Why You Should Never Cancel A Whole Life Insurance Policy – Episode 302

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[00:01] Welcome to the Prosperity Podcast. In this episode of the Prosperity Podcast, we’re going to be talking about why you should never, ever, giant exclamation points, why you should never, ever cancel a whole life policy. So Kim, take us down this road. Why is it that this is one of the, call it, 10 commandments and whole life insurance policies? Well, I’m sure glad that was you saying that because I hope it lends some extra credibility. It’s not Kim Butler, the life insurance agent saying that. It’s Spencer Shaw, the businessman and real estate investor and entrepreneur and podcast expert, et cetera, because it is so much more credibility, of course, coming from you. And it, I think, helps our listeners see the

[00:52] utter criticalness of your recommendation there. So let’s dig into this. A whole life policy that you buy at whatever age you are, which age you will never be again, right, is something as an asset that is so flexible that I can say without a shadow of a doubt, if you are passed even just the first 12 to 24 months, if you can just get past that first 12 to 24 months, it’s so flexible that there really isn’t any possible reason. I’m sure there’s always 1% something that I haven’t thought about, but there’s just really no real reason why you shouldn’t use its flexibility to sustain it and to help it sustain you. And I just hear way too many times as I’m talking to various people about, oh, I had a whole life 10 years ago, 20 years ago, my parents bought it for me,

[01:49] whatever, and I canceled it. And I’m always so saddened by that because that is truly an asset that you’ll never get back. You’ll never get back to that age. You’ll never get back to the ownership of the most important place to store liquidity, the most valuable place to store liquidity that I know of. It just amazes me when I read all of these various financial things that I read and these people are just scrambling about these days for some decent place to store liquid money, to store their cash, to store what used to be in short-term bond funds and even CDs and that kind of thing. Or I read something the other day, somebody was so excited about a 2.46%, a 2.46% CD that they found that locked the money up

[02:41] for two years. And they were excited about it. I’m thinking life insurance piece of cake should be paying one point greater than that, which that’s a spread. That’s a 30% improvement to go from, call it two and a half to three and a half. And, and, and the life insurance has the death benefit and it has the waiver premium and it has dividends on top if they get paid, et cetera, et cetera. So it’s so important that people understand what they have. And as a society, we’ve done a horrible job of learning about this product, even though it’s two to 300 years old or 600 years, depending on what you call the beginnings of it. And you won’t want to cancel it once you have it because it’s flexible, because it can adjust

[03:31] around your cashflow issues, because it can be put on pause, because it is without taxes, because it is a private account, because the death benefit can play a role in addition to the liquidity and the cash value because it will benefit you. There are ways to get it to benefit you no matter what. So for all those reasons, you don’t want to cancel it. You want to find a way to keep it. You know, I completely and totally agree. And as, as we were, you know, thinking of this subject and talking about it, I’ve thought about the people I know that have canceled whole life policies. And then I think about why is it they cancel? Because I ask, I say, why did you do that? And it tends to be someone that’s had a policy.

[04:25] And this is asking several people for about 12 to 18 months. And they say that their life expenses just got a little too much. And they didn’t see it make enough impact in their life. And so they let it go. But guess what? Every single one of them said that they regret it. Have you seen the same thing happen as well? Yes, absolutely. I hear about it, I think, most often in the form of somebody whose parents bought them whole life. And clearly, the parents probably did not do a good job of explaining to what is now an adult child, what they had. And the adult child clearly did not understand what they had. And of course, if they took that whole life policy and went to 10 different advisors, I guarantee you 9.9 out of the 10 wouldn’t know what they had.

[05:21] And so this is part of our mission is to get the news out there about whole life to help people understand how it works. And let’s just take that case study of somebody 18 months into a policy, their premium is a bit too high. And they literally could have cut that in half. Like they could have just called up the life insurance company and said this is too high. They could have cut it in half. Now that’s assuming that it had the maximum paid up addition on it. But let’s even assume that it didn’t have the maximum paid up addition on it. They could still go to the life insurance company and say, please reduce my death benefit. If you get past that one year mark, you can take a million dollar policy with let’s say,

[06:05] a $12,000 annual premium. And let’s just pretend no paid up addition for a minute here because paid up addition definitely makes it more flexible. But let’s pretend it doesn’t even have that. They can go to the insurance company and cut that $12,000 premium in half, maybe even reduce it by 60%, whereby it’s 6,000 or 5,000 or maybe even down to 4,000. Then of course, they can pay it monthly. They can pay it quarterly. They can even, especially if they did paid up additions, they could actually borrow against the cash value and pay just the base premium for a while. That’s the pause, if you will. And then when they get back on their feet, pay that loan back or pick up premiums first and then pay that loan back. There are

[06:54] so many ways to solve this problem. And so I want to just put out there to our community, if you know somebody of your friends, your family members that has a whole life insurance policy and they’re thinking about canceling it, and of course, they’re getting probably the advice to cancel it from their typical financial planner or their stockbroker, please encourage them to seek a second opinion and reach out to me. I am happy to help them understand what they have. And of course, the easiest solution to that is read the Live Your Life Insurance book and or listen to the podcasts. And yet sometimes people need just a little bit more proof. And so they are welcome to reach out to me. They can send me an

[07:37] in-force illustration, which they can get from their insurance company. Now, it is important that this is whole life that we’re talking about here, dividend paying whole life from a mutual company, not universal life. That’s a completely different discussion. But if you have whole life insurance, find a way to keep it. And if you can’t find a way to keep it, I will help you find a way to keep it. It’s that important, that valuable, and it’s that much of a mission for me to help people understand and keep their whole life insurance policies that I’m willing to spend a little bit of time to save somebody from making a financial mistake. You know, that is so generous. And notice, you know, for our listeners, I’m here acting now as

[08:21] the soundboard. It wasn’t saying you have to sit down and commit to anything. It’s Kim realizing that she is making such a valuable impact and effect on people’s lives. Regardless of what company it’s with, you guys can get additional insight. You may want to hit that back button and see that there are options. You can reduce that death benefit, or you can change how you’re going to make up payments with the paid up additions. But ultimately, sending a simple email and saying, Hey, Kim, here’s my situation. What can I do? That’s going to save people so much stress and regret. That’s the biggest thing because every single person I’ve spoke with, they always say, I wish I never would have canceled it. Very, very true. And of course, we also hear, I wish I’d bought it earlier.

[09:11] And that is an understandable regret. And yet, something that people need to not be afraid of, because it is totally fine to buy life insurance well into your 60s and 70s, you do not need to regret. If you have canceled one, fine, then we start afresh. And you can do that in your 60s and 70s, if you’re healthy. And if not, you can buy it on your adult children. And if you did by chance cancel one in the last five years, call that life insurance company and ask them what it would take to get that policy back in force. Because if it’s only been five years or less, you can actually resurrect a canceled policy, depending a little bit on how you cancel it and what you did with the cash value, etc. But there are ways to get them back if it’s within five years.

[10:07] Ooh, that is such a great tip. I’m going to share one last thing, and it’s a note that I took. And it’s often times we hear in the news, and it’s tragic and sad when a person passes away and happens to be someone that didn’t have a lot of family or loved ones around them. And you’ll read these articles where after a year or two years, they find out that the person had passed away in their home. Have you ever read articles like that? Yes. And it makes you think, well, how did that happen? And it’s because they set up automations with their bank account, their bills kept on getting paid, and everything happened. And so if you’re a parent, and you’re going to set up a life insurance policy for your kids,

[10:52] and at some point you’re going to say, now it’s your responsibility, maybe you can take the extra step of setting up some automation. So instead of just giving a policy and say, hey, here you go, maybe teach how to set some extra money aside so that no matter what, the policy always gets paid. Do additional things. And I’m sure Kim’s able to help walk you through that so that it’s an easy transition if you’re setting this up for your young children or even grown children. Absolutely. That’s another mission that I have is to get families talking about money more. And a whole life insurance policy is a great starting place because it does require some education and it requires a long-term mindset.

[11:37] And so those are things that you want to pass on. The legacy of continuing education and a long-term positive oriented mindset is almost more valuable than whatever amount of cash value or death benefit you are leaving as your legacy. Well, Kim, this has been a wonderful episode. Jam-packed, full of valuable information. I think one of the best things our listeners could do in their situation if they have canceled a policy within the last five years or if they’re on the fence of canceling a policy, send an email to hello at partnersforprosperity.com. And in the subject line, what should they put? What would be helpful so that you can get an answer to them as quick as possible? Life insurance cancel? The listeners, there you know how to do it.

[12:26] Life insurance cancel? Send that email to hello at partnersforprosperity.com. We’ll put that email in the show notes and you can get all of your questions answered from Kim. And hopefully now you will have another reason why you won’t cancel your life insurance policies. And if you know someone that’s on the fence, please share this episode with them. Let them know so that we can continue to educate as many people out there. Thank you for spending time with us today on the podcast. Thank you for listening to the Prosperity Podcast. To take control of your money and have it work for you, visit us at partnersforprosperity.com. If you liked this episode, make sure you subscribe and leave a review.