Your opinions on life insurance

[floridafam]

We have a whole or universal life policy-whatever kind builds up cach value, etc.

We have a certain amount deducted from our checking account each month.

I've gotten to the point where I'm beginning to wonder if it's worth it.

DH has a good amount of life insurance through work and has work issued policies for me and our two children.

We took out the big policy through our insurer because two of my brother's died at a young age and I wanted for my DH or I to be comfortable if anything should happen to either one of us.

What are your experiences with this? How much is too much? Do you think we could invest the money elsewhere and get a better return?

Thanks in advance.

 

[ripleysmom]

My understanding (although I am not a Insurance Agent) is that the returns on Whole Life Policies are not very high.

 

[floridafam]

I think we are guaranteed a 7% return.

I really don't have much to compare it to. My husband's 401k sure hasn't faired very well the last few years. It's just starting to grow like it should.

I feel that we had a unique situation with some young deaths in my family.

 

[janette]

Something to consider before you cancel is that you might have to qualify again to get another policy. My DH has some health concerns and life insurance is not affordable for him, we have what we can from work that is non-qualify. If you cancel and decide you want another policy later you'll have to requalify and things can change that would make that option not available later. It all depends on the premiums you're paying but I don't like being dependent on our jobs for life insurance coverage.

 

[Toby'sFriend]

That can be a very volitile subject with Insurance Agents.

IMHO - most Whole Life/Universal Life Insurance policies are horrible. The "insurance" portion of them are very expensive and the returns on the other part are very low.

DH and I both have 20year guaranteed Term Life policies. These are also automatically deducted from our checking account.

After 20 years, our kids will be grown, the house paid off, and our 401k's and other retirement savings will be highly funded. The need for replacement life insurance (should we be unable to get it), won't be nearly as high.

 

[floridafam]

Yes, we would have to qualify again if we get rid of the policy.

DH has the maximum at work that you can get without qualifying.

This policy is for almost the same payout amount as the one at work.

I've just been reviewing our finances and started thinking about this issue. I know term life insurance would be much cheaper.

 

[Lisa L from MI]

I have been pondering this lately with DH's policy of whole life he has had for some time. It is only for 25k.....and we make monthly payments. The dividend etc have added up to something that could really help us out this time of year with DD's communion and bills etc......He has quite a bit through work and I was thinking just to cash this one out and start a "term" one.......no health issues "yet"......and we are both 38........everyone I told about my whole with him said I was nuts for keeping it.......????

 

[floridafam]

Lisa L from MI,

I don't hear a lot of good things about whole policies, either.

We bought shortly after my last brother's death. I hated thinking about DH having to go back to work if something happened to me. I wanted him to be comfortable enough to take the time he and the kids would need.

We had to get the blood work, physicals, etc. to get this policy and it was a big hassle. I know he would not want to do it again.

I'm just debating if we should get a term policy and invest what we pay on this policy somewhere else.

It costs us about $114.60 per month for a $125,000 policy.

Keep the info coming.

 

[Lisa L from MI]

floridafam.....it is just about the same price we are paying for the 25k on DH for whole through statefarm.....I mean figuring per month charge....(we pay about 23/month). Right now we really could use the money we could get out of it if we close it. I know we should "invest" the money in another policy....but as I said, the money would come in soooo handy right now....

 

[Toby'sFriend]

It costs us about $114.60 per month for a $125,000 policy.

That's what I mean.

My DH has a $750k policy that costs us about $47 a month.

I just don't see the benefit of whole life. But I would definately get the replacement policy into place before cancelling the first one.

 

[Lisa F]

DH has had a whole life policy for the last 5 years or so. I can't even remember the details on it anymore but I do remember it seeming like a good thing at the time (had to do mainly with sheltering money from taxes, you can borrow against the equity in the policy and since it is a "loan" you don't have to pay taxes on it, something like that). Our payments on it are about the same as yours, only the coverage is 4x that amount and in the time that we've had it we've also accrued a nice chunk of equity (honestly I haven't looked at the paperwork in some time though). I wonder if the difference in price comes from the fact that DH started it when he was in his 20's?

 

[floridafam]

I'm sure we are paying more than average due to two sibling deaths in the family. I had to disclose this info when we purchased.

We purchased the policy when I was 29.

 

[Jenn Lynn]

We have term life insurance. DH does not get any benefits through his employer so we pay out of pocket. I discussed it with my Dad and he thought (and we agreed) that the return was not worth it for the whole life policy.

 

[Lisa L from MI]

floridafam.......like I said, we are paying the same premium as you.....we took it out maybe 10 years ago or so...

 

[CarolynFH]

If you do cancel your cash value policy, be sure to get the new policy in force before hand.

The net cash out of your pocket may not be as big as you think. You need to see what your cash values grows each year and then compare that to the premiums you paid in a year. Also the bulk of the fees have already been paid (commissions).

The cash value will be the guarenteed CV increase plus any dividends. If it is a universal policy, its the CV increase from the investments.

Most people never do invest the difference in the premiums. If you look at the difference in premiums, its not that big to invest each month.

If you trust your agent, I would have another visit with him or her. If not, I 'd contact one of the major life carriers and visit with someone who is a certified life underwriter or a chartered financial conultant.

This is TexasAggie,
I had trouble logging DW out

 

[Christine]

Both DH and I took out life insurance last year when he lost his Serviceman's Group Life Insurance (retired Air National Guard). We went through USAA and got Term Life Insurance. I believe each policy is for $250,000 and is for 25 years. DH's policy is $25 per month, mine is $32.00 per month (I have a "risk rider" because I am a thyroid cancer survivor). I have heard that "whole" is not worth it but don't know much about it.

 

[floridafam]

Interesting thoughts and comments.

We do know our agent. He has known my family for about 40 years.

I contacted him to buy the policy. I was scared and nervous after my brother died.

If nothing else, it forces us to put the money away each month, it will provide for us should we need it and it does have cash value that we could use if we ever were in a pinch.