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Where do mutual insurance companies keep their money?  Bonds are a staple of mutual insurance company investments.  Opponents of whole life insurance from mutual companies say returns on bonds simply don’t compete with the equity [aka stock] market.


Below is an amazing chart extracted from John Maulden’s Weekly Letter that should make every “buy term and invest the difference” snake oil sales rep rethink his or her position.  The commentary on these raw numbers is extraordinary and I encourage you to read the entire letter.

The commentary does not claim that you should not invest in equities or that your entire portfolio should be in bonds.  It does caution - the Prudent Man Rule trumps the Prudent Investor Rule again in this instance – that you should eschew advice from anyone suggesting that equity investments or mutual funds [stock or bond funds] are the only acceptable alternatives for “the long term.”

Stock vs Bond, Cumulative Relative Performance, 1801-2009

What does this demonstrate relative to whole life insurance?

During the past ten years, a high early cash value whole life insurance policy from one mutual company outperformed the DJIA by as much as 130% – and even outperformed the DJIA based on guaranteed values.  That’s a whole lot [pun intended] better than investment returns from mutual funds.

Whole life insurance policies are reliable financial instruments.  Whole life insurance has proven for over 150 years that it belongs in the foundation of every personal economy.

If your financial advisor suggests otherwise, you might want to find a new advisor.