Life Insurance

[Slava]

Originally Posted by Cflames_12.5

From what I understood when I last met with my investor was at a certain time the premiums would be covered with the compounded interest. For me I am not a financial expert so this seemed like a logical path to take. A two for one deal. Get a nice chunk of money for my retirement and also have a life insurance at the same time. But I could have misunderstood too I usually leave these things up to the wife. Me and money we have too much fun.

I'm not trying to say it won't work or was a bad decision or anything, but something just doesn't sound quite right. Maybe what you mean is that you could take out the money you had contributed but leave the growth in there? Theoretically that might work, it depends on the underlying return, and how much you put in I guess.

[Cflames_12.5]

Originally Posted by Slava

I'm not trying to say it won't work or was a bad decision or anything, but something just doesn't sound quite right. Maybe what you mean is that you could take out the money you had contributed but leave the growth in there? Theoretically that might work, it depends on the underlying return, and how much you put in I guess.

True, Thanks for making me worry that I have funded some insurance sales guy's coke habit. I'm kidding. What I know it's called a universal life insurance policy. It's with WFG. And according to my statements it's doing pretty good. Thanks for the post back I appreciate it.

[squiggs96]

Originally Posted by bizaro86

The cost of coverages increases when you're more likely to die, not when you're more likely to need it. I'm just about to turn 30, have a mortgage, a baby, and a wife staying home with the baby. If I die today, they will need a material amount of money to replace my income. If I die in 25 years from now, the kid will be done school and out of the house, the house will be paid off, and my investments will be sufficient to pay for full retirement for me and my wife. At that point I won't NEED any life insurance at all, even though it's more likely that I'll actually die, which makes the coverage more expensive.

(It's probably worth adding here that the term I have I bought through Slava, and it was a great experience, so no offense is intended to him)

This is the same rationale (except I'm without children!) I used to purchase term life insurance. If either of us die there is enough money left to pay off the house and enough left over to purchase some credits at an online dating site. We'll likely each carry it for 10 years or so and then stop the subscription. It's hopefully something I won't ever need, but it's not that expensive. I think we pay about $500 per year total for $1M each of term life, and both of us in our mid thirties.

[bizaro86]

Originally Posted by squiggs96

I think we pay about $500 per year total for $1M each of term life, and both of us in our mid thirties.

That's a great deal.

[DoubleF]

Originally Posted by MoneyGuy

I sell insurance and make a lot more money if I sell whole-life or UL, but I've never sold a WL policy and have only ever sold one UL policy (the client insisted). I've had this argument with commission-hungry colleagues. Buy term and invest the difference is almost always the best strategy. There are exceptions, as there are to every rule, of course.

What is the point of WL or UL? I have a Performax Gold (something) through Manulife that I've been funding since about 2010 or 2011 for a "guaranteed max of 15 years" to have life insurance for the rest of my life. Am I just throwing money away to the company for convenience sake then? The borrowing against and cash balance crap is all just slick packaging or something? Blah blah something cash balance, coverage grows starting from the 15 years exponentially after funding completes etc.

I'm not challenging you or angry, I'm just curious why you rarely sell it. I started funding this thing straight out of school (parents insisted) and had no idea what I was getting to (well... I still probably don't).

Is there some specific pro to it vs the super obvious con (pun not intended) of the higher costs that I'm not catching in my read through the responses in this thread?

[squiggs96]

Originally Posted by bizaro86

That's a great deal.

Agreed. We are both CAs, so we get a deal through a specific company. I'm not sure how this will affect us now that the three designations are merging.

When we had less assets we had lower coverage. I think the first year we paid about $300 and because they didn't have many claims they refunded us $80 at the end of the year. At that time one of the companies we (my employer, not me personally) owned was an insurance company. They quoted us $300 as the monthly premium. $300 for the whole year seemed much better.

[Phanuthier]

Originally Posted by DoubleF

What is the point of WL or UL? I have a Performax Gold (something) through Manulife that I've been funding since about 2010 or 2011 for a "guaranteed max of 15 years" to have life insurance for the rest of my life. Am I just throwing money away to the company for convenience sake then? The borrowing against and cash balance crap is all just slick packaging or something? Blah blah something cash balance, coverage grows starting from the 15 years exponentially after funding completes etc.

I'm not challenging you or angry, I'm just curious why you rarely sell it. I started funding this thing straight out of school (parents insisted) and had no idea what I was getting to (well... I still probably don't).

Is there some specific pro to it vs the super obvious con (pun not intended) of the higher costs that I'm not catching in my read through the responses in this thread?

I am in a similar position (I think I got the perfect responses here), I couldn't pinpoint what it was when I first started talking to the Metlife agent, but after some digging, I was feeling and more uneasy about this.

Here is some other references for you to make (change?) your position.


Here is the difference in plans (Term vs Permanent) : https://www.northwesternmutual.com/l...e-while-living

Living Benefits Add Value to Permanent Life Insurance

There are two types of life insurance, term and permanent, which are best known for their primary function of providing a death benefit. But if you look beyond the death benefit and understand the various options life insurance offers, you can find even more ways to strengthen your financial position.

Term life insurance provides financial protection for a specific period of time (e.g., 10, 20, or 30 years) and pays a benefit only if you die during the term. If you outlive your policy, it will expire, and your coverage will end.

Permanent life insurance, on the other hand, provides protection throughout your lifetime, as long as premiums are paid, and offers numerous additional financial benefits. Permanent life insurance policies build equity called “cash value” that accumulates over time. This accumulation of cash value, along with tax advantages available with a permanent life insurance policy, allows you to enjoy “living benefits,” including:

Some more info on permanent life insurance : http://www.newyorklife.com/learn-and...nsurance-at-23



Why not to buy permanent life insurance : http://www.foxbusiness.com/personal-...ife-insurance/

You seek only a death benefit. When the insured dies, the policy pays the face amount to a beneficiary, says Philip Cioppa, managing principal and chief investment officer of Arbol
Financial Strategies. You can buy term life insurance for periods of one to 30 years, and the sum is guaranteed.

On the other hand, the cash value in a whole life policy builds up slowly and might not yield a reasonable return unless it is held for a period of time. “It's better to have adequate coverage through a term policy than not enough coverage in a whole life policy,” adds John Thornton, executive vice president of Amalgamated Life.

You are younger than 50. Term policies are almost impossible to get after 65, says Thornton, and are pretty cheap before age 50.

You have made better, cheaper retirement investments. Whole life insurance policies build cash value you can borrow against, but can come with high fees and costs.

Term life insurance policies tend to be more affordable, says Chris Hogan, lead financial counselor of The Lampo Group. “You could put that money into a growth stock mutual fund and receive a better return for your money.”

Your health situation could change. With most term agreements, you can upgrade or change to a new policy without a medical exam, says Thornton. Individuals older than 50 and still working could opt for a term policy with a critical illness protection component, which offers lump sum payment upon the diagnosis of a critical illness as well as for organ transplants where 30 consecutive days of hospitalization are involved, he adds. The life benefit is restored two years after the individual returns to full-time employment for double protection.

Some costs of term life insurance : https://www.jrcinsurancegroup.com/be...ance-for-male/

[Slava]

Originally Posted by DoubleF

What is the point of WL or UL? I have a Performax Gold (something) through Manulife that I've been funding since about 2010 or 2011 for a "guaranteed max of 15 years" to have life insurance for the rest of my life. Am I just throwing money away to the company for convenience sake then? The borrowing against and cash balance crap is all just slick packaging or something? Blah blah something cash balance, coverage grows starting from the 15 years exponentially after funding completes etc.

I'm not challenging you or angry, I'm just curious why you rarely sell it. I started funding this thing straight out of school (parents insisted) and had no idea what I was getting to (well... I still probably don't).

Is there some specific pro to it vs the super obvious con (pun not intended) of the higher costs that I'm not catching in my read through the responses in this thread?

There are a couple of things with Performax Gold. The policy has a rate that they credit the policy which is sort of like a dividend, but not exactly. This rate has historically been about 6.7% per year IIRC (don't quote me on that, its purely by memory!). Because you get that rate, which can and does fluctuate, and a guaranteed 15 pay on that platform you are paying for the 15 years and the policy will pay the cash value plus the face amount to your beneficiary one day. You wouldn't cancel that policy after 15 years because its paid up, growing and just there for your eventual death. That part is pretty awesome IMO, because you have a growing policy and no more premiums out of your pocket.

Sounds like you bought this out of school and were fairly young at the time. That's good because this policy is a permanent policy, and will be based on a much cheaper rate than if you waited until you were say 40 years old to do that.

There are many, many ways to use these policies. Some people get sold on the idea that you will fund this thing to the max, or a lot, and then borrow the money out for retirement or part of retirement. Because its borrowed money, there's no tax. When you die the loan is paid off with the proceeds of the policy and there is money left over. This sounds like its basically how this was presented to you?

Like I say, there are dozens of ways these policies can be used and positioned. I don't sell a lot of these because to me they're quite specialized and are extremely useful in certain situations, but aren't a one-size fits all kind of solution. In the right plan, for the right person and purpose they're great, but for other people its just money tied up in something they don't really understand. That's purely my opinion, but its not just made up...I've seen it first hand!

[macker]

If you are looking for single life quotes : www.winquote.net

For Joint quotes : www.kanetix.ca

Although I have a UL policy myself I am not a big fan of UL. It is kinda like a bath tub with the drain left out and you need to have the water on full blast to try to keep some water in the tub. If you aren't maximizing your RRSPs a UL policy typically isn't the answer. I think the value proposition of UL and Whole Life policies has gotten much worse in recent years. There are some great UL and Whole Life policies around though that were taken out years ago that sure look good now!

[DoubleF]

Thanks Phanuthier. I've read many of these articles already though and I still have not quite the right idea in my head (yet) that seems to answer the question of what is what.

I've read the "benefits" of PLI (WL/UL) vs TI stuff before, but some others I have chatted to have said it's a lot of sham as the ability to use some of the PLI (WL/UL) is highly restricted (not sure if true). I did catch the "change in health situation" part which I guess sorta is great for me? I had amazing health when I first applied for insurance, but I do know that I am probably at risk of a plethora of complete random issues once 50 rolls over (none of my relatives or grandparents seem to be consistent something... except maybe high risk breast cancer? but I don't have breasts). Death via diabetes, heart disease and cancers still have a reasonable dice roll.

I'll be receiving TI for free when I get married in a few months (SO's benefits package), not that it would change my decision with what I have now.


In a nutshell, I can't really figure a clear line between the two at this point. It always feels like a rent vs buy home debate and a reasonable rule of thumb is that short term rent, long term buy. I wonder if this is the case too, or if it's overwhelming TI all the way sort of sentiment because it's just ridiculously marked up due to labeling or something.

@Slava: Yeah, that's pretty much how it was presented to me. I think I remember it being sold to me in a similar way but also because I was young and very healthy. (Dunno, it was years ago, memory already sucks. ha ha)

[cracher]

This thread makes me want to puke at the whole life premiums I've been paying. I can easily lease 2 camrys (bold X 2!!) with my monthly. Sorry to threadjack, but since so many insurance people are looking in... Can one convert a whole life to a term and get some of that cash back? 9.5 years of those stank payments... If I could sink that all into O&G stock today, I can promise that I can afford my own funeral.

[Slava]

Originally Posted by cracher

This thread makes me want to puke at the whole life premiums I've been paying. I can easily lease 2 camrys (bold X 2!!) with my monthly. Sorry to threadjack, but since so many insurance people are looking in... Can one convert a whole life to a term and get some of that cash back? 9.5 years of those stank payments... If I could sink that all into O&G stock today, I can promise that I can afford my own funeral.

If you want to PM me I could take a look at what you have and try to give you some advice? It kind of depends what you have and where it is so giving this advice in a thread like this is kind of hard (otherwise I would, not trying to be secretive about it or anything).

[FurnaceFace]

I was in the industry last century. My view is there is a place for both, and I think Slava articulated this in one of the posts above.

I bought a permanent policy where I payed the fees for 20 years and then they stopped. The policy has grown over this time, accumulating cash value I can borrow on if ever required, and overall value which can be used as a retirement vehicle. Perhaps I drank the koolaid but the idea of a liquid savings component and retirement option appealed to me. Had my personal situation warranted it, I'd have supplemented with term however the perm policy coupled with group policy insurance covered any debt (mortgage) requirements I had.

Buy term and invest the difference is a viable option assuming you follow through. I often saw people buy term and spend the difference which didn't help them. I look back on it now and wonder about some of the people who cashed in their policies would do it again. I think of one guy I knew from university who cashed in his policy his parents bought when he was a baby. The policy gave him basic coverage, cost nearly nothing, and I think would have been a useful financial tool for him now.

The only real advice I'd give is to gather information like you're doing, evaluate it and make the decision with the full picture in mind. Everyone's scenarios are different. If you can find someone in the industry who can help you learn about all the options and build a plan for you then you're further ahead than a lot of people.

I'd also say whatever you do, do something, have a plan. I will never forget the one account I serviced. Single guy, somewhere in his 40s, lived in an older war time house in the somewhat sketchy part of Regina. He perhaps had $40k in net worth and said he wasn't interested in saving anything or looking at retirement options because "the government will take care of me." I'm guessing this guy is retired or nearly retired now and I wonder if his opinion has changed. As someone in my early 20s at the time I left his house saying "that will not be me" and now that I'm about his age I'm happy to say I'm nowhere close.

[Slava]

Originally Posted by FurnaceFace

I was in the industry last century. My view is there is a place for both, and I think Slava articulated this in one of the posts above.

I bought a permanent policy where I payed the fees for 20 years and then they stopped. The policy has grown over this time, accumulating cash value I can borrow on if ever required, and overall value which can be used as a retirement vehicle. Perhaps I drank the koolaid but the idea of a liquid savings component and retirement option appealed to me. Had my personal situation warranted it, I'd have supplemented with term however the perm policy coupled with group policy insurance covered any debt (mortgage) requirements I had.

Buy term and invest the difference is a viable option assuming you follow through. I often saw people buy term and spend the difference which didn't help them. I look back on it now and wonder about some of the people who cashed in their policies would do it again. I think of one guy I knew from university who cashed in his policy his parents bought when he was a baby. The policy gave him basic coverage, cost nearly nothing, and I think would have been a useful financial tool for him now.

The only real advice I'd give is to gather information like you're doing, evaluate it and make the decision with the full picture in mind. Everyone's scenarios are different. If you can find someone in the industry who can help you learn about all the options and build a plan for you then you're further ahead than a lot of people.

I'd also say whatever you do, do something, have a plan. I will never forget the one account I serviced. Single guy, somewhere in his 40s, lived in an older war time house in the somewhat sketchy part of Regina. He perhaps had $40k in net worth and said he wasn't interested in saving anything or looking at retirement options because "the government will take care of me." I'm guessing this guy is retired or nearly retired now and I wonder if his opinion has changed. As someone in my early 20s at the time I left his house saying "that will not be me" and now that I'm about his age I'm happy to say I'm nowhere close.

I'm obviously biased here, but I do think that is a significant point. The fact is that you're going to pay the same amount for a policy whether you talk to an independent advisor about it or not (do yourself a favor and talk to someone who has access to a variety of options for you and not just one company's proprietary stuff). Even if you have done the research online or wherever, why not sit down with someone who knows the area and at least make sure that what you're planning and think is right is backed up by someone with that knowledge?

[FurnaceFace]

Slava has good info. Talk to the independents or talk to a few company guys and the good ones will bubble up. The more successful guys are less worried about making an immediate sale and more about lasting relationships.

[calgarygeologist]

Today my mom, 56, mentioned that she was considering getting some sort of life insurance and asked for my opinion. I know very little about insurance so I'm hoping to get some useful information here. She basically said that her thinking was that a smaller life insurance policy, about $150000, would be a nice addition to her assets and that she would put the insurance beneficiaries as my kids and they can use the money for school or whatever.

She previously had some term insurance when she was younger and was raising kids and pay off debt but she dumped the policy 10 years ago or so. Getting into a new policy at 56 doesn't seem like the best idea. Can anyone provide comments and opinions on this? If she does go ahead and get a policy what would be the best option for someone her age?

[DownhillGoat]

Originally Posted by calgarygeologist

She basically said that her thinking was that a smaller life insurance policy, about $150000, would be a nice addition to her assets and that she would put the insurance beneficiaries as my kids and they can use the money for school or whatever.

Personally I don't see the point. The whole idea of life insurance is to make sure your dependents are taken care of in the event of death, cover funeral costs, cover debts (ie mortgage), not as an inheritance for grand children. If she wants to help out with school or whatever why not just set up a fund instead of paying insurance premiums?

[Phanuthier]

Originally Posted by calgarygeologist

Today my mom, 56, mentioned that she was considering getting some sort of life insurance and asked for my opinion. I know very little about insurance so I'm hoping to get some useful information here. She basically said that her thinking was that a smaller life insurance policy, about $150000, would be a nice addition to her assets and that she would put the insurance beneficiaries as my kids and they can use the money for school or whatever.

She previously had some term insurance when she was younger and was raising kids and pay off debt but she dumped the policy 10 years ago or so. Getting into a new policy at 56 doesn't seem like the best idea. Can anyone provide comments and opinions on this? If she does go ahead and get a policy what would be the best option for someone her age?

Obviously I'm not an expert since I was the one inquiring in this thread, but based upon what I read (and I couldn't dig deep enough into the numbers to justify my thesis) I decided on going with a term instead of the WLP since the hidden fee's with a WLP seemed so unknown, I felt like I was getting ripped off. Term seemed like more of a guaranteed thing.

From what I've come to learn, is the increments for term policeys seem to hit milestones... 50, 55, 60, 65, etc. Since I am 30, I plan to buy a 20 year policey (takes me to 49) then buy a 30 year policey (takes me from 49-79) - that seems to be the best "bang for my buck"

Best of luck to you, if you learn anything else and care to share, I would love to hear your thoughts.

[MoneyGuy]

Originally Posted by calgarygeologist

Today my mom, 56, mentioned that she was considering getting some sort of life insurance and asked for my opinion. I know very little about insurance so I'm hoping to get some useful information here. She basically said that her thinking was that a smaller life insurance policy, about $150000, would be a nice addition to her assets and that she would put the insurance beneficiaries as my kids and they can use the money for school or whatever.

She previously had some term insurance when she was younger and was raising kids and pay off debt but she dumped the policy 10 years ago or so. Getting into a new policy at 56 doesn't seem like the best idea. Can anyone provide comments and opinions on this? If she does go ahead and get a policy what would be the best option for someone her age?

I handle this stuff and nothing you've posted about your mom says she needs life insurance. It'd be expensive at her age. I'd suggest she take those premiums and spend them on the kids or grandkids while she's alive - family dinners, family vacation, contributing to grandkids' RESPs, that kind of thing. I could call her and talk her out of this. 😉