Whole life insurance does have the insurance portion, and it’s set up to accumulate your death benefit over time. So if you are looking for a $500,000 policy and the insurance company thinks you’ll die in 30 years. Your premiums and whatever returns the insurance company can earn on those premium payments will have to add up to make $500,000 in that period, plus the insurance company’s profit. And that’s the logic dude.
If you’re thinking about it as insurance — much of your premium should go into building a cash value for the policy. Then your cash balance can multiply nicely, and provide what is effectively a decent investment return that is definitely tax-advantaged.
I really don’t know whether the 5.5% gain Dyson is expecting in this case is usual or not.
So the crucial part of this, from what I could decipher, is that you want to buy whole life insurance, that you could have a partaking or dividend-paying policy. And perhaps even, if Dyson is following the same track as folks like the “Bank on Yourself” people do, and you want to maximize the amount of savings you put into such plans (more often known as “paid up additions”).
Taking advantage of “be your own bank” stuff is about putting so much of your money into policies that, you do all of your big purchases (like buying cars, etc.) by borrowing from your policy etc. To do that you have to be the type of individual who can set aside a considerable amount of money for these large premiums as your “obligatory savings” plan.
And that makes the whole stuff very confusing, even if you are not calling it a “Secret 770 Plan”, these are complex contracts, and they’re not consistent across different insurance companies. What I can tell you is they’re difficult to compare across providers, and this remains to be a hallmark, of most commission-driven, hidden fee businesses. I am not quite sure how most of these businesses work.
In conclusion I would suggest that most of these products start to make sense only after a long period of painful premium payments say 10 years or more, and this is a small niche of insurance business that’s focused on the uber rich.
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