All Life Insurance Tips

When does Whole Life Insurance start paying off for itself? Do you recommend Whole Life or Term?

Public Comments

1. Whole life insurance is good for a minority of people. It allows you to save up money you may need later. However, the commissions and other expenses of cash value insurance suck away a lot of your money. You will make more money in the long run if you buy term life insurance and invest the money you save in an IRA, 401K, or no-load mutual fund. If you look at financial sites not run by insurance companies, they are almost unanimous in recommending term life insurance. Look at big name sites like Yahoo, CNN, Motley Fool, SmartMoney.com and Kiplinger's, and they all recommend term life insurance for most people. However, read these sources and make up your mind for yourself. You may be one of the rare people who could use whole life insurance. Sources: Term vs. Whole Life Insurance Articles: http://finance.yahoo.com/insurance/article/101749/Term_or_Whole_Life? http://money.cnn.com/pf/101/lessons/20/index.html http://www.smartmoney.com/insurance/life/index.cfm?story=whichtype0205 http://www.kiplinger.com/basics/archives/2003/03/life3.html http://www.fool.com/insurancecenter/life/life06.htm General Information on Life Insurance: http://www.fool.com/insurancecenter/life/life.htm http://finance.yahoo.com/how-to-guide/insurance/12823 http://money.cnn.com/pf/101/lessons/20/index.html http://www.kiplinger.com/basics/archives/2003/03/lifeinsurance.html
2. I recommend both. Everyone can use a permanent plan for final expenses or to leave a legacy tax-free to heirs. Get one. You will have to look at your policy to see when it can start paying for itself. Term insurance is good to cover major debts like for when you are raising a family. It is inexpensive.
3. Whole life insurance never pays off for itself unless you choose a payment option such as 20-pay whole life or life paid up at age 65. You will be paying more premiums than if you were to just pay for life. Most people have the payment option of continuous payment for life. If this is what you have, then your life insurance will neve pay for itself. While you can stop paying for the premiums in the future, your cash value will be used to pay for the premiums. Your face amount will be reduced by whatever missed premiums and any loans taken out of the cash value. If your policy lapse and you have unpaid loans, you will owe income tax on the loan because the loan has turned into additional income. I have always recommended term insurance over whole life. Its initially inexpensive and premiums remain level, depending on what kind of term you get. I sell mostly 20 or 30 year term, depending on the age of the client. I rarely sell 10 year term since most of my clients are between 25-55 years old and it doesn't make sense to sell 10 year term to that age group. Let's say you are 35 years old and you bought whole life insurance and you can only afford $150,000 coverage. You pay monthly premium of $114. With a 20 year term insurance, for the same amount, it will cost you only $22/month. Would you rather pay $114 or $22? If you invest the difference of $92/month at a 10% rate of return for the next 20 years, you will have: $70,444 at age 55. If you continue to invest for the next 10 years, at age 65, you will have $209,698. You probably wondering how can you get 10%? If you understand mutual funds, that is how you can get 10%. What if you outlive the term? Then you need to re-evaluate your needs at that time. Do you still need as much coverage? How much debt do you have left? Who is currently dependant on your income? Maybe you can keep the same coverage and use the gains or interests to pay the premium, that is your portfolio still continue to earn an average rate of return of 10%. Today, life insurance agents or even your financial planner continue to push forward on cash value life insurance. Why? They earn large commissions on it. While financial experts and investors say term insurance and investing the difference is better. (smartmoney.com March 24. 2005, Wall Street Journal (June 9, 2004)). If you understand the logic of investing the difference, in 20-30 years, you would of accumulate enough money where the gains or interests can pay off the annual premium.
4. If depend, if you buy whole life policy from mutual life company, than your cash value will increase each and every year so that you can be pay for premium from cash value. A lot of bad advice from some people, they always said , buy term and invest the different, how many people have a vrey good discipline that invest it in good and bad market? usually what people dose is , when market up, they buy, when market hot, they buy more and more, when market start going down, they will keep, when market down deep, they sell. that why, not many people make money on stock market. some will say, buy index fund and keep for long term, you will have 10% return with low cost. but after you make money, if you need cash and you sell, you will have a 10 % Tax and your money are gone forever. so what should you do? Not many people tell the true about life insurance company and policy, not all whole life insurance policy have to pay premium for life time from your pocket or from policy cash value, It depend on where you buy and what you buy. Here is the real for every one who want to buy life insurance policy, First, you look for mutual life insurance company, than buy limite time premium whole life policy, that all, that all you need to do, who are the best mutual life company, you can go with big three, New yoke life, Massmutual life and northwestern life, than buy 10 years payments or 20 years payments only policy, after the payment term end, you don't need to come out more money from your pocket to pay for life, and also when you need money, you just loan from your policy cash value without Tax, but you have to pay loan interest, but not from your pocket as long as your interest not exceed new coming dividend, new dividend will cover your interest, you will be find with it,. Because of you buy from mutual life insurance company, your the part of the company owner, that why, when company make money , you as a policy holder will get dividend from it for every year until you die or policy going to mutual which it 100 years later, meaning even you loan money from cash value to spend for what you need, you will still get more and more money from mutual life company each year, your cash value will fill up again sooner or later, than you take a loan out again for what your need, unlike stock or mutual fund, after you sold and spend, it gone, never come back to you again. you can have both whole and term insurance if you need, that is no question about that, but some will say, if you buy whole life, you will let agent make more money, I just don't get it, did you do thing for free? what do you eat them? every body need to live and make some money, If you buy term life, who make money ? agent and life insurance company, because, not many people die after term end, insurance company make money and you lose, even with all premium back term, you lose more beacuse you have to pay more for the term premuim, if you buy whole life , you still have cash value cash flow every year until you die, don't forget you just pay for 10 or 20 years, mutual company need to pay dividend to your policy cash value for life, who lose?? But if you buy whole life from pobulic stock trade life insurance company, than your the loser because they will take care of stock holder first, not to policy holder. By the ways, most of the pobulic stock trade life insurance company not selling much of whole life policy since they go pobulic any way, because they can not pay same high dividend like before and in order to sell whole life policy, company have to had a lot cash on hand, they just try to sell term and VUL, if you buy VUL, your the biggest loser unless your very young and put a lot of money in VUL, than take out all of cash value when you getting old and run. Mutual life company paid 8% to 12% dividend each year Stock life company paid 4.5% aroung dividend VUL paid very less, all base on what you make from your policy investment.
5. Typically at about the 12-15 year point. This normally makes the total premium outlay about the same as a 30-year level term. The important thing to remember is that the dividends which are used to pay the premium are not guaranteed. You'll want to research the dividend-paying history and the financial ratings of the company. Most household name carriers have paid dividends consistently. Added: Contrary to a comment made in a post above, premiums for a whole life policy are never paid out of cash value. No degradation to the policy can occur. However, in order to keep the policy in force, there is no guarantee that you'll never have to pay a premium.
6. The best insurance is Whole Life. It is true that it is about 10 times more expensive than Term Insurance in the beginning. However, after you own the policy for a while it has a negative cost and the dividends will pay the premium for you. If you can't afford Whole Life in the beginning, there's nothing wrong with getting term for a few years - no longer than 3 or 4 - but then convert it to Whole Life. Whole Life is a very powerful tool and the foundation of any solid financial strategy. The benefits you get over Term are tremendous...disability benefits, medical benefits, liability protection, basic estate planning, and cash value. But the real reason you should buy Whole Life is because you can effectively spend the death benefit while you're alive during retirement (with the proper strategy). It can make non-income producing assets produce income and increase the power of your overall financial situation in many many ways. Whole Life gives you flexibility that no other product can match. Most people - as well as many media publications - do not understand insurance and how it really works, thus you get very misguided and incorrect information. Just because it's published doesn't mean it correct. When you cancel the Term policy you will have lost the premiums, lost the earnings ON the premiums, and ultimately you will have lost the death benefit. Insurance companies LOVE Term insurance because they pay out less than 1% of all policies. They make TONS of money off of it. And in the end, you get nothing for your money. Buy Whole Life.
7. I sell Term for temporary needs (usually replacement of income) I sell Increasing-benefit whole-life with a limited payment term for funeral expenses. These are paid up in your choice of 3 or 5-years. They are not paid from the cash-value or from dividends. They are completely paid up policies. I sell regular whole-life for passing of assets. All are correct for their correct use and all are poor choices for an incorrect use.
8. If you are young enough you should own whole life with paid up additions , but just a basic policy with a Guaranteed insurability option , and that would guarantee you to buy insurance later in life without medical . It all depends on the policy and the amount of the divdends the policy will pay out and the dividends aren't guaranteed as to when the policy will pay itself off . They are no guarantee as well that the dividends will pay the premiums for the rest of your life . My suggestion is to keep paying the premium that way your death benefit will increase every year .Term is a large chunk of insurance for a low price but like the word says its term for a period of time and its renewable and convertible , and may be you should have mixture of both depending on your situation and you should sit down with an insurance agent .
9. I always recommend term since it is easy to get $150,000 to $300,000 or more starting at $2/month. I have $450,000 on myself for around $12/month. You may want to try a website that compares multiple companies at once to get you the best price. I am paying less than ½ after I did. Go to: http://www.insureme.com/landing.aspx?Refby=616164&Type=life Take care, Casey