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re: Whole Life Insurance
Posted on 5/18/16 at 11:12 pm to Bonjourno
Posted on 5/18/16 at 11:12 pm to Bonjourno
Gosh, this feels like a political board thread.
Whole life insurance is not garbage or terrible or a scam. At the same time, it's not appropriate for most people.
When it is appropriate:
1) When you become uninsurable, have a term policy that will expire after your still expect to be alive, and the term policy has a conversion feature, and your family could really use that money when you go.
2) When you have maxed out all IRAs, 401Ks, defined benefit and defined comp plans, HSAs, etc, are investing heavily in the stock, and want to use a whole life policy as a hedge, or as a tax-deferred vehicle (the growth in cash value is tax-deferred until you cash it out, and becomes totally tax free if you actually die).
For 90 plus percent of people, it's not a good deal. For some people, it's a great deal.
Whole life insurance is not garbage or terrible or a scam. At the same time, it's not appropriate for most people.
When it is appropriate:
1) When you become uninsurable, have a term policy that will expire after your still expect to be alive, and the term policy has a conversion feature, and your family could really use that money when you go.
2) When you have maxed out all IRAs, 401Ks, defined benefit and defined comp plans, HSAs, etc, are investing heavily in the stock, and want to use a whole life policy as a hedge, or as a tax-deferred vehicle (the growth in cash value is tax-deferred until you cash it out, and becomes totally tax free if you actually die).
For 90 plus percent of people, it's not a good deal. For some people, it's a great deal.
2
Posted on 5/18/16 at 11:33 pm to LSUFanHouston
This thread has me feeling like a dummy for signing up with NWM over 3 years ago. I didn't know much about retirement vehicles and I wanted to do something/anything to put money in a place to grow. I definitely wouldn't do it again knowing what I know now, although
I max out my Roth and I max out my Solo 401k so this is just another option. It's a guaranteed rate of return but the high fees are bad. I'll still have more than I put after 10 years and then I can choose to keep going or stop and it will still grow. But anything before 10 years and it's less than I put in.
quote:
When you have maxed out all IRAs, 401Ks
I max out my Roth and I max out my Solo 401k so this is just another option. It's a guaranteed rate of return but the high fees are bad. I'll still have more than I put after 10 years and then I can choose to keep going or stop and it will still grow. But anything before 10 years and it's less than I put in.
Posted on 5/19/16 at 8:30 am to Sho Nuff
quote:
I'll still have more than I put after 10 years and then I can choose to keep going or stop and it will still grow. But anything before 10 years and it's less than I put in.
That's the only drawback is the front load costs, but it's not a scam. It's not for everyone and everyone has their opinions of what is best. A lot of haters in here though.
I have a NWM policy myself and it is growing now after a few years and its nice to see the cash value growth during a downturn in the market. Once you get around that 10 year mark you can choose to let the dividend pay off the premiums and keep the cash to invest or just let it grow with that rate of return(which they say guaranteed at 5.5% but could grow based on the interest rates and they are at 0 right now).
But like the other poster said, its a hedge against the stock market and its not meant to be an strong investment, just an alternate route of income when I retire that at least had some decent growth in case my portfolio isn't doing great when I decide to retire. Then you can just withdraw from the cash value built up and let the portfolio build back up or make adjustments there. Its not meant to get you 20 or 50% return on your money.
But the key here is that if I die before that, then the family gets a nice payday.
Posted on 5/19/16 at 9:15 am to Sho Nuff
Sho Nuff, I'll say this... NWM is one of the best, if not the best, company for this type of product. So at least you went with a solid company.
You have to weigh the fees vs the deferral of income and the hedge against a bad market. Keep in mind, whole life is a quasi-investment vehicle while you are alive, and a death benefit for your family when you die. Term is one of the two, investing is one of the two (although it can be two of the the two if you leave the money when you die to your family)
You have to weigh the fees vs the deferral of income and the hedge against a bad market. Keep in mind, whole life is a quasi-investment vehicle while you are alive, and a death benefit for your family when you die. Term is one of the two, investing is one of the two (although it can be two of the the two if you leave the money when you die to your family)
Posted on 5/19/16 at 9:43 am to Bonjourno
I'll just ask this in here:
My wife and I are 23 and 25 and just completing the first year of our careers. We currently have no life insurance. I know term life insurance isn't very expensive, but what is the best way to go about finding the right plan?
My wife and I are 23 and 25 and just completing the first year of our careers. We currently have no life insurance. I know term life insurance isn't very expensive, but what is the best way to go about finding the right plan?
Posted on 5/19/16 at 10:41 am to Sho Nuff
You shouldn't feel like a dummy. There is so much inaccurate information in this thread, it is obvious some people are just regurgitating things they've heard and have probably never even looked at a policy. That being said, there are a lot of shitty carriers with shitty policies. There are really only two companies that should be considered here, and you're with one of them.
And to answer op since this got so sidetracked like it usually does, don't take permanent coverage offered through work unless you have no options. With any type of guarantee issue program, if you're young and healthy you're paying part of the premium for those the company wouldn't normally take/rate. 9/10 times, it's also a shitty carrier. If that coverage is the route you chose, you would do better applying on your own.
And to answer op since this got so sidetracked like it usually does, don't take permanent coverage offered through work unless you have no options. With any type of guarantee issue program, if you're young and healthy you're paying part of the premium for those the company wouldn't normally take/rate. 9/10 times, it's also a shitty carrier. If that coverage is the route you chose, you would do better applying on your own.
This post was edited on 5/19/16 at 10:56 am
Posted on 5/19/16 at 10:50 am to tlsu15
It's hard to determine what the best plan would be without knowing the background and what your aspirations are. If its just you two and don't plan on having kids you don't need a big plan, just a simple term policy will suffice and it doesn't need to be huge. If kids, you may look at getting a larger policy in case something happens to one of you.
Depending on what company you work for, you may already have life insurance some offer at 2x the salary. However, I would recommend NWM for life insurance. But don't let an agent talk you into something you don't need or want to do. Only figure out what the best and appropriate plan you should have given your situation. Don't discuss anything but term and go in with that mindset.
Depending on what company you work for, you may already have life insurance some offer at 2x the salary. However, I would recommend NWM for life insurance. But don't let an agent talk you into something you don't need or want to do. Only figure out what the best and appropriate plan you should have given your situation. Don't discuss anything but term and go in with that mindset.
Posted on 5/19/16 at 11:14 am to tlsu15
quote:
My wife and I are 23 and 25 and just completing the first year of our careers. We currently have no life insurance. I know term life insurance isn't very expensive, but what is the best way to go about finding the right plan?
How much, if any, are you currently getting through work?
Ideally, you want enough to replace the income you will make, maybe pay off the house and put the kids in college, etc. Essentially, you don't want your family's life to change much financially, it will be hard enough if you are not there (same goes for your wife).
My first policy I purchased was actually with State Farm, who was my auto insurer at the time, and getting a life policy through them gave me pretty big discounts on my auto policy.
Posted on 5/19/16 at 11:41 am to LSUFanHouston
Getting nothing through work at the moment. We work for a very small company (currently 25 employees), so the benefits are fairly limited.
Is there a good website that compares rates online?
ETA: I checked through geico (my auto insurer) and it looks like a $350,000 20 year policy will run us each about $215 annually. Does that sound like a good deal?
Is there a good website that compares rates online?
ETA: I checked through geico (my auto insurer) and it looks like a $350,000 20 year policy will run us each about $215 annually. Does that sound like a good deal?
This post was edited on 5/19/16 at 12:38 pm
Posted on 5/19/16 at 3:52 pm to tlsu15
quote:
I checked through geico (my auto insurer) and it looks like a $350,000 20 year policy will run us each about $215 annually. Does that sound like a good deal?
Yea. You can probably get it cheaper, but that ain't too bad...
Posted on 5/19/16 at 11:46 pm to BigErn
quote:
LSUFanHouston
quote:
BigErn
Yeah, I really didn't know much about retirement strategy and since I'm 1099 for the last 5 years I was just looking for something to get going. I figured at minimum it gives my wife a couple hundred thousand reasons to kill me and it also guarantees me money on the other end if I make it
The fees are high and the guy was upfront about them, but I figured a guaranteed rate of return plus insurance is worth something especially with how shitty my IRA accounts have been over the same period of 3.5 years.
This post was edited on 5/19/16 at 11:47 pm
Posted on 5/21/16 at 9:44 am to Tigerpaw123
quote:
Do you realize if you saved $50/month at 6.5% interest in 30 years you would have $55,000
1. Taxable and at what rate?
2. How much tax free life insurance benefit comes with that taxable amount of return?
3. Where can I get a guaranteed 6.5% return?
4. If you took that $50 per month for 30 yrs. and saved it at 800%, you'd have more than $50k. Your rate was too low to impress.
Life insurance is a tax free asset. Start there and proceed.
Posted on 5/27/16 at 2:42 pm to LSUFanHouston
quote:
and want to use a whole life policy as a hedge
Bingo!
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