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joe moving: Insurance company projections can protect your tribe are precisely that - projections that are not based on any contractual requirement (and that assumes the company is still around in the end period). IMO, do not waste your money on anything other than pure insurance - Term, from a highly rated and well established company. It doesn't cost much for a younger person (simply because the statistical probability of your dying is small, in most cases) and you can protect your tribe if you are unlucky - that is a primary duty of any adult.
Our company has a guaranteed cash value with our account so we WILL see some money no matter what happens. It is the top rated company and they have been around for a very long time and it is a mutual company so no stockholders to worry about paying.
I did sell insurance and can say that "buy term and invest the rest" has always made the most sense BUT........
only a small percentage of people were ever disciplined enough to invest that "rest" so whole life was more sensible.......enforced savings, if you will.Not the best but much better than nothing.
This was especially true the younger the people and the smaller the difference in premium.
There isn't a great deal of impetus in bothering to save/invest only $20/25 a month( or a six-pack a week)
"There isn't a great deal of impetus in bothering to save/invest only $20/25 a month( or a six-pack a week)"
I would have to disagree with this. I remember being told over and over again when I was young that it didnt matter whether you saved $5 or $150 month, you need to save something. granite its not a lot to save $20 a month, but it does add up. When I was about 20 I was a single mom and had a mortgage to pay. I struggled daily to make ends meet, but still managed most months to send somewhere between $10-50 per month to my mutual fund. I managed to have several thousand by the time I married at 26. Is it a ton of money? no, of course not but better than nothing and better than me stick that extra into whole life ins.
I was a high school teacher turned stay at home mom that has personal experience with the value of owning whole life insurance policies. You have your opinion and I have mine. I don't understand why you think it is such a bad idea when I look at the dividend our policies are paying and the cash value INCREASE we see year after year when the rest of our investments are losing money now. It isn't the only investment we have but right now it is the BEST one we have. The cash value far outweighs the premiums we have paid in and will continue to do so for the life of our policies, what is bad about that. At least you get something for all the money you put into your policies vs just plunking money into a term policy that you will never collect on. Why do you think that term is so good?
I work in insurance as an actuary so here is why....Term insurance just covers the risk of death. Additional investment options can be tacked on making it into things like Whole life.
Basically, you can buy term life and save the additional premiums in a similar low-risk investment portfolio and the benefit is that you do not have to pay premium taxes, commissions etc. to do so. So, all else being equal...insurance makes for a poor investment vehicle for that reason.
Saying that the conservative (bonds mostly) investments make whole life better by comparing them to a sinking stock market is a fallacy because you could invest your premium savings in indentical low-risk options with the funds. (without the frictional upfront costs noted above.)
Consumer Reports also recommends people generally buy term life, not whole.
Paying too much for life insurance? (http://www.consumerreports.org/cro/money/insurance/life/life-insurance-10-06/overview/0610_life_insurance_ov.htm?resultPageIndex=1&resul tIndex=2&searchTerm=life%20insurance - broken link)
Term is the only useful life insurance, anything else is simply a waste of money. There are many good policies available on the web. Do select a highly rated company and definitely compare rates closely. Do not select any company based purely on rates; remember that the company's financial position is YOUR security.
There are some great replies to this thread and I have to say I completely disagree with Pilgrim. Term insurance is a stop gap for those who can't afford universal or whole life insurance.
You have to qualify for ALL LIFE insurance with your health. Based on your health you get rated and this table rating affects the cost of your insurance.
Term Insurance is usually for a set length of time up to 30 years, thus requiring you to have to re-apply for a new policy. However, 30years older the new policy will be too expensive, even if you qualify, to purchase.
Universal policies are good as long as you pay the minimum required premium. The great thing about these policies are that they never run out, unlike a term policy. You can also put more than the minimum required like an investment and earn free interest, thus building up a cash value in the policy. You can then take a loan against your own policy, without taxes, and do whatever you want with the loan. It does affect the death benefit.
Now when you take a loan from your self, you can do many things with the money.
Buy a new car every 4 years with cash, and pay yourself back with interest, or don't pay yourself back.
Use the cash accumulation to pay for your children's college like a 529 Plan, however you are not locked in like a 529 plan. With a 529 plan, it can lose value, and what if your kid decides not to go to college, or gets a scholarship?
So there are many advantages to life insurance, and many people are using it as alternatives to other investments, and as a hedge against taxes.
As a previous poster said, yes insurance companies are not FDIC insured, and the safety of the contract is backed up by the financial strength of the issuing company.
I reply to this by saying first, that every state has a separate Department of Insurance that regulates insurance companies, and they are held to a higher reserve than even your local bank.
How old do typically people stop paying for life insurance? If I am 28, retire at 60 I would not think I'd be getting life insurance after I retire? The gap after a 30 year term is only 2 years. Not sure what that costs.
Is there such thing as a term policy more than 30 years?
How old do typically people stop paying for life insurance? If I am 28, retire at 60 I would not think I'd be getting life insurance after I retire? The gap after a 30 year term is only 2 years. Not sure what that costs.
Is there such thing as a term policy more than 30 years?
One thing to keep in mind is that life insurance is also a great estate planning tool-contrary to what Pilgrim thinks. Again, you need to look at the tax implications of your investment accounts and whatnot. Leaving a IRA to someone will incur various taxes whereas the death benefit of a life insurance policy does not. There are whole life policies that you can buy that are paid up at age 65 but the policy stays in force until you are 100 and can be used for estate planning.
How old do typically people stop paying for life insurance? If I am 28, retire at 60 I would not think I'd be getting life insurance after I retire? The gap after a 30 year term is only 2 years. Not sure what that costs.
Is there such thing as a term policy more than 30 years?
I think golfgal answered this one perfectly, so instead of having to re-qualify for a term insurance at much higher rates, your universal or whole life policy will be inforce for as long as you maintain them.
If you plan on retiring a poor old man, then no you would not need a policy other than term, however if you have a good amount of money, and would not like to leave a majority of it to our number one inheritor "Uncle Sam", then contact your local insurance agent.
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