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Should I get Whole Life or Universal Life insurance?

My husband and I need life insurance. We are in our early 30's and we are thinking about the future. I want insurance for the long run. My quote for whole life was almost double the premium for Universal. I have read a lot on here about universal and it's negative. So I don't know which one to go for. Also, was thinking about getting life insurance on my children. I was going to get a 15 pay life policy. I pay very low premiums for 15 years then it is theirs to keep without other payments. Thought it would be a nice gift, any info on that?

Public Comments

1. What's the GOAL of the life insurance? Before you can pick which kind is right for you, you need to know what exactly you want it to acheive. Me, I'm not a fan of that Universal life. See, the whole life premium is guaranteed to stay the same, your whole life. The universal life premium, is NOT guaranteed to stay the same, your whole life - it figures that your cash value will earn money to help you pay for it, and when the markets perform poorly, you'll have to pony up more - sometimes a LOT more - to keep the policy in force. I'm also not a great fan of whole life, LOL, I think you'll probably be BEST off buying term, investing the difference. And that life insurance on children, is probably a bad deal - you should calculate how much those low premiums for 15 years, would earn for you in an investment account through Schwab, and compare your results - even in 15 years, your investment account will PROBABLY be more than the death benefit, and in 30 years it will significantly outperform the life insurance.
2. How good are you with your money? If you are not good then go for Universal. If you are good with your money then I will advice you to get Term life insurance and our premium will be very less and invest the difference in a nice Mutual fund. Don't take advice with Insurance agent because they get nice commission if you buy whole life insurance. Either read online or ask a knowledgable person who is not Insurance agent. http://www.insuranceworldinfo.com/go/life
3. Whole life is bad, i had it once and my husband said it was worthless, he said term life is better. Go for the term life ins.
4. Rather than throw your money away on whole life or universal life, consider a level term policy for as far out as possible. You'll see for the same payout you'll save a fortune. And if you invest at least some of the savings into a true investment vehicle such as mutual funds or stocks, you'll come out far ahead. As far as insurance on children, again, if you wish to throw away even more money, go ahead. Insurance is replacement money for the money maker of the family should something happen to him/her. Children are not earning money so there is no replacement. Consider opening up a stock or mutual fund account for each child, put money into it on some regular time frame, and since they won't need this money until they go to college, in 15 years or so, they should have a tidy sum.
5. Consider these facts: Whole life insurance has level premiums for life of the policy. The policy expires around the age of 100. Your premiums are basically paid for two things: The cash value and the insurance. In the first 2 years of the policy, no cash value is accumulated. After the first 2 years, it will start accumulating interest (usually around 3%). If someday you wanted to take money out, you will have to borrow it and pay loan interest of 8%. If someday you die, the insurance company pays death benefit to your beneficiary, but they keep the cash value. Universal life insurance works a little differently. The premiums are flexible. If there's enough cash value, you will be able to skip paying premiums for awhile. The catch is that the cash value will be used to pay for the premiums. That means you are borrowing money from the cash value without your authorization and you will be charge 8% interest. In universal life insurance, the premiums do not remain level throughout the life of the policy. Every year, the cost of the insurance goes up because the protection element of the policy is always annual renewable term. That means more of your premiums goes to the insurance and less toward the cash value. Eventually all your premiums is paying for the insurance. In the future, you will either have to pay more premiums or the cash value will be used to pay the difference. If you die, depending on what death benefit option (which there are 2 options) you picked at the time of signing the life insurance application, the insurance company may pay both the cash value and death benefit to your beneficiary (which is Option B and cost alot more money), or just the death benefit (option A). If I was in your position, I would get a 20 or 30 year level term and put my entire family in one life insurance policy. I would put my spouse in it as a spouse rider so that the cost of owning this insurance goes down. If I want to get coverage on my kids, I would add a child rider to it. A child rider covers all children from 4 days old to age 25. While I have this life insurance, I would open a Roth IRA and invest at least $100/month in mutual funds until I retire (the maximum annual contribution you can put into an IRA is $5000/year). I would make sure my spouse would open a Roth IRA too. If you want to give a nice gift to your kids, you should set up a college savings fund for them. If you live in the United States, there is the state sponsor college plan called 529 plans and then there is federal plan called Coverdell. I think 529 plans are the best choice to fund your kid's education. If you do what I would of done, in 30 years, you and your husband will have a nice retirement fund. If both of you invest $100/month (a total of $200/month) and get an average annual return of 8%, in 30 years you two will have a total of $300,059 saved. If your mutual funds get 10% rate of return, together there will be a total of $455,865 saved. 30 years from now, you two will be in your 60's and your kids will be grown adults. Hopefully all your debts are paid off or nearly paid off. Now, $455k saved for retirement may seem alot, but 30 years from now, the cost of living will be way more expensive than what it is now. Financial experts say that one person will need at least $500k to eat 3 meals/day by the year 2040. I highly recommend that both of you max out the contributions to all retirement plans (the Roth IRA and any 401(k) at work). If both of you invest $416/month (a total of $832/month), in 30 years with 8% return you two will have $1.2 million saved for retirement. If your mutual fund gets a 10% return, there will be nearly $1.9 million. In summary, buy a 20 year or 30 year level term insurance. Open a Roth IRA for yourself and another one for your husband (IRA's can not have joint ownership. That's why its called Individual Retirement Account). Invest monthly in mutual funds (it is highly recommend that you obtain a prospectus of a particular mutual fund and read it). If you want to save your kid's education, there are various plans out there that can accomplish that goal.