Financial Recovery - CASH VALUE LIFE INSURANCE

It is newly fashionable (since the FTC staff report) to hear, in life insurance circles that, of course, life insurance is not an investment. But how was it sold?

For years and years life insurance salesmen have been trained to talk about "living benefits" and about "saving money". Every sales agent in the business has probably heard the "100 Man Story" or the "Park Bench Story" repeatedly. He has seen and perhaps used the slick printed life insurance companies' sales brochures reading "Pay Yourself First", or depicting ineffectiveness of "Put and Take Savings Accounts", exhorting, "You'll Earn a Fortune, and a Part of Everything you Earn Should be Yours to Keep", or "Don't Miss the Retirement Boat that He Had 40 Years to Make but Didn't!" This last brochure pictures a forlorn, downtrodden elderly gentleman left standing on the dock as the ship "Independence" sails off without him, the moral being that during his working years he did not pay enough of his hard earned income to a life insurance company.

It would be far closer to the truth to imply that he, in fact, paid a lot of money for "life insurance" and his cash values, such as they amount to, and dwarfed by inflation, are in the hands of his life insurance company. He is up in years and, perhaps, in failing health and he knows that, if he is to take out (borrow?) what value there is, he will leave an aging and loved wife destitute, or nearly so.

That fine luxury ship sailing off without him would be more aptly named "Trupolitan Life Insurance Company".

Ginsberg's Theorem:

1. You can't win.
2. You can't break even.
3. You can't even quit the game.*