Life Insurance Book Review

This could hardly be termed a book. More like a pamphlet. Sixty pages and all large print. Plus a few pages of ads at the end. Realistically, the back of the book summary does indicate that this is a ‘reference guide’ that is ‘compact’. For $20 though, they could have made it a little less compact.

The purpose for the guide seems to be as some sort of primer. For who? I’m not sure. The first part of the book contains extremely oversimplified definitions that are useless to any life insurance broker. A one paragraph/two sentence definition of variable universal life is hardly of use to a consumer either.

Conversely, the last part of the book is billed as ‘a reflection of more commonly made mistakes that can be prevented’. None of the points in that section would I classify as commonly made. Not that they might be made, just that the situations depicted are not what I would call common. Transfer for value rule? Gift of a policy subject to a loan? Instead of common mistakes, this section focuses on advanced financial planning matters that are incomprehensible to the consumer, and lack any sort of depth of information that would be useful to an insurance agent. Contrast that with the almost childlike definitions in the first section of the book and you’ve got a book that is at complete cross purposes.

What however is far worse in my opinion, is the bias the author shows in the first third of the book. It strikes me that this book is from the school that whole life insurance is the answer to everything. Some sections are rife with suggestions and examples that show this bias. Some examples are:

• A suitable use of term insurance is described as “there is a need to supplement cash value insurance”. Listen, either the consumer needs permanent insurance for lifetime needs, or they need term insurance. If they have a permanent need, they don’t need term insurance. The purpose of term is for the insurance NEED not to supplement a permanent need.
• In talking about the idea of ‘buy term and invest the difference’, the author states ‘this approach is suggested for those individuals who need and can afford cash value protection….’. Really? No. If you need cash value protection, you need permanent insurance. So buy it. If you need temporary insurance, buy term. The author seems to be grudgingly forced to mention this concept but clearly doesn’t seem enamoured with it.
• Some of the sections on uses of cash value are just plain wrong. “Long-term financial security in respect to replacing lost earnings from the premature death of a parent”. That statement should never be read by a consumer, and, well, I don’t have much good to say about a professional promoting this idea. The loss of earnings of a parent due to death is a textbook case of the use of term life insurance and not cash value life insurance.
• ‘ Certain that funds will be available for a child’s college education…’ is mentioned as the second reason for cash value insurance. This just stinks of sales techniques of life insurance agents who are there to sell insurance at any price. There are far better ways to accomplish college savings than the purchase of a small whole life policy.
• The author mentions that limited pay cash value insurance is suiteable where the owner can ‘afford the higher premiums’. While not much on it’s own, in conjunction with the rest of this section it speaks strongly to the idea of selling insurance based on price. I’ve seen videos of widows who are flat broke because they bought cash value insurance but didn’t have enough coverage (and thus ran out of money) because they couldn’t afford enough insurance. They were sold based on price, not insurance need. That’s an example of why this type of approach is so very wrong - people do actually die and end up being underinsured.
• Mention is made of key person insurance as being a good use of cash value insurance. Again, I disagree.
• The book also talks briefly about cash value insurance money being held as part of the general funds of the insurance company. There is a paragraph on all the wonderful things that you can do with this money. The section neglects however, to talk of what happens in many cash value policies if this general fund doesn’t prove as wonderful an investment as advertised. Considering that many insurance companies have been successfully sued in the last dozen years over this scenario, it would seem to be a bit of an oversite.(Aside: There’s also danger in portraying this ‘general fund’ as some sort of bank account that earns money that is transferred to the consumer through their policy. That is not what happens. The insurer looks at their books at the end of the year and determines what type of dividend credit they are going to pay. It’s not neccessarily tied tightly to some sort of fund that earns a specified amount of interest. The insurer might decide to pay 4% instead of 5% just because they have plans next year that will require capital.).

In summary, this book is overpriced at $20 and should be considered an embarrassment to someone billed as an estate planning expert in conjunction with a professional financial services organization. It appears to be little more than an ego stroke for an old whole life insurance believer who thought they’d like to write a book but couldn’t be bothered to waste their time actually writing it.

Title: The Life Insurance Handbook, by Louis S. Shuntich, J.D., LL.M., ISBN 1-59280-057-2
Rating: 0 stars out of 5. Blech!.
Who should buy this book: Not consumers, not agents, not financial planners.

Use the above link to buy this book in the U.S. or
Click here to buy it in Canada.