LIFE INSURANCE

[neveryou]

I have not seen 35 year term from any of the major mutual insurers.

If buying Whole Life you would want to get it from a true mutual insurer (not one structured as a mutual holding company, which IMHO is the worst of all worlds when it comes to legal structure of life insurance companies).

Aig

[yos9694]

Slow down and ask the broker to clarify. FWIU you can’t ever “switch” to WL, rather you can buy up to WL. I haven’t seen an analysis on the numbers anywhere, but my guess is it’s something like paying the difference between term and WL premiums going back to when you bought the policy, basically cost prohibitive. Basically only worth it with a really adverse health rating, and even then a ton of money to come up with.

There are two types of conversions to WL, one is as you describe but quite uncommon in practice. More commonly switching to WL means you buy a new WL policy as of that day and pay the premiums for your current age but original health rating.

[Abey]

bashing dave ramsey, yet preaching his words in one sentence. HAHA

he says only term life ins. and invest the rest.

Im not familiar with all of Ramsey stuff this is just one instance and I referenced it, if you have an argument to present I’m ready to debate

[Abey]

Are you conflating saving and investing?

WL is mostly sold as a sort of investment LI combo (borrow against it , early payouts) I will be first to say that I am not familiar with all the intricate details but from what I’ve seen investing+term always wins, anyone that has a scenario in which WL is better please to elaborate

[yeshivabucher]

WL is mostly sold as a sort of investment LI combo (borrow against it , early payouts) I will be first to say that I am not familiar with all the intricate details but from what I’ve seen investing+term always wins, anyone that has a scenario in which WL is better please to elaborate

liquidity

[Kobe Bryant]

liquidity

please elaborate

[JACKBLUE]

liquidity

liquidity you have in the funds you invest as well....

[JACKBLUE]

anyone that has a scenario in which WL is better please to elaborate

Plenty of reasons
- Tax advantaged investment (solid alternative to the typical bond allocation)
- Legacy (gift after death)
- Living benefits like LTC insurance
- Estate tax planning: have cash on hand so that executor doesn't need to liquidate assets
- Business key man insurnace: similar concept, take out insurance on business partner so that on death the other partner can pay off heirs without selling the business

and many more


@Dan, have you ever read the piece by Richard Russell "Rich Man, Poor Man" which I've referenced on DDF numerous times?

If you read it and still ask the question as to why financially independent people want to have Whole Life, then there are other issues you might be unaware of, some of which were pointed out by @yos9694 above.

Also, as one lives and sees things, one realizes the power and value of having something stable and guaranteed as an anchor in one's financial life. There is value in having a death benefit (as in liquid cash, as opposed to an asset that needs to be liquidated) whenever one dies, regardless of age. Usually the wealthier the person, the greater the need for liquidity at that point (often in order to actually preserve the overall value of the other assets).

And while @yos9694 mentioned Estate TAX planning, I can easily show NON-TAX estate planning reasons that make people WANT to have a life insurance death benefit paid after 120.

[Abey]

Would I rather pay tax on 7% gains or no tax on 2% ? And I believe there are options with taxes maybe some CPA’s can chime in

[Mordyk]

Im not familiar with all of Ramsey stuff this is just one instance and I referenced it, if you have an argument to present I’m ready to debate

It's not an argument. Your statement regarding Dave Ramsey was straight up contrary to what he believes in.  Just Google it.  He believes term life is a must, and WL is a no no

[ExGingi]

Aig

AIG doesn't sell WL. It is probably convertible to UL. And not to any UL, but rather only to whatever UL the company makes available for that conversion. Not a great conversion option, but better than nothing for someone who is uninsurable and needs the insurance.

[gozalim]

It's probably not designed to replace the investment /value aspect of WL,   just a rider of sorts to a term policy to cover the danger of becoming uninsureable down the line.

With all the benefits of WL, the OP was discussing the poor avrechim etc that have NO long term plan, I doubt many of them can afford the premiums on WL (in the amounts they'll need)

And all the WL pitch about term being money in the garbage, is part of why people who need term don't buy

[ExGingi]

It's probably not designed to replace the investment /value aspect of WL,   just a rider of sorts to a term policy to cover the danger of becoming uninsureable down the line.

With all the benefits of WL, the OP was discussing the poor avrechim etc that have NO long term plan, I doubt many of them can afford the premiums on WL (in the amounts they'll need)

And all the WL pitch about term being money in the garbage, is part of why people who need term don't buy

Indeed. The AIG conversion just allows for those that have become uninsurable or very highly rated to have insurance beyond the term expiration. It's far from a bargain.

Anyone that has an affordability issue with WL shouldn't get it. But in most cases that I have seen people would benefit (and can afford) to have 10% to 25% of their needed coverage in WL, and the balance in term. Those that don't have an affordability issue would probably benefit most from as much WL as they can get.

You've never heard from me a pitch about term being money in the garbage.

[CountValentine]

It's not an argument. Your statement regarding Dave Ramsey was straight up contrary to what he believes in.  Just Google it.  He believes term life is a must, and WL is a no no

We have a thread for DR and probably best to leave it there.

[yos9694]

Anyone who says money in the garbage doesn't understand insurance.

Suppose you were given a choice- if it snows in June then you lose $1 million, or pay me $100 right now. Given the choice between a small certain loss and an unlikely loss but one which you could not pay off the logical decision is to choose the small loss. Even if June goes by without any snow it was the right choice because you avoided a risk that exceeded your tolerance level.

[CountValentine]

Anyone who says money in the garbage doesn't understand insurance.

Suppose you were given a choice- if it snows in June then you lose $1 million, or pay me $100 right now. Given the choice between a small certain loss and an unlikely loss but one which you could not pay off the logical decision is to choose the small loss. Even if June goes by without any snow it was the right choice because you avoided a risk that exceeded your tolerance level.

Do you sell insurance?

[gozalim]

Affordability is the crowd this thread is directed at. Garbage talk isn't from brokers, it's from the customers justifying the expense

[ExGingi]

Affordability is the crowd this thread is directed at. Garbage talk isn't from brokers, it's from the customers justifying the expense

Affordability in many, if not most or even all, cases is just a mindset and a matter of priorities.

If rent goes up, no one says I can't afford it and will become homeless. If the cost of transportation goes up people don't say I can't afford to get to work anymore because it costs me another $50 or $100 per month. Etc. It's all about awareness and getting priorities straight.

[CountValentine]

If rent goes up, no one says I can't afford it and will become homeless.

Actually they do or get evicted.
Since the chance of dying is very slim at a young age LI is low on the priority list.

[solls108]

Diversification.

+1


Also, you want to put a piece of your income into WL, not a large percentage where you would make a higher interest rate.

100% Diversification.

Investing 101