Fear, Greed and Commissions

One of the biggest criticisms leveled against life insurance—particularly whole life insurance—is the so-called “huge” commissions that agents supposedly earn. Critics often imply that life insurance agents are driven solely by greed, using this accusation to stir fear and discourage people from taking responsible steps to protect their families and build lasting financial security. You’ve probably heard the saying, “When it comes to money, decisions are driven by either fear or greed.” Ironically, those who attack life insurance often rely on both: they attempt to incite fear in you while accusing others of being greedy.

But let’s break this down with a practical example.

Imagine you’re in your mid-thirties, in good health, and you decide to buy a whole life insurance policy with a $1,000 monthly premium. Meanwhile, your identical twin—same age, same health—decides instead to invest that same $1,000 each month in the market. You both maintain this financial strategy consistently for the next 30 years.

Now here’s the question: which one of you ends up paying more for your choice over time?

At first glance, many might assume the life insurance buyer does—after all, insurance comes with agent commissions, right? But a deeper understanding of the fees, costs, and benefits involved tells a very different story. When you begin to look at investment management fees, taxes on gains, market volatility, and the benefits that a properly structured whole life policy can provide—guaranteed cash value growth, tax-advantaged access to capital, a death benefit, and dividends—the narrative shifts.

So, before you believe the hype about “greedy” life insurance agents, take a closer look at the numbers. Ask yourself who really ends up with more value—more guaranteed growth, more control, and more financial security. Once you understand the full picture, you’ll see why so many financially savvy individuals still choose whole life insurance as a cornerstone of their wealth strategy.

Schedule Appointment »

Suppose your identical twin invests $1,000 each month in a portfolio that earns an average annual return of 6%, but with a 1% annual fee charged on the total assets under management. By the end of just 15 years, the cost of those fees alone will have totaled over $22,000. Here’s the important part: the higher the portfolio grows, the larger the fees become, because that 1% fee is calculated on the total amount of capital in the portfolio each year. In other words, as the investment grows, so does the cost of maintaining it.

Now compare that to the commissions paid to your life insurance agent for the same $1,000 per month whole life insurance policy you’re purchasing. While commissions vary depending on the insurance company and the agent’s individual performance, a reasonable estimate is that your agent might earn around $9,700 in total commissions over a 10-year period. After that, the commission payments generally stop—unless your agent is captive to the company, in which case they might earn a smaller commission as long as you continue paying premiums.

Unlike the commissions, the fees your identical twin pays don’t stop—they keep increasing as the portfolio grows. By year 30, your twin will have paid over $100,000 in fees—more than 9 times the commissions earned by your so-called “greedy” life insurance agent. To be exact, that’s a staggering 928% more in fees.

This example clearly shows the difference between the upfront, finite commissions paid on whole life insurance and the ongoing, compounding fees charged by many investment portfolios. So, before buying into the fear and criticism about life insurance commissions, understand where your money really goes—and what you’re getting in return.

The commissions paid to your life insurance agent came out of the insurance company’s expense account, not your earnings, even if the agent is a captive agent.  Your premiums purchase your life insurance coverage, which thirty years down the road is over $1.3 million.  Over half of that is liquid cash value that you can access and use tax-free for whatever purposes you choose.

The $100,000 plus in fees that your identical twin has paid have come right off the top of your identical twin’s earnings.  Those fees have cost over 17.6% of the total investment earnings.  Now, in order to access those earnings, your identical twin has to pay taxes! And those taxes will cost an additional 15% to 35%, depending on what type of investment your identical twin made.  This leaves your identical twin with less liquidity than you have in your life insurance policy and absolutely NO life insurance coverage!

Who are the greedy fear mongers in your life telling you to avoid whole life insurance like the plague while laughing all the way to the bank on the fees they collect from you?  “Figures don’t lie, but liars do figure.”  Don’t believe anybody when it comes to your money.  Know the facts!  Then act accordingly, and don’t let fear or greed get in your way of keeping more of the money you make.

Your money is an extension of your values, and you should be the one who decides how that money gets spent, not somebody who is using fear or greed tactics to discourage or entice you to let them manage your money for you.

Tomas P. McFie DC PhD

Tom McFie is the founder of McFie Insurance and co-host of the WealthTalks podcast which helps people keep more of the money they make, so they can have financial peace of mind. He has reviewed 1000s of whole life insurance policies and has practiced the Infinite Banking Concept for nearly 20 years, making him one of the foremost experts on achieving financial peace of mind. His latest book, A Biblical Guide to Personal Finance, can be purchased here.