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Thread: Term life insurance

  1. #16
    Quote Originally Posted by Dan Friedrichs View Post
    ... the most information-dense and useful thing you'll ever read about life insurance. ...
    Quote Originally Posted by Jim Becker View Post
    ... a sound, but separate, investment plan ...
    Company stability and good service are also important.
    No pun intended, Dan's description is dead-on (...Well, maybe just a little pun.), the linked article is much more succinct than I ever thought about being. It makes a good point about company stability too - - buy smaller policies from multiple carriers.

  2. #17
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    The problem is many people don't have the determination to start and keep at the investment portion of the equation on their own.
    Lee Schierer
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  3. #18
    the younger you are, the cheaper it is. Everyone must make their own choice, but I can tell you that as I get older I always wish I purchased more of it , earlier.

    Where it gets complicated is if you want to have flexibility in the policy to draw down the balance of your immediate needs change, or to pass on to your heirs, or to get something that lasts indefinitely.

  4. #19
    "After 20 years, the policy's guaranteed cash value is $181,630, and you will have paid $187,400 in premiums. But after 20 years, if you had bought term for $480 a year and invested the $8,890 difference, you'd have $480,806 before taxes and inflation at an average annual return of 8%."

    - - This from a quick search (the rest is blocked, so can't give you the underlying assumptions), but you have to assume it compares equal payout death benefits. The guarantee seems to be that, assuming you don't die (we're talking investments here) the carrier will store your money for 20yrs, and only charge you $6000 for their trouble. You'd think that for a $300,000 difference in outcome we could all be determined, disciplined, and committed enough to write 2 monthly checks (1 to ourselves, 1 to insurance carrier), instead of 1 to the carrier.

    By the way, I'm not in the insurance biz, but I'll bet they 'invest the difference', and that means that $300,000 gain goes in their pocket. Maybe I should be in biz?
    Last edited by Malcolm McLeod; 02-22-2018 at 2:00 PM. Reason: typo

  5. #20
    It’s not quite right to dismiss whole life out of hand. As a diversification and inheritance strategy it can make sense. But that is not what he Op is asking.

    As a gross generalization, it is my personal belief that term is best bought first for pure safety reasons but whole life MAY be right as your wealth builds and you don’t have other ways to diversify investments properly.

    Sadly you won’t get the complete answer here on smc in a single thread. Like all investing, discipline is good, but inflexibility or unwillingness to adapt based on changing corcumstances is also ill advised.

  6. #21
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    There are a lot of people who believe insurance isn't a necessary evil. There are also those who believe that buying the cheapest is always the best answer.

    Research the subject for yourself, consult trusted, close friends for their opinion and then make the decision that is right for you.

    I'm sure a lot of people would think I'm over insured. Of course, I paid $8/month for over 24 years for 50% disability insurance. Do the math 96 dollars a year. For 24 years that comes to a total of $2304.

    Then into that 24th year I awoke deaf. Care to guess how long it took me to reclaim and then exceed that $2304 when I could no longer work in the field I had enjoyed for 34 years? It wasn't long.

    Most people who buy disability insurance don't get the opportunity to use it, thankfully!

    My siblings and I buried my Mom last month. Thankfully she had a very small insurance policy. Three of us split the remaining costs among us so we could equally share the burden.
    Ken

    So much to learn, so little time.....

  7. #22
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    Quote Originally Posted by Prashun Patel View Post
    It’s not quite right to dismiss whole life out of hand. As a diversification and inheritance strategy it can make sense. .
    I agree with this...there are a number of situations where these contracts are the right choice to meet certain particular goals, particularly when the insured is involved in a business and some other things.
    --

    The most expensive tool is the one you buy "cheaply" and often...

  8. #23
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    I still remember the day I brought my whole life policies to the Prudential office and told the manager I wanted to cancel them. He called me names I can't put in this post. One of the best financial decisions I ever made.

    I ended up buying three times as much term insurance for way less money and stuck the difference into the 401k that had justed started at work. And it's cost less in fees to get at least 6 times more cash value in 30 years.
    Confidence: The feeling you experience before you fully understand the situation

  9. #24
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    An 8% return is getting awful ambitious and is no way a guarantee....
    Andy Kertesz

    " Impaled on nails of ice, raked by emerald fire"...... King Crimson '71

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