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  1. #1
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    Which life insurance policy is best?

    With a new mortgage and our first child due in a month, I will be making some tweaks to our life insurance policy. I'd like to see which route everybody else has taken in regards to the three policies discussed in the link below:

    Which Life Insurance Is Best? - SmartMoney.com

    I am no expert but my thoughts are that buying a term policy and investing the extra $ into a ROTH IRA would be the route to go.

    Opinions on the subject?



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    Re: Which life insurance policy is best?

    Quote Originally Posted by waynemorgan View Post
    With a new mortgage and our first child due in a month, I will be making some tweaks to our life insurance policy. I'd like to see which route everybody else has taken in regards to the three policies discussed in the link below:

    Which Life Insurance Is Best? - SmartMoney.com

    I am no expert but my thoughts are that buying a term policy and investing the extra $ into a ROTH IRA would be the route to go.

    Opinions on the subject?
    I'm not an expert by any means but I went with a type of whole life policy. I am 32 and don't really need term insurance. Whole life fit me because I can front load the policy and let money grow tax differed, after I build the pool up enough, I can then loan the money back to myself in the future and pay a fair interest fee (to my policy or in other words to myself). This helps grow the "pot" a lot faster and allows you to pay interest to yourself rather than a bank. As I did my research, this was a no brainer for me but keep in mind everyone's situation is different. My situation allowed me to put up the higher premiums now. Eventually the policy will create enough dividend to pay the premium.

    Your example is not a bad idea at all. Depends on how much money you want to shove in the Roth (there are limits). And what rate of return you can assume for your Roth?

    Dividend for whole life varies with interest rates (at least mine does), the lower the interest rate, the lower the dividend. So right now is a good time to buy in assuming rates will go up. Of course your rate of return is nothing spectacular, what makes the pool grow more aggressively is borrowing from it and paying the money back plus interest but this takes discipline.

    Feel free to pm me if you have more questions, I don't sell the stuff but did a lot of research before I bought my policy.



  3. #3
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    Re: Which life insurance policy is best?

    Quote Originally Posted by waynemorgan View Post
    With a new mortgage and our first child due in a month, I will be making some tweaks to our life insurance policy. I'd like to see which route everybody else has taken in regards to the three policies discussed in the link below:

    Which Life Insurance Is Best? - SmartMoney.com

    I am no expert but my thoughts are that buying a term policy and investing the extra $ into a ROTH IRA would be the route to go.

    Opinions on the subject?
    Probably a combination of both, but first and foremost you need to make sure you are protected. A lot of other variables to your question, but like I said, make sure you have your Human Life Value in death benefit in term before you start to replace some of that with permanent.
    Personally, I use permanent, and use it like my savings account. I'm 8 years into 1 of my policies and it gets between 5-6% tax free now every year, which isn't sexy, but its no different than bonds, just without the risk.
    Have I mentioned you should make sure you have the protection in place first before you look at permanent though?


    Exaggeration is a BILLION times worse than understating.

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    Re: Which life insurance policy is best?

    My wife and I both went with whole life policies as well. I got a really good premium rate from our provider because I fell into what they considered to be the elite physical category (which still makes me giggle when i think about it). Our accountant and advisor both told us that if a person can handle the pinch of a whole life premium early in their lives/careers, it pays off big down the road.



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    Re: Which life insurance policy is best?

    Don't try any funny business.



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    Re: Which life insurance policy is best?

    Quote Originally Posted by jbindm View Post
    My wife and I both went with whole life policies as well. I got a really good premium rate from our provider because I fell into what they considered to be the elite physical category (which still makes me giggle when i think about it). Our accountant and advisor both told us that if a person can handle the pinch of a whole life premium early in their lives/careers, it pays off big down the road.
    I'd get a 2nd opinion on whole life. Waste.



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    Re: Which life insurance policy is best?

    Quote Originally Posted by Cydkar View Post
    I'd get a 2nd opinion on whole life. Waste.
    Thanks, but I did (actually it was a second AND third opinion). The advisor first recommended it, and then we talked about it with two different CPAs. They all recommended whole for our situation.

    The funny thing is that if we did switch and go term, I'd have someone in my ear telling me that whole is the way to go. At some point you just have to pick a path and go.



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    Re: Which life insurance policy is best?

    Whole life is only good for the guy selling you whole life. Get a 20 year level term policy when your kids are born, and then you are done with insurance. 10x your yearly income. Invest the rest into your IRAs.

    I would love to find a financial advisor that is looking long term and not just recommending the items with the highest fee rate. My current guy suggest I buy some fund with the normal fees and a 1% yearly upfront fee. Yeah, they want a grand just to sell me the damn fund!


    Last edited by brianhos; 05-21-2011 at 02:32 PM.
    They who can give up essential liberty to obtain a little temporary safety, deserve neither liberty nor safety. - Benjamin Franklin 1775

  9. #9
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    Re: Which life insurance policy is best?

    Quote Originally Posted by brianhos View Post
    Whole life is only good for the guy selling you whole life. Get a 20 year level term policy when your kids are born, and then you are done with insurance. 10x your yearly income. Invest the rest into your IRAs.

    I would love to find a financial advisor that is looking long term and not just recommending the items with the highest fee rate. My current guy suggest I buy some fund with the normal fees and a 1% yearly upfront fee. Yeah, they want a grand just to sell me the damn fund!
    I agree..... I went down the Whole Life & Universal Life route for awhile and got tired of the huge premiums that only made my agent rich. Cashed in for simple term insurance that covers my life and that is it at a reasonable competitive price. Put the cash value of my life insurance in stocks and no-load mutual funds and now have 10 times the wealth that my life insurance agent could have given me.

    Life Insurance is not an investment tool for anyone but your life insurance company.



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    Re: Which life insurance policy is best?

    Quote Originally Posted by william View Post
    I agree..... I went down the Whole Life & Universal Life route for awhile and got tired of the huge premiums that only made my agent rich. Cashed in for simple term insurance that covers my life and that is it at a reasonable competitive price. Put the cash value of my life insurance in stocks and no-load mutual funds and now have 10 times the wealth that my life insurance agent could have given me.

    Life Insurance is not an investment tool for anyone but your life insurance company.
    If it was sold to you that it was going to outperform stocks, it was grossly misrepresented. It is, however, a great alternative to bonds and cash in your portfolio


    Exaggeration is a BILLION times worse than understating.

  11. #11
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    Re: Which life insurance policy is best?

    NEVER buy whole life. Horrible investment. Ask your advisor which whole life policy you can purchase that comes from someone other than him and see what he says. How do those guys sleep at night?



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    Re: Which life insurance policy is best?

    Quote Originally Posted by william View Post
    I agree..... I went down the Whole Life & Universal Life route for awhile and got tired of the huge premiums that only made my agent rich. Cashed in for simple term insurance that covers my life and that is it at a reasonable competitive price. Put the cash value of my life insurance in stocks and no-load mutual funds and now have 10 times the wealth that my life insurance agent could have given me.

    Life Insurance is not an investment tool for anyone but your life insurance company.

    We did the same....had whole life for 10 years before realizing it was not a good investment. Got a 20 year term when I was 37. Kids will be out of college by then and on their own. House will be paid off, Nest Egg built up and working on retirement.

    Some people are more comfortable with the WL money that they are putting away for the future. Roth is a better investment. I'm comfortable with my insurance levels and my investments in stocks, ETFs and Bonds. Now 42 and working toward how to bridge the years between retirement at 57 and when to receive pension, social security and drawing out of 401K.


    If you wait until the last minute.....it only takes a minute.

  13. #13
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    Re: Which life insurance policy is best?

    I've been told that a whole life policy is better for some people. I'd like someone to explain who that would be. I suppose it's good for somebody who would spend every penny they earned unless it was automatically socked away. If that's the case, have it automatically socked away somewhere else.

    I've had a whole life policy. It's like having a timeshare...making money for somebody else.



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    Re: Which life insurance policy is best?

    Quote Originally Posted by Cydkar View Post
    I've been told that a whole life policy is better for some people. I'd like someone to explain who that would be. I suppose it's good for somebody who would spend every penny they earned unless it was automatically socked away. If that's the case, have it automatically socked away somewhere else.

    I've had a whole life policy. It's like having a timeshare...making money for somebody else.
    Those some people are the ones who are buying it so their kids have an inheritance when they die.



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    Cool Re: Which life insurance policy is best?

    Buy term and invest the rest in a Roth. I bought a 30-yr term policy when I was 25. When I'm 55 and it expires I'll have way more in investments so won't need life insurance, and my kids will be grown up and on their own.

    Avoid whole life like the plague. It's the worst. High, hidden fees you don't even realize you're paying on an ongoing basis.

    Also, never buy life insurance on your kids.

    Just my opinions here, so do your research and decide on your own. I don't think people who buy whole life are dumb or anything, it's great they are planning to protect their family. I just think term is the way to go.


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