Does anyone have advice about whole life insurance?

[ltokuda]

My brother and sister-in-law are both execs at a big insurance company. I asked them about this a few years ago and they said to buy 20 year term. Build up your savings over time so that you won’t need life insurance 20 years from now.

Insurance companies will often try to concentrate on certain markets (e.g. 35 years old, good health, 20 year term). So depending on your age, health, and product type, one company may offer better rates than another. For the “35 year old, good health, 20 year term” market, my brother recommended Banner, ING, West Coast Life, and Genworth.

[UCGal]

I’m with the others… go with term.

Whole life doesn’t really make a good investment… and that’s what it’s trying to do – mix insurance and investing.

Also – look at what your insurance needs really are. Insurance agents will try to convince you that you need X million. In reality look at what expenses your wife would have (burial and income replacement) and work from there.

For us – we figured the surviving spouse would be fine supporting themselves and the kids if the mortgage was gone… And we want to cover the kids college. So that’s the number we used for insurance…

[UCGal]

I’m with the others… go with term.

Whole life doesn’t really make a good investment… and that’s what it’s trying to do – mix insurance and investing.

Also – look at what your insurance needs really are. Insurance agents will try to convince you that you need X million. In reality look at what expenses your wife would have (burial and income replacement) and work from there.

For us – we figured the surviving spouse would be fine supporting themselves and the kids if the mortgage was gone… And we want to cover the kids college. So that’s the number we used for insurance…

[UCGal]

I’m with the others… go with term.

Whole life doesn’t really make a good investment… and that’s what it’s trying to do – mix insurance and investing.

Also – look at what your insurance needs really are. Insurance agents will try to convince you that you need X million. In reality look at what expenses your wife would have (burial and income replacement) and work from there.

For us – we figured the surviving spouse would be fine supporting themselves and the kids if the mortgage was gone… And we want to cover the kids college. So that’s the number we used for insurance…

[UCGal]

I’m with the others… go with term.

Whole life doesn’t really make a good investment… and that’s what it’s trying to do – mix insurance and investing.

Also – look at what your insurance needs really are. Insurance agents will try to convince you that you need X million. In reality look at what expenses your wife would have (burial and income replacement) and work from there.

For us – we figured the surviving spouse would be fine supporting themselves and the kids if the mortgage was gone… And we want to cover the kids college. So that’s the number we used for insurance…

[UCGal]

I’m with the others… go with term.

Whole life doesn’t really make a good investment… and that’s what it’s trying to do – mix insurance and investing.

Also – look at what your insurance needs really are. Insurance agents will try to convince you that you need X million. In reality look at what expenses your wife would have (burial and income replacement) and work from there.

For us – we figured the surviving spouse would be fine supporting themselves and the kids if the mortgage was gone… And we want to cover the kids college. So that’s the number we used for insurance…

[CDMA ENG]

Thanks for contributing everyone.

Here is the situation. I am looking into a whole term policy with Northwestern Mutal. They pay a dividend and thier annual return is rather decent. Historically thier return has has around 5 percent a year dismissing the bubble of the 90s. So investment-wise they are somewhere around a bond (which doesn’t mean much currently)

It seemed like a decent ROR over the life time coupled with the add bonus that someone would get some profit from my untimely demise.

I admit that I have not looked into the cost benefit of term coupled with other investment vehicles but it seems like that is what is being suggested.

But one very large point the broker emphasizes, and something I have not investigated, is that money paid in dividends out of this account is tax free. So his claim is that current ROR coupled with the tax free dividends brings the effective rate up much higher.

Can anyone counter the last statement or tell me what the other “gotchas” could be?

Thanks team,

CE

[CDMA ENG]

Thanks for contributing everyone.

Here is the situation. I am looking into a whole term policy with Northwestern Mutal. They pay a dividend and thier annual return is rather decent. Historically thier return has has around 5 percent a year dismissing the bubble of the 90s. So investment-wise they are somewhere around a bond (which doesn’t mean much currently)

It seemed like a decent ROR over the life time coupled with the add bonus that someone would get some profit from my untimely demise.

I admit that I have not looked into the cost benefit of term coupled with other investment vehicles but it seems like that is what is being suggested.

But one very large point the broker emphasizes, and something I have not investigated, is that money paid in dividends out of this account is tax free. So his claim is that current ROR coupled with the tax free dividends brings the effective rate up much higher.

Can anyone counter the last statement or tell me what the other “gotchas” could be?

Thanks team,

CE

[CDMA ENG]

Thanks for contributing everyone.

Here is the situation. I am looking into a whole term policy with Northwestern Mutal. They pay a dividend and thier annual return is rather decent. Historically thier return has has around 5 percent a year dismissing the bubble of the 90s. So investment-wise they are somewhere around a bond (which doesn’t mean much currently)

It seemed like a decent ROR over the life time coupled with the add bonus that someone would get some profit from my untimely demise.

I admit that I have not looked into the cost benefit of term coupled with other investment vehicles but it seems like that is what is being suggested.

But one very large point the broker emphasizes, and something I have not investigated, is that money paid in dividends out of this account is tax free. So his claim is that current ROR coupled with the tax free dividends brings the effective rate up much higher.

Can anyone counter the last statement or tell me what the other “gotchas” could be?

Thanks team,

CE

[CDMA ENG]

Thanks for contributing everyone.

Here is the situation. I am looking into a whole term policy with Northwestern Mutal. They pay a dividend and thier annual return is rather decent. Historically thier return has has around 5 percent a year dismissing the bubble of the 90s. So investment-wise they are somewhere around a bond (which doesn’t mean much currently)

It seemed like a decent ROR over the life time coupled with the add bonus that someone would get some profit from my untimely demise.

I admit that I have not looked into the cost benefit of term coupled with other investment vehicles but it seems like that is what is being suggested.

But one very large point the broker emphasizes, and something I have not investigated, is that money paid in dividends out of this account is tax free. So his claim is that current ROR coupled with the tax free dividends brings the effective rate up much higher.

Can anyone counter the last statement or tell me what the other “gotchas” could be?

Thanks team,

CE

[CDMA ENG]

Thanks for contributing everyone.

Here is the situation. I am looking into a whole term policy with Northwestern Mutal. They pay a dividend and thier annual return is rather decent. Historically thier return has has around 5 percent a year dismissing the bubble of the 90s. So investment-wise they are somewhere around a bond (which doesn’t mean much currently)

It seemed like a decent ROR over the life time coupled with the add bonus that someone would get some profit from my untimely demise.

I admit that I have not looked into the cost benefit of term coupled with other investment vehicles but it seems like that is what is being suggested.

But one very large point the broker emphasizes, and something I have not investigated, is that money paid in dividends out of this account is tax free. So his claim is that current ROR coupled with the tax free dividends brings the effective rate up much higher.

Can anyone counter the last statement or tell me what the other “gotchas” could be?

Thanks team,

CE

[SK in CV]

Did the broker happen to emphasize that he makes a commission in the neighborhood of 90% of the first year premiums and around 5% thereafter v. around 30 to 50% and 4% on a term product?

Take a good look at the numbers. In most cases the cash value remains lower than the premiums paid until somewhere around the 3rd or 4th year.

There are rare situations where variable products and 2nd to die policies are appropriate investments. But if you’re looking for vanilla insurance, buy insurance. If you’re looking for an investment, make an investment. Combining the two is good for the broker. Rarely for the insured.

[SK in CV]

Did the broker happen to emphasize that he makes a commission in the neighborhood of 90% of the first year premiums and around 5% thereafter v. around 30 to 50% and 4% on a term product?

Take a good look at the numbers. In most cases the cash value remains lower than the premiums paid until somewhere around the 3rd or 4th year.

There are rare situations where variable products and 2nd to die policies are appropriate investments. But if you’re looking for vanilla insurance, buy insurance. If you’re looking for an investment, make an investment. Combining the two is good for the broker. Rarely for the insured.

[SK in CV]

Did the broker happen to emphasize that he makes a commission in the neighborhood of 90% of the first year premiums and around 5% thereafter v. around 30 to 50% and 4% on a term product?

Take a good look at the numbers. In most cases the cash value remains lower than the premiums paid until somewhere around the 3rd or 4th year.

There are rare situations where variable products and 2nd to die policies are appropriate investments. But if you’re looking for vanilla insurance, buy insurance. If you’re looking for an investment, make an investment. Combining the two is good for the broker. Rarely for the insured.

[SK in CV]

Did the broker happen to emphasize that he makes a commission in the neighborhood of 90% of the first year premiums and around 5% thereafter v. around 30 to 50% and 4% on a term product?

Take a good look at the numbers. In most cases the cash value remains lower than the premiums paid until somewhere around the 3rd or 4th year.

There are rare situations where variable products and 2nd to die policies are appropriate investments. But if you’re looking for vanilla insurance, buy insurance. If you’re looking for an investment, make an investment. Combining the two is good for the broker. Rarely for the insured.

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