The only people who think whole life insurance is a good idea are the ones selling it

There is a common misconception among random financial bloggers, quite a large number of professionals, and most amateur investors (and people trying to scrape together enough savings for their future) that the only people recommending life insurance are the ones selling (and presumably making money from) it.

There are a couple of issues with a statement like this.

First, it’s meant as a dig against life insurance agents, brokers, and bonafide, credentialized, advisors… a sort of smear tactic which avoids facts and statistical data in favor of emotional finger-waving.

Secondly, the fact, as a straight-up fact, simply isn’t true.

That’s fairly easy to prove.

Going as far back as Solomon Huebner, who was the professor who literally wrote the first books on life insurance (and the stock market, and the bond market, and, and, and…)… he laid out a perfectly logical reason for using life insurance as a savings. And in fact he was one of the most distinguished professors at the Wharton School, teaching (among other things) economics and insurance.

Didn’t sell insurance but he did educate insurance agents and the general public about the value of life insurance. There is also a growing body of evidence, and research, showing that separating insurance and savings is usually a bad idea. Most people don’t actually “save the difference” as directed and even when they do, the returns investors receive often fail to outperform a good whole life insurance policy, when adjusted for taxes, investment fees, and the fact that some investable dollars must be redirected to term insurance premiums.

But, beyond this simple fact, there has almost always been a debate between life insurance as a savings and investment vehicle and direct ownership of stocks (and other things) a savings and investment vehicle.

In Huebner’s words:


“In comparing the life insurance method of saving and investment with that relating to stocks, it is highly important to bear in mind that a stock is never an investment but always a speculation.” (from Life “Insurance Savings as Compared with Other Forms of Savings”).


Is that a True Fact?


Lots of people DO speculate on stocks but maybe it’s just a minority who are “winging it”. I mean… lots of people DO buy stocks… someone’s making money off them, right? Maybe a lot of folks? Maybe Huebner is some old fogie that we shouldn’t listen to anymore. I mean, he wrote that in 1923.

If you’ve been on this email list for a while, you’ve likely “heard” me yap about Hendrik Bessembinder, the finance professor at Arizona State who compiled tons of data to figure out just how profitable stocks are. He didn’t attempt to explain why they were profitable. He just wanted to see which ones were.

His findings?

As of 2016-2017, only about 4% of all investable stocks have accounted for ALL investor profits since 1926. The remaining 96% of stocks have either lost money or made very, very little.

From Steven Goldberg’s article on the topic, published in Kiplinger’s:


“Bessembinder found that only 4% of stocks contributed all of the stock market’s gain that exceeded the return of supersafe, one-month Treasury bills. Academics typically measure investment returns against those of short-term Treasuries because they’re considered riskless. The other 96% of stocks, in aggregate, merely matched the return of one-month Treasuries, according to Bessembinder…

“…Bessembinder looked at returns over successive, nonoverlapping 10-year periods, starting with 1926 through 1935. Seventy-two percent of the stocks that went public in that early decade had positive lifetime returns. Of those stocks that listed between 1966 and 1975, 61% had positive lifetime returns. But among stocks that went public between 1996 and 2005, only 39% had positive returns over their lifetimes; for those listed between 2006 and 2015, only 42% of stocks made any money. Part of the reason may be that many more stocks have been introduced in recent decades.”


Perhaps this is why there is such a low statistical probability of making more than 8% in the stock market over a long period of time.

Does that mean all stocks are bad?

Obviously no.

Does it mean you should never invest money in the stock market?

Again, no.

It does mean investing is a skill — a difficult one to master and probably not for the amateur.

Of course, you can always roll the dice and takes your chances.

But, if that’s not your brand of vodka, there is one method which is not speculative and not risky at all. In fact, it removes risk.

I’m speaking, of course, about life insurance.

And if you want to know more about it, and whether it might help you achieve your financial goals, sign up to my email list and learn all about it.

David Lewis

This post brought to you by //The Rogue Agent//. David has been a life insurance agent, and worked with some of the oldest and most respected mutual life insurance companies in the U.S., since 2004. Learn more about him and his business, here.