Results 1 to 14 of 14
  1. #1
    Addict
    Points: 106,286, Level: 100
    Level completed: 0%, Points required for next Level: 0
    Overall activity: 33.0%
    Achievements:
    50000 Experience Points1 year registered
    mtowncyclone13's Avatar
    Join Date
    Oct 2012
    Posts
    6,631
    Points
    106,286
    Level
    100
    Thumbs Up
    Received: 704
    Given: 412

    Life Insurance Question

    Please bear with me if this sounds confusing!

    I was married in 2008 and at that time I purchased 2 life insurance policies. My father-in-law is our agent so he set me up with plans that I assume have good coverage. I am 30 years old and purchased all of these in 2008. Right now I have 500K in term (with a return of premium at the end of the term), 50K in whole life (no cash value yet), and 160K term paid by my work. In total I pay $1,618 per year for these plans.

    My dad called me last night to say he has been paying on a whole life policy for me since I was 5 and now he wants me to take over the payments. He said he wished he would have told me about it in 2008 when I purchased these plans but oh well...

    This whole life plan has 250K in coverage and 31K in cash value. The yearly premiums are about $700. He said he doesn't want me to cash it out and if I did that he would just cancel the policy and take the cash value himself because in his mind it's for my retirement and not just "play money". So, here is my dilemma... I don't need a million in life insurance and I can not afford the $1,618 + $700 a year for life insurance if I kept all policies. Which policies should I cancel/keep?


    Quote Originally Posted by CycloneRulzzz View Post
    mtown is among the worst to ever play this game.


  2. #2
    Starter
    Points: 12,961, Level: 34
    Level completed: 45%, Points required for next Level: 389
    Overall activity: 0%
    Achievements:
    Veteran10000 Experience Points
    JWIL4CY's Avatar
    Join Date
    Nov 2010
    Location
    Urbandale
    Posts
    753
    Points
    12,961
    Level
    34
    Thumbs Up
    Received: 67
    Given: 15

    Re: Life Insurance Question

    Ditch the whole life policies and keep the terms. Whole life policies are a horrible investment.



  3. #3
    All-Star
    Points: 57,797, Level: 74
    Level completed: 50%, Points required for next Level: 753
    Overall activity: 2.0%
    Achievements:
    Veteran50000 Experience Points
    CycloneGB's Avatar
    Join Date
    Jul 2010
    Posts
    1,930
    Points
    57,797
    Level
    74
    Thumbs Up
    Received: 56
    Given: 49

    Re: Life Insurance Question

    Keep the whole life your dad has started for you and dump whatever term you need to.



  4. #4
    All-Star
    Points: 57,797, Level: 74
    Level completed: 50%, Points required for next Level: 753
    Overall activity: 2.0%
    Achievements:
    Veteran50000 Experience Points
    CycloneGB's Avatar
    Join Date
    Jul 2010
    Posts
    1,930
    Points
    57,797
    Level
    74
    Thumbs Up
    Received: 56
    Given: 49

    Re: Life Insurance Question

    Quote Originally Posted by JWIL4CY View Post
    Ditch the whole life policies and keep the terms. Whole life policies are a horrible investment.
    Life insurance is not an investment designed to make you money. It's ignorant to try and treat it like one



  5. #5
    Starter
    Points: 12,961, Level: 34
    Level completed: 45%, Points required for next Level: 389
    Overall activity: 0%
    Achievements:
    Veteran10000 Experience Points
    JWIL4CY's Avatar
    Join Date
    Nov 2010
    Location
    Urbandale
    Posts
    753
    Points
    12,961
    Level
    34
    Thumbs Up
    Received: 67
    Given: 15

    Re: Life Insurance Question

    Quote Originally Posted by CycloneGB View Post
    Life insurance is not an investment designed to make you money. It's ignorant to try and treat it like one
    Exactly. That's why you buy term and not whole life.



  6. #6
    Addict
    Points: 106,286, Level: 100
    Level completed: 0%, Points required for next Level: 0
    Overall activity: 33.0%
    Achievements:
    50000 Experience Points1 year registered
    mtowncyclone13's Avatar
    Join Date
    Oct 2012
    Posts
    6,631
    Points
    106,286
    Level
    100
    Thumbs Up
    Received: 704
    Given: 412

    Re: Life Insurance Question

    Quote Originally Posted by CycloneRulzzz View Post
    mtown is among the worst to ever play this game.


  7. #7
    Starter
    Points: 13,631, Level: 35
    Level completed: 41%, Points required for next Level: 419
    Overall activity: 2.0%
    Achievements:
    Veteran10000 Experience Points

    Join Date
    Jan 2008
    Location
    Longmont, CO
    Posts
    682
    Points
    13,631
    Level
    35
    Thumbs Up
    Received: 5
    Given: 7

    Re: Life Insurance Question

    I agree whole life is horrible. Term is cheap. Cancel the whole life. Also return of premium is pretty crappy. You should just buy a term policy and invest the difference. I have a 10 year 500k policy and I pay 165 a year.



  8. #8
    All-Star
    Points: 57,797, Level: 74
    Level completed: 50%, Points required for next Level: 753
    Overall activity: 2.0%
    Achievements:
    Veteran50000 Experience Points
    CycloneGB's Avatar
    Join Date
    Jul 2010
    Posts
    1,930
    Points
    57,797
    Level
    74
    Thumbs Up
    Received: 56
    Given: 49

    Re: Life Insurance Question

    Quote Originally Posted by JWIL4CY View Post
    Exactly. That's why you buy term and not whole life.
    So what happens when you have all this term insurance, and you have something happen where you're un-insurable?

    Example: You have a 20 yr term policy, 15 years in, you have a heart attack. You end up being fine but now you are un-insurable.. so at age 50 you no are no longer able to buy life insurance. Few years later you have another heart attack, get cancer, car wreck, whatever and die. Suddenly you dump all your bills (funeral, mortgage, school tuition, debt, etc.) on your family.

    Same scenario happens with those whole life policies, you die, your wife gets a $300,000 check, covers your funeral, pays off the mortgage and any of your debt, and puts the rest in the kids' college fund.

    Point being, if you're looking at this strictly from a $$ perspective, whole life is "a terrible investment" but that, to me, seems like making a decision/judgement without looking at the whole picture.

    The point of life insurance is not to make you money, it's to protect your family and assets if, God forbid, something happens to you and you're not around to do that.



  9. #9
    Starter
    Points: 12,961, Level: 34
    Level completed: 45%, Points required for next Level: 389
    Overall activity: 0%
    Achievements:
    Veteran10000 Experience Points
    JWIL4CY's Avatar
    Join Date
    Nov 2010
    Location
    Urbandale
    Posts
    753
    Points
    12,961
    Level
    34
    Thumbs Up
    Received: 67
    Given: 15

    Re: Life Insurance Question

    Quote Originally Posted by CycloneGB View Post
    So what happens when you have all this term insurance, and you have something happen where you're un-insurable?

    Example: You have a 20 yr term policy, 15 years in, you have a heart attack. You end up being fine but now you are un-insurable.. so at age 50 you no are no longer able to buy life insurance. Few years later you have another heart attack, get cancer, car wreck, whatever and die. Suddenly you dump all your bills (funeral, mortgage, school tuition, debt, etc.) on your family.

    Same scenario happens with those whole life policies, you die, your wife gets a $300,000 check, covers your funeral, pays off the mortgage and any of your debt, and puts the rest in the kids' college fund.

    Point being, if you're looking at this strictly from a $$ perspective, whole life is "a terrible investment" but that, to me, seems like making a decision/judgement without looking at the whole picture.

    The point of life insurance is not to make you money, it's to protect your family and assets if, God forbid, something happens to you and you're not around to do that.
    That's what guaranteed issue term life insurance is for . Get a 20-30 year guaranteed issue term policy and invest the amount you saved from not buying whole life and put it in a good mutual fund. Assuming you live within your means and save properly, you shouldn't have any further need for life insurance after that 20-30 years.



  10. #10
    Addict
    Points: 157,483, Level: 100
    Level completed: 0%, Points required for next Level: 0
    Overall activity: 5.0%
    Achievements:
    50000 Experience PointsSocial1 year registered
    Cycl1's Avatar
    Join Date
    Mar 2012
    Location
    North Liberty
    Posts
    6,582
    Points
    157,483
    Level
    100
    Thumbs Up
    Received: 77
    Given: 3

    Re: Life Insurance Question

    Ditch the whole life. If the 660k the term and work insurance provide wont take care of your family after you are gone, you have much bigger money issues. Whole life is terrible.


    I LIEK CHOCOLATE MILK - The Partisan Bat

    Quote Originally Posted by ChrisMWilliams View Post
    Hmmm...I'm not a huge "weiner"
    Quote Originally Posted by Angie View Post
    "Yeah, Chris' weiner is a way bigger get than mine."

  11. #11
    Addict
    Points: 157,483, Level: 100
    Level completed: 0%, Points required for next Level: 0
    Overall activity: 5.0%
    Achievements:
    50000 Experience PointsSocial1 year registered
    Cycl1's Avatar
    Join Date
    Mar 2012
    Location
    North Liberty
    Posts
    6,582
    Points
    157,483
    Level
    100
    Thumbs Up
    Received: 77
    Given: 3
    I LIEK CHOCOLATE MILK - The Partisan Bat

    Quote Originally Posted by ChrisMWilliams View Post
    Hmmm...I'm not a huge "weiner"
    Quote Originally Posted by Angie View Post
    "Yeah, Chris' weiner is a way bigger get than mine."

  12. #12
    Pro
    Points: 62,009, Level: 77
    Level completed: 23%, Points required for next Level: 1,241
    Overall activity: 13.0%
    Achievements:
    Veteran50000 Experience Points
    BigLame's Avatar
    Join Date
    Feb 2008
    Location
    Western IA
    Posts
    2,750
    Points
    62,009
    Level
    77
    Thumbs Up
    Received: 120
    Given: 191

    Re: Life Insurance Question

    Quote Originally Posted by mtowncyclone13 View Post
    Please bear with me if this sounds confusing!

    I was married in 2008 and at that time I purchased 2 life insurance policies. My father-in-law is our agent so he set me up with plans that I assume have good coverage. I am 30 years old and purchased all of these in 2008. Right now I have 500K in term (with a return of premium at the end of the term), 50K in whole life (no cash value yet), and 160K term paid by my work. In total I pay $1,618 per year for these plans.

    My dad called me last night to say he has been paying on a whole life policy for me since I was 5 and now he wants me to take over the payments. He said he wished he would have told me about it in 2008 when I purchased these plans but oh well...

    This whole life plan has 250K in coverage and 31K in cash value. The yearly premiums are about $700. He said he doesn't want me to cash it out and if I did that he would just cancel the policy and take the cash value himself because in his mind it's for my retirement and not just "play money". So, here is my dilemma... I don't need a million in life insurance and I can not afford the $1,618 + $700 a year for life insurance if I kept all policies. Which policies should I cancel/keep?
    First off, I am not a financial professional. If you have one - this is a better question for him or her. It has to be viewed with your whole financial situation. Combined with your other investments (retirement accounts, non-retirement investments, ownership is business ventures, etc), whole life can be used very effectively and has advantages over other financial instruments, particularly if you have a high salaried job or are or will own a successful business. For instance, the cash value in the policy does not count against you for when your child goes to college & applies for financial aid. For most people, if they are wage earners & are good at maximizing their 401K contributions, IRA contributions, & other accounts, the approach to just buy term & invest the rest (from the Ramsey's & the like) is good advice.

    With the info you have provided, I find it hard to believe you have no cash value in your $50K whole life policy being paid on since 2008, but that would be the first one to look at potentially cancelling & continue with the policy from your dad. Your parents paid on that policy since you were five & basically paid a good portion of the 'cost' of the insurance. $700 per year with $31K in cash value & a face of $250K seems pretty darn good - imho.

    To summarize, advice from a pro would be the way to go (but with a Father-In-Law & Father involved, I don't know how you'd do that w/o ruffling some feathers!). There are a few on this board who will likely jump into this thread - it seems to be a topic every six months or so. Most will voice what has already been stated - buy term, invest the rest. Others will agree with my view & most likely have more knowledge & can state things better than me. Still, always good to educate oneself & view all possibilities.


    “I fear not the man who has practiced 10,000 kicks once, but I fear the man who has practiced one kick 10,000 times”-Bruce Lee

    4 Point Plan

    1. Start Up 2. Cash In 3. Sell Out 4. Bro Down

  13. #13
    Hall-Of-Famer
    Points: 48,827, Level: 68
    Level completed: 35%, Points required for next Level: 923
    Overall activity: 13.0%
    Achievements:
    Veteran25000 Experience Points

    Join Date
    Jul 2008
    Location
    Wichita, KS
    Posts
    3,672
    Points
    48,827
    Level
    68
    Thumbs Up
    Received: 77
    Given: 7

    Re: Life Insurance Question

    Dump everything but the term and invest the rest/pay off debt. FYI agents make more off of whole life than term so you will meet resistance.



  14. #14
    Addict
    Points: 91,582, Level: 94
    Level completed: 18%, Points required for next Level: 1,568
    Overall activity: 15.0%
    Achievements:
    Veteran50000 Experience Points
    capitalcityguy's Avatar
    Join Date
    Jun 2007
    Location
    Des Moines
    Posts
    5,449
    Points
    91,582
    Level
    94
    Thumbs Up
    Received: 162
    Given: 156

    Re: Life Insurance Question

    Whole life simply is really only an appropriate route to take for a very select individual....generally very high net worth folks (with other variables to consider).

    You're not the first person to make this mistake, and you won't be the last.

    There is a ton on information you can find about whole life, so educate yourself so you understand it and thus you're not having to rely on yahoos like us on an internet forum. With just a little knowledge, you'll see that your situation is most likely not gray...it will be black and white.

    I've been in two different situations where "financial professionals" came at me with guns-a-blazin' trying to sell me Whole Life in one instance, and Variable Life in another. They pulled out all their best answers to try and overcome my objections. Both gave up rather discouraged realizing my objections were valid and they couldn't do or say anything that made their arguments make sense enough for me to not stick with term insurance.


    CCG

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
  •  
  • TV: TBD
  • Iowa State vs. Oklahoma
  • November 1, 2014
  • 07:00 PM