Whole life insurance... is it worth it?

You don't mention having dependents, so right off the bat, I would say that life insurance is not necessary at all. You only need life insurance if you have dependents. If you are married, you may want to consider it for your wife, but honestly, you probably don't need it.

If you do have dependents, term is the way to go. Yes, whole can force you into savings, but you pay comissions. Also, rate is not guaranteed.

Invest on your own. Begin with 401k, then IRA, then after tax strategies.

Dom

 

I would not advise a whole policy either. Even though you do not have dependents, I would still have enough insurance to cover your debts. However when or once you do lock into a term rate and open new polcies if you ever need to increase your total benefit amount, invest your other money wisely.

 

I wouldn't recomend it from what I know its a huge rip off and they win when you die.

Either you get the face amount while they keep the "Cash value" or vise versa.

My opinion go for a Term policy and with the same amount of money you would have spent on a whole life policy you can invest alittle money for the future while you get a boat load of coverage with a Term policy. I own a Term policy as well as a Roth IRA, great plan!. I also have a Life insurance license and have studied all kinds of life insurance, steer clear of Whole life!.

 

Get a term policy and invest the rest (if you get any insurance at all). There's a reason insurance agents love to sell whole life policies - HUGE commissions.

With no dependents, as long as you have enough assets to cover your burial, I wouldn't worry about insurance at all. Unless you want to give $ to nieces/nephews when you die.

 

I do not know your roommate, but he is very likely desperate to make a sale. That's it. Unfortunately, the first people new salesmen are instructed to prey upon are family and friends. If you want to help him, introduce him to some of your friends and relatives who really do need insurance. These would be people who have others who depend upon them for income. Those people include mothers, fathers, bosses and key employees who would really screw up their company if they died suddenly. There is a case to be made for buying insurance at a young age because it is cheaper and the money factor works in your favor, but only if you are positive that you will need life insurance later. Rarely does whole life pencil out for an individual buying for himself over term. The problem is that you don't need much if any now and how much will enough be later? A future employer will probably give you some life insurance and allow you to buy higher limits cheap without exams, etc. I'm sorry to say this, but the most likely reason your roommate is recommending whole life is because the premium and thus the commission is higher and he needs to turn in some numbers to his sales manager.

 

Whole life is a rip off.

 

no dependents now, so you don't care. by the time you're old, hopefully your big assets (house) if there's a family will be paid off. by term if kids show up. I recall seeing the math worked out for "Freedom 55", hmm, don't see those adds anymore. apparently it was closer to "Freedom 155"

Only valid reason I've seen for life insurance is to protect assets through bankruptcy, and to look after kids if the worst happens - but see a lawyer/accountant for particulars.

 

Benefits to whole life as an investment are simple. You can borrow against cash benefit tax free as a loan when you retire. If you go with a good company, last I checked = Northwestern and Mass Mutual as #1 and #1b, then return is fairly stable, but all value is based on their long term success at investing. It can be great or not, time will tell.

I have dependents, so it is a no brainer for me in addition to other investments. Further, I bought whole life for my kids, which is dirt cheap. I can give them the gift of premiums, and they will have a big asset to borrow against in the future if needed. Talk to an accountant/advisor, it can be a good addition. I would not use it as a the only means of investing.