re: Friend is trying to convince me to buy whole life.

quote:

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He is trying to sell me whole life and keeps talking about "infinite banking." I know it's bs but what are some good stats I can throw at him?

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I have a whole life paid-up 10 year policy... the internal rate of return is a little more than 3.5% (tax deferred), which means a taxable investment vehicle would need to get over 4.5% for it to make sense for me due to tax brackets.

I also have BND (Vanguard Total Bond Market ETF). The inception-to-date annualized return is 4.37%.

Point here is... a great Whole Life policy with a great company is basically like buying bond funds with slightly less return but with a tax-free death benefit, tax-deferred annual returns, and no volatility.

Should you put all your money into Whole Life? No. Same answer if you asked, "Should I put all my money into XYZ?"

You need exposure to equities. Take advantage of 401k or Roth IRAs (if your income is low enough to qualify). If you have extra cash flow after taking advantage of those retirements accounts and you need more life insurance, then Whole Life can be sweet.

But, all these folks saying Whole Life sucks don't really understand it's value.

With whole life, you can think of it as your bond (or Fixed Income) portion of your asset allocation but with tax benefits and creditor protection (in some states) and hedges against the unlikelihood of you dying early.

To the trolls to follow, no, I am not an insurance agent.