[Tripin93]

I am 25 years old and want to buy a whole life insurance policy. I am not sure where’s the best place to buy it from. I know there’s a TON of salesmen and advertisements out there. And I even went to college with a guy who sells Primerica. I don’t trust salesmen and all the companies look the same to me. If you own life insurance, where did you buy it from and would you recommend it? Do you know of any companies I should avoid? Thanks in advance.

Motivated by JC. I do it to make God proud.

FAR: 91 July 2015
AUD: 83 October 2015
REG: 81 January 2016
BEC: 83 February 2016

[Tripin93]

This is a lot to think about. I just said “whole life,” because I thought that was best for younger people. But… I am open to hearing reasons on why term is better. I need advice from someone whose competent and NOT a salesman! 🙂

Motivated by JC. I do it to make God proud.

FAR: 91 July 2015
AUD: 83 October 2015
REG: 81 January 2016
BEC: 83 February 2016

[jeff]

Life insurance is intended to replace you when you die so that 1) your loved ones can bury you and 2) your dependents won't have to shift their lifestyle in your absence.

For instance – a stay at home mom would have to go back to work if the husband dies and no life insurance to replace that income.

Life insurance is not an investment (outside of some estate planning strategery).

Whole Life is like a TV/VCR combo from back in the day. Not a very good TV and not a very good VCR.

Have your investments with your investments and your insurance with your insurance.

I'm a big fan of 20 year term, myself.

I'M NOT AN EXPERT ON THESE MATTERS – I'M JUST AN EXPERT ON MY OWN OPINION (which is sometimes wrong – just ask my wife).

CONSULT AN EXPERT BEFORE MAKING ANY DECISIONS (hopefully one that isn't selling you stuff).

Jeff Elliott, CPA (KS) | Another71 | NINJA CPA | NINJA CMA | NINJA CPE

[jeff]

This is good – you'll hear both sides of it:

Jeff Elliott, CPA (KS) | Another71 | NINJA CPA | NINJA CMA | NINJA CPE

[Tripin93]

This is what I wanted! I wanted to hear the opinions of people who are smart with money. I'm glad that this forum exists. Thanks Jeff!

I am single. No kids. Female. Eventually, I plan on getting married and having a big family and becoming rich (that's where the cpa fits in. haha) I'd like to be covered for a high dollar amount, and I want to get the coverage while my rates are cheap.

I think I'll worry about this later, after the exam! I'll have time to do more research then. And I'll reread everyone's responses then too.

Motivated by JC. I do it to make God proud.

FAR: 91 July 2015
AUD: 83 October 2015
REG: 81 January 2016
BEC: 83 February 2016

[rmm77]

I have a whole life coverage for 500k. my premium is 4.5k a year. If i die before the age of 65, my beneficiary will get 500k guaranteed. If i'm still alive after 65, i can take whatever the cash value of the policy is for myself, which would arguably be around 300k or more after 40 years. Whereas if I had a term life for 20 years or 30 years, If i dont die…i lose the complete value of the policy and have zero cash value. Also with term your rates increase over time, whereas with a whole life you are locked in. Anyone who says that a whole life insurance policy cannot be used as an investment does not know much about the differences in policies to begin with, no offense. My dad has had tons of clients who have been screwed over by their previous insurance agents for getting term policies because they pay a higher commission to the agent. For a young person, whole life is the way to go. if you're older a term policy would be more beneficial depending on the circumstance.

FAR-74,92
BEC-85
AUD-8/8
REG-83

[leglock]

The one negative with Term that many of the above have mentioned is that after the term, you get nothing and have wasted all the premiums paid. However, Term offers a return of premium option. Your premium will be higher, but you get it back at the end of the term.

[jeff]

Feel free to offend 🙂

1. My $1MM 20 year fixed term is $55/mo. Your $500k whole life policy is $375/mo. Run the numbers on the $270 difference over 20 years – and assume a conservative return of 5%? 8%? You pick.

2. You put in $180k over 40 years and it grows to $300k? Yikes.

3. Term policies are fixed. The rates go up after the term, for sure. That's why they are a term policy.

4. Agents make more on Whole Life. You have that backwards. That's why they push them. That's why they defend them. They are more expensive. They give you much less coverage. The rate of return sucks. If you die – they pay on the face and keep the cash value. What's not to like? 🙂

Jeff Elliott, CPA (KS) | Another71 | NINJA CPA | NINJA CMA | NINJA CPE

[acamp]

$4.5K per year for 500K in coverage. Math time:

I have a 30-year term policy which I got when I was 30 and pay $72/mo for $600K in coverage. Payment is locked. Granted our policies may differ (age, health, etc), but assuming other things equal:

Whole life: $375 per month ($4.5K per year)
Term life: $58 (adjusted to also assume 500K in coverage).

If you toss the difference ($317 dollars PER MONTH) into investments and make 10% avg over the 30 years, you end up with $716K. Further, if I kick the bucket in 20 years, my beneficiaries get:
$500K AND the difference that I have been saving in investments.

Ninja + Wiley Test Bank: [FAR - 81] [REG - 76] [BEC - 88] [AUD - 73](doh!)

Becker Videos: [AUD - 82]

California CPA

[rmm77]

FAR-74,92
BEC-85
AUD-8/8
REG-83

[jeff]

Update: I asked my friend who sells life insurance the difference in commissions between Whole and Term.

On a $100,000 policy, Whole Life pays about $500-$600 more in commissions (approx).

Jeff Elliott, CPA (KS) | Another71 | NINJA CPA | NINJA CMA | NINJA CPE

[Justin]

I'm a big fan of the 20-year term, myself.

[Hank Scorpio]

Term FTW. Also Zander is amazing. Give them a call.

FAR - 10/3/16
BEC - 69 - 10/31/16
AUD - November 2016
REG - December 2016

[Author]

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