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Whole Life Insurance - Did I Do Something Wrong?
Posted on 11/2/22 at 12:24 pm
Posted on 11/2/22 at 12:24 pm
I've been with my financial advisor since 2016. He manages certain assets. He convinced me at the time to invest in whole life insurance through Guardian as they've guaranteed dividends since the 1800s. I have LI through my employer but I felt more comfortable with having more in case something happens and my dependent needs it.
Death Benefit: $450k
Cash Value: $16k
Monthly Payment: $430
Am I an idiot for agreeing to this? Do I get out? Alternative? Thanks
Death Benefit: $450k
Cash Value: $16k
Monthly Payment: $430
Am I an idiot for agreeing to this? Do I get out? Alternative? Thanks
15
Posted on 11/2/22 at 12:32 pm to Hou_Lawyer
Me and the wife got term life a few years ago. I'm older then her got 20 years, she got 30 years both 500k. We pay $60 monthly.
This will get us both close to 60 and kids will be out the house before it ends.
This will get us both close to 60 and kids will be out the house before it ends.
Posted on 11/2/22 at 12:33 pm to Hou_Lawyer
Do you need permanent life insurance for $450k?
You've paid in $30,960 ($430x72).
You can cancel and get $16,000 back.
If you don't need permanent life insurance, then you don't have a good advisor (these are the policies with commission checks so fat that they pay for vacations).
Having life insurance outside of work sounds smart. But permanent life insurance? What is your permanent need?
You've paid in $30,960 ($430x72).
You can cancel and get $16,000 back.
If you don't need permanent life insurance, then you don't have a good advisor (these are the policies with commission checks so fat that they pay for vacations).
Having life insurance outside of work sounds smart. But permanent life insurance? What is your permanent need?
Posted on 11/2/22 at 12:34 pm to Hou_Lawyer
Alternative:
Take the $430/mo and do this:
$30/mo: $500k 30 year term policy
$400/mo: invest
At year 30, your investment will be worth about $450k assuming averaging a 7% return.
Take the $430/mo and do this:
$30/mo: $500k 30 year term policy
$400/mo: invest
At year 30, your investment will be worth about $450k assuming averaging a 7% return.
Posted on 11/2/22 at 12:38 pm to PhiTiger1764
Get term insurance in place to replace it first. It will be surprisingly cheap if you are healthy.
Then cancel the whole life.
Invest the difference.
Then cancel the whole life.
Invest the difference.
Posted on 11/2/22 at 12:38 pm to Hou_Lawyer
For most folks, this would be considered over-insured. In another lifetime I sold life insurance. We advised people to carry enough whole life to pay their final expenses and carry enough term for their family to continue living their current lifestyle. In other words, for most folks, carrying enough term to replace their income (taking the time value of money into account) and enough whole life to pay their burial expenses is sufficient.
Posted on 11/2/22 at 12:59 pm to meansonny
36, non-smoker, excellent health
The advisor couched this as another investment vehicle where I could play off the cash value if needed down the road.
He didn't even go over term.
Why would anyone need whole life then?
The advisor couched this as another investment vehicle where I could play off the cash value if needed down the road.
He didn't even go over term.
Why would anyone need whole life then?
Posted on 11/2/22 at 1:07 pm to Hou_Lawyer
I don’t see too many whole life policies in that DB range these days. They were much more attractive years ago but not so much now because of cost.
ETA: this policy makes sense if you die early. As someone said, you will probably do much better taking the premium and investing it over the course of 30 years.
ETA: this policy makes sense if you die early. As someone said, you will probably do much better taking the premium and investing it over the course of 30 years.
This post was edited on 11/2/22 at 1:12 pm
Posted on 11/2/22 at 1:11 pm to Hou_Lawyer
quote:
Why would anyone need whole life then?
Gives your financial “advisor” something to sell to make more money on.
This post was edited on 11/2/22 at 1:13 pm
Posted on 11/2/22 at 1:26 pm to Hou_Lawyer
quote:
36, non-smoker, excellent health
Cancel this and get a 30 year term policy that will take you 66.
You should be able to get a $1M policy for probably around $60-$70/mo or so. Just use a broker to find a good deal on one from a reputable place.
Invest the difference of what you were paying on the whole life policy, in 30 years $360 invested in S&P 500 alone should be worth about $670k @ 9% annual return rate (S&P 500 with DRIP has given back 9.5% over last 30 years).
This post was edited on 11/2/22 at 1:27 pm
Posted on 11/2/22 at 1:32 pm to Hou_Lawyer
quote:
Whole Life Insurance
quote:
Did I Do Something Wrong?
ummmmmmmmmmmmm yeah?
Posted on 11/2/22 at 1:33 pm to Hou_Lawyer
quote:
The advisor couched this as another investment vehicle where I could play off the cash value if needed down the road.
you mean SALESMAN
Posted on 11/2/22 at 1:33 pm to thunderbird1100
quote:
Cancel this and get a 30 year term policy that will take you 66.
You should be able to get a $1M policy for probably around $60-$70/mo or so. Just use a broker to find a good deal on one from a reputable place.
Do all of this. And as the other poster said, don't cancel anything until the term policy is in place.
After these things are done, fire your financial advisor. He is either stupid or does not have your best interest at heart.
Posted on 11/2/22 at 1:34 pm to TorchtheFlyingTiger
quote:
Invest the difference.
bingo
just get term
Posted on 11/2/22 at 1:39 pm to Hou_Lawyer
I wouldn't call you an idiot. I don't know much about your Financials, so my comment is worthless.
That said, it's an income tax-free asset that can be leveraged for greater value.
That said, it's an income tax-free asset that can be leveraged for greater value.
Posted on 11/2/22 at 1:46 pm to Hou_Lawyer
quote:
He convinced me at the time to invest in whole life insurance
That was your first mistake. Cash that shite out after securing term coverage. Cut your losses.
Posted on 11/2/22 at 1:46 pm to Hou_Lawyer
$1mil 20 yr terms in ladder. Buy one every 10 yrs.
Invest difference in S&P500.
Invest difference in S&P500.
Posted on 11/2/22 at 1:52 pm to REB BEER
Contacted broker about term. Thanks all!
Posted on 11/2/22 at 2:06 pm to Hou_Lawyer
The short answer is yes, you got ripped off by your financial advisor. One of the reasons I have always been leery of financial advisors. The only person that benefits from whole life insurance policies is the salesman who sold it to you.
You're paying $430/month for $450,000 in benefits when you could be paying $430/year for about $500,000 in term life benefits.
You're paying $430/month for $450,000 in benefits when you could be paying $430/year for about $500,000 in term life benefits.
Posted on 11/2/22 at 2:07 pm to Hou_Lawyer
Nothing gets the reply count up like a thread about life insurance...
Before you cancel, ask for an updated illustration, and compare the grwoth in the cash value to what you think you can get in the market assuming you replace with a term and invest the difference.
The key is... you have to be disciplined enough to actually invest the difference.
Whole life makes some sense if...
1) You are alreaady maxing out all tax-deferred savings options
2) You think you will have a health issue in the future
3) You are terriboe at saving / investing money
Before you cancel, ask for an updated illustration, and compare the grwoth in the cash value to what you think you can get in the market assuming you replace with a term and invest the difference.
The key is... you have to be disciplined enough to actually invest the difference.
Whole life makes some sense if...
1) You are alreaady maxing out all tax-deferred savings options
2) You think you will have a health issue in the future
3) You are terriboe at saving / investing money
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