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Old March 25th, 2006, 08:00 PM   #1
PetalMel
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Default Anyone have life insurance?

Trying to get some information/advice/opinion about "Whole" life insurance. Our agent (of course) is "strongly encouraging" us to get whole life insurance. It looks great on paper, but I'm sure there is a catch even though I can't seem to find it in the figures.

Anyone out there got some feedback. Feel free to PM me cuz I understand that this is a somewhat personal topic. At this point level term is what I'm leaning toward, but I want to hear some argument for or against the whole life from folks I "trust" vs. the dude selling the stuff.

Thanks tons for your insight. Guess I owe you a , huh?
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Old March 25th, 2006, 08:43 PM   #2
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when jake, our first born was on the way, we realized that it was time to do some planning, other than my employer provided life insurance.

we bought a small whole life policy. however this was when the dot com was going through the ceiling, and we realized we were spending a LOT of money for this "investment". that wasn't really yeilding a lot of money.

we cashed it out. we only then found out that a friend of the family had diversified their insurance company to include life insurance. it coincided with a wonderful package that Cincinatti Life was offering (to my knowledge they no longer are).

30 year term policies for me, and my wife. after 30 years, our mortgage will be paid off, other bills cleared up, and out kids will be well past college, and thus "income replacement" won't really be an issue.

of course, by then, we would expect that our wife's family will have passed on too - which will literally leave a lotto style payout in her trust...
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Old March 25th, 2006, 09:52 PM   #3
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I have to say up front the whole does look good. (know what you're thinking) but used to work at primerica back in the mid 90's. pretty much what I did and have to say is this. I picked up a policy for my wife and I for about $30 a month for $100K for each of us until my son is old enough to take care of himself. Death insurance is exactly that "in case of death"
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Old March 25th, 2006, 09:59 PM   #4
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Life insurance is a gamble. In reality you are gambling against yourself. You are gambling you will die and your beneficiaries will receive the face value before you pay them the face value.
I help young veterans and their widows understand their government life insurance plans daily.
Personally I have a 30 pay life. Which means I only pay for it for 30 years, yet my survivors receive the full face value plus accrued dividends for my entire life.
The only negative issue with "whole life" is it has to be paid for the insured's whole life. It is never "paid in full". This only becomes an issue when the insured become old, or disabled. Someone must continue to pay on whole life until the death of the insured for the face value to be payable at time of death.
You didn't mention if this is coverage for a child policy, your policy, or a family policy.
That being said, persons of comfortable/substantial protected assets don't need life insurance.

Last edited by RICK; March 25th, 2006 at 10:02 PM.
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Old March 25th, 2006, 11:52 PM   #5
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Whole life is a terrible investment no matter what they (the salesman) tells you. You should look into term life that is as long as it would take to make sure you have enough saved/invested should you or your spouse die it would be ok finacially. To start you should get about 8-10 your annual salary. If you invested the money you would have put into a whole life plan you would make a lot more than you'll ever get out of the policy itself. Sure adventually you can get some money back out of it but its at about a 3-5 percent increase. Thats bad.
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Old March 26th, 2006, 12:20 AM   #6
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Quote:
Originally Posted by Tab
Whole life is a terrible investment no matter what they (the salesman) tells you. You should look into term life that is as long as it would take to make sure you have enough saved/invested should you or your spouse die it would be ok finacially. To start you should get about 8-10 your annual salary. If you invested the money you would have put into a whole life plan you would make a lot more than you'll ever get out of the policy itself. Sure adventually you can get some money back out of it but its at about a 3-5 percent increase. Thats bad.

So you say I should take out a term policy for 8 to 10 times my annual salary and faithfully pay the premium for say 30 years to only have the policy expire and now I'm 70 , in poor health and I need to shop for a new policy . But if I bought a whole life policy which never expires and I pay the same premium in 30 , 50, 60 years that I pay at todays standard that is terrible ?

I do not have my whole life policy in hopes I get a small return on it , I have it because just like a 401k or a retirement plan I can borrow against it , it is double face value if I die by accident and when I'm 80 yrs old or more I still have the same coverage as I did in 2005 or even 1995 . It is there to aid my family in the event I should die.

In my opinion term life is a terrible investment and is not different than renting a house for 30 years when you could have bought the house and it would be yours , term life is just that ...term , when the terms up so is everything you paid for , if you plan to invest in something you should plan on it being sound and permanent.

I'm not an insurance salesman but I surely can not see the benefit of paying for something for 30 years to only have it expire and possibly not be able to be re newed.
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Old March 26th, 2006, 12:44 AM   #7
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Originally Posted by square eyed rio
So you say I should take out a term policy for 8 to 10 times my annual salary and faithfully pay the premium for say 30 years to only have the policy expire and now I'm 70 , in poor health and I need to shop for a new policy . But if I bought a whole life policy which never expires and I pay the same premium in 30 , 50, 60 years that I pay at todays standard that is terrible ?

I do not have my whole life policy in hopes I get a small return on it , I have it because just like a 401k or a retirement plan I can borrow against it , it is double face value if I die by accident and when I'm 80 yrs old or more I still have the same coverage as I did in 2005 or even 1995 . It is there to aid my family in the event I should die.

In my opinion term life is a terrible investment and is not different than renting a house for 30 years when you could have bought the house and it would be yours , term life is just that ...term , when the terms up so is everything you paid for, if you plan to invest in something you should plan on it being sound and permanent.

I'm not an insurance salesman but I surely can not see the benefit of paying for something for 30 years to only have it expire and possibly not be able to be re newed.
Well insurance can have value like peace of mind thats true. I think TAB meant its a poor investment for 30 years. If you are in your 20s and you are married AND have a kid (if your married,and you die your spouse should likely be able to support themself) then you get insurance so the kid can be raised right until they are 18. You dont need a 30 year policy. If you make it out of your mid 30s and have a good career and house and other investments that is what takes care of your family. You can make 10% per year in the stock market with out even trying. Real estate is a much better investment than a life insurance policy. Bonds are a better investment tool, atleast you dont have to keep paying into them, and bonds dont lapse or screw you over like insurance companies do.

Insurance on your life is no more of an "investment" than insurance on your car, or extended warranty your plasma screen from circuit city (policy held by insurance company). Its a calculated risk, you try to beat them, they hope you fail. Go to a inurance companies head quarters you will see they are impressive, they arent building skyscrapers by being wrong less often than being right. Just like a casino, different names .... the game is the same.

Also the comparison of term and full life vs. buying renting is not very good. You often rent a home for as much, as you would if you buy it, with out tax benefits, or appreciation. You can buy term cheap as hell if you are 20-45'ish because such a small percentage die before their late 50's .... and they know it.

Your goal should not be to simply be able to say you have insurace up untill your death. It should be a fallback plan to you can get some investments going.

Cliff notes: If you are single you never need life insurance. If you are married thik twice if you need it, if you have a kid term is good fall back till the lil guys grow up. If full life helps you sleep at night and you got money burning a whole in your pocket its a good value.

Last edited by jamiesann; March 26th, 2006 at 04:51 PM.
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Old March 26th, 2006, 06:59 AM   #8
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Term here. Thinking about getting Whole Life for the kids so they can have it when they turn 18. They can keep it for life insurance on themselves or cash it out. We have USAA and love em.
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Old March 26th, 2006, 07:51 AM   #9
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Keep researching. We regretfully went with whole life. We are "tweaking" our finances. Nancy switched from whole to term. That is the next thing I'm gunna do. All the research I've seen is to go with term.
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Old March 26th, 2006, 09:11 AM   #10
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Quote:
Originally Posted by square eyed rio

In my opinion term life is a terrible investment and is not different than renting a house for 30 years when you could have bought the house and it would be yours , term life is just that ...term , when the terms up so is everything you paid for , if you plan to invest in something you should plan on it being sound and permanent.

I'm not an insurance salesman but I surely can not see the benefit of paying for something for 30 years to only have it expire and possibly not be able to be re newed.
some of us view life insurance no differently than a home owners, or car policy - that is not as an investment, but instead as a fixed rate guaranteed monthly amount for a catastrophic claim. in my case, it's income replacement pure and simple. When I'm old and retired, there won't be any income to replace, and thus no need for renewing a policy that can't be renewed.

when I'm in my 60s/70s/80s (if I live that long) I had damned well better be in a financial position to not need to have any concern over leaving funds for my heirs.

my kids should be self sufficient long before then, my own financial affairs in order, and my wife set up by her family as well.

if I could buy home owners, or a car policy with a fixed rate for 30 years you bet your ass I would do so in a heart beat.

Quote:
if you plan to invest in something you should plan on it being sound and permanent.
no such thing. period. there is only lower levels of risks.
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Old March 26th, 2006, 09:36 AM   #11
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Jamisahn is right on. You shouldnt need life insureance when your 60+. Or even younger. Your investments (not insurance investments because its the worst one you could make) should WELL surpass anything you'll get from an insurance company. Borrowing against your own insurance policy is as dumb as borrowing against your home, it's your money/equity and you'll need to "barrow" it to get it? You USE your own money from other investments if you need money. Whole life IS NOT a savings/investment plan. With that said you DO need to look out for your family in the case you die and to be sure there covered. So thats where the 8-10 times your salary comes in. If after 10 years they cant make it then there is something wrong. If your not going to invest anything throughout your life then your in trouble and if your going to count on an insurance company for your retirement funds then your in real trouble. Oh and term life is much less expensive then whole life in the long run. Mostly because if your in good health now (assuming your in your late 20's or 30's) then getting it should be a breeze and fairly cheap. Relatively speaking. Good luck and shop around no matter what you choose. SOME insurance guys are as bad as used car salesmen and are not looking out for YOUR future.
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Old March 26th, 2006, 10:16 AM   #12
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I have already posted but have read the whole thread. I realize alot of info to digest. the main thing is coming from my point of few is that I was recently in a life or death motor cycle accident. I will be 40 in June thank GOD. I have term insurance $30/month for a 100K and invested the difference say 50/week my way. I've had the insurance for around 5+ yrs. my investment has earned me an account of 20+K of my money I don't have to ask to borrow my own money. just my input.
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Old March 26th, 2006, 12:42 PM   #13
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Dave Ramsey has a lot to say about whole life.

The only good financial thing about whole life is that you don't have to declare the $$ you have in it in a FAFSA form when you are applying for financial aid for the kids when they go to college.

They 'tell' you that you get these great returns, but typically, its less than 2% from our experience. I think when we got our policy, the examples showed 10% return. We use to have a policy with Prudential, we canceled it and got our money out of it.

It was a horrible investment.

For example, back in 1993, I got a $100,000 policy, that cost me $75.00/ month. Plus, I bured extra money in it so I didn't have to declare those funds when the girls applied for financial aid (FAFSA). This year, I cancelled the policy & got a term $100,000 policy for $17.00 a month. That means for 12+ years, I was paying almost $60.00 a month into the investment piece, and even with the extra thousands I put into it, I next to nothing out of it when I cashed it in.
The insurance sales person try to justify that the reason I didn't get more out was that the insurance alone is around $30.00/month. Um... No it isn't.

Type in term life in google, and check out some of the sites, you'll find that the term life insurance is half the salesman will tell you. They take so much off the top, you're rate of return is around 1.7%. At least that is what it was with Prudential.

Maybe in our case, we made out better because the girls probably got more financial aid, but if that isn't your driving force, I'd say DON'T do it.
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Old March 26th, 2006, 04:29 PM   #14
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Amen to Dave Ramsey. He pretty much changed my life and the way I view money. Oh yea Term insurance all the way. It is just what it says INSURANCE! Not a savings account!
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Old March 26th, 2006, 05:38 PM   #15
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I was also licesced to sell Lofe insurance, but quikly got outof it, the biggest thing I can say is this, keep your investments as investments, and insurace as insurance. Do you expect to get money back from your auto insurace without making a claim on it? No,

Typically for the same premium you will get way more insurance with term them whole, if not there is something wrong, either your paying too much for the term, or there's something they are not telling you about the whole.

STAY AWAY FROM WHOLE LIFE
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Old March 26th, 2006, 05:53 PM   #16
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We have never carried any Life Insureance. Is that not what SS is supposed to be for? My Dad Passed he had re-married and had 3 children with a new wife. She recived enough SS to raise them with out any life insurance. and as far as having life insurance on my own children I figured If I was to loose a child the price to lay them to rest would be way less the the cost of raising them and never seen any reason to carry life on a child.

Thats just the way we looked at it and the Insurance people can go and flip burgers like every one else.:tonka:
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Old March 26th, 2006, 11:35 PM   #17
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I went with term life ins. In my line of work, you NEED it. Going to work everyday for me is a crapshoot. All it takes is one person determined to kill a cop that day, and I'm done. Hopefully my training and God's good grace will see me old and knowing my grandchildren.
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Old March 27th, 2006, 06:32 AM   #18
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Thanks everyone for your input. This has been a long drawn out "consultation" with the person we are working with. I have done google searches and read up on the issues and the majority say term is the way to go and that whole life isn't as cracked up as it looks on paper. The numbers this guy shows us on "cash value" etc. on the permanent whole life are impressive, but I KNOW there has to be a catch otherwise everyone would be touting this as the way to go and the sales dude wouldn't have to work so hard to sell it


We are looking for salary replacement in the event one of us is hit by a bus. Retirement stuff is mostly taken care of through my father's smart investing and frugal living (must skip a generation :tonka:). So I'm not about to hand over a whole bunch of cash to some salesman for a year of whole life when that will pay for about 10 years of term which is really all we need.

BTW, our sales guy told me that the commission on whole life is 55% which also made me skeptical on how that can make it a great investment for me. Great investment for HIM obviously (no wonder he has a great house on Torch Lake for a cottage---he isn't lying when he says "whole life and it's benefits" helped me get the property Up North...)

Well, bummer for our sales dude, no new boat for him due to our commission......term is good for us..

Thanks again. Guess I owe you guys a sometime, huh???
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Old March 27th, 2006, 07:25 AM   #19
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Quote:
Originally Posted by Just a Spouse
Dave Ramsey has a lot to say about whole life.

The only good financial thing about whole life is that you don't have to declare the $$ you have in it in a FAFSA form when you are applying for financial aid for the kids when they go to college.

They 'tell' you that you get these great returns, but typically, its less than 2% from our experience. I think when we got our policy, the examples showed 10% return. We use to have a policy with Prudential, we canceled it and got our money out of it.

It was a horrible investment.

For example, back in 1993, I got a $100,000 policy, that cost me $75.00/ month. Plus, I bured extra money in it so I didn't have to declare those funds when the girls applied for financial aid (FAFSA). This year, I cancelled the policy & got a term $100,000 policy for $17.00 a month. That means for 12+ years, I was paying almost $60.00 a month into the investment piece, and even with the extra thousands I put into it, I next to nothing out of it when I cashed it in.
The insurance sales person try to justify that the reason I didn't get more out was that the insurance alone is around $30.00/month. Um... No it isn't.

Type in term life in google, and check out some of the sites, you'll find that the term life insurance is half the salesman will tell you. They take so much off the top, you're rate of return is around 1.7%. At least that is what it was with Prudential.

Maybe in our case, we made out better because the girls probably got more financial aid, but if that isn't your driving force, I'd say DON'T do it.
Well, there are guaranteed whole life accounts. You can get a guarantee of 4.5% return on the policy. I know that is not huge, but you are getting the insurance policy benifit as well as the return and you have access to the cash value at the same time. This is not a significant on a 100k policy, but if you do 1,000,000 or more the added benifit can be that it becomes your own bank. Another thing to consider is the time-value of money. Generally speaking, once you are building cash value, the 4.5% starts building exponentially over time just like any 401K.

1) whole life is not attractive because of its cost.
2) there is more than one whole life, i.e. "guaranteed"
3) make sure the company actually underwriting is reputable and been around for a very long time.
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Old March 27th, 2006, 11:03 AM   #20
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Well, there are guaranteed whole life accounts. You can get a guarantee of 4.5% return on the policy. I know that is not huge, but you are getting the insurance policy benifit as well as the return and you have access to the cash value at the same time. This is not a significant on a 100k policy, but if you do 1,000,000 or more the added benifit can be that it becomes your own bank. Another thing to consider is the time-value of money. Generally speaking, once you are building cash value, the 4.5% starts building exponentially over time just like any 401K.

1) whole life is not attractive because of its cost.
2) there is more than one whole life, i.e. "guaranteed"
3) make sure the company actually underwriting is reputable and been around for a very long time.

the problem with this is there is ussually still added fees that don't go to your acount, so if you where paying $100/month, how much of that is actually going in your account, plus as you stated, 4.5 isn't very much, so why not pay for a much much less term policy, and inverst the money saved in something else, chances are after 10-20 years you would have much more in your own investment then you would have in that whole life policy, and the money would be more accessable to you if you ever needed it. People whole sell whole life can be very convincing with these twists, but I've seen holes shot in every one of these policies when they are looked at with a microscope, every time paying seperate for term/putting money in your own investments, beating out the whole every time.

also, if you are going to let a whole life saleman try convincing you to buy their policy, then let a guy who only sells term do the same, guys who sell both will push whole because they make more off the whole life policy.

as much as people say bad things about Primerica, they actually teach people some good things avout the importance of investing early, and the differences in term/whole life

if you want life insurance, get your info about the whole life, then have a primerica person come over and show you all the bad points in it, get a quote for term from primerica, then shop around, primerica is expencive for term, but cheap compared to whole life.

check with your credit unions, many offer good priced term insurance

and also I'll say Miffy makes soem good points too, not everyone NEEDS life insurance, and those that do probably don't need 250k to 1mill like the sales guys push on you
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