Am I Being Duped?

A YouTube viewer asks:

I’ve been up way later than I should be trying to figure out if I got duped. I’m 35 and seven years ago my friend set me up a variable whole life policy in which I pay in every month. Obviously if I had just put this payment to work in the market over the last 7 years it would have doubled basically, but can’t go back. Am I just stuck in this now?

As somebody whose first job was at a giant insurance company, I can say with a high degree of confidence that yes, you got duped.

Commissions for these products, at least when I was in the industry, were 50% in year 1. And with permanent life costing way more than term, what do you think insurance agents are going to push?

I would imagine the fact that he’s your friend makes this hurt more than if it was sold by a stranger. This doesn’t make him a bad person, just one that responds to incentives. I can’t help but think of Charlie Munger’s “Show me the incentive and I will show you the outcome.”

I don’t know your friend so I can’t say this with any certainty, but he might have thought he was doing the right thing. These companies brainwash young people into thinking that permanent insurance is the answer to everything. And it’s not your fault for falling for it because the marketing materials that these places have are incredibly compelling.

They don’t sell billions of dollars in premiums for no reason. They make the stock market look like a roller coaster ride where you could lose all your money, and make insurance look like a guaranteed win.

I am a big believer in life insurance, but as a 28-year old, you would have been better off with term insurance. This is assuming you needed the insurance in the first place. You’d need it if your death would be a financial burden to your family. If you didn’t have a family at that age, then you didn’t need insurance, and your friend was flat out duping you, incentives be damned.

As far as your last question, “Am I just stuck now?” Give us a call and we’ll see what your options are.

Josh and I got into this and much more in our latest episode of What Are Your Thoughts?

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