Whole vs Term life insurance. Anyone? Need inputs

[7.62x39]

Perhaps not the best place to post this, but I am sure you guys have life insurance. I've done my homework, but just curious what others have to say.

1. Parents are 60 and in decent health right now. Bought each a 25k whole life insurance policy. Nothing huge. Just to cover funeral expenses. I expect them to live for at least another 20 years. Currently paying $220/month total for both policies.

2. Sister just joined Primerica and she said Term life is better. She is able to get a 15 year (20 yr not available for people 60+) term life (25k each) for around $100/month. And since I am already willing to pay $220 for whole life, I can take the $120 and invest it. According to her, $120 invested over 15 yrs at a interest rate of 5-9%, I would accumulate around $40-50k.

My main problem here:

- If my parents live pass the 15 year term, which I think they will, the policy is done and renewing would be extremely costly. Accumulating 40-50k over 15 years is not a guaranteed. If I somehow landed in the 30k or under when my parents pass away, I'm screw. Yes, I will be paying more than 50k for the whole life policy if my parents pass away at 80+, but 50k is guaranteed no matter what. I don't think about how much I've paid over the years, but what I'm guaranteed at the moment.

So why is she trying to convince me that the term life + investment is a better idea? Seems to me like, term life policies were created to lapse just before the insured dies and that is why my parents do no qualify for a 20 yr term. If I need to invest extra just to cover my ass then the whole life makes sense. Who's the say the stock market will not crash to the ground on the 14th year from now?

 

[liljoe]

Haha, its not always so simple, huh?

Term at 60 is a gamble. However many people do that and create a little fund with the difference they save like you mention plus it's liquid. Some people dont want to bother and just buy whole.
You gotta run the numbers and see how it works out. Be conservative with your investment return estimate.

 

[minute bull]

 

[Pwent]

its like buying or renting a home

term is cheaper but at the end of the term, if you dont die, you have literally nothing and to sign up for another term is probably more expensive

whole life is more expensive, but youre usually locked in at one price, and it accumulates money that you can use in retirement. so its an investment thats useful in life. so your plan of investing 120 a month, still happens in your whole life policy, its not like a term where the money is just gone.



so it depends on your situation, if youre broke but a sole breadwinner, a high paying term that lasts until your kids are grown is pretty good. if youre thinking long term (20+ years), then get a whole life

i think your problem is that if your parents live to be 75, the cost to renew it will be very high if you can get them insured at all

 

[7.62x39]

When it comes to any type of insurance, I really do not like to take gambles. My currently car insurance is 100/300k cover. I could drop it down to 50/100k and pay less per month, but then if I ever do need the 100/300k coverage, I'm screw. Darn insurance. You don't get enough, you're screw when shit happens. You get more than enough and nothing happens for the rest of your life, you're screw too. I guess that's why it's called insurance.. arrgg..

 

[7.62x39]

its like buying or renting a home

term is cheaper but at the end of the term, if you dont die, you have literally nothing and to sign up for another term is probably more expensive

whole life is more expensive, but youre usually locked in at one price, and it accumulates money that you can use in retirement. so its an investment thats useful in life. so your plan of investing 120 a month, still happens in your whole life policy, its not like a term where the money is just gone.



so it depends on your situation, if youre broke but a sole breadwinner, a high paying term that lasts until your kids are grown is pretty good. if youre thinking long term (20+ years), then get a whole life

i think your problem is that if your parents live to be 75, the cost to renew it will be very high if you can get them insured at all

Thanks, that seems to make sense.

 

[ralphc1]

When it comes to any type of insurance, I really do not like to take gambles. My currently car insurance is 100/300k cover. I could drop it down to 50/100k and pay less per month, but then if I ever do need the 100/300k coverage, I'm screw. Darn insurance. You don't get enough, you're screw when shit happens. You get more than enough and nothing happens for the rest of your life, you're screw too. I guess that's why it's called insurance.. arrgg..

Check out a blanket liability policy. It allows lower car insurance and home insurance limits while providing much higher liability coverage. I have a $1million umbrella liability policy added to my homeowners for under $200/year.

 

[ralphc1]

Perhaps not the best place to post this, but I am sure you guys have life insurance. I've done my homework, but just curious what others have to say.

1. Parents are 60 and in decent health right now. Bought each a 25k whole life insurance policy. Nothing huge. Just to cover funeral expenses. I expect them to live for at least another 20 years. Currently paying $220/month total for both policies.

2. Sister just joined Primerica and she said Term life is better. She is able to get a 15 year (20 yr not available for people 60+) term life (25k each) for around $100/month. And since I am already willing to pay $220 for whole life, I can take the $120 and invest it. According to her, $120 invested over 15 yrs at a interest rate of 5-9%, I would accumulate around $40-50k.

My main problem here:

- If my parents live pass the 15 year term, which I think they will, the policy is done and renewing would be extremely costly. Accumulating 40-50k over 15 years is not a guaranteed. If I somehow landed in the 30k or under when my parents pass away, I'm screw. Yes, I will be paying more than 50k for the whole life policy if my parents pass away at 80+, but 50k is guaranteed no matter what. I don't think about how much I've paid over the years, but what I'm guaranteed at the moment.

So why is she trying to convince me that the term life + investment is a better idea? Seems to me like, term life policies were created to lapse just before the insured dies and that is why my parents do no qualify for a 20 yr term. If I need to invest extra just to cover my ass then the whole life makes sense. Who's the say the stock market will not crash to the ground on the 14th year from now?

Term insurance is for people who want protection for their family in case of an early death. If you go with term life, look for one that allows you to purchase additional coverage without a physical. If one of your parents should fall ill, you could increase coverage to gain money to use for one that might live beyond the policy limit.

Whole life is for people who want to build their retirement money while protecting their family. Often the coverage decreases over a certain age. Burial has gotten so expensive and many are opting for other options like cremation or body donation.

 

[HARRISON_3]

Dental plan

 

[SSgt Dickweed]

For myself I went Variable Universal Life insurance, but option number 2 sounds better IMO.

 

[Lubaolong]

Whole life is almost always the wrong choice.

 

[Rozko]

Whole is too god damn expensive at that age. Get the longest term you can for them.

 

[HIMBOB]

Why do you even need life insurance for 60+yo people?

They still working?

I don't mean to be rude but once you stop earning a working income you are financially better off dead well your estate is.

Trauma and tpd different story, but once you are dead your expenses are zero.

 

[Tycho- Taylor's Version]

Dental plan

Lisa needs braces!

Term insurance is for people who want protection for their family in case of an early death. If you go with term life, look for one that allows you to purchase additional coverage without a physical. If one of your parents should fall ill, you could increase coverage to gain money to use for one that might live beyond the policy limit.

Not a bad idea. Just make sure the term product is convertible.

 

[AznTrojan]

wtf.. why are you buying life insurance at that age..

life insurance should be used as income replacement in case someone dies early..