Whole or Term?

[certherfbeef]

What do ya'll suggest? Whole or Term Life insurance? I can't ever make sense of the stuff, one is supposed to be better than the other. I just can't remember which. Can't talk to the insurance companies...they just want to sell you what will make them the most $$.

 

[Cattle Rack Rancher]

I used to be insurance licensed and I have term insurance. No sense investing with the insurance company. There are better places to put your money. I'd recommend probably ten year term insurance.

 

[msscamp]

Certs, I would suggest pm'ing Bez! on this one. I have the same problem - lack of understanding.

 

[cypressfarms]

Term life insurance is the way to go.

If you want to invest, do it with an investment, you'll get better returns. If you want life insurance, buy term. Whole life is something conjured up by the insurance companies to make people feel like they are getting some benefit ($$ returns) by purchasing a more expensive policy.

Neither is "better" (they will both pay off if/when someone dies) but term is more economical if you want life insurance.

 

[norriscathy]

There is no such thing as "life" insurance; only "death" insurance. Insurance is necessary to pay debts and provide for you family in the event of your death. It is NOT an investment vehicle. If you buy whole life it usually takes three years before you start building cash surrender value. Those premiums for the first three years pay the agent's commission! Then when you die you normally only get the face value of the policy anyway; NOT the face value and the CSV you've been paying so dearly to build up.The ONLY way to go is term! Don't believe me? Take the difference in premiums and put it in a 4% CD. You will be amazed at how much more cash your family has after 20 or 30 years PLUS you still have the face amount of the policy as protection. TERM! TERM! TERM! TERM!

 

[rwtherefords]

Term is the ONLY way to go, unless your objective is to make an insurance company wealthy. Insurance is for coverage, NOT AN INVESTMENT!

 

[denoginnizer]

Term.

 

[Workinonit Farm]

Three months ago we finally took the plunge and got our life/death insurance policies. Lots of research etc. Term is definitely the way to go.

Katherine

 

[denoginnizer]

If you feel like you need to make an investment get the price of term and the price of whole life. By the term and put the money you save yearly, into a cd.

 

[jennibluis]

My whole life policy pays better than a cd, pays off double if I die, has cash value after 1 st year and I can borrow from it at a 2% margin.

 

[dun]

My whole life policy pays better than a cd, pays off double if I die, has cash value after 1 st year and I can borrow from it at a 2% margin.

So in effect, the sooner you die the bigger winner you are

dun

 

[jennibluis]

No, my son gets to go to the college of choice or buy the bigger farm next door!
If I beat the odds(history of heart attacks in the family) I get my money back plus interest.

 

[Beefy]

My whole life policy pays better than a cd, pays off double if I die, has cash value after 1 st year and I can borrow from it at a 2% margin.

that sounds like a good deal. whats the catch?

 

[jennibluis]

You still have to pay for it.

 

[denoginnizer]

My whole life policy pays better than a cd, pays off double if I die, has cash value after 1 st year and I can borrow from it at a 2% margin.

Is that guarnteed money or expected money? I mean the cash back at the end of the whole life contract.

 

[norriscathy]

My whole life policy pays better than a cd, pays off double if I die, has cash value after 1 st year and I can borrow from it at a 2% margin.

You just haven't found the hook! If you also get CSV in addition to the death benefit you paid even more for the policy! Just sit down and compute the difference in premiums compounded out at 4% over 20 or 30 years. No way is whole life a winner.

 

[El_Putzo]

My whole life policy pays better than a cd, pays off double if I die, has cash value after 1 st year and I can borrow from it at a 2% margin.

Mine is similar. You wouldn't happen to have insurance through the Knights of Columbus?

Edit: I just wanted to add also that after about 8 yrs, my policy builds up enough value, that it pays it's own premium. The way it was explained to me, its like you are putting money into a mutual fund. After about 8 yrs at 7%, it doubles itself. It is at that point, where you stop paying a premium and it pays for itself. Kinda like giving your money to a broker and letting them play the market, except you are guaranteed a 7% return. Now, I'm not saying they aren't making any money off of me, they are, because everything over that 7%, they get to keep. Basically I'm borrowing them my money to play the stock market with.

I know that is probably thoroughly confusing, and I'm sure I don't understand it 100%, but I do trust my agent as he is a neighbor, and I believe and honest and trustworthy individual.

 

[fellersbarnoneranch]

wouldn't cert do well to go with a longer term than the 10 year? Getting a better rate at a younger=healthier(hopefully--and no insult to the old timers intended) age?

 

[norriscathy]

wouldn't cert do well to go with a longer term than the 10 year? Getting a better rate at a younger=healthier(hopefully--and no insult to the old timers intended) age?

Term insurance is just that; it is for a term of years. Most policies have rate increases every five years. They are all different, but 5 year level term is more expensive than 1 year term but cheaper than 10 year level term. The longer the term the more expensive the policy is. Just depends on your needs.

 

[rwtherefords]

This discussion is losing focus of what insurance is. It's coverage! Do you expect your car insurance to be an investment/savings account? NO! You expect to get your car fixed in the event of a crash. Life insurance should pay a benefit in the event of your death. That's it.

First point, if you compare the coverage you can get for the same premium between term and whole, you'll find that you'll get way more coverage with term.

Second point, you need more coverage when you're young than old. In fact, you shouldn't need any coverage when you're elderly. You should have everything paid off and have savings to cover your burial. You need the big $$$ if you were to die when you're 24 and have a 5 year old left behind. That's the part of life where you have debt and the greatest liability in responsibility for loved ones. Since you only need coverage for part of your life (term), then term insurance is the best way to purchase what you need. When you don't need it anymore, don't buy it.