I don't really understand why everyone is totally against the variable investment life insurance policy. For now, the life insurance part is just a security measure and by signing up for the plan at an early age, I qualified as Preferred Elite which means less fees and can ensure I will have life insurance forever not just for 30 years. Right now I am thinking about my family but when I am older and have kids and a family as my dependents I want them to be covered as well. Why waste $50 every month and have it expire at $0 at the end of 30 years.
Why is everyone totally against the whole life insurance policy? They are generally horrible deals and make no sense at all financially.
You have recited verbatim the sales pitch that whole life salespeople give, to wit:
1. Right now you qualify for Platinum Preferred Elite, something that we only offer to our extra Special customers that meet very strict underwriting criteria.
2. With Term coverage you risk becoming uninsurable and seeing huge rate increases as you age.
3. Why waste any money on Term, when it will expire worthless at the end of the couple of decades of coverage? Build up value with Whole Life coverage and you will have something of value at the end of the couple decades. Having something is better than having nothing right?
(end of summary of sales pitch)
Instead of dropping $150/month on whole life, at least analyze the alternative before ruling it out. As another poster mentioned, you can spend $50/month on a 30 year Term policy and get a $1,000,000 coverage amount. Probably much more coverage than you are getting now, right? The goal of life insurance is to provide for your dependents, and a million should help them out immensely.
Then take the $100 per month you have left and put it into a 401k or IRA or brokerage account.
I'll do the math for you. $100 per month invested in an average mutual fund returning an average of 8% per year will leave you with $136,000 in 30 years. Not exactly nothing.
After 30 years of spending $150 per month on a combo of $50 Term life insurance and investing $100, you will have $136,000 left to do with as you like. Odds are your insurance needs in 30 years will not look anything like they are today. $1 million coverage may be sorely inadequate. Or you may have done very well building wealth and be a multi-millionaire on your own accord and have no need for additional life insurance.
Another way to look at the Whole Life policy is to examine the commissions the salespeople receive when they sell it. If it is like typical whole life policies, the salesperson receives almost all the first year's premium, and then receives a significant portion of the premium for some number of years after that, eventually only receiving a few percent of your premium each year after 8-10 years. Sounds like a very lucrative sale for your salesperson because it is. Probably not the best deal for the customer unfortunately.
My advice would be to do the math yourself and figure out what is the best alternative for you long term. Make a decision based on what your analysis reveals and what your goals are. Don't be suckered by the salesperson's appeals to your emotions and fears.
I speak from experience. About 8 years ago (when I was 24) an old "friend" tried to sell me a whole life policy with $10,000 per year in premiums. I forget the coverage amount, but it wasn't anywhere near a million. Luckily I decided against buying the whole life policy. Now I find myself with an extra $100,000 or so in my investment portfolio due to paying myself that $10,000 a year and allowing it to compound and grow in my own accounts. And that ignores the fact that I was able to contribute that $10,000 per year to tax advantaged accounts like 401k and IRAs that led to significant tax savings as well.
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