Permanent life insurance (1 Viewer)

[someone]

I'm looking to purchase life insurance for my fiance and I. A financial advisor we just started working with tells me it's a no brainer to go with permanent life insurance vs term. From what I understand, it makes sense too, but seems too good to be true. Anybody have this or know about it? What are the drawbacks?

 

[jrdbrn]

If you have the money to put in for the rest of your life it makes sense. The only time it doesn't make sense is if for some reason you can't afford it some where down the road. You just paid all that money for nothing.

I did term. I think I got it for $4.55 a week for $250k. It's a 30 year term. It's a chance you take.

 

[UncleTrvlingJim]

What's your intention for getting insurance? You can get a much higher coverage for less monthly payment with term... so from a standpoint of protecting your family if you die, term is "better". Of course, if you don't die you never get any money.

However, as a savings plan, whole life insurance is terrible for a rate of return. You'd be better off, saving your money in a mutual fund.

I went the direction of getting term life insurance and saving money in a mutual fund.

 

[someone]

Well, initially my goal was to protect my family in case I die. But once I learned about permanent life insurance, I thought why not get some sort of return while at the same time protecting them. It seems to be like buying vs renting, no? But if it were that easy, why would anyone get term life insurance? I'm assuming premiums are a lot higher (I haven't gotten any numbers yet)?

 

[jrdbrn]

I think it was $25 a week for perm and $5 a week for term... for me at 29 years old.

 

[UncleTrvlingJim]

Well, initially my goal was to protect my family in case I die. But once I learned about permanent life insurance, I thought why not get some sort of return while at the same time protecting them. It seems to be like buying vs renting, no? But if it were that easy, why would anyone get term life insurance? I'm assuming premiums are a lot higher (I haven't gotten any numbers yet)?

The premiums are going to be a lot higher. Get your quotes, and then run some numbers on what your return would be like if you got term and invested the difference in premiums into a mutual fund.

 

[crosswatt]

i would think you'd get a better return on your dollar to buy a term policy and invest the difference in a higher yield financial vehicle. But that's just an opinion. Everyone's situation if different.

 

[Dre]

If you are very wealthy (maybe top 2-5% of America), it MIGHT make sense as an additional, conservative retirement investment vehicle for diversification. Otherwise, you probably have better places to spend your money. By the way, the commissions a financial advisor gets from selling a permanent policy are probably the highest commissions that advisor gets. So your advisor wins really big if you buy it.

Edit: and don't buy for her until you are married. And do you depend on her income or have kids? If no to both, you probably don't even need life insurance at all for her.

 

[someone]

i would think you'd get a better return on your dollar to buy a term policy and invest the difference in a higher yield financial vehicle. But that's just an opinion. Everyone's situation if different.

What kind of investments would you recommend? I've only recently finished school and started my career so I don't have a lot to invest yet, but hope to start investing soon.

If you are very wealthy (maybe top 2-5% of America), it MIGHT make sense as an additional, conservative retirement investment vehicle for diversification. Otherwise, you probably have better places to spend your money. By the way, the commissions a financial advisor gets from selling a permanent policy are probably the highest commissions that advisor gets. So your advisor wins really big if you buy it.

Edit: and don't buy for her until you are married. And do you depend on her income or have kids? If no to both, you probably don't even need life insurance at all for her.

Our incomes are about the same. We don't have kids. It sounds like term life insurance is the way to go for us, but I'm leaning towards waiting until we're married.

 

[goalierat]

There is also term insurance with return of premium. This was you can get more coverage for cheaper then at end of term you can get your paid premiums reimbursed in which at that time invest into a fixed annuity that return and you would have your permanent on place gaining interest. Thay is one of the products I offer.

 

[UncleTrvlingJim]

What kind of investments would you recommend? I've only recently finished school and started my career so I don't have a lot to invest yet, but hope to start investing soon.

S&P index fund. Look at Vanguard.

 

[Elija Nevett]

I have never understood life insurance. It is a bet you take on yourself dying. You loose either way.

 

[crosswatt]

What kind of investments would you recommend? I've only recently finished school and started my career so I don't have a lot to invest yet, but hope to start investing soon.



Our incomes are about the same. We don't have kids. It sounds like term life insurance is the way to go for us, but I'm leaning towards waiting until we're married.

My bank account would tell you not to listen to me.



Truth is that there are so many different variables that directly depending on your situation. You would need to sit down and ask these questions to yourself. Probably a few I'm leaving out here, but it's a start. How big of a increase in income are you looking at over the next five years? Ten years? Is your occupation recession proof, or do you have the chance of decreased income from time to time? How is the student loan situation? Debt situation? Amount of current capital you have on hand? Stuff like that.

Personally, I'd look into buying a duplex, and rent one side of it out, and live in the other. The tenet will help you pay the mortgage, and when you move out in a few years, you rent the other side. You now have an income generating property in your portfolio. From there, you can buy one or two more, or whatever level you feel comfortable with, and you have a great stream of mostly passive income that grows with inflation.

 

[crosswatt]

S&P index fund. Look at Vanguard.

Also what he said. Look at the factors I mentioned above, and choose the risk level in those index funds you feel comfortable with. Unmarried with no kids and a steady job, you can probably be very aggressive. Much more so than say I could.

 

[someone]

I'll look into the Vanguard S&P 500 Index Fund. Have you guys ever considered P2P lending websites such as Lending Club or Prosper?