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Message
re: Why dont more people see the value in Life Insurance?
Posted on 2/9/17 at 7:17 am to Keeble9145
Posted on 2/9/17 at 7:17 am to Keeble9145
quote:
False, I have one with State Farm and every year the face value grows along with the cash value. The initial benefit for mine is like 502 and by the time I'm finished paying it's like 517 and continues to grow.
I'd bet good money you are wrong here. Virtually no policies have a death benefit and a cash value that is payed out. Its almost 100% of the time one or the other.
Futhermore, I can almost guarantee your numbers are off. Your policy very well may get a cash value of $150,000 at some point but its not in 10 years although it may be at age 80 or something.
My wife's grandfather bought her a Single Premium Policy at her birth for $10,000 in the mid 80s that now has a cash value of $82000 and a death benefit of $384,000. It was a very good investment. But they are no longer legal in that manner, and that kind of return is very very rare.
2
Posted on 2/9/17 at 10:19 am to Keeble9145
9/10 troll. I'm a life insurance guy and can tell you that State Farm has a crap permanent life portfolio.
Posted on 2/9/17 at 10:27 am to Keeble9145
quote:
There is a reason State Farm is the number one life insurance company in the U.S though.
No.
Posted on 2/9/17 at 11:16 am to baldona
quote:
I'd bet good money you are wrong here. Virtually no policies have a death benefit and a cash value that is payed out. Its almost 100% of the time one or the other. Futhermore, I can almost guarantee your numbers are off. Your policy very well may get a cash value of $150,000 at some point but its not in 10 years although it may be at age 80 or something. My wife's grandfather bought her a Single Premium Policy at her birth for $10,000 in the mid 80s that now has a cash value of $82000 and a death benefit of $384,000. It was a very good investment. But they are no longer legal in that manner, and that kind of return is very very rare.
First of all I said that the cash value would reach 150,000 when I was ~50 and I'm 30. Second I never said it would pay out cash value and a death benefit, I simply said the death benefit grows along with the cash value which is 100% true. Literally said nothing that you just claimed I just said. Also 80,000 will grow a lot faster than 10,000. I worked in life insurance for ~4 years, I know what I purchased. Nice try though.
Posted on 2/9/17 at 1:45 pm to Keeble9145
I took a hunting trip with a 70 something year old guy that owned his own very successful insurance company. He had been in business for 40 plus years. We spent 48 hours in a truck traveling so we talked a lot. He was very guarded at first when I quizzed him about life insurance. But he warmed up to me by the end of the trip and his parting words to me right before we got back home was "Son I am a very wealthy man because people have bought insurance from me. My advise to you is don't invest your money in insurance. Buy the least amount you need and invest the rest in something else". He said most of the time life insurance only makes one person rich and thats the person that sells it. I could tell he hated saying it but he really just wanted to give me good advise. I have always taken what he said at face value and appreciated him telling me that.
Posted on 2/9/17 at 1:55 pm to Hankg
There is almost nothing in life that has as much value to me, as a fully underwritten term life policy issued by an excellent carrier , purchased while young and at a very affordable premium, that manages my financial risk and assures my family will be able to thrive in the event of my death.
Posted on 2/9/17 at 2:09 pm to Lsupimp
quote:
There is almost nothing in life that has as much value to me, as a fully underwritten term life policy issued by an excellent carrier , purchased while young and at a very affordable premium, that manages my financial risk and assures my family will be able to thrive in the event of my death.
I'm going to quote that on my next marketing brochure.
Posted on 2/9/17 at 3:10 pm to Keeble9145
quote:
There is a reason State Farm is the number one life insurance company in the U.S though.
And there it is. Only took three pages to get the plug for State Farm in. Are you going to tell us who your "agent," is and how we should all give him a call?
This post was edited on 2/9/17 at 3:21 pm
Posted on 2/9/17 at 3:13 pm to Keeble9145
quote:
First of all I said that the cash value would reach 150,000 when I was ~50 and I'm 30. Second I never said it would pay out cash value and a death benefit, I simply said the death benefit grows along with the cash value which is 100% true. Literally said nothing that you just claimed I just said. Also 80,000 will grow a lot faster than 10,000. I worked in life insurance for ~4 years, I know what I purchased. Nice try though.
So then, why do you care about its investment value? Did you purchase an investment or did you purchase life insurance? You realize how idiotic your claim is that your life insurance is a fantastic investment if you cash it out?
You bought $500k in life insurance for $80,000 and at 38 when it is paid for you are claiming you got a fantastic deal and everyone should do it?
Get term life insurance for life insurance. Invest your money as an investment. DO NOT MIX THE TWO.
You want to know the #1 reason not to use Life insurance as an investment outside of estate planning? So you don't cash out your life insurance that you would otherwise need as insurance for your family at your death.
Posted on 2/9/17 at 6:07 pm to baldona
quote:
Virtually no policies have a death benefit and a cash value that is payed out. Its almost 100% of the time one or the other.
Probably 75% or more of whole life policy holders believe their beneficiaries are going to receive the death benefit and cash value. Most insurance salesmen don't lie about this aspect, they just never provide clear information. The policies and terminology are by design confusing for the average person, and false assumptions are easily made.
Posted on 2/10/17 at 3:31 pm to baldona
quote:
So you don't cash out your life insurance that you would otherwise need as insurance for your family at your death.
Well the point is not to cash out all your life insurance policy unless you died.
In the case with the NWM WL Policy: You shouldn't touch it until 65(you could if you wanted but if wouldn't be a smart strategy IMO) similar to a Roth when you could pull from it once that age hits. Once you reached this age, you also wont have to pay any more premiums on the policy. It is complete. Dividend will continue until you die and goes towards the cash value. Now you would have a death benefit to pay when you die(past 65) and cash value that built up and earned at least a 5% return guaranteed that has compounded. In addition to your other investment accts you were contributing to.
I think the key here is it really depends on your age, it isn't good to get this once you start to get into your 30s. However its hard to get a good policy when you aren't making a good bit. Its a painful first few years is the trade off because you dont see anything growing. Once it takes off though then it will work out. It isn't as bad as some of you make it out to be. But I understand both sides of the argument though. Term/Invest the rest vs A good WL/Investing.
Posted on 2/10/17 at 4:29 pm to AUtigerNOLA
Rather than start a new thread, I'm just going to post this here and hope it's not interrupting the conversation too much. I'm 29 and unmarried. About a year ago I was discussing with my Dad about the benefits of locking in a term life policy at low rates while I am young. At that point he disclosed to me for the first time that he and my mother had whole life polices on me and my siblings that they opened shortly after we all were born ($50/month through MetLife).
He said their plan was to transfer the policy to us once we needed it (married/kids). I was pretty thankful to find out they had done this and even more so that they are continuing to pay the policy just as they have always done even though I offered to take over the payments.
With that being said, I have put off looking into what the best strategy would be moving forward once the time does come for me to take over the policy. The extent of my knowledge is pretty much limited to what has been reiterated throughout this thread: term life is the better financial option, cheaper, invest the difference, etc. But I am going to assume with a 30+ year head start that this changes things. I have no idea what the current cash value is.. just looking for any and all advice on the situation. TIA.
He said their plan was to transfer the policy to us once we needed it (married/kids). I was pretty thankful to find out they had done this and even more so that they are continuing to pay the policy just as they have always done even though I offered to take over the payments.
With that being said, I have put off looking into what the best strategy would be moving forward once the time does come for me to take over the policy. The extent of my knowledge is pretty much limited to what has been reiterated throughout this thread: term life is the better financial option, cheaper, invest the difference, etc. But I am going to assume with a 30+ year head start that this changes things. I have no idea what the current cash value is.. just looking for any and all advice on the situation. TIA.
Posted on 2/11/17 at 9:22 am to Wortivi22
FWIW
State Farm is a mutual life insurance company. Are they the "number one life insurance company"? Thats a very broad assumption and obviously debatable. They do offer a 10 pay whole life policy. You pay a premium for the first 10 yrs and its paid up after that. If the policy owner dies during these 10yrs, the beneficiary receives both the cash and death benefit.
State Farm is a mutual life insurance company. Are they the "number one life insurance company"? Thats a very broad assumption and obviously debatable. They do offer a 10 pay whole life policy. You pay a premium for the first 10 yrs and its paid up after that. If the policy owner dies during these 10yrs, the beneficiary receives both the cash and death benefit.
Posted on 2/11/17 at 10:30 pm to Keeble9145
"Insurance? I never been insured in my life. There's no risk."
Posted on 2/12/17 at 1:36 am to Keeble9145
quote:
The fact that the top 10% of the wealthiest people are the ones who own the majority of life insurance should tell you all you need to know.
That when you have more money than you know what to deal with, you scrape the bottom of the barrel of asset diversification?
Posted on 2/12/17 at 9:36 am to AUtigerNOLA
quote:
Well the point is not to cash out all your life insurance policy unless you died.
Clearly, but then why discuss the investment option?
What would happen if the government offered loans on future social security payments? It would be a disaster. That's no different than taking a loan on your 401k or purchasing WL policy while you are young for the "cash investment". Oh by the way, you realize how you are getting a return on your investment right? Because the insurance company is investing the money themselves. So you are essentially investing in the insurance companies investments. The risk is very low, but there is risk in that investment.
Some of them can be decent investments, decent. But the very fact that you are mixing your insurance which is there to otherwise cover something you can't afford to happen and an investment is a horrible idea.
The one and only reason that idea even exists is because its a huge money maker for the insurance industry. Not because its a good product.
I don't have an issue with large profit margins, but people need to realize that insurance companies profit margin is 75-90% range on the first year of a Whole Life policy. Private insurance brokers can see that return themselves. The reason I say that, is it just goes to show you how little actual insurance you are buying when that high of portion goes into profit.
I don't have or know the numbers, but the reason why insurance companies can have such high profit margins on product like that is simply because people stop paying/ owning the policies. If someone published the percentage of people that own a Whole Life policy from their 30s to death I bet it would be incredibly low. Therefore, what "insurance" are they actually selling? The main point in buying a WL policy over term is to keep it until death, while the insurance companies are actually betting on the policy costing you so much you cancel it before that happens.
This post was edited on 2/12/17 at 9:42 am
Posted on 2/12/17 at 9:11 pm to baldona
quote:
Clearly, but then why discuss the investment option?
I don't think I ever brought up the investing option. I understand the commissions they get from WL policies. I understand it's not an investment. The point like you said it to have it until death. The point is to stick with it until 65 to get the true benefit out of it. If I die before then, big pay day for family. And if you do this then I don't see how it's such a terrible thing. The cash value has earned way more than any CD or fixed income investment could do. You also now have the death benefit when you die. Like I said I get both arguments. The big negative is if you cancel the policy, you would have wasted the money which would be a bad decision.
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