KillJoy Posted April 20, 2012 Report Share Posted April 20, 2012 Like the Title says, which is better and why? KillJoy Quote Link to comment Share on other sites More sharing options...
gillbot Posted April 20, 2012 Report Share Posted April 20, 2012 http://www.fool.com/personal-finance/insurance/2006/05/08/whole-life-vs-term-life.aspx Quote Link to comment Share on other sites More sharing options...
Orion Posted April 20, 2012 Report Share Posted April 20, 2012 (edited) Buy term, invest the difference. Eventually, you should be self-insured. EDIT: I feel I should explain my position a bit more fully. I have a $400,000 25 year level term policy. If I die in the next 25 years, my family gets $400k. My monthly cost for that is $50. For a Whole Life policy with the same payout, my cost would be $275. (I know, because I checked with my broker). I would be paying that until I turned 100, and at that point, I could cash it out for $400k. (If I live that long, which is unlikely). So, for an apples to apples comparison, lets just stick to dealing with the next 25 years, ok? The difference between the monthly cost is $225. That difference, over the course of 25 years, is valued at a total of $67,500. So, you save that much just for having the different policy. But lets say you invested that in a mutual fund and averaged 10% (pretty conservative, actually) compunded annually. After 25 years, you would have just over $300k in the fund. ($301,025.33, to be exact) At the age of 58, just about the time I retire (Since we are using me as the example here) I would have a nice little retirement nest egg started. If I continued to invest for 4 more years until I retired, that number would jump to over $460k. Not too shabby. If I wanted to cash out my whole life policy at 25 years (Which you can do), I would get $97,680. After having paid in a total of $82,500. So, not too much growth in those 25 years. So, for the first 25 years, the protection is the same. After that, there is about a 2 year window wherein if you were to shuffle off the old mortal coil, your family would be missing out on a little bit of the money that the whole life policy would have paid out (At ages 59 and 60, the investment would be worth $335k and $373k, respectively, as opposed to the $400k provided by the WL policy). But after that, you have actually provided MORE protection for your family, and that could even continue to grow if you chose to continue your investment at $225 monthly. I hope this helps to illustrate my point. There are arguments for both sides, but in my mind, it is as simple as what I have just laid out for you. Edited April 20, 2012 by Orion Quote Link to comment Share on other sites More sharing options...
Rally Pat Posted April 20, 2012 Report Share Posted April 20, 2012 http://www.daveramsey.com/article/the-truth-about-life-insurance/ Quote Link to comment Share on other sites More sharing options...
Got-Boost? Posted April 20, 2012 Report Share Posted April 20, 2012 ^Agreed... Quote Link to comment Share on other sites More sharing options...
Wease Posted April 20, 2012 Report Share Posted April 20, 2012 http://www.daveramsey.com/article/the-truth-about-life-insurance/ Great post. To sum up what Dave says at the bottom: "If you follow my Total Money Makeover plan, you will begin investing well. Then, when you are 57 years old and the kids are grown and gone, the house is paid for, and you have $700,000 in mutual funds, you'll become self-insured. That means when your 20-year term is up, you shouldn't need life insurance at all—because with no kids to feed, no house payment and $700,000, your spouse will just have to suffer through if you die without insurance. Don't do cash value insurance! Buy term and invest the difference." This is nearly dead on what I'm doing, except I'll have more money at 57 and no house payment well before that (less than 10 years to go). I've got a 20 year term policy worth $1M that costs me $44 a month. When that's up, my kids will be grown up and in college. Life insurance is to help your family should you die early. That's it... :nod: Quote Link to comment Share on other sites More sharing options...
Orion Posted April 20, 2012 Report Share Posted April 20, 2012 I've got a 20 year term policy worth $1M that costs me $44 a month Eff you and your elite tier ass. Sucks being a fatty with Sleep Apneia. Quote Link to comment Share on other sites More sharing options...
Wease Posted April 20, 2012 Report Share Posted April 20, 2012 Eff you and your elite tier ass. Sucks being a fatty with Sleep Apneia. Nothing against you or your current condition, but as you know, I was a fatty. Dropping nearly 90 pounds and keeping it off changes all of that... :nod: Quote Link to comment Share on other sites More sharing options...
zeitgeist57 Posted April 20, 2012 Report Share Posted April 20, 2012 I'm a student pilot, and SCUBA-certified...and last year I got a $1MM John Hancock 20-yr TL policy for $780/yr. Take it from a broker: LIFE INSURANCE IS NOT SUPPOSED TO BE AN INVESTMENT VEHICLE!* *Unless it's an annuity. Quote Link to comment Share on other sites More sharing options...
Littleguy Posted April 20, 2012 Report Share Posted April 20, 2012 Term life only imo. Quote Link to comment Share on other sites More sharing options...
AngryBMW Posted April 20, 2012 Report Share Posted April 20, 2012 I'm a student pilot, and SCUBA-certified...and last year I got a $1MM John Hancock 20-yr TL policy for $780/yr. Take it from a broker: LIFE INSURANCE IS NOT SUPPOSED TO BE AN INVESTMENT VEHICLE!* *Unless it's an annuity. Xoxo. -Marc Quote Link to comment Share on other sites More sharing options...
kirks5oh Posted April 20, 2012 Report Share Posted April 20, 2012 term life only here. 20 year, $5million dollar policy. i invest what i would normally put in a whole life plan. once you get married you should have a policy. once you have kids, its an absolute must. Quote Link to comment Share on other sites More sharing options...
KillJoy Posted April 20, 2012 Author Report Share Posted April 20, 2012 We have a 30 Year Whole Life that we got 8 years ago (shortly after getting married). We got our Value Sheet yesterday in the Mail. What was "projected", is nowhere near where we are, hence my asking. I know that some of you here know what you are doing, and it seems that Term Life is favored. KillJoy Quote Link to comment Share on other sites More sharing options...
Rally Pat Posted April 20, 2012 Report Share Posted April 20, 2012 Quote Link to comment Share on other sites More sharing options...
Littleguy Posted April 20, 2012 Report Share Posted April 20, 2012 The smart money is to get a term life policy at least 10x your annual earnings and have it until your youngest child finishes college. Quote Link to comment Share on other sites More sharing options...
Orion Posted April 20, 2012 Report Share Posted April 20, 2012 Nothing against you or your current condition, but as you know, I was a fatty. Dropping nearly 90 pounds and keeping it off changes all of that... :nod: I gotta get my ass to the gym or something. Damn this not having any discipline about food. Quote Link to comment Share on other sites More sharing options...
Wease Posted April 20, 2012 Report Share Posted April 20, 2012 term life only here. 20 year, $5million dollar policy. i invest what i would normally put in a whole life plan. once you get married you should have a policy. once you have kids, its an absolute must. Damn, $5M?! Quote Link to comment Share on other sites More sharing options...
AngryBMW Posted April 20, 2012 Report Share Posted April 20, 2012 Damn, $5M?! I'm actually surprised it's not more. Remember what his profession is...and what his earning potential is. -Marc PS - your yard looks nice. Quote Link to comment Share on other sites More sharing options...
zeitgeist57 Posted April 20, 2012 Report Share Posted April 20, 2012 The other nice feature about most good insurance carriers: If you do a term policy, you can usually add additional coverage down the road (i.e...get another 10-year term policy while deep in an existing 20-yr policy) without needing to go through medical screening: very beneficial as insurance gets more expensive as you get older and your health deteriorates! Quote Link to comment Share on other sites More sharing options...
Wease Posted April 20, 2012 Report Share Posted April 20, 2012 I'm actually surprised it's not more. Remember what his profession is...and what his earning potential is. -Marc PS - your yard looks nice. Doh, I did forget that... Quote Link to comment Share on other sites More sharing options...
Smokey Posted April 20, 2012 Report Share Posted April 20, 2012 Good advice in here, but one important thing you must remember....you have to have the discipline to invest the "savings" over the term policy. Most people I have seen try that method start out investing the extra money and then over time find one reason or another that they need to use that money elsewhere (daycare, bills pile up, sickness, etc). My wife and I have whole life policies and a convertible term (like Clay mentioned) because I knew I wanted to ensure I would always continue that investment. While it's not a huge money maker, I'm guaranteed to die and someone gets the benefit at some point. Plus, I'll never put in more than I get as a benefit so no worry about investment losses. So Clay...are you the one I see about getting me a guaranteed 10% or more return each year like the example states? Quote Link to comment Share on other sites More sharing options...
Orion Posted April 21, 2012 Report Share Posted April 21, 2012 So Clay...are you the one I see about getting me a guaranteed 10% or more return each year like the example states? Averaged, over a 25 year span. I'm sure there are lots of brokers you can see that would help you with that. The only gaurantee I mentioned was that investing the difference over the same period of time would result in a larger financial gain. Quote Link to comment Share on other sites More sharing options...
kirks5oh Posted April 21, 2012 Report Share Posted April 21, 2012 Damn, $5M?! i've gotten different advice. one guy says get this, another says get that. at the very least, i want my wife to have 5 years or more coverage. the house is paid off, my school loans are close, we have two car notes (escalade/z-06) that are at 0% financing--but could break even if she had to sell both. its a tough call. i pay way too much for this shit---my disability insurance is quite bit more than all my other policies (life/cars/umbrella/etc) combined. if only i knew there was zero % chance of cutting my fingers/hand off, i could save/invest much more. Quote Link to comment Share on other sites More sharing options...
silverhatch Posted April 24, 2012 Report Share Posted April 24, 2012 I just had to unfortunately use my husband's life insurance. He had whole life and it was much more expensive per month than term. Had I known that he was going to pass away so young we would have definately gotten lots of term life. At least we had enough to take care of what needs to be done and pay off our home. Quote Link to comment Share on other sites More sharing options...
Smokey Posted April 24, 2012 Report Share Posted April 24, 2012 wow. Very sorry to hear about your loss, but glad at least that you had some coverage to carry you through. Quote Link to comment Share on other sites More sharing options...
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