An Aldeer brother texted me asking me to post this. His computer acts crazy at times and won't let him log in but he can read the posts. He's trying to decide on term versus whole life insurance. He's asking for pros and cons. Here was my response.

I have 30 year term with Alfa. Term is the way to go. Even insurance people will tell you, if they are honest, that whole life only lines the pockets of the agent. It's sold as a "savings account" type of policy but it ultimately only pays a very small interest rate and is a terrible investment. If you took the amount you pay for whole over term and invest it consistently, you'll have a whole lot more money than you will off of the whole life "investment". I have a whole life policy also that I have had from probably close to 10 years. When I finally figured out how bad of an investment it really was, I tried to cancel it and get my money that was "saved" for me. They wouldn't let me. You have to let it sit for so many years before you can pull money out of it. That way they can make interest off of it rather than you. So, I just quit paying the premium and let the money saved pay it. The money has been paying the premium for about three years now. It will eventually run out and they will cancel the policy. I'll just have double coverage until that happens.

In an ideal world, term is best. Buy the longest term you can qualify for, and plan to no longer need life insurance when it runs out.
But that's sorta where whole life still has a purpose. I do not sell whole life for the cash value benefit. I always tell people, "If you're buying this for the cash value, you can make a heckuva lot better investment elsewhere." The cash value is just a side benefit. Buy whole life for the permanance of it. Truth is the majority of people aren't prepared to be without life insurance in their golden years, and by then their terms have expired and they can no longer buy term (because term has age limitations). So there's still a need for whole life. But with FEW exceptions, I don't suggest anybody buy large volume (expensive) whole products. If you're 20's to 40' in age, buy a huge term policy and maybe a small whole policy in addition. That way you get LOTS of coverage in your needy years, then you'll always have that whole policy (locked in at the young-age price) when you're old. And more than likely that whole life policy will have reached a point where it has enough cash value to pay itself then too.

What's the percentage of term life pay outs?

You really don't need to give advice about something you obviously know nothing about.

When I was in my early 20's I was sold a universal life policy and told it was whole. After buying a house and having a second child I found out I didn't have whole life (the selling agent had picked up and moved.) My new agent told me I could pull out $1200 and still have enough value to pay the policy for 8 years (which I did) and I now have $750000 in 30 year term coverage. My agent tried to sell me $200000 in whole coverage for over twice what I pay for my term policy. Term is the way to go. The only instance I've ever heard of any financial advisor recommending whole life is in certain situations where there is a very large estate (estate planning) to avoid some forms of taxation (which I don't understand totally).

around 3%


You can't pour tea into a cup that's already full. I'm staying out of the permanent/term argument

Term that can be changed to whole life before it expires. .02

I got term to age 99. I wont need it then. I am staying out too. My opinions apparently really piss some people on here off.


http://www.aldeer.com/forum/ubbthreads.php?ubb=showflat&Main=75885&Number=908144#Post908144

You got a term policy to age 99? Just curious, how old are you?

52 Got it when I was 22 or so.

Read what Dave Ramsey say on the subject. He does a good job of explaining how bad of an investment whole life is vs. term. Term is the way to go.

It may last until age 99 but the premiums will likely be unaffordable as you get older. You might want to review that to make sure you understand exactly what it will do.

Dave Ramsey has never had to tell someone they were uninsurable and could not provide coverage for their family. He is simply selling a system and his term insurance recommendations fit into what he is selling.

Permanent insurance does more than just provide "cash value". It guarantees insurability and many other benefits that most term insurance does not offer.

I have been in the business for a long time and have one of the largest agencies in the country. Our process is very simple - determine what the client needs, then explore the different options for that person to get that amount of coverage. The type of policy you have does not matter when you die. At that point it is all about the coverage amount. Get the coverage amount right, then worry about the policy type. But there are times when a permanent policy makes A LOT more sense than a term policy.

For Dave Ramsey to paint everyone with the same brush regarding term life insurance is simply irresponsible. Just like some of his hard line opinions on debt are simply irresponsible. There are times where taking a calculated risk is part of life. For example, not buying a business because you may have to get a loan for part of it. Painting everyone with the same brush on that situation is also irresponsible.

Now, I agree with him that debt for the most part is bad. You should avoid unsecured debt at all cost and pay cash for cars. Don't buy things you don't need, especially if it requires financing. Take out 10-15 year mortgages and put a lot of money down when you buy a house. But when an opportunity presents itself that may be life changing for you and your family, sometimes you just have to take a little risk. I've done it and I would do it all over again. And you know what? So would Dave Ramsey.

Its level till 99. It was decreasing term. They changed it to level a few years back. I understand exactly what it was and is.

My whole thing with whole life is who gets to keep the money in the account when they pay the death benefit. The insurance company. That is just wrong. All I am gonna say. Maybe!

Same thing happens when you don't die during the term.

Huh? There ain't no money in the account. You have to pay for "insurance". Ain't no savings account for them to steal with a term policy. Fordf150 has this nailed. He don't need our help.

There are permanent policies where BOTH the cash value and the death benefit are paid at the time of death. However, in some situations, there are some complicated reasons why you would not necessarily want that feature in your policy.

Also - I doubt very seriously that you have a "level" term policy til age 99. I don't know of a single company that has that type of policy.

Yea it is called universal life and is almost as bad as whole life. I assure you my policy is as stated.

Wasn't giving advice to him. Just telling him what I have and three close friends of mine, that all sell whole life and term life insurance have told me about how the policies are set up and who really benefits. There are only two types of financial advisors that will tell you whole life is a good deal. 1) those that recognize the person they are talking to doesn't have the discipline to invest on their own, and 2) those that sell whole life. If you have it/own it and are happy with an average of 3% return, more power to you. I'll keep paying a fraction of the premium and investing the difference, get an average of 12% return.