Author Topic: Life Insurance - Whole vs Term vs Universal  (Read 8379 times)

KCLarkin

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Re: Life Insurance - Whole vs Term vs Universal
« Reply #10 on: October 26, 2017, 06:08:08 PM »
The complexity of various life insurance products (other than term) comes from the fact that they are basically combining investing with insurance and doing it in a way to hide their exorbitant fees and terrible returns.  When you also consider the lack of liquidity, lack of flexibility, counterparty risk, opportunity cost, it just doesn't make sense.  There's almost always a better way to accomplish your financial goal, including tax avoidance in most cases.  And after-tax returns are what matter. 

Your agent may also show you a prospective return of x%. What they don't tell you, is that this is a return of capital plus return on capital.

And your agent probably won't let you review the contract either. I once had a financial advisor refer me to an insurance agent to "price out" insurance. The insurance agent refused to let me take the contract home to review. So I fired my financial advisor (who I actually liked).

Definitely avoid anything other than term insurance.


boilermaker75

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Re: Life Insurance - Whole vs Term vs Universal
« Reply #11 on: October 27, 2017, 05:56:38 AM »
I have never purchased life insurance. I have had a policy through my employment. If I didn't, I probably would have bought a term policy when my daughter was born. I have also said no to long-term health care policies. These are also expensive for what you get. Typically 80-90% of the first year premiums go as a commission to your financial advisor followed by additional payments in future years.

bookie71

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Re: Life Insurance - Whole vs Term vs Universal
« Reply #12 on: October 27, 2017, 09:33:30 AM »
First, why are you buying insurance?  Most are buying it for protection, not as an investment. 
When we were younger and had a bunch of "dependents" I wanted enough insurance to get them through college and to keep my wife from having to marry someone so she could take care of them.  My eyes were opened when I found out that whole life  of about 10,000 cost about the same as 100,000 term (this was in the early 1960's.
I ended up buying 500,000  term with a term of 20 years and the premium would increase every 5 years (theoretically my income would go up which it did).
The big problem then was finding a salesman who would talk to me, with the internet that shouldn't be a problem now.
From having several insurance salesmen as clients over the years you will notice the cash value starts growing after about 3-4 years. This is because of the high commissions paid to the salesman.


Always remember, Pigs get fat and hogs get slaughtered.

ICUMD

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Re: Life Insurance - Whole vs Term vs Universal
« Reply #13 on: October 27, 2017, 09:58:41 AM »
Thanks for everyone's input!  This board has been far more helpful than any Investment advisor, banker or accountant I've ever had (poor luck perhaps!)

All of you have confirmed for me that Whole Life and Universal have investment components that complicate the issue of what you're actually paying for and have returns that are marginal at best.  Commissions are far too excessive.

As I'm currently 41 yrs old and have no dependents yet, I think I will hold off on any insurance product for now.  I think a defined Term of 20 yrs or so may be useful upon having children to cover them until they are adult age in the case I die early. I think this would help avoid liquidation of my investment portfolio to pay taxes on Canadian 'capital gains' (and not estate taxes as several of you have correctly pointed out).   Some people mention these insurance products as a tax planning strategy.  I have to say, I don't see the benefit in this regard.
FIH.U TCEHY, IFFNY, BRK.B

emily

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Re: Life Insurance - Whole vs Term vs Universal
« Reply #14 on: January 08, 2018, 12:59:45 PM »
I would like to look into term life insurance. Any recommendations on a company? Also is 20 yrs better or 30 yrs?

rkbabang

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Re: Life Insurance - Whole vs Term vs Universal
« Reply #15 on: January 09, 2018, 07:53:47 AM »
I would like to look into term life insurance. Any recommendations on a company? Also is 20 yrs better or 30 yrs?

For 20yr vs. 30yr. it would depend on your age I think.  I bought a 30 yr term at 30yrs old figuring that it would protect my family for my expected work life, hoping that by the time I was 60 my house would be paid off and all my kids would be adults.  I'm in my 40s now and if I was buying it for the first time I would probably look for a 10 or 15 year policy, certainly no longer than 20.

I don't know about companies, I just got a few quotes and picked one.

bookie71

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Re: Life Insurance - Whole vs Term vs Universal
« Reply #16 on: January 09, 2018, 08:38:47 AM »
If yo are going for the shorter term, be sure it is renewable if your health should change
Always remember, Pigs get fat and hogs get slaughtered.

rkbabang

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Re: Life Insurance - Whole vs Term vs Universal
« Reply #17 on: January 09, 2018, 08:41:37 AM »
If yo are going for the shorter term, be sure it is renewable if your health should change

Or that it lasts as long as you think you'll need it.  Do you really need life insurance in your 60s+?  You shouldn't have any debts or young children, and should have saved a substantial amount by then that paying for life insurance isn't necessary.  If you are 65 or 70 years old and need life insurance you are doing it wrong.


bookie71

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Re: Life Insurance - Whole vs Term vs Universal
« Reply #18 on: January 09, 2018, 08:43:56 AM »
I dropped all my life insurance at about 55 or so, when all the kids had finished college.  Saw no need for more.
Always remember, Pigs get fat and hogs get slaughtered.

boilermaker75

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