ou can go to the bank on this: every time I write something negative on any insurance product the proponents of these products come out of the woodwork, kicking and screaming.
My recent article on the Be Your Own Bank (BYOB) scheme didn’t sit well with Clark Sowers, Belle Fourche, SD, who wrote a letter to the editor of the Rapid City Journal shaming and disparaging me for my characterization of cash value insurance as a scam.
The only problem is that I didn’t call whole or cash value life insurance a scam. I did, however, call the BYOB scheme “one step from being a scam.”
I found it very interesting that Sowers says BYOB is promoted by other fee-only planners, inferring I must be out of step with my profession. I have never met a fee-only planner that promoted the BYOB concept, and I know a few thousand of them. I would be very interested in meeting a fee-only planner who promotes it.
Sowers also says my article is simply an advertisement for weak alternatives to cash value insurance. I reread my article three times and have yet to find any alternative I promoted in the article, outside of “Don’t do it!”. I certainly could have promoted a number of very strong alternatives, like putting your money in a real bank or 401(k) and avoid paying all the high fees to the BOYB shysters.
Finally, Mr. Sowers’s justification for cash value life insurance rests on the fact that General George Custer financed his trip to DC to save his career. While that may be true, stories like this are ubiquitous with the BYOB people. They are quick to point out that Walt Disney, J.C. Penney, Sen. John McCain and, yes, George Custer all used policy loans to finance projects and therefore, you should too. They don’t bother to discuss that the circumstances, fees, and policy structure of the policies these people owned, compared to the policy they want to sell you, may be equating apples with mussels.
It’s too bad that legitimate life insurance professionals are not stepping up and protecting their brand by distancing themselves from this type of shady marketing. There are many honest life insurance salespeople who would agree. The bottom line is that the BYOB spin is a scam and it’s hurting the life insurance industry as a whole.
Rick Kahler is a Certified Financial Planner, President of Kahler Financial Group, author of the “Financial Awakening” blog, and a featured contributor on the CIF Blog.