What is the best thing that I have learned over my76 years that can help us move toward financial equality?
PROPER USE OF LIFE INSURANCE
My Non-Professional Advice:
As near as possible to the age of responsibility, 18, buy as much quality-level term life insurance as you can. I recommend policies that can automatically convert into quality whole life insurance. Your health is likely to be the best that it is going to be at this young age; therefore, you lock in at a low premium rate.
Quality whole life insurance has guaranteed cash growth and dividend-related cash growth. Mutual insurance companies, those owned by policyholders, not stockholders, pay higher dividends. Stock-owned life insurance companies likely will not pay any dividends because their profits go to stockholders.
Get level term life insurance with riders that:
- Allow the policy to pay the monthly premium if you become disabled, allow the term insurance to convert to whole life insurance.
- Allow conversion to whole life insurance if you become totally disabled.
- Allow conversion to whole for the entire length of the term policy (not just the first five years), allow future life insurance at the health rating of your initial term life policy, etc.
Very few mutual life insurance companies have all of the riders listed above. The Guardian Life Insurance Company, to the best of my knowledge, has these plus other riders. Please check other providers for their offerings.
So, why life insurance?
Historically, we have bought death insurance policies, which are funeral insurance policies. We paid weekly while others received much greater death benefits while paying monthly. Think about it: having someone come around our neighborhoods every week to collect was not very cost-effective.
Our policies had a defined death benefit that did not increase over time, no matter how much we paid into the policy. Meanwhile, the monthly policies have increased internal cash value and increased death benefits.
As your work-related income increases, buy or convert term insurance to whole life insurance. You end up with policies with about a six percent annualized growth rate that is not invested in the stock market.
In fact, the top mutual life insurance companies have paid a dividend for over one hundred plus years in a row. This return means that they paid dividends throughout every depression, even the Great Depression!
The money inside the whole life policy grows from guaranteed and dividend increases. You can borrow from the built-up cash value within your policies with the option of paying it back or not paying it back. I highly recommend paying it back to keep the policy healthy.
During the latter years of the whole life insurance policies, both the internal cash value and the death benefit will increase.
Because the cash within the policies is not invested in the stock market, it does not experience market fluctuations!
This methodology helps Blacks grow family wealth through whole life insurance, internal cash growth, and death benefits. In other words, because we live, we get to benefit from whole life insurance internal cash growth while we live, and our families benefit if and when we die!
The above advice is my personal take on life insurance as a financial growth strategy. Please utilize licensed professional life insurance representatives to help with your personal and family life insurance planning.
Thanks for listening!
William Leroy Kennedy
Former Financial Services Professional at Kennedy Group, Ltd. – Financial/Motivation
Studied Architectural Engineering at Prairie View A&M University “Giving a strong recommendation: Khan Academy for educational success”