There’s this podcast called Millionaires Unveiled. I was listening to it once, and they were interviewing a millionaire whose net worth was about $3.75M. He broke down how he built his wealth. It was basically a high income, staying very frugal, and investing. Mostly in real estate and some in the stock market. (Pretty typical). He also mentioned he had about $90,000 in cash value life insurance. That’s about 2.4% of his net worth. The millionaire was young, and didn’t really seem to understand what the life insurance policy did, but he was advised he should buy it so he did.

The interesting part was the reaction of the hosts. This was episode 195. So they had interviewed 194 other millionaires and they said NO OTHER MILLIONAIRE HAD EVER BROUGHT UP LIFE INSURANCE BEFORE as a means of building or holding their wealth. That matches my own experience in terms of interacting with millionaires as well.

YET, if you scroll around on social media you’re confronted with a very different landscape. It seems every other finance guru is standing in front of a whiteboard espousing the magical benefits of buying permanent life insurance. And they’ll even help you out with a free consultation if you click their link in bio! What do they all have in common? They’re all earning big commissions from selling it. The real magic they’ve found is in a marketing funnel on social media and lax governmental oversight on conflating their insurance product with an investment product.

You’ll never find an index fund insurance salesman. You know why? They’re incredibly cheap. There’s no profit margin to pay commissions. In investing, insurance, or anything else, it’s always important to consider the incentives of a person giving you information. Of course not every person selling something is pushing a bad product, but if EVERYONE ELSE in the industry except the agents pushing it is against it, it should certainly be a reason for caution.

As always, reminding you to build wealth by following the two PFC rules: 1.) Live below your means and 2.) Invest early and often.

-Jeremy