Whole Life Insurance

[Princess Disney Mom]

Does anyone know if this is a good idea? I have term life already. My financial planner is also suggesting to add Whole Life. It is very expensive.

 

[ilovemk76]

Does anyone know if this is a good idea? I have term life already. My financial planner is also suggesting to add Whole Life. It is very expensive.

Whole life insurance is a bad investment vehicle. I would consider getting a new finacial planner as this one seems to be out to just sell you stuff that lines his/her pockets.

My financial planner has never told us to get whole life insurance. All he has done is run the numbers to see if we have enough term insurance.

 

[JaymeC]

I agree. I would highly consider finding a new financial planner, this one does not have your best interests at heart. Whole life insurance is almost always a bad idea.

 

[kacaju]

Don't do it. We have it because we didn't know any better 20 years ago. I can't dump it now because dh has had some major health issues.

 

[mhsjax]

All I know is that anyone that I have ever talked to, that is in the biz of either life insurance or financial planning says stay away from this stuff. Bad idea.

 

[Swimalie]

Whole life insurance is a bad investment vehicle. I would consider getting a new finacial planner as this one seems to be out to just sell you stuff that lines his/her pockets.

My financial planner has never told us to get whole life insurance. All he has done is run the numbers to see if we have enough term insurance.

Agree.

 

[disneysherrym]

Basically it boils down to what you want your insurance to do for you. Term and whole life are easily compared to renting versus buying a home. Term insurance is temporary coverage where whole life is permanent insurance. If you only need insurance to cover you for a certain time frame and are not looking for any cash value then term in the way to go. (mortgage and debt coverage, coverage incase of death while you have children at home and need to worry about education costs etc.). You also get no return on your money with term, but again this coverage is more affordable for the short term.

Whole life insurance will provide permanent protection that will also gain a cash value. If for some reason down the road you may decided that you need that money you have the option of cashing in the policy for the cash value or can use that amount a buy a paid up policy that would buy a lower amount of coverage, but with no more payments.

It really depends on you financial situation. I hope this gives you a little insight on the two. If you are only worried about current needs then term is the best thing for you to purchase.

Did your financial advisor do any type of financial needs anaylsis with you. If you have enough coverage now there is no need to buy more. As state above they are just trying to sell you something else if the need is not there. In order to determine your needs they should be able to back it up on paper with informatin that you provided them during the financial needs anaylsis not just on their recommendation without getting any info and input from you.

 

[hsmamato2]

I know Dave Ramsey is seriously against Whole Life,b/c he says you pay WAY more into the policy over your life than you will get...in the end. It makes more $$$ sense to buy term,and invest an equal amount you would have spent on the whole somewhere where you have a better rate of return on your money.

 

[bettymae1121]

Every single financial advisor I've ever listened to says Whole (also Universal) insurance policies are a bad, bad idea.

 

[branv]

Is this an Ameriprise or Primerica "financial advisor"? This sounds exactly like the kind of investment advice these people give, as they often have ulterior motives for recommending this that is far more for their own benefit than their clients. Be aware that financial advisors at places like this are often just some person who has no previous experience in finance or investing, let alone a formal education in areas like economics, finance or business. The few people I know that became so called advisors for these places were job-hoppers with less than stellar backgrounds, with NO finance background, talked into a job someone convinced them they could make tons of money doing. Basically it's not finance, but high pressure sales, which is why they usually hit up their friends and family (and then those people's friends and family) to get clients.

In short, if your advisor is telling you life insurance is a great investment vehicle, run, don't walk, to a real financial advisor.

 

[mjkacmom]

I'd find a new financial planner - I assume he's getting commission on that sale. It's rarely a good investment. DH has been a CFP for 20 years (and teaches a college class each semester), and we don't have any whole life.

 

[Jeff_G]

Run away run away! Bad bad bad!

Whole life is insurance with an investment component wrapped inside. They are commission and fee heavy especially in the beginning, to get your “investment” out you “barrow” money against the policy which if you don’t pay pack you then owe taxes on it. When you die the insurance company pockets the investment and pays out only the face value of the policy!

Keep your whole life and invest what you can in a real investment, if you have someone depending on you for income you should have 10 times that number in term insurance, otherwise a funeral can be as little as a few thousand dollars.

And I agree it’s time to look for a new financial planner, this one has called everything they are doing for you into question with this suggestion.

Be blunt ask him what he is making on commission from the whole life, ask him to show that to you in writing. An honest person should have no problem telling and showing you exactly what they make off of you in commission.

 

[Princess Disney Mom]

Thank you to everyone that responded. This is what I thought but I feel better that everyone else confirms not to get it. Thanks so much.

 

[PatsMom]

What type of life insurance is appropriate is different for everyone. Depending on the OP's situation, a whole life policy might be appropriate. In our financial planning practice, we rarely recommend them outside of estate planning purposes but if someone has a legitimate need for permanent insurance for a purpose such as pension replacement, it might be an alternative to investigate. As might a universal life policy.

Term is generally very cheap and the best choice for most young people - they need coverage and a lot of it to replace salary if they die.

I would check into the financial planner's qualifications and background. Also the method of compensation. If the planner is a registered investment adviser, he or she has a fiduciary obligation to recommend what is in the best interest of the client. If the planner is really a broker/insurance agent in disguise (such as Primerica reps often are) then the fiduciary standard does not apply. Most reputable planners I know will gladly explain exactly what the commission they receive is and how they are otherwise compensated.

This is not intended to be financial advice.

 

[okie from muskogee]

Bad idea, you are smart to ask first. I would get a new financial planner. Insurance is not an investment. Term is the way to go.

 

[TheRustyScupper]

Whole life insurance is a bad investment vehicle. I would consider getting a new finacial planner

Absolutely correct - on both statements !

 

[a1tinkfans]

Does anyone know if this is a good idea? I have term life already. My financial planner is also suggesting to add Whole Life. It is very expensive.

2 words
RIP OFF!
anyone that tries to sell this to you is looking for their BIG commission...they get a HUGE portion....
Term is always the better "investment" per se.

Get the LONGEST term policy you can afford, at the YOUNGEST age to get the BEST value!

again, NO WHOLE...term is the way to go................

 

[a1tinkfans]

Absolutely correct - on both statements !

a thousand times!

 

[clh2]

Our financial planner - who we pay on an hourly basis (i.e. doesn't make 1 single penny on any of our investments) also doesn't recommend whole life.

We did a whole big analysis about 10 years ago on life insurance. The analysis included - getting past when our DD was in college, considered wedding expenses for her too. It also considered when we were going to retire, along with several other factors. Another main goal was to replace the other spouses income.

As you build your reitrement protfolios - your need for life insurance decreases. We took this into account too.