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re: Life Insurance - What is the "right" amount / type?
Posted on 8/28/13 at 12:16 pm to Janky
Posted on 8/28/13 at 12:16 pm to Janky
Mainly, you have to pay the target premium to guarantee the death benefit. Most agents illustrate the minimum premium. Te policy has its guarantees and even secondary guarantees, however these can be broken, mainly by not paying enough premium. ETA: also, if one premium is paid even a day late, te guarantees can be drastically reduced or even fully breached, depending on the contract.
Don't get me wrong, their guarantees are much stronger than a normal UL, those blow up on everyone.
However, I have seen enough Guaranteed UL's that were underfunded in the early years that the client is faced with the policy dying out or their premium tripling, if not more.
I have just seen way to many issues with all UL policies to have any faith in them. Traditional WL is all I sell with regards to WL policies.
quote:
BOLI is also another instance where permanent insurance is better than term.
Yep. The list can go on for a good bit. Just as te list why term may be better can go on for a while.
This post was edited on 8/28/13 at 12:43 pm
1
Posted on 8/28/13 at 12:46 pm to GoCrazyAuburn
Here is actually a pretty good article about them that goes over many of the concerns. I had forgotten I had this bookmarked a while back.
Guaranteed UL FYI
Guaranteed UL FYI
Posted on 8/28/13 at 12:56 pm to GoCrazyAuburn
I read it and I really did get it. It appears that if you pay your premium on time and the insurer is solven then it works, no? I just read that article as a guy trying to find a way to poo poo the product. Just my opinion of course.
Posted on 8/28/13 at 1:02 pm to Janky
Yes, they can work. My hatred for them doesn't come from a 0% success rate. I have seen them work. I have also seen them blow up on friends, and they got no warning or notice from the company. The contracts are very tricky like that. You also have to make sure you pay the full target premium (agents will illustrate a minimum to get the sale). I hate those type people.
My issue is, if I am going to forgo more cash value growth for the guaranteed DB, why not just get a policy that guarantees the DB and has strong cash value growth. Yea, it may be a little cheaper, but you give up so much more.
Traditional whole life is just vastly more flexible.
My issue is, if I am going to forgo more cash value growth for the guaranteed DB, why not just get a policy that guarantees the DB and has strong cash value growth. Yea, it may be a little cheaper, but you give up so much more.
Traditional whole life is just vastly more flexible.
This post was edited on 8/28/13 at 1:05 pm
Posted on 8/28/13 at 2:17 pm to 756
quote:
show me one example where whole life is the best choice
John Smith meets with agent at age 30. He has a wife, a mortgage and a child. Needs $500k coverage. Agent suggests mix between whole and term. Mr. Smith wants to go cheap and does a 30 Year term for $70/month.
30 years later, he's 60, his term is done, but Mr. Smith (like most Americans) is not very good with money and doesn't have much saved. He has to continue working so his wife wants around $200k for income protection. Unfortunately at his older age, he's going to now pay $220 a month for the next 20 years. That's going to cost him a whopping $52,800 over 20 years.
Let's say Mr. Smith is now age 80, left with no coverage, and he's out the $78,000 total he spent on term insurance.
Go back to age 30. He could have purchased $200k of 20 Pay whole life and a $300k 30 year term for a combined premium of around $270/month. The 200k of whole life would be paid for after 20 years and he'd still have 10 more years of the term. After the 20 years the premium would drop to $49/month.
The total cost for this protection over 30 years would be $70,690; about the same amount he's spent on term is entire life. The only difference is now at age 60 he has around $100k of cash from his whole life and $200k of death protection that's paid for. What option do you think was better for Mr. Smith in this situation?
I'VE MET PEOPLE LIKE JOHN SMITH WHO LISTENED TO PEOPLE LIKE YOU. Americans SUCK at saving money and the whole buy term invest the difference DOESNT WORK for the average American. Because the average American isn't saving enough for retirement they're working in retirement which means they still need life insurance for their spouse. I have older clients paying around $300/month for less than $100k of coverage because they went term their whole life.
I just don't get the hate for whole life. We all pay health, auto, renters, disability, long term care, home owners, and don't get any cash unless we file a claim. I don't get how an insurance product that ultimately gives you more cash than what you paid in without filing a claim is a bad thing.
Posted on 8/28/13 at 5:38 pm to gatorsimz
quote:
The total cost for this protection over 30 years would be $70,690; about the same amount he's spent on term is entire life.
bullshite. Ive had term for 30 yrs and paid around $15K
If hes as bad as you claim he is in money managing, then hes already borrowed against his WL policy anyway, or dropped the policy because he could no longer afford the premiums
And only an idiot is going to buy insurance at 80
Posted on 8/28/13 at 5:47 pm to League Champs
quote:
bullshite. Ive had term for 30 yrs and paid around $15K
It's not bullshite. It can easily happen. And it was over a total of 50 years, not 30.
quote:
And only an idiot is going to buy insurance at 80
Some people don't have a choice.
Don't go into financial planning.
This post was edited on 8/28/13 at 5:53 pm
Posted on 8/29/13 at 7:28 am to Sternocleidomastoid
For the short number of years I've been reading here, this question gets posted in various shapes and sizes, many times per year.
The simple answer is to own the amount of life insurance that equals the value of your life, economically speaking. Maximum coverage is available for one to own. Ask for that amount, and then purchase the policy type that will pay the benefit at the time of claim.
Pretty simple. Seriously.
The simple answer is to own the amount of life insurance that equals the value of your life, economically speaking. Maximum coverage is available for one to own. Ask for that amount, and then purchase the policy type that will pay the benefit at the time of claim.
Pretty simple. Seriously.
Posted on 8/29/13 at 10:27 am to gatorsimz
quote:
I'VE MET PEOPLE LIKE JOHN SMITH WHO LISTENED TO PEOPLE LIKE YOU. Americans SUCK at saving money and the whole buy term invest the difference DOESNT WORK for the average American. Because the average American isn't saving enough for retirement they're working in retirement which means they still need life insurance for their spouse.
So in a nutshell people who need whole life are ignorant about personal finance and managing their money, doesn't seem like a great selling point!
Posted on 8/29/13 at 10:32 am to EA6B
quote:
So in a nutshell people who need whole life are ignorant about personal finance and managing their money, doesn't seem like a great selling point!
No. In a nutshell, WL can be for the bank CEO's and Joe the plumber alike. It just depends on the person and situation, which disproves the notion that it is incorrect for 100% of situations 100% of the time.
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