Advice: 10 Financial Pitfalls to Avoid

September 26, 2016
Comments (7)
  1. KnightsOfColumbus says:

    Number 10 you are telling people not to buy whole life at a young age because they do not have children yet. I work for a non profit that sells life insurance. You spend less money the earlier you buy whole life. Term insurance pays about 1% of all contracts. Term is what you buy once you have kids because it satisfies a need until they are adults and the need is gone. Whole life is in place because everyone dies and funerals are not free and everyone leaves some sort of debt behind. More importantly putting money into whole life in your 20s means when you are retiring in your 60s if you no longer need the insurance you can cash it in and add it to your retirement money. Having 30-40 years of growth in whole life will give you 2-4x in returns. I am 27 and pay 200 a month into whole life for a 10 year payoff. If I have kids there is well over 100k in life insurance. When I am 65 I can cash in a policy I paid 24k into and it will give me a guaranteed 70k in cash with potential for much more if interest rates increase throughout my life. Please do not offer financial advice if you are not licensed and do not know how to properly plan for someone’s future. In 2017 the mortality rate is being rewritten and new policies will cost more. You are essentially telling someone to procrastinate and not plan for their future. It is financially ignorant to claim whole life has no purpose until we have more debt. Term is meant to cover these debts short term, and if you planned properly long term you won’t have a huge debt to cover and won’t need a term anymore. Everyone dies someday, whole life insurance has a purpose 100% of the time for every person alive. Funeral costs are only going to increase with time

    1. Keith says:

      Using insurance as an invest strategy is something that only someone selling insurance will tell you.

      1. KnightsOfColumbus says:

        My non profit has a guaranteed 4% interest for life and offers policies paying 6.5% which you cannot get anywhere else. So yes if you want high interest instead of a 1% cd or 0.5% money market or a 1% IRA then working with my organization is currently your best retirement option

    2. Jason says:

      I sell Life Insurance and whole life is a great policy if you are getting something small to cover burial expenses. Term Life is significantly more cost effective, at 27 years old, you could cover yourself for $250,000 for the next 30 years for under $30/mo (assuming a good level of health and being a non-smoker). Then transition the policy at that point to a $20,000 burial policy and spend less on all of that coverage than a $200/mo Whole Life policy.

      Most people don’t have $200/mo to spare for life insurance, but most people do have $30/mo. The post is about cost effectiveness, not spending as much money as possible.

      1. KnightsOfColumbus says:

        Term has a purpose as I stated above. People fail to properly plan for retirement if you cannot afford to put $200 a month towards retirement then you haven’t found a career yet

      2. KnightsOfColumbus says:

        Also waiting 30 years to get a whole life for burial purposes means you will pay three times the monthly premium for the same 20,000 and that is assuming you are healthy enough to not get rated in which case you will pay 5-10 times as much per month. Furthermore at 27 if you pick a company paying dividends your 20,000 policy will be worth significantly more when you pass away if you started at 27

  2. Jonathan M. Billingsley says:

    Thank you for pieces of advice! Great article!

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