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Life Insurance Question
Old 02-19-2014, 01:37 AM   #1
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Life Insurance Question

I recently found this amazing forum and have as a result become a very disgruntled Ameriprise client. My wife and I purchased whole life policies through Ameriprise about 5 years ago and since we couldn't afford the death benefit amount that we needed, our advisor supplemented the rest with a flexible-premium adjustable life insurance policy which she said acts just like a term life insurance policy. It seems to be just like a term policy since there is a fixed premium over 30 years but I'm not sure since it states on the first page of the policy that the "flexible-premium adjustable life insurance policy is commonly called universal life insurance."

My question: What's the difference between a flexible-premium adjustable life insurance policy and a term life insurance policy?
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Old 02-19-2014, 08:10 AM   #2
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I don't know but my rule of thumb is that when comparing two products, the one with the longest name is usually inferior.
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Old 02-19-2014, 08:27 AM   #3
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There is an old saying:

'where there is mystery there is margin'

Chances are it is a much better deal for the insurer than it is for you.

We are in our early sixties. We have only ever had term insurance. Lots of it and for a fraction of the cost. It covered our risk when we needed it. We no longer have it.
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Old 02-19-2014, 09:15 AM   #4
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I'd run to Vanguard with a copy of all my stuff from Ameriprise. Generally, term insurance focused on the years you need it is far better than life.......and, the salespersons commissions are less. You may also consider a fee only financial planner......you need someone with your best interests at heart. You don't mention any financial plan.....since your life insurance should be part of an overall financial plan, Ive suggested Vanguard and the FI. Good Luck!
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Old 02-19-2014, 09:36 AM   #5
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Im no expert on life insurance, but Wikipedia says:

Another major difference between universal life and whole life insurances: the administrative expenses and cost of insurance within a universal life contract are transparent to the policy owner, whereas the assumptions the insurance company uses to determine the premium for a whole life insurance policy are not transparent.

http://en.m.wikipedia.org/wiki/Universal_life_insurance

Think it's a great deal for the sales person, not so good for the consumer. Run away, you're learning a lesson. Try to only learn that lesson once.
MRG
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Old 02-19-2014, 10:57 AM   #6
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I had a term life policy before I retired. It was a fixed yearly premium for a 10 year period, with a fixed death benefit. Very simple, and I shopped for it online, no sales pitches.

You'll have to compare that with your flexible premium thing to see what the differences are.
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Old 02-19-2014, 11:48 AM   #7
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Since it's Ameriprise, I have a weird feeling that I am overpaying somehow or being screwed. But I'm trying to be optimistic that my advisor wouldn't do that.

Where are some good reputable low-cost term life insurance policies? Any suggestions?
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Old 02-19-2014, 12:03 PM   #8
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Try Fidelity.com under "Investment Products"
Vanguard may have something similar.
Or Google term life insurance and select one of those. One problem is that many will want a name and address first.
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Old 02-19-2014, 12:40 PM   #9
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Biggest diff is you can buy more life insurance using term instead of anything else. Agents don't push term because it doesn't pay much in commission whereas the others like whole, universal and other dog poop policies pay a ton, something like a year of your premium is commission.

At this point you should try to look for a term to replace what you have. Go to metlife, it has an online quote as well as other sites like directquote or aigdirect... I am pretty sure your payments will drop or you can up the coverage for the same or lower cost.

Here is another site that is really helpful, Bogleheads • Index page

Good luck.
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Old 02-20-2014, 11:48 AM   #10
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The more important question is how many more years before you retire and what are rhe ages of your dependants?
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Old 02-20-2014, 02:07 PM   #11
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UL is like a bank account with a term insurance rider. Your premiums are deposits, there are withdrawals for cost of insurance charges and expenses and additions for interest.

UL is NOT term.
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