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SFB085 Basics of Life Insurance Part 5 - Whole Life

| November 28, 2017
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Episode Summary

In part 5 of this seven part series on the Basics of Life Insurance, Paul sits down with Cory Shepherd, President of Sound Financial Group and author of Cape Not Required, to discuss Whole Life Insurance, how it worked before 1982, and how legislation called TEFRA/TAMRA changed the rules around life insurance. 

What Was Covered

  • 04:05 - How long whole life insurance lasts and what “endowing” means
  • 05:50 - Cory defines what an asset class is
  • 07:13 - Paul gives an example of how whole life insurance worked before 1982
  • 11:34 - TEFRA/TAMRA - legislation between 1982-1987 that made new rules around life insurance and why they made it
  • 12:27 - Paul explains what the “Seven Pay Test” is in TEFRA/TAMRA
  • 13:37 - The TEFRA/TAMRA Corridor
  • 14:14 - Cory weighs in on the government’s role with life insurance
  • 16:10 - A major advantage of owning whole life insurance
  • 17:07 - Paul gives an example of how someone might use whole life insurance
  • 19:18 - Cory explains the “checkmark asset”
  • 21:27 - Paul compares the restrictions of a 401(k) plan and whole life insurance
  • 23:31 - Moving your cash to a better place to be positioned over time
  • 24:34 - Paul gives an example of the “still water strategy”
  • 25:57 - Paul uses an orchestra metaphor to explain orchestrating your financial assets


"Most people are not going to live beyond the expectancy or beyond the endowment of a whole life policy."

"People…pre-1982 were choosing whole life insurance as a place to store capital vs many other places they could put money."

"A set of legislations whose acronyms were TEFRA & TAMRA made up some new rules around life insurance."

"There are billions and billions of dollars in corporate America…that would love to own more whole life insurance."

"Before the TEFRA/TAMRA legislation you could put cash into a whole life policy and have 100% access to it right away."

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