“The rich rule over the poor, and the borrower is servant to the lender.” (Proverbs 22:7)
As Ben contemplated the big change he was going to make from the standard financial advice that most Americans follow, but for whom it doesn’t work, he began to think about life insurance in a new way. He still owned other term insurance, but he had recently purchased a $1,000,000 20 yr term policy and was paying $657/year for it so that he could reach his HLV in coverage. He had enjoyed this cheap coverage, but began to see that he would probably never get anything back for the premiums he paid.
He realized that he was a customer of the life insurance company, but he didn’t enjoy any of the privileges of an owner. Ben had noticed throughout life that the benefits come to those who own a company. Good companies work hard to deliver good products for a good value to their customers, but they don’t stay in business unless they earn a nice profit.
He had actually watched this in action through his father. His dad had left the corporate world when he was young and had opened a dry cleaners. It had been difficult at first because his dad made it his mission to run the best, fastest laundry in town while charging less than a lot of other people. Ben remembered that they had started out – not poor exactly – but he never got the nice toys that a lot of his friends got. He learned later that his parents really struggled in those early years. But the original became more and more profitable over the years as word spread about the quality work he did at a good price. His dad’s hard work paid off and he opened new stores that were profitable more quickly because of the wisdom learned and the synergy that was building. By the time Ben reached high school, his family was one of the richest in town, and Ben’s dad was able to pay for all of Ben’s college out of pocket.
When Ben thought about how he wanted to participate with a life insurance company, he realized that he could either be a customer (and buy term insurance), or be an owner by buying whole life insurance. He knew it would mean paying some dues up front, but he wanted to be the one cashing those fat dividend checks down the road, not the one forking out huge term premiums because he hadn’t thought ahead!
He had always known that it was better to own his own home than to rent it because after many years the value in the home created would be his and not the landlord’s. It made sense to him that the same thing was true with life insurance. Why would he keep a policy for 10 or 20 years as a renter (term), knowing that there was a 99% chance he would get nothing from it, when he could own a whole life policy and receive the benefits of ownership that appreciated more and more each year?
So, he decided to get rid of one of his term policies and purchase a whole life policy. Tomorrow we’ll look at how he did it.
This is Part 2 in the story of Ben’s life using Whole Life Insurance in a variety of ways. You might want to read the introduction to this series which will link to each post in the series explaining how whole life works as well as linking to each post in this series on Ben’s story.
Photo credit: aesthetic angi