E28 - Is Whole Life Insurance a Scam? (The Truth Most People Miss)

Most people think whole life insurance is either a scam… or a secret wealth hack.

Both are wrong.

In this episode, Jaden breaks down what’s actually happening behind the scenes—why so many people regret buying whole life insurance, when it genuinely is a bad decision, and what has to be true for it to work the way it’s supposed to.

This isn’t about defending or attacking the product.

It’s about understanding the system.

Because if you don’t see this clearly, you’ll either avoid something that could help you… or commit to something that hurts your financial future.

You’ll learn:

•  Why poor policy design is the #1 reason people feel burned 
•  The situations where whole life insurance truly doesn’t make sense 
•  The biggest misunderstanding people have about using it as an “investment” 
•  How to think about whole life inside a larger financial system 
•  What needs to be in place before this strategy actually works 

If you’ve ever questioned whether whole life insurance is legit—or felt unsure about how it fits into your financial life—this episode will give you clarity.

If this episode changed how you think about money and financial systems:

→ Follow the show so you don’t miss what’s next
 → Share this with someone who’s been questioning their financial strategy
 → And if you want to go deeper, connect with me directly to build a system that actually fits your life

Learn more at www.jadenzubal.com | Follow @jadenzubal | Join the *Before the Returns Weekly* newsletter

📩 Questions or ideas? Email: jadenzubal.wealth@gmail.com

⚖️ Disclaimer: This podcast is for educational purposes only. It is not financial, tax, or legal advice. Always consult with a qualified professional before making financial decisions.

Transcript

Why People Regret Buying It

When Whole Life Insurance Is a Bad Decision

What Has to Be True for It to Work

Final Answer: Is It a Scam?

SPEAKER_00 0:02

Is whole life insurance a scam? Honestly, sometimes it is, but not for the reason people think. In today's episode, I'm going to break down three things almost nobody explains clearly. First, why so many people regret buying it. Second, when it actually is a bad decision. And third, what has to be true for it to actually work the way people say it does. Because if you don't understand these, you'll either avoid something that could help you or end up buying something that hurts you. Hello and welcome to another episode of Before the Returns. I'm your host, Jaden Zuball, and today we will talk about whole life insurance, whether it is or is not a scam and why or why not. So let's jump into it. Whole life insurance itself isn't a scam. But the way that most policies are designed and sold is why some people feel like they get burned. So let's start with why that happens. Okay, so the first thing as to why whole life insurance may be a scam. And this one's pretty simple. It's that a lot of people end up regretting buying it. Why do they regret buying it? Well, there's a couple of main reasons that I see come up. One is just simply poor design, meaning that the policy was not designed to do what the client thinks it's going to do. So if you buy a policy from somebody with the intent of being able to use this policy to borrow from the cash value and invest in real estate. And then six months into it, you call up the agent and you ask them to take a policy loan and they say, Oh, I didn't know that you were going to want to do that. And now you you don't have access for another year. That is not uncommon. There are insurance companies out there that require you to wait a year after you purchase the policy before you can take a loan. But on the other side of that, there are also companies that I use myself that you can take a loan a couple weeks after you start the policy. So there's there are major differences in design, company, things like that that influence what you can and cannot do. Another regret is buying it, not realizing that there might be a long break-even period. So depending again on the company and the way that it's designed, the breakeven period could take a couple of years. It could take 10 or 15 years, right? And if you're buying this policy to use the cash value to invest in things, waiting 10 or 15 years is probably not the greatest decision. So the need that you have, the desire that you have to use it doesn't fit the way that the policy was set up. Okay, and that kind of leads into the biggest reason that people regret buying it. But it's just simply that there was no clear explanation up front, right? Because, like I've said, there are so many different companies, different ways it can be designed, different outcomes that you can get. So you need to one, understand the differences in those, make sure that they actually fit your goals. Because if they don't fit your goals, you will end up in this bucket right here. You'll end up in the bucket of not understanding what you got into and regretting having purchased the whole life policy in the first place. So it's it's usually not even that they bought something bad, right? The policy is doing what the policy was meant to do. But it means that there was a lack of understanding, typically attributed to the advisor selling it, because they're not explaining how it works and whether the way that it works actually fits your goals or not. And this is where most people stop. They just assume that the product is bad and that the product is the problem. But this leads us into the second issue. So, point number two, when is it actually bad to buy the policy, right? Because as I said, there are some cases where it may just not make sense for you. So, what are some of those situations? Well, things like not having an emergency fund. If you don't have savings, if you're not used to saving, if you're not comfortable saving money, this might not be the right tool for you, at least not yet. Also, if you have high interest debt, if you have loads and loads of consumer debt, again, this strategy can serve a purpose. And I've even used it to help people pay off debt before. However, you still have to have the ability to save money, you still have to be in a position where you're willing and able to do so, and you're willing and able to focus on and pay off that debt because it's not going to do you any good to save money or to go invest in other things if you have loads of 20% interest debt. The reality is if you have a credit card at 20% and you choose to not pay that card off because you want to save money and earn 5% or 6% in your insurance policy, or you want to even invest in something that pays you 10%, guess what? You're still losing 10% because you're paying 20% on the credit card and you're making 10% on your investment, the thing that you decided to put money into, you're still losing in that scenario. So you still need to focus on getting rid of the consumer debt, regardless of whether you're going to save money in a bank account or you're going to save it in a policy or you're going to invest it in something. The consumer debt needs to be taken care of. Also, if you have a short-time horizon, the whole life policy may or may not be the right fit, as I talked about. There are some policies that you can borrow from very quickly. There are others that you're going to have to wait a while on. And there are always trade-offs for these different scenarios, right? It is things you want to look at, you want to pay attention to, and decide which fits your situation best. So in many of these situations, it's simply that the policy is not optimal for the time that you're in, right? It's not that it may not fit down the road at a different time after you focus on some other things first, but it might not be the right fit now. It's just simply the wrong tool for the problem that you're dealing with today. So if that's true, what has to be different for this to actually work? And that is part number three. So when and how does this actually work for people? And this is the part that most people never hear. You know, this is not often talked about in this type of context. But the reality is, for this to work, I would say 95% of the people that I've worked with over the last decade, we have to make sure that this is designed specifically for what's called cash value. Basically, think of it like your savings bucket. It's got to be designed to grow that savings bucket and not just focus on death benefit. Now, don't get me wrong, death benefit is important. It is a significant part of why this matters and plays a big role in what I would call family banking. Because if we're setting up a family bank, we're trying to protect ourselves now, trying to protect our money, grow our money, and we're also trying to build a legacy, whether that is a legacy for your kids, your grandkids, for a charity that you want to leave money to, whatever, right? But that that money is there for the future, and it's there to be used today if this is done correctly. What else has to happen? Well, it has to be designed to fit a bigger financial picture. Meaning, don't just dial in on the insurance policy and say, I need this policy, this is going to solve all my problems. Because I'm here to tell you, I've been in it for 10 years personally. I have eight of these policies between myself and my kids. And in that situation, the whole life policies do not solve every problem. They do create long-term lasting wealth. They enable you to make smarter, more thought-out decisions long-term, but they are not a one size fit all. It is not, this will solve everything for you today. So again, it has to be designed into a bigger system. What is the big picture? What are we trying to accomplish with this? Why are we doing the insurance policy so that the context is correct and we can use it appropriately, we can contribute to it appropriately, and we can use it at the right times. Which kind of leads into the next point here, which is, you know, what is it actually for? What's what's your purpose? Why are you setting up something like this? Or why would you put money into any sort of investment? It doesn't really matter what you're trying to save, grow, and protect money for. What matters is understand that purpose for yourself and then dial in on it and focus on your goals, right? If we don't focus on the goal, whatever you focus on is what you're going to achieve. So if you're focused on a goal over here and then you decide that you want this cool whole life policy, and then two weeks later you decide you want to put money into crypto, and then you want to put it back into the market, and then you want to take some money and put it into savings, and then you learn about this thing called velocity banking. And like you can't do this jumping around thing without having some direction because if you don't have direction, it doesn't really matter what tools you use. So whole life insurance is not there to outperform everything. It's just there to simply make your overall big picture perform better and work better. But the whole life is not the investment. It's not the thing that's gonna outperform the market every year and outperform your real estate. That's not what it's there for. I get that question a lot, right? People are asking all the time, is whole life insurance a good investment? Well, if you're treating it like an investment, I'm gonna tell you no. And I'm a huge proponent of whole life insurance. I think it fills a really important role in our lives, but it's not a good investment. It is not meant to be an investment. It's a very conservative way to save, grow, and protect money. So it's the wrong question to say, is whole life insurance a good investment? It's not a bad question, it's just the wrong question. You know, judging whole life insurance as an investment is like judging a savings account for not being a stock. Different tools with different jobs. So is whole life insurance a scam? Well, from what we've talked about today, sometimes, right? It's not the tool, it's not the policy that's the scam. It's the way it's sold, the way it's talked about, the education that's received around it, right? This is not, you know, I hate the idea of get rich quick schemes, and I hate the idea of this magical one size fits all, this tool that's going to solve all the problems, right? That's not what it is. So if it's designed incorrectly, if it's sold incorrectly, or if it's used in the wrong situation, I think it could potentially fit the bill of a scam, right? Again, it's not the tool that's the problem. It's not the policy. Life insurance is a very old tool. It's 200 years old or more. It's been around for a very long time. The tool itself is not the problem. It's the way that it's designed, structured, set up, and sold. If this episode added any value for you, like, subscribe, and share. Follow along. We'll release more content just like this. And we look forward to catching you on the next episode.