Back to the Basics

Recently a southern state spent $214 million over a four-year period to hopefully improve the reading proficiency of fourth grade students. The results were dismal.  According to the Nation’s Report Card, only 1 out of 3 of this state’s students improved their proficiency and their fourth graders fell from 39th place to 47th place nationally.[i]

This is a common thread which has been repeated frequently in America.  Early literacy rates in America were nearly 100 percent in the early 1800s.  By 1940, literacy rates were 96% for whites and 80% for blacks.[ii] Today only 50% of U.S. adults can read at the 8th grade level.[iii] And the more illiterate we become as a nation the more we spend on trying to teach students how to read.

The more money spent accomplishes but one thing, more illiteracy.  And that is because money can’t replace the basics required in learning how to read.

Consequently, it is no coincidence that these basics are never included in each new and elaborate curriculum that will supposedly “fix” the illiteracy problem.  Namely because if everyone could read, then there wouldn’t be any need for any more elaborate and expensive curriculums to be developed and deployed.

The same is true with life insurance.  Most Americans (84% according to that latest LIMRA study) realize that they need life insurance.  But more than 40% of Americans don’t own it.[iv]  Compare that to 1920 when there were 120 million policies were inforce, and the American population was only 106.5 million at the time.  Even as late as 1970, 90% of households owned life insurance, which included 72% of all adults.

You might be asking yourself, “What happened?”  And rightfully so because the cost of life insurance has effectively gone down, not up, since 1920.  So, why are people not purchasing the life insurance coverage they know they need?

Eliot Spitzer, defamed former governor and attorney general of New York State who once publicly pontificated, “It’s time to let science…not politics or rhetoric, lead us…,” boasted that his job as attorney general was not to enforce regulations but to reform industries.

Between Spitzer, the failure of the life insurance industry to court the bedrock of America…median income families, and Hollywood’s numerous plots depicting life insurance agents as immoral scammers and frauds who are boring, rude and miserable, it’s no wonder that most Americans are so life insurance illiterate. And to make matters worse, most Americans believe life insurance is way too expensive.

So, what has the life insurance industry done to overcome this illiteracy?  They have followed the example of the American Schooling System. They have developed more elaborate and expensive life insurance products while adding more administrators and cutting back on agent training public awareness efforts.  At the same time, they have made life insurance illustrations and contracts harder to understand while providing fewer guarantees and less certainty for policy owners.  Which means, Americans are becoming less and less literate about what kind of life insurance they need, what kind of life insurance they can easily afford and  what kind of life insurance will provide them the sustainability they are looking for over their life time.

It’s time to get back to basics.  And the basics of permanent life insurance is Participating Whole Life Insurance (PWLI).

  • PWLI is the only life insurance product that was developed to meet the demands of the consumer.
  • PWLI is the only product that guarantees the owner a right to participate in the profits of the insurance company.
  • PWLI is the only product that guarantees your cost of insurance will never rise.
  • PWLI is the only product that develops equity (cash value) without risk.

PWLI then, is the product that you can trust and rely upon, not merely to pay a death benefit, but to provide liquidity, tax preferred growth and sustainability for your future.  That’s good news.

But just like in American education, these basics don’t sound exotic enough. And so, more and more people are enticed to discredit the proven historical performance of PWLI for the newer, more sexy products like Variable and Indexed Universal Life products. They are also being enticed to leverage their existing PWLI to purchase more life insurance coverage than what they can afford, merely to allow agents to collect more commissions.   But just because something is new and exotic doesn’t mean it will be there for you when you really need it.  And that’s why an affordable and comfortable PWLI premium is the best way to assure yourself that you will have the coverage you need for your entire life.

Stick to the basics because the basics in life insurance (PWLI) will pay off in the future.  You don’t want to be like one policy owner who paid $500,000 in premiums and today can no longer afford to pay his premium. If he doesn’t pay his life insurance premium this year, his policy will lapse. And when it lapses he will owe tax on 2.7 million dollars.  You see, he believed the new and elaborate was better than the old and basic.  Only now is he finding out the truth.

You don’t have to spend millions of dollars to rediscover the basics.  All you have to understand is that keeping with the basics will save you time and money while building the financial security and sustainability that you are looking for. It’s what Americans demanded in the 1920s and it is what Americans should be demanding of life insurance companies today.



[ii] The Underground History of American Education, John Taylor Gatto (Former New Your State and New York City Teacher of the Year)