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Does universal life insurance make sense for us over term?

We are in the process of getting life insurance quotes. Married, wife is 23 and husband is 27 (he is a pilot so has horrible rates). At first we thought we would want a 30 year term policy for $300k. When we met with an agent he gave us quotes for term and universal life. The premiums were about $30 more a month (increased from $170 to $200 for the two of us) for the universal life policy. I would have never considered a permanent policy until receiving these numbers as from my research I thought we would get very low term rates and unaffordable permanent policy rates. $200/month is unaffordable so we are likely going to drop our amount of coverage to the minimum we'd need anyways. I don't foresee us to need insurance after the 30 years is up, we would rather invest on our own, etc. Just looking at the cost per month and that after 30 years we'd be out the $170/month with nothing to show except peace of mind vs. after 30 years paying $200/month having a bunch of money guaranteed to us (another form of retirement savings although with high fees), would it be dumb to choose a term policy because of our weird rates? Which should we pick (I am still shopping around to make sure I can't get a better deal on term but this is going through our family's agent)? Thanks! From the guaranteed projections for this 50% fixed 50% variable (based on S&P500) policy we would come out ahead vs. investing the $30/month difference on our own. Otherwise, I would never even consider this. I had always heard it was better to get term insurance. Thing is, our rates are so high as my husband is a pilot (otherwise it would be under $80/month and term would be a better deal). The goal is to protect the surviving spouse against our debts for the next 30 years while we expect to have debts (or our parents if both of us die). Are there any other types of permanent insurance that we should look at instead that may still make more financial sense than universal? I am also getting more quotes to see if this term quote was high. Also, this rate is subject to decrease after they evaluate the questionnaire my husband answered about his flying (the agent assumed he would get the same rating as his other clients who are pilots). We have separate retirement savings.

Public Comments

1. Finance 1 has it right. And, rarely do I hear the right explaination that Finance 1 gave. Did the agent give you an illustration of the Universal life policy? If not ask for one. That will show you what the policy would do in the future. I strongly suggest you listen to Finance1. That is the right advice.
2. It's impossible to say which you should pick, because from what I see, you're "trying to get a deal". You haven't done the MOST important thing, when buying life insurance - SET THE GOAL. What's the GOAL you want the life insurance to acheive? Keep in mind, life insurance is primarily a DEATH planning tool, and a for most people, a crappy investment tool. Always RUN THE NUMBERS. Then, check the guarantees. Many agents sell Universal Life based on the BEST possible scenario - which leaves many, many MANY unhappy insureds when the market is down - like now. Set your goal. Compare UL products based on minimum GUARANTEED returns. I think when you read the small print, the amount that's GUARANTEED, is NOTHING. And compare to average stock market returns here:http://www.msfinancialsavvy.com/calculators/monthly_deposit_savings_calculator.php $30 a month for 30 years at 10% - stock market average - adds up to $$69,000. Compare that to the GUARANTEED amount on the UL, and verify that the PREMIUMS are guaranteed level, also.
3. It's nice to see people giving some good advice for a change when it comes to insurance! I am an insurance broker myself, and have yet to sell a universal policy. I just don't like them, and never spin them as a so-called investment. Being that you're so young, you might want to also inquire about a return of premium option with the term product. Most of the life companies out there offer them. It's a cheap rider when you're young.....not so cheap when you're older. There are even several carriers out there that offer term insurance to a certain age, say 65, instead of 10,20,30 years. Being that your husband is a pilot matters to some carriers for some reason (even though flying is safer than driving!), but not all of them. Hope this helps