242 | The Good, the Bad, and the Ethical Gray Areas of Whole Life Insurance with Ashley Foster

Ashley Foster



Welcome to the second in my two-part series on what are possibly the most misunderstood insurance products out there: annuities and whole life insurance.


Our goal at Hendershott Wealth Management is to help you build wealth–and a legacy that lasts. Part of that process is protecting your wealth, and that’s why getting the right insurance matters so much!


I’ve avoided covering these topics until now because it’s really difficult to find someone who can be considered an expert who isn’t also trying to sell you a policy. But then, I realized I can find product experts who are no longer selling the product–like today’s guest, Ashley Foster.


Ashley used to make a living by selling whole life insurance policies, but over time he realized that he didn’t want to sell insurance–he wanted to do comprehensive fiduciary financial planning like we do at HWM.


He gave up earning huge commissions that funded luxury trips with parties DJ’d by someone from the Beastie Boys (true story) to pursue a more meaningful career; one that allows him to focus on what will be the most helpful to his clients, instead of trying to sell them expensive insurance they likely don’t need.


These days, Ashley runs his own firm, Nxt:Gen Financial Planning, and loves to go on vacations–that weren’t funded by commissions–with his wife and their adorable cat, François. (Make sure you check out our YouTube channel to see Frankie’s adorable unflappability!)


Ashley joined me on this episode of the podcast to demystify the world of whole life insurance policies.


From the actual cost for consumers to the loss of potential returns vs. investing in the stock market over the same time period, he breaks down the good, the bad, and the ethical gray areas of whole life insurance. 👇

Here’s what you’ll find out in this week’s episode of Love, your Money:

  • What led Ashley to become an expert on whole life insurance 
  • How becoming a CERTIFIED FINANCIAL PLANNER™ professional changed the direction of Ashley’s career 
  • What a whole life insurance contract is, and how it limits your long term financial growth
  • The true cost of a whole life policy–from opportunity risk vs investing, to the cost of premiums relative to potential benefit payouts
  • How transparency, compliance, disclosure, and conflicts of interest influence insurance sales
  • The circumstances in which purchasing a whole life insurance policy make sense, like guaranteeing an inheritance for heirs or covering estate taxes
  • Whether Ashley still recommends whole life insurance to clients now that his income isn’t reliant on those sales

    …and more. (Spoiler alert: He doesn’t recommend these policies, and neither do I!)

Inspiring Quotes

“Anyone that could fog a mirror was a prospect for me.”

"The insurance industry] was almost like the Wild, Wild West... I said, ‘I’m a financial advisor. I’m here to help.’ And obviously, that wasn’t the case."

“The incentives were just kind of perversely structured that sometimes you didn’t really focus on, “is this right for the client?” You were just focused on selling the policy. And that was kind of like the whole thing that got me really thinking, like, “am I doing the best thing for my client or not?”

“The number one prize: You got to keep your contract… our contracts, including retirement, health insurance benefits, all of these things–were tied to selling whole life insurance, right?... you had minimums that you had to go ahead and keep. And so if I wanted to keep my health insurance, I had to sell a minimum number of commissions.”

“I’ve unwinded more dubious whole life insurance sales to clients that have come to me than I have probably ever recommended.”

Resources and Related to Love, your Money Content

  • Ashley Foster on LinkedIn
  • Nxt:Gen Financial Planning–Ashley’s private virtual fee-only practice, dedicated to helping veterinarians discover their life’s vision and using money as a tool to get there.

Enjoy the Show?​



Hilary Hendershott: Well, hello, money lover. Welcome to the second in my two-part series on possibly the most misunderstood insurance products out there; those being annuities and whole life insurance.


I’ll be honest, I’ve avoided covering these topics until now, simply because it’s actually really difficult to find someone who can be considered an expert who isn’t also trying to sell you a policy. I want my interviews to be reasonably unbiased so you can make your own decisions, and annuities and whole life insurance policies are commissioned products. So, folks who know about them are inevitably pushing the sale.


I’ve heard a few academics cover the topic, but not thoroughly, and the feeling I got was that they understand the principles of the products–but not the nuances, costs, and downsides.


But recently, I realized that I can actually find you product experts who are no longer selling the products. And that’s because oftentimes when people get into insurance sales, they find they actually want to do what I do, which is comprehensive fiduciary financial planning. So, some of them pivot careers and give up earning commissions to sell insurance.


So, for the first time, I’m bringing you interviews with two other financial advisors on Love, your Money!


Let me just be transparent and say, I, as a professional, do not recommend or use either of these two products; not myself, not with my family, and not with my clients. I think they’re both overpriced, unnecessary, and underearning, but I often see them in people’s portfolios and I find myself helping new clients unwind their complex and expensive insurance contracts so we can maximize both expected earnings and their optionality going forward.


And I wanted to be able to share with you why I’ve come to that decision. So, I’m bringing in experts.


Ashley Foster is a certified financial planner and the owner of Nxt:Gen Financial Planning, a fee-only and location independent firm. Nxt:Gen serves early and mid-career veterinary professionals. You’ll hear him say that his wife, Anna, is an ER veterinarian. So, I’m thinking maybe that’s how he picked up his niche.


Ashley picked up his whole life insurance expertise during the first years of his career at the New York Life Insurance Company. Of course, I’ll let him and his cat, François, tell the story best. And if you missed last week’s episode on annuities, go back and listen to Episode 241 of Love, your Money when you’re done with this one. Here we go.




Hilary Hendershott: Ashley Foster, welcome to Love, your Money.


Ashley Foster: Hilary, thank you. I’m really excited to be here to share all this information with you.


Hilary Hendershott: I’m excited to hear about it, too. I feel like we should introduce the side star, the other creature in your camera there, which is your kitty cat. What’s the cat’s name?


Ashley Foster: His name is François; Frank to his friends. And he is our four-year-old Devon Rex that my wife got me as a Christmas present back in 2019. And he’s been our little buddy ever since.


Hilary Hendershott: And he’s just curled up in a ball there. He’s like unflappable.


Ashley Foster: Yeah, he’s chilling out. He’s getting ready. We’re vacationing to Hawaii on the 22nd of May, and, he’s getting ready for his sixth trip to Hawaii. So like, he’s a little traveler. He does really well.


Hilary Hendershott: Okay, amazing. Well, thanks for having him on the show. He may be the first cat on my show.


Ashley Foster: He’s quite the star.


Hilary Hendershott: Love it. Would you please tell my audience about your career journey that made you an expert on whole life insurance? We’re here today to talk about whole life insurance. So, tell us how you got to be where you are about that product.


Ashley Foster: Oh, boy. So, in a galaxy long, long ago, a galaxy far away, but back in 2007, I graduated from college and I always knew that I wanted to be a financial advisor. But I was a college athlete and went the humanities kind of route, liberal arts route, and never really imagined myself having the opportunity to do so. So, I graduated from Florida Tech, came back to Houston, Texas, where I was from, the economy was really starting to bite back in the day because of the Great Recession and so, I got into recruiting… and I hated it and I hated working for other people.


I had my own little side business in college to make a little bit of extra money, and I wanted to do something entrepreneurial. So, lo and behold, my mom–God bless her–was out at a networking event and was handing out my resume to whoever would take it, and it fell into the–


Hilary Hendershott: Your mom?


Ashley Foster: My mom. My mom, of all people. So, I’m half Mexican. My mom’s the Mexican in the family, and she is like a bulldog for me. And so, she knew I wasn’t happy, and she was like, “Hey, I’m going to go out and just see what I can do for my son.”


[My resume] Got into a partner at New York Life Insurance company’s hands. Partner is just the fancy word for sales manager. And so, I got a phone call from her to come in for an interview. Four meetings later, I’ve got a job and I’m a “financial advisor/life insurance agent.” And I thought I hit the jackpot. I was like, “Oh, man, this is great.” Like, I love CNBC, watching it, like all of the bright lights. I’m super ADD. I was like, I’m finally going to be the next Jim Cramer. You know what I mean? Did not happen that way.


So, went into training; New York Life has got a wonderful training program. It was two weeks, but it was mainly focused on sales and product, and it wasn’t really focused on advising people. It was really focused on putting a specific product in front of people and really trying to push that. I didn’t know any different, 23 years old, what do I know, bright-eyed, bushy-tailed, right?


Let’s fast forward, sometime to about 2011, 2012, and I made it through the Great Recession. It’s 100% commission job–


Hilary Hendershott: You hustled.


Ashley Foster: Man, I had to. Anyone that could fog a mirror was a prospect for me, and that’s literally what they said: If you have someone that can fog a mirror, they are a prospect for yourself. Made it through all of that, became my own partner in the Houston office; I was one of the youngest partners in the company at that time, and I was tasked with building my own sales team.


And I got to the point where, I remember early on in my career, I was like, “I don’t know if I could do this management thing. It just doesn’t feel right bringing people on board to then go out and sell all their friends and family life insurance.” And then the attrition rate was super high. I think, like after three years, 90-something percent of the people that start fall off, right? And I just didn’t feel comfortable with that. So, I didn’t last long. I probably lasted maybe like eight months.


And then I had an opportunity to go work with a mentor of mine who was not with New York Life. He was an independent financial advisor, and one of the things that he told me was a prerequisite to come work with him was you got to get your Certified Financial Planner. Now, granted, my old business partner was a super old-school life insurance guy. There’s a story of him selling life insurance at a funeral. Okay, this dude was like super…


Hilary Hendershott: I’m shaking my head. Those of you listening on the podcast, I’m shaking my head. It’s such an eye roll.


Ashley Foster: Right? And it’s just the wildest thing. He’s a great guy, but man, any opportunity he got to push life insurance, I mean, he was in it. He was just old school sales dude. But the best advice he gave me was to go ahead and become a Certified Financial Planner; that was his prerequisite. Taking those CFP courses, Hilary, really changed the direction of my career. All of a sudden, I was like, I’m not pushing product. Now, I’m learning how to like taxes and how to apply insurance in a fundamental way to be able to help a client, or investments, or just general financial planning-type principles, like saving money, spending.


Hilary Hendershott: How to actually help people in a consultative way.


Ashley Foster: 100%, right? So, it wasn’t a sales process. It was a consultative process to help a client get from point A to point B to point C. And it just felt so different. I was like, man, this is what I really wanted to do.


Hilary Hendershott: Okay. So, you’ve been there, done that, and in a way rejected or walked away from that insurance company life. Interestingly, my dad worked for New York Life when I was born. So, I know, I’m familiar. So, let’s start from the beginning. Folks listening may not even understand what whole life is, so what is a whole life insurance contract?


Ashley Foster: Yeah, so that’s a good question. So, it’s in the name, whole life. It’s a life insurance contract designed to literally last you your entire life. And when I started in the business in 2007, the age table went up to 100, then it got revised to 120. So, what happens, let’s say, if you make it to 120, okay? The policy then pays out all of the cash value that it accumulates. So, think of whole life is, or the way that they trained us to think about it is, is that it is a forced savings vehicle with a life insurance component attached to it. You pay your premium, it builds up a “cash value”, and then from there, at a later date, you can use this cash value–and they would always tell us “tax-free”; there’s a little bit more intricacy into this–but you can use this cash value to go ahead and pay for anything that you want basically, and use it as a loan from the policy.


So, in the olden, olden, olden, olden days, term insurance–which is the other insurance that your listeners may be familiar with–term is like temporary. It lasts for a specific number of years, if you pass away, it pays out a death benefit. If you don’t pass away, the policy basically goes away because it becomes too expensive after the term for most people to keep.


Back in the day, there were not many savings vehicles available to people, right? You couldn’t, in the 1930s, go and buy an ETF or anything like that. So, whole life insurance was very much the primary way that most families would do their savings.


Hilary Hendershott: So, that’s the way they would access stock market investments.


Ashley Foster: Almost like that. So, remember, whole life is not invested in the stock market. It is invested in what’s called the general account of the life insurance company. So, the life insurance company has a big account with billions and billions and billions of dollars, where all of these premiums go in, right? And they have all of these kind of different investments, but they basically have an almost somewhat predictable rate of return on this general account. And that’s how the whole life policy can provide a very conservative–so think of like a high yield savings account kind of rate of return–on the policy without any volatility. So, there is a guaranteed component of the whole life, and then there is a non-guaranteed component of the whole life.


The guaranteed component of the whole life is, as you pay your premium, there will always be this amount of cash value. You will always have this amount of death benefit. The non-guaranteed component: the insurance company says that they are going to pay you a dividend on top of what your cash value earns.


Essentially, a dividend is a fancy way of saying that the life insurance company is returning an excess of premium. At the end of the year, they calculate, “okay, these are my expenses overhead, these are my profits. I paid off also this amount of claims. So, then I’m going to return a portion to our policyholders.” That is if it is a– now gets confusing–ff it is a mutual/privately owned company. Public companies offer whole life insurance, right? So, like, Lincoln Financial Group is a public company, but they no longer offer whole life insurance policies because it’s not very profitable for them in the near term.


So, private companies, like New York Life, can offer a whole life insurance policy because it’s not very profitable for them early on, but it is in the longer run for them. So, they keep you there by giving you “dividends,” which enhance the returns of your “cash value.” So, the next question you may have is like, well, what returns can I expect? Typically, you can expect almost bond-like returns. So, in the long run, I have a whole life policy that I still have, that I sold myself.


Hilary Hendershott: You do?


Ashley Foster: I do–from 2011. I sold it to myself because I earned a commission on it. So, why not? But I never canceled the policy. So, I still have it. It’s like 150 bucks a month, you know what I mean? And I don’t know, for some reason, it’s like my attachment to the life insurance. It has a little bit of a special meaning for me. Because my wife is like, “Well, why don’t you cancel it?” It’s like, well, I don’t know. If I die tomorrow, you get a little bit of extra money. That’s not a bad thing, right?


But it is almost like bond-like returns, or high-yield savings account returns. So, in the long run, this policy should generate me over a 30 to 40-year period, somewhere in the range of like 3% to 4%. So, this isn’t something that’s like, you’re going to make a lot; you’re not getting rich off of it. Although on the flip side, a lot of agents will sell it as, like, you’re going to get rich off of this thing–and that’s where I saw the conflicts of interest.


Hilary Hendershott: Well, that’s why consumers who buy them get disappointed.


Ashley Foster: 100%. So, most life insurance policies don’t make it to the 10th year–of those whole life policies. And a lot of those whole life policies need at least… anywhere between six to seven years to go ahead and break even. So, if I could go ahead and give you an example, it’s like having a home, if you think about it, right? A home builds equity; same with a whole life insurance policy–it builds equity. It’s not invested in the stock market, it’s a piece of property. And the same with the whole life insurance.


And generally, if it’s not a crazy period, you’re going to get a 3% or 4% return. Like, typically, in the past, you would on your home. Now, kind of being a little bit different, but still–over a period of time, there’s a breakeven point on your home where what you put into it, with all the mortgage and stuff like that, now, you’re kind of breaking even on what you’ve put into it versus interest, your closing costs, stuff like that. The life insurance policy almost acts the same way, because in your first seven years, your cash value is, like, minuscule. So, it’s taken me on my policy close to about eight years to where the money that I put in now equals the cash value. So, now, I’m making a positive return. So, I’ve gone back and actually did the math–


Hilary Hendershott: Wait, I have a question. Tell me the math afterward–but so, you’re paying 150 bucks a month. What is the death benefit for that amount of money?


Ashley Foster: $100,000.


Hilary Hendershott: Okay. So, it is a small policy.


Ashley Foster: Correct. For a 28-year-old with a good health rating.


Hilary Hendershott: Right. Okay. And then you did the math. Go ahead.


Ashley Foster: Yeah. So, I did the math and I said, “Well, if I were to put 150 bucks a month instead into the S&P 500, what would I have?” I would have had probably almost three times the amount of money inside the S&P 500 fund than I would have had in the whole life insurance policy, right?


Hilary Hendershott: That’s clear. That gives people ways to weigh the tradeoffs. I appreciate that math. So, do you know, or is it even clear and consistent how much more expensive a whole life policy would be in terms of premium than a term life policy for the same death benefit?


Ashley Foster: Yeah. So, I mean, probably anywhere between 6 to 10 times more expensive.


Hilary Hendershott: 6 to 10 times.


Ashley Foster: I could probably get, back then, a 20-year term insurance policy at $100,000 as a healthy, super preferred–so when I say preferred, super preferred, nonsmoker, those are the health insurance rate, the health ratings, because they have to assess your health risk to give you the policy. So, the healthier you are, the less expensive it is, the more discount you give on the premium–and so, for 150 bucks, I probably could have gotten somewhere in the range of probably like 1 million to 1.5 million of 20-year term life insurance for my age at that time. So, it is a significant difference in the type of death benefit you can go ahead and get for a term life insurance policy versus a permanent life insurance policy, like a whole life policy.


Hilary Hendershott: Right. And so, is it possible for someone– let’s say, someone between the age of 35 and 45 buys a half-million-dollar whole life policy. How much would the sales agent make?


Ashley Foster: Yeah. So, depending on the company, but typically, on a whole life policy, about 50% of the commission in the first year. So, they make 50% of the first-year premium, and then typically after that, they receive a trail of renewals to keep the policy enforced.


Hilary Hendershott: So, the agent continues to get paid.


Ashley Foster: Correct. So, let’s say you put in $10,000 a year as a premium, okay? You would get $5,000 as a first-year commission, and then after that, you would probably/maybe get somewhere in the range of, like, anywhere between 1% to 3% of the premium after that as your renewal.


Hilary Hendershott: Okay. So, it’s significantly higher in the first year.


Ashley Foster: Correct. Yeah, correct–and that’s obviously the incentive. Now, this is getting a little bit in the weeds, but some companies will go ahead and charge you back if someone that bought a life insurance policy from you surrendered it in the first year, or sometimes maybe surrendered it in the first five years. But generally, the incentive was, if you’re selling a term life insurance policy, you’re getting maybe 50% or maybe 60% of $1,000, or you’re getting 50% of $10,000, right? Like, what’s the incentive for you if you’re the sales agent out there, right?


Hilary Hendershott: I always feel bad to–telling the people I refer insurance, I guess, quotes to, I always feel bad because I know they’re not making much on commission because I only let them sell my people term policies.


Ashley Foster: Yeah, same with me. And my old business partner, he and I have an agreement, and I basically say that, like, hey, any client that I send your way, like they’re in a bubble. You don’t talk to them about any other type of insurance or anything like that. There is a need for permanent insurance out there. It’s a very specific, very niche type of need; generally, has to do if someone is like ultra conservative or if they maybe have an estate planning issue. They just want a lifetime life insurance benefit. Mom and dad have permanent life insurance, I want permanent life insurance, too, right?


Hilary Hendershott: Right. I’ve had someone describe it to me as a guaranteed inheritance for your heirs.


Ashley Foster: It could be, depending on how you want to go ahead and handle it and structure it. So, there’s niche reasons, but I let him know, I say– because all my clients are 26 to 45 years old, like, this is the type of policy, and don’t sell them anything else. And we have a great relationship because he doesn’t do that and that’s excellent. And I mean, for a financial planner, it’s very difficult to find an insurance agent who will basically stay in that lane and then also not try to upsell your clients. And we have a good relationship, and I send them a good amount of business.


Hilary Hendershott: So, are sales agents required to be transparent about the commission that they earn if people ask? Or was that even an option for you, if not required?


Ashley Foster: Yeah. So, it wasn’t like they said, like, “hey, you should lay out how much you get upfront,” right? Generally, one of the ways that one of the partners told me how to handle this question is, is that, like, “I’m not paid by a commission by you, the client. I’m paid by the companies that I represent.” That was kind of the way that we handled that question. I’ve never really had anyone–I’ve been doing that, the life insurance game now, back then for almost 10 years. And I never had anyone ever ask me like, “how much are you going to make from this?” I did have people say, like, “how do you get paid?” I get paid, not by you, the client, but by the company I represent. They pay me a commission in the policy that I sell. And that typically was it; that really was the way to kind of like deflect the question.


Hilary Hendershott: Yeah, except all costs come down to the end consumer in all cases, right?


Ashley Foster: Exactly.


Hilary Hendershott: Okay. And did they instruct you to call yourself a financial planner?


Ashley Foster: So, back then, New York Life, one of the things that they were really good at, was telling us to make the distinction that we were not to market ourselves as “financial advisors” because you needed licenses in order to go ahead and say that you’re an advisor, right? So, you needed an insurance license to sell insurance. Then you needed what’s called a Series 6 and 63 to go ahead and sell mutual funds, open individual retirement accounts, things like that. And then you need a Series 7 and 65, I believe, to go ahead and actually do financial advising through them.


One thing about them was that they were very compliance conscious. And so, if we had a Series 6 and 63 where we could sell mutual funds or another type of permanent life insurance–which is called variable life insurance, universal life insurance, or a variable annuity; variable meaning that it’s invested in the stock market–we were to call ourselves financial services professionals.


Other folks I saw in the business, that did not work for that specific company, basically, they just call themselves whatever the hell they wanted, right? So, at least I give New York Life props for kind of like trying to be as ethical as possible. But at the end of the day, they’re also kind of covering their butts so that, like, I didn’t go out there and say, “I’m a financial advisor.” And then, I said, “hey, do this.” And then all of a sudden, it can come back on me. And then it obviously goes back to New York Life. So, they were kind of very regimented to cover their ass. So, that’s why they had those types of descriptions.


But anybody else… it was almost like the Wild, Wild West, I mean, I knew guys and gals that were just straight life insurance agents. They represented multiple different companies, they were independent. I said, “I’m a financial advisor. I’m here to help.” And obviously, that wasn’t the case.


Hilary Hendershott: And so, I want to give people a sense of… I mean, I guess, it’s interesting because what you’re doing for the company–and you’re not on a base salary, you’re commission-only–and so, you’re selling these policies and you’re winning these prizes, these expensive trips and things. What were some of the prizes? And I guess you were really good because you’re winning awards. And so, what are some of the things that you were winning?


Ashley Foster: Yeah. So, first off, you won the opportunity to continue working there. So, that was the…


Hilary Hendershott: Number one prize!


Ashley Foster: That was the number one prize: You got to keep your contract. So, I think this goes into a greater–kind of dissects the question a little bit more and gives the listeners more insight–the challenge was that our contracts, including retirement, health insurance benefits, all of these things–were tied to selling whole life insurance, right? The more whole life you sold; frankly, the more insurance you sold, but you got paid more on whole life, right? And so, you had minimums that you had to go ahead and keep. And so, if I wanted to keep my health insurance, I had to sell a minimum number of commissions.


And then above that, they had what was called sales clubs. And so, if you hit one sales club, you got a recognition, you got a little plaque, something like that. The higher you went, the more extravagant the trips were, the more extravagant the rewards were. So, when I hit my stride and was having a lot of success in the life insurance–I mean, like I said, all-expenses paid trip to Prague, stayed at the Four Seasons, got to hobnob with, literally, like the chairman of the board of a Fortune 500 public company and other board members. I mean, it was incredible how we were treated.


And we were treated like celebrities and rock stars. I’d never experienced anything like that in my life. My wife kind of goes like, “Yeah, well, too bad we can’t go on those trips anymore.” You know what I mean? I was like, “I know.” We pay for our own trips now, but even on the lower-level clubs that you would hit. So, one of the years, I didn’t hit the top level, I came in at the second level. We went to a trip, we stayed at a really amazing resort in San Diego. I think it was the Coronado. I think they had one of the guys, the DJ from the Beastie Boys come in and do a pool party for us, everything was paid for… I mean, it was legit. It was an awesome opportunity.


Hilary Hendershott: You were going, I have arrived.


Ashley Foster: Right? But obviously, if you go back and dissect all of this, these are huge, massive conflicts of interest, right? I serve my clients today because number one, I enjoy the work that I do and I enjoy helping people. Number two, I make a living from it.


On the flip side, though, in the life insurance world and frankly, some of the bigger companies and things like that, that also what are called broker-dealers–they’ll incentivize their folks by trips and things like that. I mean, it’s really hard to separate those conflicts of interest, right?


So, if you’re a salesperson, you want to go on the fancy trips. You go on two of them? Your significant other expects to go on the third, right? So, it’s just kind of this whole gamification thing. And the incentives were just kind of perversely structured that sometimes you didn’t really focus on, “is this right for the client?” You were just focused on selling the policy. And that was kind of like the whole thing that got me really thinking, like, “am I doing the best thing for my client or not?” And taking the CFP course really solidified that, “I don’t think I’m doing the right thing for my client. I think I need to be doing it another way.” And that’s why I started my firm Nxt:Gen Financial Planning after leaving the big company in 2018.


Hilary Hendershott: Right. That’s a big change to go from New York Life to being the owner of a firm where you have to build the business or you don’t get paid at all. And you don’t have the brand name or the marketing power of that big company behind you anymore. If you’re listening, what I want you to take from what Ashley just said is, if you’re considering purchasing a whole life contract, your premiums are paying for those trips, right?


Ashley Foster: 100%.


Hilary Hendershott: You’re paying for people you don’t even know, to get DJ’d to by the Beastie Boys, right? So just be aware!


Ashley Foster: I don’t even remember who that guy was. I knew the Beastie Boys was, I was like, “oh man, that guy’s having a great time.” Yeah, he probably got paid a good amount of money to be there.


Hilary Hendershott: Oh, my goodness, the Beastie Boys. I had their License to Ill album on cassette; listened to it on repeat. I think it was freshman year of high school or something.


Anyway, I want to circle back so as to not be perceived as completely biased because that’s how I’m positioning this conversation is– you’re the unbiased one. And I think it’s clear what your conclusion is about whole life as a planning tool but you had mentioned there are use cases for whole life. You are one of them–you have your policy, you just want to keep it. You understand the upsides, downsides, the costs, it’s fine. It’s your savings account with a death benefit attached to it.


And the second being, we mentioned a guaranteed inheritance for your kids, assuming you can afford to do that and achieve all your other financial goals. And then you sort of mentioned the estate planning needs. And you and I know what that is, but I want you to please explain it to my listeners because they probably don’t know what that refers to. So, can you give the use case for a couple who needs the whole life policy to pay for estate liquidity?


Ashley Foster: Yeah. So, take somebody, I think, the limits are now, I think it’s like $11 million per person if you’re married. So, if my wife and I were worth, let’s say, $23 million, that’s an exclusion from what are called estate taxes, right?


Hilary Hendershott: So, you can die with an estate that’s worth up to almost 23 million and not pay any estate tax. And the estate tax is expensive! It’s 45%.


Ashley Foster: It is. And so, the life insurance policy comes in as discounted dollars to pay for that estate tax. So, let’s say you’re worth $30 million. Your estate or your heirs have to pay 45% on $7 million. They got to come up with that money like really quick. You either like “sell” the family farm to go ahead and pay for that, or you can go ahead and use this life insurance policy that pays when you die, and these dollars will go ahead and cover the estate tax, thus preserving the assets inside of the estate, right? Because almost all people, they’re not sitting like Scrooge McDuck on a big pile of cash that they can then just write a big check to the government. They have assets. Maybe they have private stock that they can’t liquidate or they have a company and machinery and land and all of these other things.


Hilary Hendershott: Or 22 rental properties.


Ashley Foster: Exactly. Things that they can’t liquidate very quickly. Or if they did, it would be like a fire sale, right? And so, the life insurance basically, here’s the cash, pay off the estate tax, and preserve the remainder of the estate for the heirs, basically.


Hilary Hendershott: Perfect. Okay, so you and I agree, those are the three most reasonable use cases for whole life policies. By the way, François is awake. He’s having a little bath. Very cute. I love having the cat on.


And you answered one of my questions–one of my questions was going to be, do you yourself have a whole life policy? So, you answered that. And it’s a small one. I mean, relative to what would be your net worth or your desired net worth at your date of retirement, it’s not that much. So, you’re considering it a small piece of your overall financial plan. Have you recommended whole life at all to your clients?


Ashley Foster: No. And I’m really trying to think about this. I’ve unwinded more dubious whole life insurance sales to clients that have come to me than I have probably ever recommended. So, I’m really thinking… I don’t think that I’ve recommended to any of my clients that they purchase a whole life policy or any type–because there’s other types of permanent insurance–any other type of permanent life insurance.


Hilary Hendershott: Okay. All right, good to know. I think that’s where the rubber meets the road. I really appreciate all of this amazing wisdom you’ve dropped today on Love, your Money, and I have one final question for you. Are you ready?


Ashley Foster: Yes.


Hilary Hendershott: If your money were writing you a love note, what would it be thanking you or complimenting you for?


Ashley Foster: Yeah, I love that question because it really gets you to think introspectively. And there’s a quick story behind my answer here–and the note is, “thank you for not burning me”. And so, what I mean by that is, is that when I had those two really big years in the life insurance business, I made more money than I’d ever seen before in my life. I think I made more money than my parents have ever seen before, right? And all of a sudden, you get a half a million check that hits your bank account and you’re like, oh, my God. So, at that time, I hadn’t met my wife; I was probably maybe six months away from meeting my wife at that time. There was a lot of thought process of, like, let’s go to Vegas. Let’s go do some really stupid things with this.


Hilary Hendershott: Was that thought process? Or was that knee jerk…


Ashley Foster: It was almost a knee-jerk reaction. You have a 31-year-old single man who comes across the biggest pay day of his entire life and he has stars in his eyes… and I didn’t do that. What I did was, is that I made sure that I fully funded my 401(k) that year because it was the first time that I could do that. And then also, I set up a savings account, I paid off all of my student loans; at some point, I took loans from my parents because cash flow was tight some of those times, especially when I was getting my CFP, I was making hardly any money at all–and so, I paid my parents back because they loaned me some money to help keep me afloat during that time. I invested in the stock market, I opened an E*TRADE account and bought my first stocks. Yeah, did I spent some of it pretty dumb? Yeah, I bought some fancy suits that I don’t really wear anymore.


Hilary Hendershott: Nobody does.


Ashley: Right, exactly, especially after the pandemic. But the story of that is, is that when my wife went to work for her recent company, we had an opportunity to invest money in her company at the time. And I had set money aside from that payday in a savings account, and that was the money that we used to invest in her company, and that has grown massively for us.


Hilary Hendershott: What a blessing.


Ashley Foster: And so, looking back now as a 40-year-old married, mature man with a fur baby behind me, I didn’t burn my money by being stupid with it. I saved it, I did smart things with a majority of it, and that has then been able to multiply a lot of our wealth later on–and has given us opportunity to invest. And really, if everything pans out with her current company, then things are going to be wonderful. So, I’m sure that’s what my money is thanking me for if they could write me a love note. So, there you go.


Hilary Hendershott: Love it. I bet your wife is grateful to you, too.


Ashley Foster: She’s amazing. She’s been such a rock for this, especially in my business. She turned me around. So, a lot of the success I have, I’ve really owed to the partnership with her.


Hilary Hendershott: Oh, very cool. What’s a place on the internet people can find out about the things that you do or in case they’re a veterinarian and want to meet you?


Ashley Foster: Yeah. Or if they want to see, our next gen mascot, François, he’s also prominently displayed. So, it is www.nxtgenfp.com.


Hilary Hendershott: Well, you made that one, it’s kind of hard to verbally give to people. All right, we’ll have that in the show notes as well. Very much appreciate your time. Ashley, thank you so much for being here.


Ashley Foster: Thank you for having me.



Hendershott Wealth Management, LLC and Love, your Money do not make specific investment recommendations on Love, your Money or in any public media. Any specific mentions of funds or investments are strictly for illustrative purposes only and should not be taken as investment advice or acted upon by individual investors. The opinions expressed in this episode are those of Hilary Hendershott, CFP®, MBA.


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