Thoughtful and creative insurance and financial guides recognize par whole life as the most powerful, flexible and versatile financial tool in the U.S. economy. These enlightened guides use par whole life for applications as simple as fulfilling basic family needs, as complex as the most advanced estate planning and wealth management strategies, and for every imaginable personal and business financial reason.
The idea that par whole life could also help solve the financial challenges faced by the Social Security System sprouted from the fertile minds of this group of insurance and financial guides.
The premise is simple. The U.S. Congress would exercise its wisdom (hmmm, I'm guessing that congressional wisdom is an oxymoron) and pass a law that required the Social Security Administration to purchase and maintain:
- A $10,000,000 par whole life insurance policy on each member of the House of Representatives upon election
- A $50,000,000 par whole life insurance policy on each member of the U.S. Senate upon election
- A $100,000,000 par whole life policy on the president, vice president, and speaker of the House of Representatives.
These purchases would create an immediate death benefit pool of $1,235,000,000. The death benefit would be payable to the Social Security Trust Fund. The U.S. Congress would not be able to get its greedy and power hungry mitts on it, and the law would prohibit them from accessing this money for the General Fund.
That's not a lot of money in the grand scheme of things in Washington DC, however...
- The makeup of the U.S. Congress is not static, and there tends to be a bi-annual 25 percent turnover in both the House and the Senate due to retirement, lost elections, and expulsions for criminal or ethical reasons, and death (and turnover in the White House is guaranteed to occur at least every eight years).
Therefore, one could expect the amount in that pool to grow by about 12.5 percent each year. That means that the initial $1.25 billion would become about $5 billion in 12 years, $21 billion in 24 years, $86 billion in 36 years, and more than $350 billion in 48 years.
Here's an even better idea. If every U.S. Senator and U.S. Representative had a term limit of 12 years, there would be 100 percent turnover at least every 12th year or about 33 percent every two years. Then, the $1,235,000,000 would grow, based on a conservative estimate, to more than $2 trillion in 48 years.
Now, if we inflate the amount of death benefit on new policies issued to the newly elected at the same rate we inflate the compensation and expense accounts of the U.S. Congress, then reaching a total of over $8 trillion in 48 years is a reasonable assumption. In addition, using the dividends from the par whole life policies to purchase additional paid-up insurance would compound the total death benefit even further, and achieving death benefits of over $20 trillion or more in 48 years is a reasonable expectation.
Moreover, since the actual death benefits that the Social Security Trust Fund receives would not be subject to the whims of the U.S. Congress, they could safely be used to purchase secured debt. The SSA would thereby retain the principle. This would create a secure future revenue stream for the SSA over and above the death benefits.
Finally, if the U.S. Congress would allow the SSA to use just a small percent of the current payroll tax to purchase small -- say $10,000 -- par whole life policies on the $51,859,000 current Social Security Beneficiaries, and on every person that becomes eligible for Social Security, then the Social Security System would begin to receive accelerated death benefits as these beneficiaries die and would become solvent that much quicker.
The real possibility
Of course, the possibility that the almost totally corrupt U.S. Congress would actually act in the best interest of "We the people..." -- and that a scheme like this, which might actually work, could overcome the political power brokers to corrupt persons in Congress -- is about as realistic as the 7.5 percent year upon year returns illustrated by some insurance and investment advisors for mutual funds and equity indexed universal life insurance policies.
However, if this scenario ever becomes reality, I want to be the agent that sells the policies.
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