Life Insurance: Seceding From the Financial System?
At FEE’s site, I make the case that permanent life insurance is a relatively tame option (as opposed to exotic things like Bitcoin) for seceding from the current system that has trapped so many middle-class Americans. An excerpt:
Although Mises refers matter-of-factly to life insurance as a savings vehicle, in the United States it was gradually displaced by mutual funds, which had become more accessible to the average household and looked very attractive by the late 1970s. The high interest rates and inflation of this era—the result of government manipulation in the financial markets—suddenly made conservative life insurance look boring and sluggish. Americans were steered by the “experts” into Wall Street, and federal tax laws—which levy large penalties on all assets except the ones exempted by the IRS—only reinforced the transformation of the conventional wisdom.
Yet even though we can understand the historical events that pushed Americans away from the use of life insurance as a savings vehicle, the pendulum is beginning to swing the other way. The downside of “tax-qualified” retirement plans is that their tantalizing breaks on tax treatment come with significant strings attached, such as stiff penalties for early withdrawal. Furthermore, the appeal of the stock market as a hedge against price inflation is greatly muted when it is subject to periodic crashes.
Naturally, if you want to learn more about this perspective, you should come to the Night of Clarity in downtown Nashville August 15-16! Details here.
I don’t dispute that whole life insurance has many of the benefits you talk about, but I really have to balk at this characterization of it as secession from the financial system. The things WL funds invest in are the very same government and government-entangled entities you rightly criticize. They’re certainly not investing in small businesses that raise financing outside the Wall Street nexus.