6 Responses

1. Doing the Right Thing

   February 9th, 2010 at 4:27 am

   1

   The problem with life insurance is that people don’t fully understand it, so they believe everything the life insurance agent says.
   Life insurance is suppose to be use as a protection of income, not as a tool to use for future goals. Reason why many life insurance companies sell cash value products is because they are more profitable than to selling term.
   The problem with cash value is that when you die, your beneficiary will get the death benefit, but not the cash value. If you live to age 98, you are no longer covered, but you get the cash value. How many people do you know that actually live to age 98? Of those people at age 98 or above, how many are actually sane enough to know they even had life insurance in the first place?
   You are correct that investments should be kept separate from life insurance, but the insurance agent is not going to show the client why it should be kept separate. Buying term and investing the difference is the most cost effective thing a person can do. Check out this blog about the cost between term and whole life: http://obe231.blogspot.com
   When people read that blog, buying term and investing the difference would make more sense.

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   February 9th, 2010 at 9:03 am

   2

   You can’t borrow from a 529 or and IRA without heavy penalties. Money markets don’t stay up with inflation.
   Cash value life insurance is a type of insurance where the premiums charged are higher at the beginning than they would be for the same amount of term insurance.
   The part of the premium that is not used for the cost of insurance is invested by the company and builds up a cash value that may be used in a variety of ways. You may borrow against a policy’s cash value by taking a policy loan. If you don’t pay back the loan and the interest on it, the amount you owe will be subtracted from the benefits when you die, or from the cash value if you stop paying premiums and take out the remaining cash value.
   You can also use your cash value to keep insurance protection for a limited time or to buy a reduced amount without having to pay more premiums. You can also use the cash value to increase your income in retirement or to help pay for needs such as a child’s tuition without canceling the policy. However, to build up this cash value, you must pay higher premiums in the earlier years of the policy.
   Ron @ InsureMe http://www.insureme.com/landing.aspx?Ref…

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   February 9th, 2010 at 11:47 am

   3

   Life Insurance Policy – What Is The Difference Between Term And Whole Life Insurance?
   Even though there are many different forms of life insurance policies, essentially all life insurance policies are either term insurance or whole life insurance, or a combination of the two.
   There is also universal life insurance that you can adjust the premium and the policy to the amount you think you need.
   Variable life insurance is an option for someone who wants to have control of the financial and investing aspect of their insurance policy.
   What Is A Term Life Insurance Policy?
   A term life insurance policy provides pure insurance protection for a specific period of time, such as five years, ten, or 20 years. At the end of the term period, the policy expires with no accumulated cash value, and no benefits are payable. The death benefit is only paid if you die during the term period. Some define a term insurance policy as “insurance that is actuarially designed to expire before you do.”
   The premiums on term insurance are generally low, but increase substantially as your age increases. For this reason , a term life insurance policy is the most economical when purchased at a younger age and when the term is longer. Short term renewable policies would initially be less expensive, but after middle age the renewal premiums begin to jump dramatically.
   For example, in an annual renewable term insurance policy with a $100,000 death benefit, the annual premiums might look something like this. Remember these are just examples to show the difference of cost with age.
   $150 / year age 35
   $450 / year age 50
   $1,800 / year age 65
   What Is A Whole Life Insurance Policy?
   Whole life insurance is the most common form of life insurance sold. These type of policies remain in force until you either die or reach age 100, as long as you pay the premium as scheduled. Also known as ordinary life, or permanent insurance, a whole life insurance policy is characterized by level premiums, level face amounts, guaranteed values, and a relatively high degree of safety.
   Whole life insurance builds a living benefit through its guaranteed cash value, enabling the policy owner to access this cash for emergencies, as a supplemental source of retirement income and for other needs.
   A whole life insurance policy will include both insurance and a savings aspect. They are often used for long term financial planning. Many people like the level premiums associated with whole life insurance, since you always know what the cost of insurance will be and never need to be concerned about your monthly premiums going up.
   The risk factor of a whole life insurance policy and company is much different than it is for something like an auto policy. When an insurance company issues an auto policy, it hopes that the policy holder will be a safe driver and will never be in an accident. When an insurance company issues a whole life insurance policy, it knows it will someday be called upon to pay the claim.
   With online Internet access you can easily shop around and compare the many different companies and policies. Take time to get several life insurance quotes and check to see how they are rated with the BBB. It’s important to look into the financial standings of the insurance companies you are considering before you sign up for any type of life insurance policy.

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   February 9th, 2010 at 2:47 pm

   4

   Life insurance is going to help you in your life so you can live your life freely its help you in you bad time, may be it don’t come but evil never tell you before coming

5. rajy0007

   February 9th, 2010 at 3:56 pm

   5

   Sure, any of those examples would be other uses for saving money. Individuals have to look at their specific needs. Term insurance is very popular because it is the least expensive. However, if you do not collect the proceeds at the end of the term (in other words, die), you have essentially wasted those premium dollars. Insurance is just protection against the unknown.
   If however, you have the funds to buy a whole life policy, it has other uses such as taking a loan against the cash value and the interest rate is never going to be above 8%. Where do the interest payments go? Into YOUR cash value. Yes, if you die while paying back the loan, your death benefit is decreased by the loan amount. However, the death benefit is, especially in the early stages of premium payments, much higher than the cash value so you still get a considerable amount of proceeds.
   People say buy term and invest the difference. If you are disciplined enough to invest the difference, go for it. Let’s say that you buy a whole life policy and find you are not able to afford it after a while. You can convert it into a paid up term policy and never pay premiums again. You can also convert it into an annuity and receive a fixed payment each month for life or longer.
   As you see, whole life can be used for many things but if you buy term and don’t use it, what was it good for?
   Ron Rock, ChFC

6. Ron

   February 9th, 2010 at 10:00 pm

   6

   Life insurance is a straight bet with the insurance company, about whether or not you are going to die within a certain period.
   Life insurance is NOT a good savings or investment vehicle, as you point out. Agents that sell it that way, do so because they MAKE A LOT OF MONEY off those products, they are NOT in the consumer’s best interest. People that buy these types almost NEVER collect, because after a few years of paying exhorbitant prices, they realize they could have done better buying a CD at the bank. Then they let the policies lapse. The only one who makes out is the agent; first year commissions are usually 90%, and with bonuses can be 110%.
   Life insurance DOES serve a purpose – straight term coverage, especially for families with small children.