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Started By
Message
Is it ever reasonable to get whole life insurance compared to term?
Posted on 8/18/15 at 9:16 am
Posted on 8/18/15 at 9:16 am
seems like the lion's share of posters here prefer/have a term policy over whole. Now, i know the 'basics' of the two, however, when it comes to buying a policy, we just haven't acted on it yet.
Me and the wife are 34/32, both in reasonably good health and just married as of earlier this January. No kids yet, but we're working on that.
we both have the standard work life policies (1x salary), but we all know that won't cover much. I also opted into the voluntary supplemental term policy that they offer for $250K (around $15/month).
a couple that we know recently purchased a whole policy ($250K each), that came out to around $250/month for each. I know whole policies are more expensive than term, but damn that quite a difference than what i just quoted on accuquote.com. For seemingly $400/annually, i can get a 30 year, $500K policy.
So, is it really as easy as just going ahead with term policies?
Also, does it make sense to get an additional policy a few years from now to cover us after the initial term policy expires (30 years from now, obviously).
Me and the wife are 34/32, both in reasonably good health and just married as of earlier this January. No kids yet, but we're working on that.
we both have the standard work life policies (1x salary), but we all know that won't cover much. I also opted into the voluntary supplemental term policy that they offer for $250K (around $15/month).
a couple that we know recently purchased a whole policy ($250K each), that came out to around $250/month for each. I know whole policies are more expensive than term, but damn that quite a difference than what i just quoted on accuquote.com. For seemingly $400/annually, i can get a 30 year, $500K policy.
So, is it really as easy as just going ahead with term policies?
Also, does it make sense to get an additional policy a few years from now to cover us after the initial term policy expires (30 years from now, obviously).
This post was edited on 8/18/15 at 10:18 am
5
Posted on 8/18/15 at 9:27 am to The Egg
The truth about whole life (WSJ)
I would never touch whole life.
I think term is oversold too. I mean, do you really need that much term? I can see it if you make a lot more money than your wife, or you have a lot of debt. Once you have kids, it changes. But again, how much do you really need?
eta: if someone tells you to buy whole life, make sure they don't sell it. Its pretty common they troll money boards.
I would never touch whole life.
I think term is oversold too. I mean, do you really need that much term? I can see it if you make a lot more money than your wife, or you have a lot of debt. Once you have kids, it changes. But again, how much do you really need?
eta: if someone tells you to buy whole life, make sure they don't sell it. Its pretty common they troll money boards.
This post was edited on 8/18/15 at 9:33 am
Posted on 8/18/15 at 9:30 am to Hawkeye95
I'm not a big advocate of whole life either, but the cash value on whole life is better than stuffing money under the matress.
Posted on 8/18/15 at 9:33 am to The Egg
You use term insurance to fill a temporary need. The idea is at the end of the term, you no longer have that need, because you have other buckets of money to use (like investments) or you have an expense that will no longer be there (like education of child).
You can get a term for a number of years, or, you can get term to a certain age. For example, one of my policies is term to age 75. However, once you cross about 55 years old, the premium jumps a whole bunch each year.
Term can be level (premium stays same each year) or increasing premium.
Is it ever reasonable to get whole life insurance compared to term? Yes, but not so much for the life insurance part of it. If you run out of tax-favored investment buckets, the tax deferral of a good whole life policy investment engine might make some sense as a part of a investment strategy. Even then, there are a very few companies I would work with.
You can get a term for a number of years, or, you can get term to a certain age. For example, one of my policies is term to age 75. However, once you cross about 55 years old, the premium jumps a whole bunch each year.
Term can be level (premium stays same each year) or increasing premium.
Is it ever reasonable to get whole life insurance compared to term? Yes, but not so much for the life insurance part of it. If you run out of tax-favored investment buckets, the tax deferral of a good whole life policy investment engine might make some sense as a part of a investment strategy. Even then, there are a very few companies I would work with.
Posted on 8/18/15 at 9:53 am to LSUFanHouston
quote:
Is it ever reasonable to get whole life insurance compared to term? Yes, but not so much for the life insurance part of it. If you run out of tax-favored investment buckets, the tax deferral of a good whole life policy investment engine might make some sense as a part of a investment strategy. Even then, there are a very few companies I would work with.
This is good analysis - there are rare situations when whole life might make sense, but on the whole - for actual death protection and income replacement for spouse and children (i.e. the main reason we're shopping for life insurance in the first place), term is going to be the better buy, 10 times out of 10.
And - few people want to talk about long-term disability insurance. I really think this is a companion product to term that most people ignore. Rather than overbuy life insurance, you should buy "enough" of both life insurance and long-term disability insurance, should you become unable to work before you reach retirement age. Those protections should cover the same period of time, i.e. your expected work life.
Posted on 8/18/15 at 10:01 am to Ace Midnight
I need to get on the disability train.
I took out a million in life when we bought our house last year for 30 year term as I was 29 years old. I plan to self insure after that.
Kids are coming within a year or two. Seems to be just about the right amount and time period that made sense to me.
I took out a million in life when we bought our house last year for 30 year term as I was 29 years old. I plan to self insure after that.
Kids are coming within a year or two. Seems to be just about the right amount and time period that made sense to me.
Posted on 8/18/15 at 10:04 am to Ace Midnight
quote:
And - few people want to talk about long-term disability insurance.
and it's relatively cheap for people with office jobs
Posted on 8/18/15 at 10:31 am to yellowfin
quote:
And - few people want to talk about long-term disability insurance.
and it's relatively cheap for people with office jobs
I am always surprised by how many people don't have DI.
Posted on 8/18/15 at 11:48 am to The Egg
I was 100% pro term life and 100% against whole or universal - until I got sick 4 years ago.
Whole or universal would look pretty sweet now because that diagnosis will never allow me to get term at acceptable levels again.
I am fortunate that I could convert some of my 20 year term to a permanent policy.
Whole or universal would look pretty sweet now because that diagnosis will never allow me to get term at acceptable levels again.
I am fortunate that I could convert some of my 20 year term to a permanent policy.
Posted on 8/18/15 at 11:27 pm to Hawkeye95
It depends. If u are looking for death benefit then buy cheap term.
For an alternative to saving in a bank there is no better vehicle than overfunded dividend paying whole life...not as an investment, but as an alternative to saving,
A bank is paying nothing and whole life will pay 4 or 5% and insurance companies by law have to keep sufficient reserves...banks operate on a fractional reserve basis and fdic is a joke if something ever happened.do your own research!
Forgive me-but I'm typing this on my cell.
For an alternative to saving in a bank there is no better vehicle than overfunded dividend paying whole life...not as an investment, but as an alternative to saving,
A bank is paying nothing and whole life will pay 4 or 5% and insurance companies by law have to keep sufficient reserves...banks operate on a fractional reserve basis and fdic is a joke if something ever happened.do your own research!
Forgive me-but I'm typing this on my cell.
Posted on 8/19/15 at 9:49 am to nelatf
appreciate the responses.
Posted on 8/19/15 at 9:58 am to The Egg
I bought whole for my kids when they were born but I don't really remember why 
Posted on 8/19/15 at 4:44 pm to Hawkeye95
quote:my rule? i need enough money so that my wife can stay home until my last kids has entered college.
Once you have kids, it changes. But again, how much do you really need?
so, lets say I need 20 years of living expenses plus college tuition. $8,000 X 12 X 20 = about $2 million, maybe even $2.5 million just to be safe.
ETA: in reality I only have $1 million for me and $1 million for her. But, I may up that later.
This post was edited on 8/19/15 at 4:46 pm
Posted on 8/19/15 at 6:51 pm to Sandy_Ash
if i buy term policies now at 34, would it make sense to buy another policy a few years from now, say 5-10 years to cover the time after the initial policy expires?
Posted on 8/19/15 at 7:43 pm to Sandy_Ash
quote:
my rule? i need enough money so that my wife can stay home until my last kids has entered college.
She a stay at home mom or is this just your rule?
My wife makes plenty of money. She will be required to keep working after I die
Posted on 8/19/15 at 9:22 pm to The Egg
quote:
if i buy term policies now at 34, would it make sense to buy another policy a few years from now, say 5-10 years to cover the time after the initial policy expires?
I've seen 30 year level term, and I've seen term policies to age 70.
Posted on 8/19/15 at 10:55 pm to The Egg
Buy term, invest the difference. Whole life is great....for the insurance agent
Posted on 8/19/15 at 11:40 pm to The Egg
If you have the money and able to max the contribution, IUL is the way to go which tracks the S&P 500 without risk. I rather own than rent my life insurance.
Posted on 8/20/15 at 7:48 am to Odinson
I'd rather have my money make money for me instead of the agent. Plus a person usually doesn't need that much life insurance after age 70 as the house, cars, etc. should be paid off
Posted on 8/21/15 at 6:34 am to Teddy Ruxpin
quote:
She a stay at home mom or is this just your rule? My wife makes plenty of money. She will be required to keep working after I die
I think my wife would pray To keep me in purgatory if I did that . 
on having a wife who makes some coin though. Naw, she is a home maker. Before that, she was a school teacher and librarian. I want her to stay home.
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