should i get term life and a little bit of whole?
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HsiaoChu
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In my opinion, getting any life insurance is a scam. You are hoping that you won't need it and but you are paying someone money every month just in case. But, in my opinion, whole life is a bigger scam. You are thinking that you are actually putting money away and that the life insurance people are saving it for you in a responsible way.
IMO, get the term for what you need when you need it, and do the whole on your own or with some savy financial advisor with a great track record.
IMO, get the term for what you need when you need it, and do the whole on your own or with some savy financial advisor with a great track record.
ziggy29
Moderator Emeritus
Getting any insurance is placing a bet that favors the insurer. But if you are a sole breadwinner earning $100K and your spouse is raising 2-3 young kids at home, would you rather not participate in the scam and die on them without it?
HsiaoChu
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Its a scam that we all participate in. But term is a the better value. As long as there were kids in the house, and as long as the rates are affordable, I keep the term since I am the major breadwinner and my wife(and when there were kids in the house) had no easy recourse. But even so, the amount that I could afford wouldn't have put them on easy streak.
Now I have a friend who took out 2 million and then tried to committ suicide. He failed, but one day after the 2 million was in effect again he didn't use pills, he used carbon monoxide. PA is a state where insurance pays on a suicide.
Unfortunately the survivor gave the whole amount away to the Lutheran Church. Can you imagine that? And what's more, can you imagine that the church took it? Now she's destitute and desperately needs money. Do you think her precious Lutheran Church will help her? Not a chance. If the church had been caring about her, they would have said she should gift the whole amount to them in her will, and take the CD interest on it in any year that she wanted to give it. At the time that would have netted them about $120K per year.
I would recommend level term life insurance to cover all your debts, and an additional amount that makes you feel comfortable if something should happen to you (not likely). You should investigate your company's optional life insurance offering if available - it's usually very inexpensive to buy additional coverage under that group plan.
I haven't carried any individually purchased life insurance since I turned 45 (originally purchased to cover our mortgage), and personally have no use for any of the other aggressively pushed forms of "life" insurance (buyer beware - you would do better to invest your discretionary income yourself).
You might find yourself having to shop this type occasionally. When I carried it - it renewed every five years (their opportunity to raise the price). Age 45 used to be the jumping off point. When you renew over that age, it used to jump up significantly. They should provide you with a spreadsheet that shows the prices at different ages
I haven't carried any individually purchased life insurance since I turned 45 (originally purchased to cover our mortgage), and personally have no use for any of the other aggressively pushed forms of "life" insurance (buyer beware - you would do better to invest your discretionary income yourself).
You might find yourself having to shop this type occasionally. When I carried it - it renewed every five years (their opportunity to raise the price). Age 45 used to be the jumping off point. When you renew over that age, it used to jump up significantly. They should provide you with a spreadsheet that shows the prices at different ages
ziggy29
Moderator Emeritus
As a Lutheran myself I take offense to these remarks. I'm sure there are some congregations that are a little more mercenary than others. But I'm also pretty sure the church never held a gun to her head and demanded that they get the entire insurance payout. No church I know of would ever expect such a thing. So if this is just religion-bashing, please save it for someone else.
REWahoo
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And someWHERE else other than on this forum.
ziggy29
Moderator Emeritus
That too!
harley
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Insurance is not a scam, it's insurance. It's insuring that if you win the bet (ie. die) the people you love will only have to deal with the grief, and not with financial catastrophe on top of it.
That said, term life is insurance, while IMO whole life is an investment product. And one that makes everyone involved in it better off, except of course, you. I would avoid it. If you need more insurance just get a bigger term life policy.
jimnjana
Thinks s/he gets paid by the post
The only whole life policies I would recommend are those from the Army AirForce Mutual Aid Association, Navy Mutual Aid Association and other Associations that you might qualify for that:
1) Don't pay sales force a commission
2) Are owned and operated by the members for the mutual benefit of members.
3) Policies are 100% refundable, meaning if you decide the policy is not right for you, you get 100% of your premiums back.
4) Don't penalize you for dividend or interest income that your policy earned if you decide to cancel your policy early.
5) Association is financially strong.
6) policies are low cost and earn competitive interest.
You won't find any for profit insurance companies that meet the criteria I described above. So, I'd stay away from them.
Stay with the Term, Whole Life is not what you want or need. I bought 3 Whole Lifes policies in my life, I'm not that smart. All 3 went into litigation for some type of fraud. The first 2 I cashed in after the settlement and I still hold the 3rd. I did receive a 31K settlement 2 years ago on the 3rd. Just goes to show that Whole Life policies are not something that you want to get involved in. The ins. co and the salespeople are the only ones happy with them.
saluki9
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What I really think you should do is put all your insurance questions in one thread and not 5 different ones for each question
meierlde
Thinks s/he gets paid by the post
In the old days there were participating mutual whole life insurance, which in the long term is not a bad deal (30 years) after 30 years the dividends would pay the premium and at that point the premium flows right to cash value. But of course 30 years is a long time and the participating policy is hard to find. (The dividends buy additional insurance, which in turn pays dividends on its cash value) So today the total cash value grows by 2000 a year on a 20k face value policy. But then that was then and you probably can't get that kind of deal today.
CCdaCE
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That's what I did; get a little whole life and the rest term. So, I'll always have the $50k in whole and the other $100K+ in term. The $50k is outside of work, pay premiums for 15 yrs. and the dividends are supposed to cover it after that. The term is through work and is dirt cheap, but if I switch jobs or health goes to crap, then my term is likely gone or the premium goes up. Supposedly the whole life would stay in effect, assuming I keep paying the premiums.
If I had it to do over, I think I'd do it the same way, just shop around for better whole life rates. I was young and naive.
-CC
If I had it to do over, I think I'd do it the same way, just shop around for better whole life rates. I was young and naive.
-CC
travelover
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Skip the whole life - a good portion of your premium pays commission to the agent. That is why it is sold and not bought.
Keep your insurance and investments separate.
Keep your insurance and investments separate.
All life insurance policies pay a commission to the agent. The premium for whole life is bigger, but the commissions are smaller. As an example, commission on a term product might be 100% of the first year premium, while on whole life it may only be 55-65% with 3-10% renewals for the first 10 years. Contrary to popular belief, the agent's job is not done after the policy is sold. There is a lot of post-issue work when things need to be changed that the agent gets paid nothing additional for. A lawyer will charge you $500 to walk in his office and review a document. An insurance agent will spend hours and hours re-working your policy changes (beneficiary change, payment changes, assignments, etc) and not charge you a dime.
To answer the question, in my opinion, it is a good idea to have the death benefit you need today covered with term insurance, but to still have some permanent insurance as a "safety net" in case you outlive the term and still need coverage. As an example, if your total coverage needs are $1 million, you may consider $900k of term and $100k of permanent. While the term is active, you have $1 million of coverage. After the term expires, you still have $100k "just in case." It will always be much cheaper to buy the coverage when you are young and healthy than when you are older and have health issues that will put you into a less favorable risk class.
Now, this is an early retirement forum, so most people here believe you won't need the permanent by the time you reach retirement age, but your average person usually still does. You may also want to consider guaranteed universal life (GUL) as an alternative to whole life. The cost is much lower (premiums will be 40-60% less) and the death benefits are guaranteed for life. It will never generate the cash value like whole life will and you can basically think about it as term insurance with a premium guaranteed for life. A lot of my clients will buy a GUL policy that is set up to be "paid up" at age 65 so that when they hit retirement, they no longer need to keep paying premiums, but the death benefit is locked in forever. As an example, a 36 year old in perfect health can get $100,000 of GUL paid up for life at age 65 for only $590 per year. A "20-pay" would be $690 per year for 20 years. A "10-pay" would be $1,125 per year for 10 years.
Sarah in SC
Moderator Emeritus
Just stick with the term life--skip the commission-rich rest of the life insurance. Get enough to make sure the kids get through school (say, 20 or 30 years). You can self-insure after that.
travelover
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You might want to mention that you have a conflict in interest in your "opinion".
He does have a disclaimer stating that he is an independent insurance agent in his signature line.
.
travelover
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Sorry, I have signatures and avatars turned off.
ERD50
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travelover
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I think you should add that disclaimer in your signature and avatar!
-ERD50
But I couldn't see it anyway!
saluki9
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Would you be happier if other members didn't post in threads related to their occupation?
travelover
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I'm not unhappy. I do have a hair trigger for anyone taking financial advantage of others. I did a mea culpa a few lines back. Do you need further groveling?
jimnjana
Thinks s/he gets paid by the post
Policies like this still exist. I'm holding a Knights of Columbus Policy whole life policy which I paid premiums on for about 22 years. This year I changed the policy to apply the dividend towards the premium vs buying additional coverage. (Over 22 years the coverage increased by over 40% with no increase in premium) I'm not real happy with the insurance but decided to hold it vs cashing in a the present time, makes DW a little happier knowing that this policy will be in force long after our term policies expire. BTW, this policy was sold as a ten year pay policy, the knights settled a class action lawsuit over misleading representations by their sales force regarding their whole life policies a few years back, of course, policy holders really got nothing as a result. During the policy review with the new insurance rep, I discovered for the first time that my cash value was less than what I've paid in premiums over the years. I was surprised because every year I receive an annual statement that seemed to indicate that dividend rate was very healthy. But what I didn't realize was that additional paid up insurance cost me a large portion of my dividends and is not convertible to cash if the policy is canceled. At least through organizations like the Knights you can still buy these types of policies, I would not if I had it to do all over again.
