Welcome to Martinis and Your Money, the podcast about living a better life one cocktail at a time. I'm your host, Shanna McLeigh. I'm so excited you're joining us today. We're going to have a lot of fun, so let's get started. Hello Martinis and Your Money listeners. In case you didn't know, September is Life Insurance Awareness Month, and as a financial planner, life insurance is near and dear to my heart, not only for my family's financial health, but also the financial health of my clients' families.

So I'm excited to tell you that today's episode is being brought to you by my friends at TermLifeInsurance.com. TermLifeInsurance.com provides affordable life insurance for your family, so please check them out at www.termlifeinsurance.com or through my site financially-blonde.com/termlife. Today I'm talking to Joshua Sheets, founder of the website and podcast Radical Personal Finance about life insurance.

I've talked about this topic on the podcast in the past and I wanted to go into greater depth with Joshua and speak more to the choices between whole life and term life and when life insurance makes sense as an investment. Josh's years of training and education in life insurance were clear in our conversation, and I think this is a valuable conversation for anyone who doesn't feel comfortable with their life insurance knowledge.

And now here's Joshua Sheets. Welcome to the show, Josh. I'm glad to be here. I'm so glad to have you. It's been a year since we were sitting next to each other at FinCon when I was just starting to think about podcasting, and I'm excited to now have you on my podcast.

I'm glad that you're doing it. We need lots and lots more people to build new financial blogs, new financial podcasts, and to diversify the sources of information. So I'm glad that you're doing it. I'd love to see thousands more people step into this ring as well. I totally agree.

The more the merrier, right? Everybody's always like, "Oh, is it too saturated?" I feel like it's never saturated. Everybody's got a unique voice and perspective. Right. There are different people who will come from different perspectives, and all of us are going to relate more with a certain background. So I've got a certain background and a way of expressing thoughts that is perfect for some people, and there are some people who cannot stand the low IT things.

And I look at some financial shows out there and say, "I would never in my life listen to that show." But yet I know they have a real audience. And so I love the fact that we've eliminated the barrier between somebody who is an expert or a content creator and the individual listening.

And so we need more and more competition. I'm a big free market guy, and I love the competition. I love it. And you used to be a financial advisor like me, and we used to say in the industry, "There's a client for every advisor. There's someone for everyone." And my listeners are probably all people who love to drink, since I do.

That works. And I'm bringing you into the fold today. So what are you drinking with me today? I have got a beautiful, let's see, it's a blue hefty cup here filled with crystal clear, perfect water. Wow. Is it Florida's finest? It is tap water run through my filtration system.

I should have been better prepared and made myself a nice white Russian or something, but I didn't. Wait, so is a white Russian your go-to drink if you were to have a cocktail? It is. And the story behind that, I'm not much of a drinker, but one time I had a sales job when I was in college, and I really have never been a drinker.

But at this job, part of my job description was to go to cocktail parties and do the how are you's and who are you's with some people who were there. And so I needed to have a drink in my hand, and I never ordered a drink in my life.

And so I walked up to the bar to order a drink, and I didn't know what to order. So the guy beside me ordered a white Russian. And I was like, I'll have a white Russian. So I got one and I tasted it. I said, wow, this is delicious.

And to this day, I don't know how many years later that still, if I'm going to order a drink, it's often going to be a white Russian or a glass of red wine. That's hysterical. That's like how I got into Malibu Bay Breezes. That was my first underage drinking experience.

I was like, oh yeah. Somebody's like, oh, just drink a Bay Breeze. It doesn't taste like liquor at all. It's funny how much of drinking is all about the image and the status. And there I was. I didn't have a clue. Like, what are the names of drinks? I don't know.

And the white Russian is such a peculiar drink, too. I mean, it's delicious. It's like dessert in a drink. That's funny. I love it. Well, I'm drinking my go-to. Well, I've got a lot of go-to's. This one is just a vodka tonic. I'm a big vodka fan. I'm a clear liquor fan.

A long story that I don't think I've yet shared on the podcast. One day I will share it of why I only drink. I say it's the only way I'm prejudiced is in my alcohol. I only drink the clear stuff. So the brown stuff's got me in trouble in the past.

I believe it. So, well, I'm excited to have you on because this show is airing in September. And September is Life Insurance Month, which is a very exciting topic to the two of us who are financial planners and know the importance of it, but probably not really exciting to the general population.

I love the topic. Even if you're not excited, I'm pretty passionate about life insurance. So I'll do my best to make it interesting. I need you to bring your egg in because you used to work for Northwestern Mutual. Yeah, I spent six years as a financial advisor with Northwestern Mutual.

And I probably, as an introduction to the topic of life insurance, I probably should give a quick background on my history in the industry. Please do. I'd love it. Because life insurance is one of the most emotionally charged issues. And people often have very strong opinions and perspectives on it, specifically with regard to what type of life insurance you should buy.

There's a lot of reasons for it, but people have strong opinions. And what's interesting is, as a young man, I was always a buy term and invest the difference guy, which is one of the most strongly held perspectives. And I couldn't conceive of why anybody would think anything else other than that because I was profoundly convinced that the only type of life insurance you ever bought was term life insurance and everything else was a total waste of money and a total rip off.

And then I met people who were on exactly the opposite side who would say, "Why would anybody buy term insurance?" I couldn't believe it. There are strong opinions. Very strong. And so I was always a personal finance junkie. From my early teens, I was the nerd who probably when I should have been out playing football, I was reading books on personal finance.

So at that time, I primarily consumed mainstream personal finance books, something like David Box, The Automatic Millionaire or Millionaire Next Door, Think Thomas Stanley, things like that, just mainstream perspectives. And that served me well up until I was in college. And in my middle years of college, I had kind of an up and down financial life in my own personal finances.

But in my middle years of college, I got turned on to The Dave Ramsey Show by my brother who gave me a copy of the book Total Money Makeover. And that book really inspired me to get out of debt. And it also shaped a lot of my own personal financial philosophy because at that time when I was working to pay off my debt, I was listening to Dave Ramsey every day for about the podcast of his three-hour show.

And I just consumed thousands of hours of his content. Yeah, thousands wouldn't be an exaggeration. I would say thousands of hours. And so I was very strongly, with regard to life insurance, I was very strongly persuaded of his perspective which is always buy term life insurance. After college, I worked for a little while in the corporate world and I knew that I didn't want to work in the corporate space anymore.

I wanted to run my own business and I got laid off from a job. And when I was deciding what my next move was, I decided to go into the financial services business. And I was recruited by a few different companies and the company that I chose to join was a company called Northwestern Mutual.

Now, Northwestern is one of the leaders in the life insurance business. That's their heritage, is as a life insurance company. And ever since 1999 with the Financial Services Modernization Act, all basically prior to 1999, if you were an insurance company, you did insurance. If you were an investment company, you did investments.

And if you were a bank, you did banking. Well now since that time, everything's all mixed up. So your insurance agent sells you investments and refers you to their banker. You buy life insurance in the lobby of your bank and everything's all mixed up. The one-stop shop now. Exactly.

But the heritage of Northwestern Mutual was as a life insurance company and they are known as one of the largest providers of whole life insurance. And I knew that going in based upon my company research. So I interviewed with four different recruiters and advisors as part of my interview process.

And the question that I had for all of them was I said, "I don't believe that I could ethically sell whole life insurance because I don't 'believe' in the product." It's almost like it's a religious conviction. I don't believe in it. And I said, "Tell me why I'm wrong." And here I was sitting with some very smart, very experienced people.

Some would say very biased, but I'd say smart and experienced. And all of them shared with me thoughts and ideas and perspectives that I never knew. Concurrently, I was actually interviewing with other companies including Primerica, which is the exact opposite. They're almost arch enemies, Northwestern Mutual and Primerica because Primerica only sells term life insurance and Northwestern Mutual, their main flagship product is whole life insurance.

So I had a very interesting exposure to the industry. So I did a lot of research about insurance products to try to understand what was I missing. And then I went on to build a career. I decided that I learned enough about whole life insurance to be satisfied that it wasn't an ethically wrong product.

It wasn't like it was a terrible product and I can share some of the reasons why. But it did need to be rightly used. So I built a business with Northwestern Mutual for the first few years focusing primarily on insurance sales, life insurance, disability insurance and long term care insurance.

Then after a few years, when I started I was a young and green 23 year old newbie. And then I spent a lot of time studying and a lot of time working hard and learning my craft. And then I transitioned to more of a wealth management practice for another three to four years.

So I spent a total of six years there. And at that point in time, I closed my practice to launch Radical Personal Finance. And that's what I've been doing for the last year and a half now. And you just gave my listeners exactly why I have you on for this conversation.

So I'm even more excited. I knew this about your background and I appreciate you sharing it. I've talked about life insurance on the podcast in the past and just life insurance in general because step one is thinking about life insurance, I think. And then I really wanted to do this next level, dive deeper because I see this all the time with my clients.

Some of them don't even know they should have life insurance or don't understand the importance of it. So that was the first podcast was let's address life insurance. And now this is step two is like, okay, what type of life insurance is right for me? And I think, and there's all, like we said, there's opinions on either side.

And I think it gets very confusing for some people. And we both know that there are persuasive arguments on both sides, rightly, wrongly, and it gets people confused. And I really wanted to have kind of more of an in-depth conversation about life insurance to help people really understand why term, why whole life, when does it make sense and kind of how to understand the difference, the differences and the nuances.

So I, so the first question I really have for you is why do you think whole life gets such a bad rap? A bunch of reasons. And number one, whole life insurance gets a bad rap because all life insurance agents are paid on commission and commissions are calculated based upon a percentage of what in the business we call the first year premium.

So these premium rates vary across companies and across types of policies, but they'll range from anywhere from 50% of the first year premium to a hundred and, to over a hundred percent of the first year premium, depending on the product. So let's just, for sake of analysis, let's just say 50% makes our math simpler.

If you're selling a term life insurance policy that's $30 a month, then your first year premium is $360. So a 50% commission rate would be about $175 ish. That's not bad money, but if you can take the same insurance product and you can change the commissions from $30 a month to $300 a month, well now you've just increased your commission rate to a much higher number.

And I hate to do on air math because I always get the number wrong, but let's just say it's, I mean, you're in $1,750 if I'm, if I'm anywhere close on my mental math. And so there's a very large incentive for insurance agents to change from the $30 a month policy to the $300 a month policy because of the incentive for higher commissions.

And unfortunately money talks and there have been many, many life insurance agents who have made the choice to press the product that's the higher commission product than just simply because of the fact of it being a commission. Now that's the first thing you got to get out there and you got to be aware of that.

After being in the industry, I personally think there are fewer agents who've made that decision than I thought before being in the industry because most agents that I know usually they're really working hard to do what's in their client's best interests. But there is a very large potential conflict of interest there.

The second thing that's happened is due to the nature of the industry being somewhat siloed in the past, oftentimes the only tool that a life insurance agent had to help their clients with investments was a life insurance policy or an annuity. And so what happened is you would generally either be a stockbroker, in which case you didn't sell life insurance, or you were an insurance agent, in which case you didn't sell stocks.

So there's a natural lifestyle with life insurance needs that in most, and I'm going to use as my proxy client, I'm going to use a middle income, dual income household, middle class situation because planning for somebody who is in the lower economic sphere, minimum wage worker, is very different than planning for somebody who's a billionaire.

And I'll talk about some of the strategies, but let's just stick with a middle income household. There's a phase of need. And so let's say that you have a two income household, young families coming together. There's a need at that age for a lot of insurance because their need in case one of them dies is very large and they don't have a lot of money to invest.

But through the course of a career, they're going to pile up money, they're going to want to invest, and the need for insurance is going to decline. And so that becomes a real business problem for a life insurance agent. If they can't also do investments, then they have to say, "Well, how do I keep my client with their insurance policies for longer and how do I give them something to invest?" And so what happened is insurance agents would start to compete against stockbrokers.

And this is usually the comparison that you hear in today's world where people talk about, "Well, you either buy stocks or you buy whole life insurance." That's often the comparison that's made. And I think that's an unfortunate artifact of that siloization of the industry. I think the best model personally, from my opinion, is for a good financial advisor to have access to both life insurance products and investment products and then to fit those products to their client situation.

But there's some powerful conflicts of interest. And then the other thing is when you get into companies, all financial companies in many ways are suspect. Many insurance companies have just done some egregious things with their products and with their policies, just like many financial companies have done some egregious things to their products and to their policies.

And the financial industry does not have a history of transparency. They don't have a history of low costs. So those things are changing very much because there's now a lot more transparency and that's forced the costs down. And this is across the board on insurance policies and on investment products.

There's been massive presses by the free market to expose certain things and that's caused the companies to change their product design. But there are a number of reasons why and there's some very important conflicts of interest that consumers need to be aware of so that they can move properly through the industry.

And I think you bring up great points, Josh, too, because the there are reasons why whole life gets a bad rap. And and for full disclosure, these things still happen, you know, even though because I you know, I've got clients who who specifically have these situations where they met with a financial planner at you know, and the financial planner title we both know can be thrown on just about anything.

Anybody could call themselves that. And and then and people clients have this perspective of what they're going to get and they don't always get that. And they think, OK, well, I'm talking to a financial planner and they say they're a holistic financial planner and they give this great presentation.

But at the end of the day, it ends up being one thing. And in particular, I this is why I really want to talk to you, too. I recently had a client who was working at the financial planner before me, and he was actually at Northwestern Mutual, and she wanted to invest and, you know, do a number of different things.

And her, you know, quote, investment product is a whole life policy. And she's 30 something years old with no kids and not married and no property and anything like that. And from my perspective, I thought, wow, like, how did this make sense? You know, and I wanted to pick your brain.

Like, what would you think about this? This seeing this from somebody else's portfolio? In my mind, it just screamed, you know, again, conflict of interest. And I know you don't know the full story, but what are your thoughts on if you see something like that? And what are your thoughts on how does how does a client like her how does she how does she even know she got the run?

It's like, how do you even decipher? You think you're speaking to a professional financial planner and you just trust them? And how do you know? How do you kind of read between the lines? I really that's the most difficult question that I get. And it's the reason why I created Radical Personal Finance.

It's very hard for most consumers to know whether they're getting good advice or bad advice. Yeah, it's very difficult. And one of the things that I'm trying to do with with my show is to bring more light to some of the things that often aren't talked about. There's no way I don't believe there's any way that you or I can sit here and you may know more facts, but with just the facts that you described, it's very hard for me to know, okay, was this person given good advice or bad advice?

I've been in situations where on a case like that, it's a natural fit. And it could be a natural fit, for a number of reasons. If the person, for example, has a natural or an inherent distrust of investing in stocks. On the surface of it, you would generally say younger person, little need for insurance, 30 year old, not single, you would say not so much of a need for death benefit.

That's a mark against life insurance. You would also say long time horizon, assuming that they're investing for retirement. So you want as you want, you've got a long time horizon. So you should you should be investing in a way that's going to have the highest maximum possible return over long period.

You would usually steer away in that situation from whole life insurance and you would steer towards a much more aggressive stock based portfolio. But I've also been in that situation where a client just flat out categorically says, I cannot stomach the thought of losing money and I cannot stomach the volatility of the stock market.

That's very difficult because for financial advisors, oftentimes you as an advisor are very comfortable with volatility, but many people are actually not comfortable. And a hobby of mine is actually to look at what are the actual returns that people actually get in their investments. And when I was trying to figure out how do I become a skillful and useful investment portfolio manager, I went back and looked at what are the actual returns that people get.

And in general, when you pull the data, you find that the average investor underperforms their own investments by greater than 50%. So there are a number of false comparisons that are often made by those of us who are pundits on the industry where we say, well, the S&P 500, if you put your money into an S&P 500 index fund and left it alone, you would get a 10% rate of return over XYZ historical period.

But when you look at the actual average investor, you find they've underperformed that return by greater than 50%. And one reason for that can be volatility. And so if that person talked through with their advisor and their advisor said, here are your options. You could choose mutual funds and here's what we would guess with the mutual funds, here's the volatility that we would expect.

You need to be prepared in any year for the value of your portfolio to decline by about 15%. Every three years, you need to be prepared for the value of your portfolio to decline by about 33%. And over the course of your investment lifetime, Miss 30-year-old, you need to be prepared for on at least two to three occasions for the value of your portfolio to decline by about 50%.

Those are the realities of investing in the stock market. And so you've got $100,000 here in this investment account. That means that it's very likely that you're going to open your account statements within the next three years and your account's going to be down to about $60,000. Are you okay with that?

If they're okay with that, I would encourage them to be in stocks. And my job as a good investment advisor is to move them into stocks. Now on the flip side, if I turned them and they said, no, I can't handle that. I cannot do that at all. You'd have to go through over tax ramifications as well, which is a whole separate thing that I can share.

Then you might look at something like a life insurance policy and you might say, this policy is guaranteed to grow in value. Here is what we, here's historically how this policy is performed. Looking forward, I would guess that it would work about like this. You may get a rate of return that's about, depending on the policy, depending on the policy design, 4 or 5%, 6% maybe, depending on how you've structured it.

What would you prefer? And that person may have chosen to be preferred. Now I've just sketched that out as an ideal. They may have said, okay, let's do the life insurance policy. I've sketched that out as an ideal scenario. And my guess is that neither of those things happened as far as most advisors are not good enough to go through all the scenarios.

But that would be what I would love to see every advisor do. Because the problem that I see, the mistake that I see people making is they don't clearly articulate what their goals are. Then they don't clearly understand the risks and the benefits. And I'm not just talking about what's the standard deviation of my investment portfolio.

What are the risks and the benefits of any approach to investing? And then how do I make an intelligent decision within those choices? So I don't like the comparison of stocks versus life insurance. I own both. And I think both have a place. But they've got to have a right place in the right situation at the right time.

I don't like to see either of them vilified. I agree. I think they both have a place. And I want to talk more about where you think, what your opinion is on term life versus whole life. And we kind of went through a little bit on life insurance as an investment.

But I think they both have a place. And I think that the kind of comfort that the listeners and general public should have is that there is a place for these things. It's just a matter of, it really comes back to the investor and the client of being more clear and concise on what they need.

And I think, like you said, sometimes they just don't. I've had clients who are like, I hate to see my portfolio go up and down. I hate it. I hate it. I hate it. I hate it. And so what they're saying to me is I want a conservative portfolio.

So one in particular cracks me up. She cracks me up. So she was in mostly fixed income. And she's an older client too, but she was mostly fixed income. And then we meet for her quarterly review. She's like, why isn't my portfolio going anywhere? And I said, well, remember how you said you didn't like the up and down?

OK, well, maybe I need a little more risk. I said, OK. So then we add on more risk. And then she's like, wow, my portfolio just kind of seems all over the place. Fast forward to the next quarterly meeting. I'm like, well, remember? And it's funny because I think clients will say things and mean something else.

Sometimes they're not even totally sure how they feel in theory. And I think a lot of what I do and spend time with them is helping them understand what's going on. I think the best way to get really comfortable with what's happening in your portfolio is to be educated.

And hopefully you're working with a financial advisor or financial planner who is getting you comfortable with that and understanding, like you were saying, a $100,000 portfolio could be $60,000. But then it could also equally be $120,000. And understanding that kind of big swing. And as long as they understand that those are the outcomes, then getting them comfortable with the outcomes, then I feel like they have a better grip on what they're doing.

But I wanted to ask you about term versus whole life. So this is the big kind of crux of it, right? Let's just say somebody goes to talk to their financial planner, whatever firm they work at, and says, I need life insurance. And what kind should I get? When do you think that it makes sense for somebody to have whole life?

And when do you think it makes sense for term life? If the need for insurance is temporary, you always buy term life insurance. If the need for insurance is permanent, you buy whole life insurance. It's that simple. There's really no need to, I mean, there are varieties to it, but that's what you need to recognize.

All temporary life insurance needs should be met with term. All permanent life insurance needs to be met with whole life insurance. And what do you think is a permanent need for life insurance? Who's somebody who has a permanent need for life insurance? I think most people have a permanent need for life insurance, but there are some people who have more of a need than not.

Tying together that question and also the previous commentary that you provided, one thing in my experience that really changed me, and I was fortunate because I worked with Northwestern Mutual, I had the opportunity to work with people who had been long term clients of the company. They call this just managing the company's clients.

And so as part of that, when I started as a financial advisor, I was 23 years old, and so naturally the natural market that I had was young people. And so I had my philosophies about the best way to handle money as a 23 year old or a 24 year old or a 25 year old.

And then I had the academic framework from becoming a certified financial planner or working through the chartered life underwriter curriculum, had the academic framework. But when actually speaking with people who were older, and I had several clients who were in their 70s, 80s and 80s, I would discover things like a client would say, and this is with regard to the topic of whole life insurance, they would say, "The best financial decision I ever made was to buy a whole life insurance policy." And I would say, "Huh?

That shouldn't be the case." Well, what happened is that they looked back and that actually had been their best investment, even though the academic would say, "Well, it shouldn't be," but it actually was for them in reality. So the other thing I didn't understand was I had always bought into the concept of self-insuring.

I'd always understood that if I would buy term insurance and I would invest the difference into stocks, and so therefore because of doing that over the course of about a 20 to 30 year time perspective, then I would get into a situation where I would have plenty of money and I would no longer need life insurance.

I would be self-insured. That was the concept that I began with. I had an experience that really, really changed that, however. The experience was with a client, and this was a network client, somebody who'd had policies with the company for a very long time and I took over servicing their account.

They were in their mid-70s. They had been very successful. The husband had been an entrepreneur, had sold a company for several million dollars. They had invested the majority of that money and they'd split it between him and his wife in some different trust accounts. When I met them, they had a net worth of about $2 million and they were living within their income, but it was starting to get tight.

The reason it was getting tight was because the majority of their money was tied up in houses. They had a $600,000 house in Massachusetts and about a $450,000 house here in Florida. He had exhausted his investment accounts. His wife still had her investment accounts and trust, but because of their age, those were primarily tilted in the direction of fixed income and they weren't creating a ton of income at that time.

This was about three years ago. She died unexpectedly. She was there at the first meeting. I met with them a couple of times. I was working through a comprehensive plan for them. Then all of a sudden, he called me and said, "My wife's in the hospital. She contracted this very strange disease and she died over the course of a couple of weeks." Here he was with a net worth of $2 million and he didn't have $5,000 or $10,000 in his checking account.

He couldn't pay for the funeral. He had to put the funeral on to a credit card. I delivered a death benefit check of about $60,000 or $70,000 of the death benefit on her permanent life insurance policies that she'd had. He was so grateful to have that money because it got him through the period of months, allowed him to pay for the funeral and allowed him to wait until the house was sold, etc., before he was able to get through.

That really surprised me because in general you would say, "Here's somebody who has $2 million of assets and no debt and you're telling me that they need this life insurance money." But it was a real blessing to them to have the life insurance money. That caused me to filter my academic approach, which was, "Well, they should have just had a bigger emergency fund." Yeah, but people spend their emergency funds.

It caused me to say, "Well, they should have maintained more liquidity. They shouldn't have had those two houses." But when people are involved in their houses and they've got their lifestyles and their country club memberships and everything set, they don't often change. It really caused me to become a little bit less convinced of my academic perfection and a little bit more connected with real life.

I think that most people would like to have some life insurance that continues forever. The other experience that I had working with clients, and I'll often refer to clients because that's what changed me. I had my theories and then I met real life. The other experience that I had was I found that almost nobody ever ran out of their need for life insurance because instead of my approach, which was, "Well, you buy a house and then you pay it off and then you just get really rich." Most people buy a house, they pay it down, then they upgrade their house, then they buy cars, and then they put their kids in college.

What happens is that most 50-year-olds are not measurably of a better financial situation. They don't actually need less insurance than they did when they were in their 30s. They actually need more often because they've increased their incomes, they've increased their lifestyles, and now they need to cover that. I recognize that the need for insurance often doesn't go away like in my mind it should.

Then also, people don't like giving it up. When people haven't owned life insurance, they don't actually know the feeling of security and confidence that comes with having life insurance. Once they own it for a while, usually something will happen. They'll have a close call on the highway or a friend of theirs will have a heart attack or something like that.

Then all of a sudden they say, "I'm really glad to know that if something happened to me, I've taken care of my family." Once they get into that perspective, then they often look at their situation and say, "I don't want to lose this." One of the big things that I have had to work through is a lot of clients who might be in their 50s and their 10-year term life insurance policy is going away and they don't want to lose their insurance coverage.

Then you're out shopping the market as a 50-year-old and saying, "What can I do and how can I figure out how to keep life insurance in force?" Maybe in the meantime they've had some health scares. You're watching that commercial with Alex Trebek. Right, right. Like, "Hey, that sounds like a good idea." I have come to prize in financial planning a concept that I almost never hear people talk about.

That's the concept of flexibility. When I build an insurance plan, I want to make sure that no matter what happens, that it's going to work over the long term. In general, you always solve death benefit needs with term life insurance because term insurance is going to be your cheapest way to buy death benefit.

That's always going to be the case. Term insurance is going to be your cheapest way to buy death benefit in the beginning. But you have to recognize the fact that your insurance is going to expire. Term life insurance is temporary. It's going to expire. If you have a short-term need and you need death benefit, you always start with term life insurance.

But you want to leave yourself some options as your financial life develops. It might be the fact, it might be the case that 10 or 15 years from now, you're effectively self-insured. You've paid off your debt. You've saved a million dollars. You don't need life insurance anymore. At that point in time, you go ahead and drop it.

But it might be the case that something else has happened. You've started a new business. I've been in this situation where I invest heavily into investments that are non-liquid. You've bought houses. You've bought rental properties. And all of a sudden now, if you die, you don't have liquid assets that are sufficient to cover your family.

So you need to make sure that your term life insurance program in and of itself is flexible. And then you need to make sure that you have options to change it from term life insurance to permanent life insurance as you need to. Yeah. And I think that's a great point, too.

So let's talk about that a little bit, too. What do you say to somebody who's listening to this and thinks, Josh is brilliant and I love the idea of the combination and the flexibility of insurance? What do you say to someone who doesn't have the budget to do? You know, and we know this working with younger people and being in our 30s is how do you manage having that coverage, that insurance coverage and you want your cake and eat it, too.

What should you do to try to fit it into your budget? I've got on my show, I hope this whole thing doesn't sound like an ad for radical personal finance, but I've got probably at this point 12 to 18 hours of content on life insurance. So I'm going to give the short answers.

But if people really want to dig deep, there is some content available on life insurance. I've got, I think I did a three hour show on term life insurance. And I don't often like to talk about academic backgrounds, but in this case I'll go ahead and do it. There's a design, I do have an academic background in the insurance industry and that's one of the things that does make a difference when you study the academics of it.

So for example, I have a certificate called the Chartered Life Underwriter, which is in many ways equivalent to a master's degree exclusive to life insurance. If you can work with an insurance advisor who has after their name CLU, that means something and you should consider that person a little bit more knowledgeable than the guy next door on the street.

But the answer is cost is not a constraint if you do the program right. So I'm 30 years old and I have two young kids and I'm married and I am the sole income earner in my household. I have just under two and a half million dollars of term life insurance, I think it's like 2.3 million dollars of term life insurance.

And my monthly premiums for that are something like 85 bucks a month. So it's not generally cost prohibitive to have term life insurance if you adjust it right. For younger people, I do not like level term life insurance. The standard advice you hear is buy 10 or 15 or 20 year level term life insurance.

I don't like that and there are a few reasons why. In short, level term life insurance is a product that will force you out at a predetermined date, 10, 15 or 20 years from now. The cheapest prices will always come in the shortest periods of terms. So 10 year term insurance will always be the cheapest.

But the problem is it's inflexible and you're forced out of the policy after 10 or 15 or 20 years. There's another type of policy design which used to be far more popular. This is called annual renewable term life insurance or another name for it which is the same as yearly renewable term.

This is not as popular today because it's hard to explain how it works to people. So it's not easily packaged into a 30 second TV commercial. But if you talk to an insurance agent, ask them about an annual renewable term policy. That's what I own is all of my insurance is annual renewable term insurance.

The way these policies work is they are pure term life insurance. There's no cash value accumulation. There's no savings programs to it. It's just pure term life insurance. But the way that insurance policies work internally is that every year the actual cost, the premium increases each year of your insurance because you're one year closer to your likely death.

So the way these policies work is they charge you whatever the actual premium is at the current age for your situation. So I pay every year what the actual cost of insurance is for a 30 year old male. I don't pay for what a 40 year old male is.

I pay for a 30 year old male. In the beginning of life, this is the best plan for younger people, people in their 20s, 30s and 40s. When you get to about your mid 40s, that's when you need to change. At that point in time, you want to start looking at level term insurance products instead because the premium rates start to increase substantially on annual renewable term once you get into the 40s and 50s and 60s and they're unaffordable at that point in time.

So that's where your level term policies are the best bet. The reason however why, so my term insurance policies and my wife's policies are all a, it's a Northwestern Mutual product because that's where I came from. It's a product called Term Insurance to Age 80. So the way it works is I can keep my insurance policies as long as I want up through the age of 80.

So that gives me another 50 years of coverage but I pay the exact price that a 30 year old should pay. So it's very cheap now and they're convertible anytime between now and age 60 without taking any medical exams. So my plan is to build a lot of wealth and build a lot of assets.

I have some small whole life policies at this point in time but I expect to probably desire to have more whole life policies in the future. So if I sit down at age 40 and I got a couple million bucks and I decide I want to go ahead and purchase some more whole life policies, I don't have to take more medical exams.

I can just swap out my term life insurance for whole life insurance. So that is my recommendation for younger people to what my family is doing and it's my recommendation for others to pursue. It's very hard however to find an insurance agent who's going to be aware of annual renewable term or yearly renewable term.

More and more companies are pulling their products but if you ask your insurance agent, there are companies out there especially included in the brokerage world who offer that type of product. We are going to take a quick break in the show right now and if you are thinking about looking into life insurance, please check out this podcast episode sponsor, TermLifeInsurance.com.

Where you can analyze your needs and find the best coverage for your family all in one place. Check them out at www.termlifeinsurance.com. I think you bring up a great point too Josh. It's hard to find. A lot of insurance out there is products and is for lack of a better word, cookie cutter.

So clients fill out a drop down box and then they fit in a very specific thing and especially for the term product, there are insurance companies don't like to invest a lot of time and energy and resources in the term product. That's just their, you know, they want that to be the quickest easiest sell.

They don't want to invest a lot of time and you bring up the point that it could be a little bit, clients can have the ability to make it a little bit more complex and work a little bit more in their favor and it's going to take extra time on their part, on the client's part to ask and figure it out and see if they're working with a company that can provide them what they want.

There's no reason not to work with an insurance expert. One of the things that is frustrating to me in some ways is the fact that all insurance, there is no, I am not aware, I actually got an email from a reader saying it was two companies that he thinks that they did so I need to check this out.

I don't know the names of any companies off the top of my head that will sell insurance that's not commission based. All insurance products are commission based and the question is who's keeping the commission? So let's say for example when I was an insurance agent with Northwestern Mutual, I had access to Northwestern Mutual's products and then I could also sell insurance with any company that brokered their insurance which is most companies out there.

So I could sell a Northwestern Mutual policy or a MetLife insurance policy or Prudential policy or a Banner policy or whatever and I would be paid a commission on any of those sales. That commission is exactly the same as the owner of what TermInsurance.com or SelectQuote or AccuQuote or any of these companies that advertise on TV, Xander Insurance for the Dave Ramsey crowd.

All of those companies collect the exact same commission on their products as I would collect on the sale of it. And so when you're thinking about the purchase of insurance, you have to say, "Well, what am I trying to get? What's the service that I'm trying to get?" If you work with a local insurance agent, if you can find somebody who's competent and who's trustworthy, even on a term life insurance sale, that can be worth it as far as from their perspective from a commission standpoint.

If I were a commission rate on brokered insurance products like a Banner Life or Prudential or MetLife, those would range from 75 to 100% of the first year premium. And so as long as you're not trying to buy an $82,000 policy, in which case it's really not worth it.

There's not enough incentive there for an insurance agent to work with you. But if you're working with a family and you're going to buy a million and your wife's going to buy a million or your husband's going to buy a million, you're going to wind up with premiums that are 100, 200 bucks a month.

There's an 800 to $1,200 payday there for an insurance agent. And so it's worth it for an insurance agent, even on term life insurance products, to sit down and work with you and say, "Let me walk you through. Let's figure out how much insurance you actually should have and you'll get some more personalized advice." I think that's really valuable because all you're going to get online is a calculator and you're going to get a multiple of income approach or something like that.

But yet you're going to pay exactly the cost for that versus the product from your local insurance agent. So why not work with someone who can actually review your situation? Yeah, I think that's a great point. And to also talk about fees and things like that, these are not fees that come out of the client's pocket.

This is how they're compensated internally, the insurance agent. So you shouldn't have to worry about you, the insured, as paying the fees out of pocket. It comes out of the sale of the plan. It's an internal fee from the insurance provider. So like I always say, you get what you pay for.

You get what you pay for in a lot of things in life and you can get what you pay for in insurance as well. And if you do want that extra attention, some people, the online, the dropdown, whatever, that's fine. That works for them and that's great. But if you want that extra attention and extra handholding, it's out there.

There are people out there and you can get it and not necessarily have to pay for it. But you do have to make sure that you understand what you're getting and that you're not getting more than what you need to and you are working with someone you trust. I think the reason people don't want to work with individuals is because they're concerned about sales pressure.

And many life insurance agents over the years have used high pressure sales tactics and this makes people feel very uncomfortable. And so they're concerned that if Joshua Sheets shows up in my house and he's sitting at my kitchen table, he's going to pull out the hammer. He's going to say, "Sign here." And all of a sudden I'm going to wind up buying something I didn't expect to buy.

That's a reasonable, rational fear. I have the same fear in other areas of my life and reasons why I don't want to work with a salesperson. I think that the best move is get educated so that you can ask good questions and then try to work with an agent who knows what they're talking about and even get a second opinion.

It is a risk because many agents will use a high pressure sales tactic on you. But if you're educated, you can smell it out. And again, I've done my best. I know Shannon's doing her best. We're doing our best and today it's better in 2015 than it was in 2013 for transparent sources of information to know.

Like I said, most people don't have a clue how much commissions are on insurance policies. I've just told you normal rates, normal ranges so you can have an idea. I always wish in the years of it as an agent, I always wish people would ask me, "How much money do you make and how do you get paid?" People don't ask.

And I think that ought to be clearly available and clearly available information. Don't be scared to ask hard questions. It's your money. You've got to take care of it. Well, they think it's – those are questions you think you ask a financial advisor or financial planner and I think they're not necessarily common questions people think about in insurance sales.

And like you said, there's money being paid out and people should understand where it is. But how do you advise somebody though – I mean they're doing their research, maybe they've asked around, nobody's got a good insurance person for them to work with. How do they go about finding somebody?

Another difficult question. So I've struggled with how to answer this question. I'll give you my answer. Feel free to disagree. But I've struggled with how to answer this question because having been in the industry, I have a soft spot, some biases having been in the industry. But now that I'm external to the industry, I can see the problems and see those – see the problems.

Here's my best guess. I think there's a lot of value. Personally, I am biased but I think there's a lot of value in working with somebody who is at least if you don't know anybody already. Let's say that you're working with your Merrill Lynch lady and she's going to say, "OK.

Here, let me refer you over to my insurance rep." OK. That's fine because then they can service it within the office. But if you don't have an existing relationship, I would probably prefer to work with a mutual insurance company instead of a stock insurance company. There are three big ones who are – there are others that still exist but there are three really big ones that are the market leaders and those three are New York Life, Northwestern Mutual and Mass Mutual.

I would check to see if any of those three companies have an office near you. Then what I would do is I would call that local office. I would ask to speak to the managing director. That's usually the term that will be placed on it or it could be the supervising director.

The person who is in charge of that office used to be called the district agent. But now – and that's actually still what it's called in insurance contracts but that name has been changed on the public marketing side. I would say, "Here's my situation. I'm trying to find a rep, trying to find an agent.

Which of your agents would you refer me to?" That person will choose one of their agents. I think that's about the best plan that I've got for you right now because that will allow you to work with a company that has a history in insurance. Usually, a rep from one of those companies is going to be more well-trained with life insurance than is say the local car insurance rep.

If you actually have some friends that have taken jobs working as a life insurance rep for say the local car insurance company and they just have their financial services rep, the production expectation, the number of policies and things like that of those reps is for those of us who come from a life insurance background is laughably low.

There's really not the incentive or the desire for many of the agents in that situation to really be experts on life insurance. At least if you go with one of those companies, they're going to have access to training and they're probably going to be more knowledgeable. Just because they're with those companies doesn't necessarily mean that they're exclusively able to sell that company because that's the fear.

The fear is, "Well, if I work with the Mass Mutual guy, then I have to buy Mass Mutual." Mass Mutual might be the best fit or it might not be. Northwestern Mutual might be the best fit or they might not be. So ask the rep, "Can you sell me products with other companies?" I had many clients for whom Northwestern Mutual policies were the best solution.

I also had many clients for whom Banner life insurance policy was the best solution. If you're working with a rep that has access to both, then they should be able to help you out and actually give you some better, more personalized advice. I actually agree with your suggestion on how to find an insurance rep that you can speak with.

I think that the first choice is obviously somebody you know and trust, but if you don't have that person, the next best is that route. I would say when you do speak to that office manager, the person in charge, having come from a branch office experience, I think anybody who's at the top level of an office, they know who their people are and how they work and operate.

You should have a very honest conversation with that office manager or whatever their call, whatever their title is, and say, "Look, I'm looking for somebody like this. I don't want a hard sell. I want somebody who's going to answer my questions." Give them the full detail of who you are and what you want and they will do a really good job of finding the right fit for you.

Most people who are managers of an office like that, they have a client either, depending on the company. For example, my understanding, New York Life managing directors don't do any personal production. They're going to refer out all of theirs. Some Northwestern mutual managing directors do do some personal production.

It varies depending on the company. I don't remember what MassMutual, FS and my friends, what they do. Most of the time, when people are at that level, they're not going to be necessarily 100% focused on building new clients. They're focused on managing other agents. Some of them might say, "I'll help you myself," in which case, go for it.

It's probably fine. Or they'll go ahead and say, "We'll just go ahead and call. Here's the person who's going to be the best fit," and they'll help. Don't be scared to call multiple offices. Just because the company name is a name that's respected and admired doesn't mean that the office is run by somebody that you want to work with.

I had a great experience at Northwestern Mutual, but I've met people who said, "I had the worst experience in the world." Having been outside the industry, there are some offices that I would never work with. Just like with anything, you've got to look around. The name helps. It's a good start, but you've still got to figure out who's actually going to work with you.

Lapera: Yeah, definitely invest the time and you'll get what you pay for as far as what you invest in. Kline: I have some thoughts for you. Earlier, I sidestepped the question of whole life insurance as an investment. I have some thoughts on that topic. Lapera: I actually wanted to go back there.

We kind of talked about it a little bit. But yes, I did want to go back to that point of whole life as an investment option. This will come up a lot. Again, it kind of goes back to the industry. If somebody is meeting with a person who works for an insurance company, a financial planner who works for an insurance company, many times you will get a pitch, a sales pitch.

You might get a great financial planner who will give you a very holistic approach, but I know personally I've had a number of clients get a very strong pitch on the value and benefit of life insurance as an investment. My clients call me and they're like, "I don't know.

Maybe it sounds like a good idea. I don't really know what I was just told, and it's hard for them to decipher it." What is your view on whole life as an investment solution? Kline: I've got some strong thoughts on this. I'll do my best to lay them out in a way that people can understand it.

I have a little dream. One of my dreams is that in the future you won't have to distinguish between, "Well, my financial planner is a financial planner from an insurance company," or not. Today, it is much more likely that a financial planner who works in an insurance company is more likely to suggest a whole life insurance policy than someone who doesn't.

I'm not sure how much of that. I think some of that is just due to experience, bias, things like that. I think some of it is just due to exposure. For example, if I hadn't ever worked with some of those older clients who told me, I would look back on their history of investing in stocks.

So many people who've done everything that Money Magazine said to do, they've wound up losing money in stocks. I think more people lose more money in their 401(k)s than they make. There are a lot of reasons for that. I think when you actually look at actual returns, what we as financial planners tell people to do doesn't work many times because they don't do it.

It's not that there's anything wrong with the advice, it's wrong with how we articulate it, which is a whole challenging question of how do we as advisors do a better job for clients. But insurance has a lot of strengths and a lot of weaknesses. The first thing I would recommend to people is to pull away the idea of belief.

Earlier I joked about it kind of being a religion. I believe in life insurance or I don't believe in life insurance. To this day, many financial planners would make statements like that. Well, I don't believe in whole life insurance. One of the things I learned and I had to go through some very painful tearing as an advisor was not to say that, but rather to say what are the attributes of any product or any choice or any decision.

Let's pull it out of life insurance for example and say what about investing in real estate. Somebody says, "Well, I don't believe in investing in real estate," or "I believe in investing in real estate." People who make those statements are probably not real experts in the industry. They're probably not expert real estate investors.

The only purpose of any investment is to create cash for you and that cash is going to have certain attributes, sometimes going to be cash now and sometimes going to be cash later. But we're using that investment to fund our lifestyle and to fund our goals. So we can look at any financial opportunity and every financial opportunity will have strengths, it'll have weaknesses, and it'll have a place where it fits.

Savings accounts have a place where they fit. I keep cash and $20 bills at home. I don't keep all my money in a savings account. There are reasons for that. There are risks to it. Same thing with insurance policies. Insurance policies have benefits and have advantages and disadvantages as do stocks.

But even if you say something like stocks, that still doesn't tell you anything about the trading strategy. So every approach has benefits, has advantages and disadvantages. You can only ever make a good decision when you actually know what your goals are and then you can look and say, "Ah, here's the right move." And I like to use a couple of simple analogies for people.

My favorite is the question of cars. If you go to a car dealership and you say, "Well, I'm looking at," and you're looking at two cars. One car is a Honda Civic and the other is a big Ford F350 Dually. How do you choose between those two different vehicles?

You only choose between them based upon what your goals are. If you walk into the car dealership and you tell the person, "I'd like to tow the horse trailer around as I travel across the country and show my horses off," and they start talking to you about the fact that the Honda Civic gets great gas mileage, you know you're in the wrong situation.

On the same hand, if you say, "I need a commuting car," and they start talking to you about the F350, you're in the wrong situation. And so most of the time what happens in bad relationships, financial planning relationships gone bad, is the advisor or the salesperson hasn't effectively articulated the goals and then effectively clarified the attributes of a certain type of product.

And they're not connected. That's usually where it goes bad. Not based necessarily on the actual attributes of the product, but actually where they're connected. Once you start with the basis of, and this is where I'm going to switch to a different metaphor. Once you know what I want to do, for example, I want to dig a hole, or I want to move some things, so I need a shovel.

Well, there are literally dozens of different types of shovels that you could buy. You could get a snow shovel, you could get a flat shovel, you could get a rounded shovel, you can get a garden spade. There are tons of different designs of shovels. Some variations of design are very large.

For example, a snow shovel versus a simple round garden spade. Big difference between those. You wouldn't try to dig a hole with a snow shovel, and you'd be dumb to try to move snow with a garden spade. But then you can even fine tune it a little bit more, and you can talk about slight differences of different lengths of shovels and different applications for them.

So the same thing with insurance. I like to explain that to say, let's walk away from the emotion of a philosophy and talk about the actual attributes of the product. Fundamentally an insurance policy can represent a couple of different things, but it represents an insurance product with certain built-in attributes.

Some of those attributes are the tax code, some of the attributes are the investments that are within the policy, some of the attributes are actually how the internal mechanics of the policy work. So where people often go wrong with, the first place that they often go wrong when comparing insurance policies as an investment, is they make a poor comparison of what is their alternative.

If you are trying to compare a traditional, whole life insurance policy, I'll be specific here, a traditional ordinary life insurance policy with an old conservative mutual insurance company, a Mass Mutual, a New York Life, a Northwestern Mutual, if you're trying to compare that with stocks, you're making a poor comparison.

Because from the perspective of the investments that are driving that, it's like the F-350 and the Honda Civic. Fundamentally, a traditional ordinary, what's called a portfolio-based life insurance policy, is going to be funded based upon what in industry lingo is called the general account of the insurance company. The general account is their portfolio of investments that they run, which they're using as reserves to pay out their policy obligations.

By law, that investment portfolio is going to be extremely conservative in nature. Usually, greater than 80% of that investment portfolio is going to be invested in fixed income investments. Depending on the insurance company, depending on the cycle, they may have a portion of it which is invested in public securities, they may have a portion that's invested in private placements, they may have a large portion invested in real estate, each insurance company advantages differently.

But it's a very conservative portfolio. So, if you're going to go back historically and say, "How do the returns over a 20 or 30 year period of my whole life insurance policy compare to the returns of my S&P 500 index fund?" In a normal market scenario, the S&P 500 index fund is always going to have a higher ending value than the whole life insurance policy.

That's generally going to be true because the market is going to be delivering a higher return to pay you for the volatility that you have to suffer. So, I would never compare a life insurance policy directly against stocks, unless I'm just simply saying, "Well, here are some different choices." I would compare a life insurance policy against other types of investments that are very, very stable.

So, I would compare it against putting together a portfolio of CDs. I would compare it against putting together a portfolio, perhaps, of corporate bonds, depending on the structure. That's what I would compare it against. If you compare a well-designed life insurance policy against those types of investments, life insurance has a lot more going for it.

It's a much more compelling case. There are also some disadvantages to life insurance policies. For example, you've got to be aware of the tax ramifications of life insurance. One of the disadvantages of life insurance is you cannot put it into a qualified account. You can't put it into an IRA.

You can't put it into a 401(k). It has to exist as a separate external product. And so, the disadvantage with life insurance is that if you own a policy, you own it for 30 years and you cash it out, then you're going to pay tax on that money at ordinary income rates.

If I'm going to compare that, and no matter what the growth is, it's going to be paid at ordinary income rates. If I'm going to compare that to possibly the tax advantages of using a Roth IRA, where I can have growth after 30 years that doesn't pay any income taxes, or if I can compare that to a portfolio where, for example, I'm holding stocks on a long period of time where I can pay taxes at long-term capital gains rates, that's a demerit against the life insurance policy.

But then you can move into some specifics of, for example, the ability to borrow money out against the policy without surrendering it. Now, all of a sudden, that money can come out without incurring current income taxes as long as the policy stays in force. Now, I've got an advantage of life insurance.

So where I think life insurance works really, really well, whole life insurance policies work really, really well, is they work very well for longer-term, safer dollars. When I was trying to figure out how to articulate it, I was studying just some sales training of some life insurance agents, and that was a phrase that really made sense to me.

Longer-term, safer dollars. So I view my life insurance policies as part of my emergency funds, part of my backups. I don't view them as a core component of my ability to really grow wealth. They're part of my emergency funds. I actually like to keep a bulk of my emergency fund in a life insurance policy if possible, because this is money that is very, very safe.

It's guaranteed by the insurance company to always increase in value. The rate at which it will vary from time to time. But in the case of an emergency, let's say I have a short-term car repair bill or something like that, with most life insurance companies, you can have the money within 24 to 48 hours.

Now, that's not always the case. By law, they have up to six months to send you the money. But as a matter of practice, most insurance companies will be able to get you a check in 24 to 48 hours. So when I look at something like an emergency fund situation, for me personally, and I look at the fact of, okay, if I'm going to pretend I'm going to keep six or 12 months of living expenses on hand as cash, well, a certain amount of those living expenses needs to be readily available in case a hurricane blows through.

So maybe I'm going to keep a month or two worth of living expenses in $20 and $100 bills in my gun safe, something like that. Then a certain amount of it needs to be readily available in, say, a savings account or a money market fund that's linked directly to my checking account.

But I don't need a year's worth of cash sitting in a savings account. But I can go ahead and keep some of that cash in the context of a life insurance policy. Then if I need it out, I can go ahead and get it out in 24 to 48 hours.

With that, that should get me through a lot of the things that would bankrupt other people. But then I've taken what I've done there is I've effectively taken money that's sitting in a savings account earning what, 0.0 nothing, and I've moved it into an environment where it's not earning 10%, but maybe 4 or 5%.

Who knows how long this low interest rate environment is going to continue. Life insurance dividend rates are on the decline right now because of the fixed income interest rates. But I'm earning more than I'm earning in a savings account. When you also start to compound that with other benefits and you look at the tax-free transfer at death, there are some advanced techniques, estate tax planning techniques we can get into, and not even estate tax planning, just some advanced tax planning techniques even for people who aren't subject to the estate tax, which is most of us are not at this point.

Now we've got an over $10 million exemption amount for everybody. It becomes a more flexible approach. In Florida, money that's in a life insurance policy is exempt from the claims of creditors. It's also a non-probate asset. So it passes by contract law not based on probate law. I can own the policy in a variety of flexible ways.

So as a tool within my financial planning arsenal, it's useful. But it's not because it's a catch-all be-all. It's just simply useful. That's my opinion. Unfortunately, none of that stuff ever comes into a 30-minute sales presentation for most people. No. I was going to say that's the first I've ever heard this.

Well, this is my frustration with the financial planning industry. I've sat through a lot of those. Not only am I against a lot of the sales of life insurance policies, I'm against a lot of the sales of mutual funds and Roth IRAs. The reason is because structurally speaking, our financial advisory industry is structured to sell financial products rather than structured to help clients reach financial goals.

What I would love to see is a transition from us as financial advisors away from being paid upon the sale of financial products towards clients paying us directly for advice. Unfortunately, that's very uncommon. Most people don't pay for advice. They don't pay for coaching. But if they did, I'd not only sell less life insurance, I'd sell fewer IRAs and I'd probably start a lot more businesses.

I'd help people transition a lot more careers. There are a lot more things. So that's why, I mean, there's a reason why I have 12 hours of content on life insurance. I haven't even gotten to universal life insurance, which is going to require its own 12 hours. I haven't even gotten into variable products.

I just have term life insurance and whole life insurance because this is always the challenge. As a tool, there's nothing wrong with the tool, but poorly applied or misapplied, it can be a disaster or it can be really, really great. You're right. Well, first of all, I've never heard it, life insurance, whole life insurance as an investment discussed in the manner that you just did.

I've heard a lot of whole life pitches having been a financial advisor. But you bring up the great point of everything. This is why I left a large wealth management firm to start my own company because no matter what they tell you, there is always going to be a bias.

And it is very difficult to sift through that as an individual working within a large organization. But that's why people listen to podcasts and read blogs and try to find the best information out there to help them navigate. And I agree with you. I think there is a place for whole life and it's just as an investment, even it's just a matter of understanding where and how it fits in your total mix of your life goals.

Two of the pieces of data that when I was trying to first get my hands around it, that really convinced me that I didn't know what I was talking about when I just said, "Well, whole life insurance is a bad investment. Don't you know that?" is number one, when I learned about the concept of what's called bank-owned life insurance.

And there are two in the industry they call these BOLI, which is B-O-L-I, bank-owned life insurance. And the other one is COLI, which is C-O-L-I, which stands for corporate-owned life insurance. And one of the things that I didn't understand is that many large banks keep a substantial amount of assets within the context of life insurance policies.

And they can use that, they can keep that there because it still counts according to the federal guidelines on banking as part of their capital reserves. And so they're able to take some of their money and tuck it into a life insurance policy and it can be very, very useful for them and they can earn a higher rate on it than they can with just simply money sitting in a less productive financial product.

Large corporations often also will use life insurance for various purposes, including funding their pension plans for their key employees and for their executives. When I learned about that, I said, "Wait a second. Maybe my view on this is a little bit too simplistic." Unfortunately, the average consumer is not going to be able to access the information that they need in order to make a good situation.

Because even though I just went through that whole long speech on, you know, variety is a whole life insurance, whole life insurance policy from New York Life or Mass Mutual or Northwestern Mutual is nothing like a whole life insurance policy from Prudential or from Transamerica. They're just night and day different focuses because just because you have the life insurance contract, that doesn't mean that the actual underlying contract is well built.

You have to look at the expenses of the contract. You have to look at the actual company's mortality experience. You have to look at the dividend rates that they're paying and how those dividends are structured. It's a very involved situation, which is why most financial advisors and financial planners who look at it say, "Don't buy whole life insurance.

Buy term life insurance and invest the difference." That's what's so frustrating about it. It's really one of those things where you need to be an expert in it and you need to be very knowledgeable in it. Most people aren't going to put in the time or energy needed to develop their expertise, but those who do, do very well in the insurance industry.

If my listeners want to get more in-depth knowledge, how do they find you? RadicalPersonalFinance.com if they're on a computer. The best way to listen to Radical Personal Finance should be in most of the podcast directories or just search your app store on your phone. Just search Radical Personal Finance.

You can go back through and see a lot of past show titles. I think I've got them properly tagged. I'm behind on all my tagging and what not on the computer. If you go on the website on RadicalPersonalFinance.com and search, just check the tag for life insurance or click one of the drop down menus on the top where how the content is organized and go to life insurance.

You'll see a number of shows that I've put there. They're pretty hardcore. Don't expect them to be short sound bites. They're the hardcore master's degree level information on insurance. I'm hoping to simplify this over time and create more consumer friendly products and pieces of content that will be helpful.

But for now, that's the best way to find out more. Good stuff. I'll have links to all these in my podcast notes on Financially Blonde. I feel like we could talk about this and clearly you have, but we could talk about this for hours. Let's wrap it up here and get to some random three questions for you.

I'm ready. Okay. We've been talking about insurance as an investment and investments in general. So your first question is, what's the best investment you think you've ever made? Best investment I've ever made is in my own income and in my own business. Most people do not want to get rich and they don't want to retire, but they do want to be financially independent and the primary place that you should focus is on your personal income and on building your own business because for a variety of reasons, that will give you the fastest path to that return.

And focusing on your own income is the most controllable option and that is what makes the difference. I've never met anybody who got rich by investing in their 401k or their IRA or by buying life insurance. I've always met people who were rich either because they made a high income or because they had a business who built some additional wealth by investing in their 401k or in a life insurance contract.

But you've got to focus first on building a massive income. Your goal should be 10 years from now to increase your income by a factor of 10 and that's very, very doable or to build your own business if you are entrepreneurially minded. I'm with you. I said to people when I started my own company, I'm like, "That's where I'm investing my capital because I think I'm the best bet out there." Yeah, absolutely.

So I'd invest in me all day long. Good stuff. Okay, question number two. If you could only have one book with you on a deserted island, what book would it be and why? I'll have to tilt this in the context of a finance book. Oh, no. I want to hear.

The problem is I hate the answer. Christians are the worst and I'm a Christian because the answer to that question is a Bible and that sounds really, really horrifyingly trite to many people. The reason is because it's the book that never ends as far as when you start to see how it works.

I mean, there's a reason why I don't know how many millions of pages have been written about it. So that is the most versatile book that I would go to but most people when they hear an answer like that, they just say, "Oh, that's ridiculous." Like, "That's too easy." If it's a book in general, I would say the Bible, which is a total of 66 books, so you'd have to narrow it down.

And the reason is simply it's a book that never gets old and that when you talk about the wisdom of the universe, the deeper you go, the deeper it goes. So I don't know if that's an annoying answer for you. If so, I can give you a finance book.

No, I personally love that answer and your reason why, but let's just say for people who found that annoying or tried, what would be your other option? So let me look at my bookshelf here. I was a part of that also. I was stalling to try to come up with my answer to the question.

I actually asked you this because I just wanted to give you some more time to stall. I recently put on my blog, I had just a fun post this week about things about me and I answered this question myself. And now this will make me seem really vapid, but my answer was Pride and Prejudice.

It's a beautiful book. I don't think there's anything vapid about Pride and Prejudice. Cosmo magazine maybe, but Pride and Prejudice is, how does it start? There's a commonly held belief that any eligible man with an income, I don't know, you could probably quote it better than I can, must be looking for a wife.

It's a beautiful book. My favorite finance book that I would, I am actually working on a book right now and what I'm trying to do is to build it to be the actionable book that is to be the book that's everything that you can do, that you can actually do with money.

But in the meantime, I would say just a great financial book to recommend to people. These questions catch me so flat footed. A good financial book would be something like Richest Man in Babylon. If you haven't read a book like Richest Man in Babylon, I'd encourage you to do that.

I don't really read many novels these days. If I do, it's dystopian fiction or techno military thrillers, things like that. But a good finance book would be Richest Man in Babylon, which might be something that I would enjoy reading again. Okay, good stuff. But if I were on a desert island, I wouldn't, here's what it would be.

On a desert island, I would take the Encyclopedia of Country Living or I would take a book like that that's very, very practical. Oh yeah, no, no. We're not going practical. Turn my desert island into an oasis. We're not going practical. I know, and I'm Irish, so I mean, I'd be sunburn reading Pride and Prejudice on the beach.

It wouldn't be good, but we're not talking practical. It's not reality. All right, your last question. When you relax, what do you do? Relax? What's that? I know. Married, two kids, business. Yeah, I know it doesn't happen often. So when it does, what do you do? I would say if I'm really relaxing, I'll probably watch YouTube videos.

That's probably the go to. I read a lot, and so that is a primary go to is various reading projects. But if I'm really just need to turn my brain off, I'll watch YouTube videos. I have a soft spot for overlanding videos, which is a whole subset of four wheel drive people who take their car and basically drive it around the world where the journey is the goal, not just getting to the destination.

And so I'll go, and my wife and I are watching a wonderful series that is on YouTube right now called Expeditions Overland. And there's a group of young filmmakers who've put together their vehicles, and they've done various adventures in the US and then up to Alaska and then down to Panama.

So that's our thing recently as we've been watching each week as their new episode comes out on YouTube. It definitely would encourage people that. It's really beautiful. Just look on YouTube called Expedition Overland. All right, good stuff. Joshua Sheets, Radical Personal Finance, thank you so much for joining me today and talking about insurance, whole life, term life, investments, all that good stuff.

I really appreciate it. Thank you, Shannon. I appreciate being here. Cheers. I hope you enjoyed my chat with Joshua today. As you can see, insurance can be a very complicated subject matter, but it's an important one. So I encourage you to invest the time to get more comfortable with it.

If you want to find the notes for this show as well as links to Josh's site, you can find them on my blog, financially blonde and that's financially-blonde.com. If you have any comments or topics you'd like for me to discuss, please email me at Shannon at fin blonde.com and that's Shannon@finblonde.com or tweet to me at blonde_finance.

And finally, I'm continuing to pursue my goal of reaching a hundred five star ratings and reviews on iTunes and plan to give away 20 free signed copies of my book, Train Your Way to Financial Fitness to listeners who leave a five star rating and review. So if you leave one, please send me an email to Shannon@finblonde.com and I will send you a copy of my book.

The first 20 reviewers who leave reviews after this show will receive a free copy. Five star ratings and reviews help my podcast get out to more listeners and I love and appreciate my listeners and would love to have even more. And until next time, take care. Thank you again to our podcast episode partner, termlifeinsurance.com.

You can check them out online at www.termlifeinsurance.com and follow them on Twitter at termlifeblog. Hey, martinis and your money listeners. I love a drink and a chat with a good friend as much as the next person. And if you joined in on the fun, I hope that you're at least 21 or older, you drink responsibly, and if you did drink, please don't drink and drive.

It makes for an all around more fun time. And until next time, cheers. The Fremont Street Experience in fabulous downtown Las Vegas is home to over 100 amazing bars and restaurants and the world's ultimate zip line, Slotzilla. Be sure to check the calendar as Fremont Street Experience hosts Downtown Rocks, a free live concert series featuring top artists such as the All-American Rejects, Live, Smash Mouth, Gin Blossoms, Taking Back Sunday, and more.

Go to vegasexperience.com to see the lineup and reserve your flight on Slotzilla, the world's ultimate zip line.