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So here is what I'm looking at, you tell me if you think this makes sense....Whole Life policy with a $1,000,000 death benefit. Premium is $27,690/year for 10 years. Guaranteed cash value at end of 10 years is $287,250 with $1,000,000 death benefit totally paid for. Target cash value is well over $300K with an additional death benefit of $67K. A 20 year term life policy for the same amount would cost me $15K and I'd have nothing to show for it after the term and no benefit to pass on to anyone....What am i missing?
So here is what I'm looking at, you tell me if you think this makes sense....Whole Life policy with a $1,000,000 death benefit. Premium is $27,690/year for 10 years. Guaranteed cash value at end of 10 years is $287,250 with $1,000,000 death benefit totally paid for. Target cash value is well over $300K with an additional death benefit of $67K. A 20 year term life policy for the same amount would cost me $15K and I'd have nothing to show for it after the term and no benefit to pass on to anyone....What am i missing?
$15k per year? are you 400 lbs overwieght? a typical term policy isn't going to be $1,000/month for $1mil in coverage.
your guaranteed value in the whole scenario is basically the case you put in each year. so they're guaranteeing you your cash? give me $28,000/year and i can guarantee you $287,000 too! all the while i'll buy myself nice things using the interest i earn on your money. if i earn more than what i expect, i'll even give you that too!
$15k per year? are you 400 lbs overwieght? a typical term policy isn't going to be $1,000/month for $1mil in coverage.
your guaranteed value in the whole scenario is basically the case you put in each year. so they're guaranteeing you your cash? give me $28,000/year and i can guarantee you $287,000 too! all the while i'll buy myself nice things using the interest i earn on your money. if i earn more than what i expect, i'll even give you that too!
dude come on, the $15K is the total cost over 20 years! Its way less than $1000/year. Yes you can give me my money back after 10 years but can you also guarantee me that you will give my kids another million ON TOP OF that when I die? No matter when that may be, 5, 10, 40, 50 60 years down the line. Not to mention the money is tax free as discused earlier.
for the investing, I would do 401k to what the company matches then Roth IRA.
For the whole life, what happens if you die after the first premium or 5th, do you get that 27k (or 27k*5) back as part of your cash value, or no?
i think for a lot of people 27k a year is prohibitive.
hijacking the thread a little.. do most people still carry life insurance after they retire? my term expires when i am like 57!! would it be better to re-new when i am say, 35 so that brings me to 65 instead of waiting longer.
for the investing, I would do 401k to what the company matches then Roth IRA.
For the whole life, what happens if you die after the first premium or 5th, do you get that 27k (or 27k*5) back as part of your cash value, or no?
i think for a lot of people 27k a year is prohibitive.
hijacking the thread a little.. do most people still carry life insurance after they retire? my term expires when i am like 57!! would it be better to re-new when i am say, 35 so that brings me to 65 instead of waiting longer.
You always get the cash value back plus the benefit, but up until about year 3 the cash value is much less than what you put in. for instance in year 1 you put in $27K but the cash value if you die is only $10K, year 2 the cash value is $28K but you have put $54K total in. It should be noted that should you die you still get the $1MM death benefit, a quick death is never good for the insurance company regardless of what policy you pick.
The bottom line with life insurance is this.Most people buy a term life policy and pay the premiums for the term, never to cash in on the benefit. Most of them are like us mid 30's middle-upper class. This group, statistics will tell you will live to well over the average life expectancy of 75. Still most of us will buy term policies that expire by the time we are 55( very little chance of dying by then) and that is how insurance companies make money( I'm captain obvious today).
That is why I'm considering whole life. I get the insurance and at least I'm guaranteed the money will be there for someone.
Last edited by Goldendoodle1969; 02-15-2011 at 08:29 AM..
dude come on, the $15K is the total cost over 20 years! Its way less than $1000/year. Yes you can give me my money back after 10 years but can you also guarantee me that you will give my kids another million ON TOP OF that when I die? No matter when that may be, 5, 10, 40, 50 60 years down the line. Not to mention the money is tax free as discused earlier.
$15k total makes sense, i figured that but it wasn't clear the way you typed it. sorry, i'm not sold on the whole LI policies. they carry large maintenance/admin fees, and they are expensive. they're an alternative to hedge fund investing, as the NYT correctly compared them to. it just doesn't make sense for 95% of the population, yet they still try and sell them to us.
for the investing, I would do 401k to what the company matches then Roth IRA.
For the whole life, what happens if you die after the first premium or 5th, do you get that 27k (or 27k*5) back as part of your cash value, or no?
i think for a lot of people 27k a year is prohibitive.
hijacking the thread a little.. do most people still carry life insurance after they retire? my term expires when i am like 57!! would it be better to re-new when i am say, 35 so that brings me to 65 instead of waiting longer.
it depends on your theory of LI, but my brother-in-law (financial planner) and I have basically agreed on the idea that life insurance is to provide for your dependants if you're gone based on the expenses you have. i'm 29 with a new 30 yr mortgage. we have a kid on the way. my wife is 30. i'll buy term life insurance that will cover $1,000,000 if i die that will cover the cost of the mortgage and leave extra for my wife, with the assumption she is young enough to remarry and/or adjust her spending accordingly.
if you want it as an investment...whole different conversation. i just don't view life insurance as an investment.
and by the time i'm 60, my mortgage will be paid off, kids will be out of college, etc....then there's no reason to have life insurance anymore.
You always get the cash value back plus the benefit, but up until about year 3 the cash value is much less than what you put in. for instance in year 1 you put in $27K but the cash value if you die is only $10K, year 2 the cash value is $28K but you have put $54K total in. It should be noted that should you die you still get the $1MM death benefit, a quick death is never good for the insurance company regardless of what policy you pick.
The bottom line with life insurance is this.Most people buy a term life policy and pay the premiums for the term, never to cash in on the benefit. Most of them are like us mid 30's middle-upper class. This group, statistics will tell you will live to well over the average life expectancy of 75. Still most of us will buy term policies that expire by the time we are 55( very little chance of dying by then) and that is how insurance companies make money( I'm captain obvious today).
That is why I'm considering whole life. I get the insurance and at least I'm guaranteed the money will be there for someone.
but you could invest the cost of whole life insurance yourself and likely end up with the same result, except avoid lots of admin expenses and fees. you buy cheap term insurance in case something tragic happens early to cover dramatic expenses. if nothing happens until you're 75, you're pretty much ok by then anyways, and the $300,000 you put in would have grown to well over $1m if you invested properly over that time frame. i just don't see the upside.
yeah I am not sure. home will be paid off, kids out of college for me as well (i think?!), but a lot of people do not retire until 65 and the last 5 years can be huge in terms of gains. age 57 (for me), 60 or 65 could be pretty far off from each other in terms of life changes.
you should get going on that term life it will take a while to process!
yeah I am not sure. home will be paid off, kids out of college for me as well (i think?!), but a lot of people do not retire until 65 and the last 5 years can be huge in terms of gains. age 57 (for me), 60 or 65 could be pretty far off from each other in terms of life changes.
you should get going on that term life it will take a while to process!
yeah, i'm about to do it.
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it will take a while to process!
