Does anyone have advice about whole life insurance?

[briansd1]

Very timely subject.

A friend of mine just asked about Life Insurance. He’s a retired veteran and is being offered a policy.

Here are the details. What do you guys think? He’s 48 yo.

SK in CV, can you take a quick look and give quick feedback?

This sheet shows coverage amounts by age and rates.
http://www.insurance.va.gov/sglisite/forms/8714%2810-08%29.pdf

What is VGLI?
VGLI is a program of post-separation insurance which allows Servicemembers to convert their SGLI coverage to renewable term insurance. Members with full-time SGLI coverage are eligible for VGLI upon release from service.

How Much Coverage is Available?
VGLI coverage is issued in multiples of $10,000 up to a maximum of $400,000. However, a Servicemember’s VGLI coverage amount cannot exceed the amount of SGLI they had in force at the time of separation from service.

How Much Does VGLI Cost?
VGLI Premiums are based upon the separating member’s age. Premium rates were reduced effective July 1, 2008. Follow this link to view VGLI premium rates.

http://www.insurance.va.gov/sglisite/VGLI/VGLI.htm#convert

[ljinvestor]

If he needs coverage and this is guaranteed issue (meaning they don’t have to go through paramed & UW) then I would take it right away then look for cheaper alternative.

If you look at the chart for 48yo at $100k coverage it is $250 annually which is a little less than the avg cost of 10yr guaranteed term on a Standard Non Tobacco Male with quality carriers ($280-$310). Pref NS male would be approx $180-$200yr with those carriers.

At age 50 VGLI is $410 then at age 55 $763. They have the right to raise rates too. I only see this as a good option if his health is worse than Standard or he uses Tobacco & they take him at the rates shown on the form. If he has good health he might as well lock in rates now with a 10-20 guaranteed term from competitive carrier such as ING, TransAmerica, Protective, Principal, Metlife. Best to use agent that has access to many carriers because some have better rates at Pref while others are better at Std

[ljinvestor]

If he needs coverage and this is guaranteed issue (meaning they don’t have to go through paramed & UW) then I would take it right away then look for cheaper alternative.

If you look at the chart for 48yo at $100k coverage it is $250 annually which is a little less than the avg cost of 10yr guaranteed term on a Standard Non Tobacco Male with quality carriers ($280-$310). Pref NS male would be approx $180-$200yr with those carriers.

At age 50 VGLI is $410 then at age 55 $763. They have the right to raise rates too. I only see this as a good option if his health is worse than Standard or he uses Tobacco & they take him at the rates shown on the form. If he has good health he might as well lock in rates now with a 10-20 guaranteed term from competitive carrier such as ING, TransAmerica, Protective, Principal, Metlife. Best to use agent that has access to many carriers because some have better rates at Pref while others are better at Std

[ljinvestor]

If he needs coverage and this is guaranteed issue (meaning they don’t have to go through paramed & UW) then I would take it right away then look for cheaper alternative.

If you look at the chart for 48yo at $100k coverage it is $250 annually which is a little less than the avg cost of 10yr guaranteed term on a Standard Non Tobacco Male with quality carriers ($280-$310). Pref NS male would be approx $180-$200yr with those carriers.

At age 50 VGLI is $410 then at age 55 $763. They have the right to raise rates too. I only see this as a good option if his health is worse than Standard or he uses Tobacco & they take him at the rates shown on the form. If he has good health he might as well lock in rates now with a 10-20 guaranteed term from competitive carrier such as ING, TransAmerica, Protective, Principal, Metlife. Best to use agent that has access to many carriers because some have better rates at Pref while others are better at Std

[ljinvestor]

If he needs coverage and this is guaranteed issue (meaning they don’t have to go through paramed & UW) then I would take it right away then look for cheaper alternative.

If you look at the chart for 48yo at $100k coverage it is $250 annually which is a little less than the avg cost of 10yr guaranteed term on a Standard Non Tobacco Male with quality carriers ($280-$310). Pref NS male would be approx $180-$200yr with those carriers.

At age 50 VGLI is $410 then at age 55 $763. They have the right to raise rates too. I only see this as a good option if his health is worse than Standard or he uses Tobacco & they take him at the rates shown on the form. If he has good health he might as well lock in rates now with a 10-20 guaranteed term from competitive carrier such as ING, TransAmerica, Protective, Principal, Metlife. Best to use agent that has access to many carriers because some have better rates at Pref while others are better at Std

[ljinvestor]

If he needs coverage and this is guaranteed issue (meaning they don’t have to go through paramed & UW) then I would take it right away then look for cheaper alternative.

If you look at the chart for 48yo at $100k coverage it is $250 annually which is a little less than the avg cost of 10yr guaranteed term on a Standard Non Tobacco Male with quality carriers ($280-$310). Pref NS male would be approx $180-$200yr with those carriers.

At age 50 VGLI is $410 then at age 55 $763. They have the right to raise rates too. I only see this as a good option if his health is worse than Standard or he uses Tobacco & they take him at the rates shown on the form. If he has good health he might as well lock in rates now with a 10-20 guaranteed term from competitive carrier such as ING, TransAmerica, Protective, Principal, Metlife. Best to use agent that has access to many carriers because some have better rates at Pref while others are better at Std

[Anonymous]

As i know, Whole life insurance is expensive because You’re paying not only for insurance but also for the investment portion.

[Diego Mamani]

[quote=abell]Insurance agents are funny when you ask them about amounts for life insurance. The one that worked with us suggested we insure my husband at a level so that if my husband died so that I remain a stay at home mom. I thought that was crazy, as at that time I was pregnant (and had a 2 year old), and I was not going to add up 18 years of my husbands income to determine the amount on top of everything else we wanted to include (we put two years of current income just to give me time to adjust and find work).[/quote]
I figure, if my savings already exceed two years of current (after tax?) income, then I’m all set and I don’t need life insurance, right?

I’ve seen many “insurance calculators” online, where you enter your age, your income, etc., but they never ask for your current level of assets or net worth. If you’ve saved plenty, then maybe you don’t need life insurance, right?

[Anonymous]

Hi

I found that a member asked same question in this forum some months ago.

Pls use search box to find this questions with comments

[Raybyrnes]

Funny. I reread my old post regarding the whole life policy not so much in defense of this strategy but to say that it may be appropriate in some circumstances. i also pointed out that 5% might have been a fairly good return on a risk free investment.

So far had they bought that policy they would have been well ahead of the buy term and invest in CD (comparable risk free strategy) Just saying.

[Anonymous]

So what happens if you need to stop funding the policy for whatever reason?

[ljinvestor]

Whole life policies are going to vary by company and depends if they were initially overfunded or min funded, but generally if one stops funding earlier than the initial design or skips a few years premium then it wont look near as good.

For those focused more on accumulation, they should purchase min death benefit and a high early cash value product that has good contractual guaranteed rate. Agents don’t get paid very well on those because commission is mainly based on death benefit, but it gives the client a lot more flexibility.

Life insurance can be a great planning tool but it’s very disappointing to see how often it is not structured properly.

[Author]

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