong. Life insurance is a
great risk management strategy, but it's not a great investment. When you tell
your life insurance company, "hey I need you to give my family a 1 million dollar
check when I die"—which is what you get with a whole life insurance policy—they
look at you, and then they start calculating. Hmm. According to my numbers
you have another 50 years to live. Wait. Is that a Big Mac? 45 years. If they think
you have another 50 years to live then they start calculating. Okay, you're going to
have to pay us 800, or $850 a month, or whatever, for the rest of your life which
we think will be another 50 years, and then that investment has to pay us
enough to pay our financial advisors, our brokers, make a profit, and then have
enough money to give your family a million dollars. That might explain why,
according to Consumer Reports, the average return—remember average—on a
whole life insurance policy is a whole 1.5 percent a year. Oh. Life insurance
does a great job as a risk management strategy because if you unexpectedly
died three years from now while you're building your wealth, your family won't
have to struggle financially and worry about how they're going to pay their
bills. And if you understand money and investing, you can beat the life
insurance returns. I would much rather you take this short term life insurance
policy for 10 years, 20 years, 30 years, whatever you need to build your wealth,
and then take this difference, this $800 or whatever it is, and invest it into
assets and investments, you know, stocks, real estate, your own business, because
these things that you're investing in, these assets, are things you own, and you
control, you can get a better return, you can use this money while you're alive to
live a better lifestyle today, and you could get even better tax breaks. Myth
number four: Life insurance is a wealth building tool. Ha. This myth is great. Many
people will try to sell you on the idea that you can use your life insurance to
build wealth because, A: You can strategically use your whole life
insurance plan to build your savings, or B: You can strategically use your whole
life insurance to invest tax-free. Let's start by talking about building a
savings with your whole life insurance plan. When you pay this eight hundred and
fifty dollars a month for your whole life insurance plan, some of this money
goes to your life insurance which is the money that your family gets when you die,
which is called the death benefit, and the other portion goes into, what's
called, the cash value portion of your life insurance which is essentially like
your strategic savings account through your life insurance, actually, through your
whole life insurance because your term life insurance doesn't have this cash
value part. This cash value part sounds really cool because this money that
you're investing and paying into with your whole life insurance, gets saved
with your life insurance company, and then your life insurance company gets to
invest this cash value portion, and it gets to grow tax-free, and your term life
insurance policy doesn't have that. Tax-free? That sounds amazing. But, here's
what people don't tell you. A: If you don't use this cash value when you're
alive, many times the savings and investment you've been building up gets
donated to your life insurance company because, remember, your family is only
getting this death benefit, and so many times insurance companies will take this
cash value and keep it for themselves if you don't use it. B: Using this cash
value that you saved up in your savings and your investments that
you've been building isn't so easy. You can't just walk into a bank and say, "hey. I like
to withdraw my $100". I mean, you can borrow against this cash value. These are
savings and investments that you've been building up and growing, and so you can
take a loan out against it. But, you have to pay this money back, plus interest, to
your life insurance company to borrow your own money, and if you don't pay that
interest, don't worry, your life insurance company will just reduce the death
benefit or the big check that they're going to give your family when you die. C:
If you get a whole life insurance plan and even paying into it for 5 years 10
years, and then you decide, hmm, this isn't the best plan for me,
and you want to get out of your whole life insurance plan, well, all this money
you've been saving and investing into your plan gets forfeited. I mean, they
give you something called a surrender value, but the savings and investing that
you've been building is donated to charity, and by charity I mean your life
insurance company. And in case you were thinking "I'm not going to be one of those
people that stopped paying my whole life insurance plan", just know, that according
to the Society of Actuaries, almost half or 45% of whole life insurance
policyholders surrender their policy within the first ten years. Maybe it's
because people realize it's not worth the money?
I don't know. And D: The returns on your whole life insurance policy suck. Like we
just talked about. So, yeah, you might be building up the savings and investment
account that you think is growing tax-free, but the returns suck. It's very
hard to access. If you stop paying into it, you lose it. And, if you don't use it,
you might lose it still. If instead of paying $850 a month for your whole life
insurance policy, you bought a term life insurance policy
paying something around $30 a month, and you took the remainder, let's just say
eight hundred dollars a month, and you invested it, yourself, in the stock market,
real estate, whatever, and you just got an average return of 7% a year, and you did
this for the next 50 years which is how long you expected to live, well, now your
investments will be worth over four million dollars, and that's just an
average return. If you did worse than average, and you only got a 4% annual 237
return, you'll still have an investment account worth over 1.5
million dollars. And the best part is, let's say, year 25 life happens, and you
couldn't invest any money into your investments. You didn't invest any money
year 25. Maybe year 26 too. You didn't invest any
money into it. Your assets, your investments, don't disappear. You still
own them. And chances are, they were still growing in value and building you wealth,
and you don't have to sacrifice it. And you can use this money. This might be
paying your dividends to live a better lifestyle today. Not to mention, if your
goal is growing your money tax-free, you have the ability to do that if you take
this money and invest it into an asset like real estate, and now you have
control over your money, you can use your money while you're alive, and you can get
better tax breaks, and I know this because, well, I'm a licensed attorney.
This is going to make a lot of people upset. While whole life insurance give insurance
companies a windfall, they were not made for people who understand money, and who
understand how to invest their money. Myth number 5: You have to deal with
pushy life insurance people. Do you want to know why life insurance people love
pushing whole life insurance? There are two reasons. The first reason is because
most people are not disciplined enough with their money to do what I just said.
Buy term life insurance and invest the rest into something that will pay you
with better returns. So, whole life insurance forces people to invest their
money which is better than not investing their money, even though whole life
insurance returns aren't that great. And the second reason is because the
commissions on whole life insurance are, well, huge. But now, thanks to the internet,
getting life insurance and getting your good life insurance policy is a lot
easier than you might think. Thanks to our sponsor, Policygenius, you
can just go online, and they will make insurance companies fight for you, and it
doesn't cost anything to use them. All you have to do is go on to their website,
enter a few pieces of information which just takes a couple minutes, and then
Policygenius will show you a bunch of different quotes from different life
insurance companies, this way, you can be sure you're getting the best price and
the best deal so you can save the most money and keep it in your pocket. And if
you need help or if you have questions about life insurance,
they have unbiased experts you can talk to who are not incentivized to upsell
you anything, this way, you can be sure you're getting the best policy for your
lifestyle. And you won't have to worry about people
trying to shove the most expensive policy down your throat. Policygenius is
completely free to use, so, if you want to get a free life insurance quote in just
a few minutes online, I got the links to where you can do that in the description
below. Minority Mindset is a partner with
Policygenius, so, if you use them, we will get compensated, but there's no
additional cost to you. I mean, they're completely free to use, so, if you want to
learn more and see how much life insurance will cost you, I got the link
to where you can do that in the description below. Myth number six:
Everybody needs life insurance. I hate seeing GoFundMe funerals.
A GoFundMe funeral is when somebody unexpectedly dies, and they didn't have a
plan for the family. They didn't have assets, investments, or life insurance, to
take care of their family if they unexpectedly die, and, so the family
needs to put together a GoFundMe page to raise money for funeral expenses, and
living expenses, and everything in between. It breaks my heart seeing things
like this, and you don't want your family to ever be in that situation which is
why, some sort of life insurance is so important, but unlike what the majority
people say, your goal shouldn't be to rely on life insurance to take care of
your family. If you have the minority mindset which means you think different
than the majority of people when it comes to your money, your goal is to be
self-sufficient which means you have enough assets and investments to take
care of your family. Once you have built up enough assets or enough investments
to live your life and pay your expenses, and you don't have any consumer debt
left, well, now you're free. You don't need life insurance to take care of your
family because you have assets there that are already taking care of your
family. If you happen to die tomorrow, your family would be financially okay.
For most people that means you need a net worth of 5 million dollars and no
consumer debt. If you don't have that yet, no problem. Use term life insurance for
as long as you need and use the extra money to build up your assets and your
wealth, this way you, can take care of your family. That's what financial
education is all about, and that's what we talk about on our Channel. And myth
number seven: You can't qualify for life insurance.
I've heard this expressed in a couple of ways. One way, there's people in their 20s
say "oh-I'm too young to qualify for life insurance", and other people say "oh-I have
this health condition so I can't get life insurance". Look, if you're young in
your 20s, especially if you have any sort of debt, and especially if you have any
sort of cosigners on that debt, you need life
insurance because if you die, your debt doesn't just go away, especially if you
have a cosigner on it. Your cosigner is going to be held
responsible, and so your life insurance can help take care of that burden.
I hope life insurance is something you never have to use, but it's better to
plan financially so you can save your family that hardship. And even if you
have health conditions, you can still qualify for life insurance and Policygenius
can show you how without paying an arm and a leg for your life insurance.
Again, if you want to learn more, I got the links in the description below. Thank
you for watching. If you enjoyed this video, share it with one friend, that way, you
could help spread the word. I hope you enjoyed learning more about my thoughts on
whole life insurance, term life insurance, and life insurance in general. And if you
want to learn more of about how you can start investing, especially investing your
first $1,000, I already made a video on it, and you can watch it by clicking this
button, right there. Thank you for watching, and as always, KEEP HUSTLIN' *