rocknrobn26 Posted October 3, 2008 Share Posted October 3, 2008 Was talking to my Godson and he told me he just bought a Convertible Term to Whole policy. I was trying to convince him that term was better, that is max (as term is ~50% cheaper) it to protect the family as that is the main reason why we all get insurance. I have some whole life, but the "equity" in the policy is BS when compared to just getting your family the max benefit if you happen to die. Is my reasoning correct or not?? Quote Link to comment Share on other sites More sharing options...
Scooby Posted October 3, 2008 Share Posted October 3, 2008 Was talking to my Godson and he told me he just bought a Convertible Term to Whole policy. I was trying to convince him that term was better, that is max (as term is ~50% cheaper) it to protect the family as that is the main reason why we all get insurance.I have some whole life, but the "equity" in the policy is BS when compared to just getting your family the max benefit if you happen to die. Is my reasoning correct or not?? totally agree as does Susie Orman: http://www.oprah.com/article/omagazine/omag_200308_suze Quote Link to comment Share on other sites More sharing options...
untateve Posted October 3, 2008 Share Posted October 3, 2008 It is my understanding that Term is much better than Whole. Take the difference in costs and invest it and (up until a few weeks ago), you will make more money than dumping it in Whole. Quote Link to comment Share on other sites More sharing options...
twiley Posted October 3, 2008 Share Posted October 3, 2008 Whole is just a way for the agent to make more money. Stick to term. Quote Link to comment Share on other sites More sharing options...
Bree22 Posted October 3, 2008 Share Posted October 3, 2008 You are being short sited. Whole is better than Term because you lock in the cost, You traditional only have to pay for it for 13 to 16 yrs and then you will have it for life. Term is better than Whole because it is cheaper so you can carry more protection per dollar. Your biggest (max coverage) insurance need is traditional when you are younger with a family. Personally I think you should have a blend of both. The more you are worth the more whole you should and need to carry. As for you grandson he looks like he made a good decision in general. Term that is convertible is good. If something happens to him (not dying) that makes him uninsurable, He at least will have life insurance based on his healthier and younger age. I am not an expert and someone would have to know all the facts to state what is best for someone. Susie Orman I personally take with a grain of salt. She is not always right. Nobody is. People need to do their own research and make their own decisions. If only one product is right for everyone then why would we have all these choices? Each product is designed to perform a certain function. It is the job of the agent (good luck their) and insured to make the right choice for them. I am small business owner and do have both Whole and term insurance. I am not a life insurance agent. Quote Link to comment Share on other sites More sharing options...
Puddy Posted October 3, 2008 Share Posted October 3, 2008 It is my understanding that Term is much better than Whole. Take the difference in costs and invest it and (up until a few weeks ago), you will make more money than dumping it in Whole. +500k Quote Link to comment Share on other sites More sharing options...
Caveman_Nick Posted October 3, 2008 Share Posted October 3, 2008 You are being short sited. Whole is better than Term because you lock in the cost, You traditional only have to pay for it for 13 to 16 yrs and then you will have it for life. Term is better than Whole because it is cheaper so you can carry more protection per dollar. Your biggest (max coverage) insurance need is traditional when you are younger with a family. Personally I think you should have a blend of both. The more you are worth the more whole you should and need to carry. As for you grandson he looks like he made a good decision in general. Term that is convertible is good. If something happens to him (not dying) that makes him uninsurable, He at least will have life insurance based on his healthier and younger age. I am not an expert and someone would have to know all the facts to state what is best for someone. Susie Orman I personally take with a grain of salt. She is not always right. Nobody is. People need to do their own research and make their own decisions. If only one product is right for everyone then why would we have all these choices? Each product is designed to perform a certain function. It is the job of the agent (good luck their) and insured to make the right choice for them. I am small business owner and do have both Whole and term insurance. I am not a life insurance agent. I wouldn't disagree with that. IIRC, the returns on Whole Life are guaranteed, which makes it a safe albeit slow investment vehicle. Nothing wrong with mixing a bit of both into the soup. Quote Link to comment Share on other sites More sharing options...
Bree22 Posted October 3, 2008 Share Posted October 3, 2008 (edited) I wouldn't disagree with that. IIRC, the returns on Whole Life are guaranteed, which makes it a safe albeit slow investment vehicle. Nothing wrong with mixing a bit of both into the soup. What you have to remember is that Whole life is not an investment vehicle for return on investment. It is for protection. Term is not very cost effective when you get older and it stops at age 70. Whole is designed for either burial expenses or asset (estate) protection or creating estate. the poll should have the 3rd option as a blend of both. Edited October 3, 2008 by Bree22 Quote Link to comment Share on other sites More sharing options...
yo mama Posted October 3, 2008 Share Posted October 3, 2008 The road is well traveled. Term is better for most folks. But whole life is a great estate planning tool for those who need guaranteed liquidity at their death to pay taxes, buy out business partners, or just want cash to make the distribution of assets cleaner and easier among multiple beneficiaries. Even then, simple whole life is generally less advantageous (from a tax perspective) than universal life and other new-fangled derivations of permanent insurance. That said, most folks just want some protection for the period that the family is dependent on the bread winner. So a 20 year term policy will usually do the trick, unless you aren't done having kids. Convertible term is great, however, because what if you find out you have cancer or something within that 20 year term? You'll be uninsurable when the term expires, assuming you outlive the term. At that point you'd be hosed. Personally, at age 35, I went with 25 year convertible term. My kids are only 4, but I want coverage that extends until they're about 30. The only other question that really needs to be addressed is the appropriate amount of coverage you need. Quote Link to comment Share on other sites More sharing options...
Caveman_Nick Posted October 3, 2008 Share Posted October 3, 2008 What you have to remember is that Whole life is not an investment vehicle for return on investment. It is for protection. Term is not very cost effective when you get older and it stops at age 70. Whole is designed for either burial expenses or asset (estate) protection or creating estate. the poll should have the 3rd option as a blend of both. The simple truth is that you buy insurance for the sake of insurance, but in the case of whole life versus term life whole life does indeed provide return on investment. At least the programs I have evaluated did. There were provisions to cash out of the plan at a profit. I am not saying it's a strong investment vehicle...just that it acts as one whereas term life money is just paid and forgotten. Quote Link to comment Share on other sites More sharing options...
rocknrobn26 Posted October 3, 2008 Author Share Posted October 3, 2008 (edited) The simple truth is that you buy insurance for the sake of insurance, but in the case of whole life versus term life whole life does indeed provide return on investment. At least the programs I have evaluated did. There were provisions to cash out of the plan at a profit. I am not saying it's a strong investment vehicle...just that it acts as one whereas term life money is just paid and forgotten. True but it takes a long time. I have about 40% Whole life and 60% term. Granted the WL have increased in payout because I chose to buy more insurance w/ dividends vs taking the cash, and my term premiums go up every few years, but I still contend that insurance should be kept simple and cover the person's needs, because as time goes on and one gets older, needs lessen due to being empty nesters, no mortgage, etc. I carry most of my Term to cover my mortgage balance. Once I pay that off....goodbye Term. I think the biggest mistake young couples make is not insuring or under insuring the wife, even if she is a stay at home mom. As some of you know, this Godson's dad died 14+ years ago, so I truly try to fill that role as much as possible and I love the fact that he asks my opinion on things. I love this kid like my own. I'll share these comments w/ him. Thanks! As far as funeral expenses... we have a "take-all" policy w/ our garbage service, so I told the wife to put me in a recycle bag and kick it to the curb when I go toes up! Neat, Cheap, and easy! Edited October 3, 2008 by rocknrobn26 Quote Link to comment Share on other sites More sharing options...
westvirginia Posted October 3, 2008 Share Posted October 3, 2008 True but it takes a long time. I have about 40% Whole life and 60% term. Granted the WL have increased in payout because I chose to buy more insurance w/ dividends vs taking the cash, and my term premiums go up every few years, but I still contend that insurance should be kept simple and cover the person's needs, because as time goes on and one gets older, needs lessen due to being empty nesters, no mortgage, etc. I carry most of my Term to cover my mortgage balance. Once I pay that off....goodbye Term. I think the biggest mistake young couples make is not insuring or under insuring the wife, even if she is a stay at home mom. As some of you know, this Godson's dad died 14+ years ago, so I truly try to fill that role as much as possible and I love the fact that he asks my opinion on things. I love this kid like my own. I'll share these comments w/ him. Thanks! As far as funeral expenses... we have a "take-all" policy w/ our garbage service, so I told the wife to put me in a recycle bag and kick it to the curb when I go toes up! Neat, Cheap, and easy! I'm sure you'd also make some pretty colors in the fireplace... Quote Link to comment Share on other sites More sharing options...
SuperBalla Posted October 4, 2008 Share Posted October 4, 2008 so I told the wife to put me in a recycle bag and kick it to the curb when I go toes up! Neat, Cheap, and easy! Recycle? You want to be recycled? Quote Link to comment Share on other sites More sharing options...
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