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149R | Whole Life Insurance

Jonathan digs deep comparing whole life insurance and term insurance. Laura gets over $130 of clothes from Old Navy for 80 cents!

How Laura Broke Old Navy

According to Brad, this may be Laura’s best shopping experience of all time. She only paid 80 cents for goods that would normally cost $132.92! The girls and Laura have eight new activewear items to add to their wardrobe for the price tag of 80 cents!

The score started with a standard Old Navy sale. It was offering 50% off the entire site. Plus, an extra 30% off for clearance items. Naturally, Laura shopped through the clearance section to fit some great deals.

Laura also scored free shipping. She needed $50 worth of items in her cart, so she made sure to just hit that threshold. The big savings came from a $50 Old Navy rewards coupon. The coupon effectively eliminated the entire subtotal minus 80 cents. She earned the coupon by being a credit card holder at Old Navy. She uses the card for everyday purchases when she is not trying to score travel rewards sign up bonuses.

Laura knew the rules of the Old Navy game and used them to score an amazing deal. What deals will you find next?

Whole Life Insurance

While talking with a friend, Jonathan was prompted to dive into the entire world of whole life insurance. Although he knew that whole life insurance policies were generally a bad investment, he wanted to find out more about the numbers behind this reality.

Buy term, invest the difference.

It took a lot of digging around to come up with whole life insurance policy rates. With so many different nuances, whole life insurance options are overwhelmingly complex. The complexity itself is a red flag. If a financial product is in your best interest, then it is not complex.

Whole life insurance is never bought, it’s sold. It has to be sold becasue no one using common sense with all the information in front of them would voluntarily sign up to pay up to 10 times more for an insurance product.

In his research, Jonathan uncovered two types of life insurance policies for kids through one company. Gerber offers these two policies:

  • The Grow-Up Plan. This is their flagship program that offers standard whole life insurance for your kid.
  • The Life College Plan. This is a whole life insurance policy for you that is marketed to help you save for college with less risk than stocks and more return than savings bonds. At the end of a 10 or 20 year period, your child will receive a payout out or if you die prematurely they will receive a death benefit.

These are fairly standard options in the whole life insurance world. Let’s take a closer look.

Related: Insurance–A Framework

The Numbers

With the Life College plan, your kid is guaranteed to receive $32,000 at the end of a 20 year period or a death benefit earlier. If you ever stop making payments at any point, then you would receive nothing. You would need to pay $106/month over 20 years to receive the benefit.

If you chose to invest that $106/month over a 20 year period with an 8% market return, then you would earn nearly $63,000! The contributions alone are worth over $25,000. Even with a top tier bank like CIT Bank, you could earn around 2% interest on the contributions for a grand total of around $31,000 at the end of a 20 year period.

The same Life College plan will allow you to contribute $433/month for 20 years with a guarantee of a $131,000 payout. If you invested this amount of money over a 20 year period with an 8% return, you would accumulate $257,000!

Related: Earn More Interest On Your Emergency Fund: CIT Savings Builder Review

The Heartstrings

The reason that whole life insurance is an option is the heartstrings attached. The salesman pulls at your emotional side to get people to sign up for these plans.

First, they tout the importance of teaching children about finances through insurance. However, there are a million better ways to do this including an allowance or a trip to the bank.

Second, they promote guaranteed insurability. If your child developed a condition that made them uninsurable in the future, the whole life insurance policy you bought for them as a child could come into play. However, this is life insurance working the wrong way. You are supposed to ensure that your family is financially okay if you die early, not the other way around.

Buy Term, Invest The Difference

Jonathan and his friend compared their numbers to get a better understanding of their policies. Jonathan has an $800,000 term life insurance plan that costs $30/month. His friend has a $300,000 to $500,000 whole life insurance plan that costs $250/month.

If Jonathan invests the difference of $220 into the market with 8% returns over a 20 year period, his investment account would be worth around $130,000. Let’s say he leaves that money untouched in his investment account until he dies at 80 years old without any other contributions, it would be worth around $961,000.

The numbers of these policies speak for themselves!

Related: Get The Best Price On Life Insurance With Policygenius


Brad and Jonathan are looking forward to testing out OnTrajectory for themselves. Let us know what you think about this robust planning tool! Click here to get a free trial of this software.

Check out the full episode about OnTrajectory with Tyson Koska here.

Community Feedback

Let’s hear what is going on in the community this week.

Win For Denise

Denise and her husband did something ‘crazy.’ They sold their 4/4 house in northern Virginia that was costing them around $5,000 a month to maintain. The house felt akin to throwing away their money into a very fancy garbage can.

After making the sale, they moved into a rental nearby. Now, they are getting themselves set up for success in the future. Congrats!

Win For Javier

Javier became a lifetime member at his Crossfit gym for $3,500! That cut out a recurring annual expense of $1,800 and will allow him to enjoy Crossfit as often as he would like.

Simply by asking, Javier was able to score a lifetime membership and shave $45,000 off of his FI number. Congrats!

Terry’s RA Advice

Terry called in to add on to Anthony Gary’s advice about becoming an RA. After college, RAs can become hall directors or community supervisors. Most schools pay around $15k to $40k per year, plus free housing.

In Terry’s case, he earned $18k/year plus free housing. He also earned his master’s degree for free since he was a school employee. Check out your options here.

Anthony’s Advice On Negotiation

Anthony Gary, from episode 138, called in to share his thoughts on Tori Dunlap’s salary negotiation tips. He wanted to point out other things to negotiate besides salary.

Some things to consider include your start date, COBRA costs, technology stipends, sign-on bonus, gym membership, work from home options, vacation days, and more. He shared his guide on negotiating your salary which can be found here.

Listen: How To Get Paid To Go To College With Gary Anthony

Win For Jennifer

Jennifer’s 1992 Honda Civic has hit 265,ooo miles! After 30 years on the road, this is extremely impressive.

Related: Longest Lasting Cars On The Road Today.

Call For Wins

At the end of the year, we are dedicating an episode to wins from the community. Please send in your win! Send us a voicemail or shoot us an email at [email protected].

Help us inspire the community!

Cities of FI

Please take a few minutes to fill out of survey about the best cities of FI. We appreciate your help!

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