There was an article in Accounting Today recently entitled 10 Tax Tips for College Grads. If you guessed, as a result of reading there missives, that “buying a life insurance policy while you’re young and healthy” was one of the tips, you’d be wrong. Is that omission a result of media bias or ignorance?
While all of the tips were sound (okay, #6 is basically there to make it 10 tips instead of 9), only #’s 3, 4, and 5 have a chance to have as much financial impact as procuring a whole life policy with a major carrier.
Number 3, continuing your education on your employer’s dime is sound advice and few would argue that it could have a significant economic impact on one’s career. Of course, not all employers offer that perquisite and there is at least some evidence available that the cost of an MBA is not the best use of one’s dollars.
Few would dispute that #4, aggressively contributing to retirement accounts, isn’t a good suggestion. To tweak that suggestion, contributions to the employer’s 401(k) could be capped at the match. The next $6,000 should be directed into an IRA. Why? Employer’s 401(k) menus are limited by necessity, so your favorite stock or ETF may not be available in it. Typically, stocks are limited to the employer’s stock (ask me about NUA).
Number 5 is the sleeper. In my opinion, HSAs are the most underrated employee benefit available today. The employer must offer a high deductible health insurance plan and the employee must participate in it to also participate in the HSA. But contributions to the plan are tax deductible, they grow tax deferred, they come out tax-free provided they are used to pay medical expenses, and there is no “use it or lose it” provision.
Those are the only three tips that could wind up having a more favorable financial impact than buying a whole life policy. The other seven would provide minimal economic value. Well, #7 could possibly provide more value, but I would think it would only apply to a small percentage of the grads.
So to answer the question, since I can’t discern a benefit the media would gain by intentionally bashing whole life, I believe it is ignorance. The media, for the most part, has not been exposed to the characteristics of the whole life product and is therefore guilty of ultracrepidarianism.