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Hi all! My broker I just met is trying to sell me a Whole Life plan of Insurance. I have 2 boys ages 1 and 3 and know that iy’h one we’ll have to pay for Weddings etc. He explained that it is a great option as a forced savings with the addition of the death benefit. He showed me how my money can double in 15 years almost guaranteed. Has anyone had experience with Whole Life? What are your recommendations?
It’s an investment. Figure out what the interest is, and if you could get a better return elsewhere. If you can (factoring in what term life would cost), it’s not worth it.
I’m told you can do better than whole life, but do your own research.
If you have the discipline, buy term and invest the difference.
Buy term life insurance from an A rated Insurance Company, you can find them on the internet and put the difference in an a mutual fund. Do your research on the internet. You will find funds that are geared to pay college education, this is the type of fund that you are interested in.
Just type term life on the search bar and you can find out what term life will cost you based on your age and amount of insurance, usually less than $100 per month. Then compare it to the whole life cost.
Next look for top rated high yielding mutual funds over the last 15 years. A fund that knows you wouldn’t be withdrawing your funds for the next 20 years invests differently than a fund that worries that the investor will withdraw their money anytime they are not happy with the return.
Whole life is great…for the selling agent.
It is sold as a forced savings vehicle, but you lose out on the returns available on investments that have no commissions involved.
What good is building policy value, then borrowing it to pay for weddings and G-D forbid something happens to you and your widow and children get a pittance?
Term life is cheap, just develop the discipline to save each month.
The only time whole life was great for policyholders was in the times of great inflation. In 1980 my father was able to borrow $100,000 in policy value against a whole life policy he bought in 1946 for 2% and invest it in bank CDs at 18%. But in modern low interest rate economies one would not accumulate that amount of policy have and have the chance to arbitrage the funds.
“Buy term and invest the difference”? Invest in WHAT?
S&P 500 index fund.
Use life insurance for what its meant for = insurance in case something happens to you there will be money for the yesomim and the almana. Get a 30 yr term when your young and healthy and that’s it. $ure every broker wants to sell you whole as they get more gelt for that.
I would suggest Annual Renewable Term (ART) rather than a 30 year fixed term. If a 22 year old gets a 30 year term what will he do when he’s 52 and still needs term insurance? Renew at, possibly, astronomical unaffordable rates due to his then age and health? ART, on the other hand, can be renewed annually till age 90 or 100 in most State (70 in New York). And you are advised what the rate will be for each future year before you purchase the policy. (The rate specified does not change regardless of future health so long as the premiums are paid each year.)
Insurance companies have better access to investments than you do.
Therefore?
Insurance companies have better access to investments than you do.
That’s to their benefit, not yours. Their markup and fees makes it less beneficial to consumers than the financial products you can get on the open market.
thank you health – i had to laugh about that put-away-$100-a-month line. or was i crying?
Sheesh.
Insurance companies have better access to investments than you do.
But that doesn’t mean they have access to better investments, especially when you think long term.
Mrs Plony
Depending on your health and age and the amount of insurance. For example, someone 43 could get $500,000 of term insurance for less than $50 per month. This is for 10 year term life insurance and is renewable, just the premium will go up after 10 years.
If you put a $100 per month in a mutual fund for 20 years you would have $24,000.00 besides interest. It is not uncommon for yields to be as high as 20% per year so you may not only have enough to pay for the wedding but also to support them for a year or two.
All you need to do is have the insurance and the mutual fund paid automatically from your bank account. You wouldn’t even notice it.
The only problem is that you can’t touch this money if you run short and need to pay bills.
In order to find term insurance just type term insurance 20 years and then fill out the form online to get a quote.
As far as finding mutual funds look for a fund which doesn’t require a large investment but has high returns over 15-20 years.
Here too all you need is to type in High Return Mutual Funds over the last 15-20 years in the search bar and then choose the one that best suits your goals.
The High return on mutual fund will beat the insurance companies all the time.
This system will cost less and give you more money if done properly. As a general rule over the long run if you sit and hold on even the worst stocks make money over the long run. You just have to not get into speculative stocks that might go bankrupt but with mutual funds your diversified so the risk is less and since it is professionally managed they will not cash out if the price drops, as small investors do. They will buy and wait for the price to go back up as it usually does. This is how they make money for you.
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