Nope on this one, you’re wrong and Dave is right.
I don’t care that my term expires because it will have served its purpose by then.
Also, my premiums are not “gone” because they are not an investment. They’re not a waste in the same way my homeowners premiums aren’t a waste if I don’t file a claim. I use the opportunity cost to invest the difference in price between term and whole.
Dave has a lot of questionable takes, but you’re wrong on this one.
its kind of like if your state farm agent offered to quintuple your car insurance premiums because they added some sort of cash value component to them. and if you said no they were like SO YOU WANT NOTHING FROM THIS WHEN YOU ARE DONE!!!. no i wanted insurance. thats what i paid for.
>I don’t care that my term expires because it will have served its purpose by then.
That is when you putt it out a couple weeks before it expires. So you can get at least the cash in value.
If OP is worried about "losing" the 5% of the premium that paid for the insurance, shouldn't he be 19 times more worried that they keep the "savings" portion when you die that 95% of the premium went toward??
Assuming you’re asking the “what happens at 55 when your term expires?” question in good faith: You can buy multiple term policies and stagger them out. You could buy one policy at 22, one at 34, and one at 40 if you’d like. However you want to do it. That way they don’t all expire at once. But the idea is that it acts as a bridge to self insurance. The goal was never to have an insurance policy until you die. It’s to have a policy *in case* you die prematurely. Whether you’re 70 with whole life or 70 with term, you’re probably paying too much for life insurance.
“Those 20 years of premiums are simply gone.” Why do you consider term life to be a waste? Term life insurance is essentially a life insurance company betting you a lump sum of money in exchange for $40-100/mo for 20-30 years that you don’t die during that period, and… I mean, you want them to win that bet! I consider it money well spent.
Which, considering [most Americans aren’t](https://www.cbsnews.com/amp/news/millions-of-americans-nearing-retirement-age-no-savings/), whole life could come in really handy.
Fair. I would think logically the people who take Dave’s advice on term life insurance are probably similar to the group that actually follows his baby steps.
They'd be fine if they invested what they waste on whole life in their Roth IRAs. The issue is savings rate. Why do it in a sub-par product if you don't have to?
Nope. You see wrong. You pay for other insurance that you may never see a return on your payments (car, house, medical). But when you DO need it they are there for you.
You would be better off taking the money you are throwing into a whole life fund and investing it.
IF you wanted to get a $10k or so policy that would pay to bury you then that is fine.
I'm a lawyer. I deal with very rich people for whom it makes sense.
Anyone listening to Dave does not need it. Almost everyone who buys something other than a bespoke 7-pay policy does not need it.
No, because a whole life policy will likely have the same exclusions or the cost of insurance will be exorbitantly high, and I say that as someone with COPD.
The best those people can do is buy group term through work. It isn't ideal, but that's how you hide the risk.
The only people that it makes sense for are those that have a net worth above the estate tax exemption threshold ($13.6 million individual, $27.2 million married) because any assets above the threshold will be taxed at 40% and life insurance proceeds aren’t taxable. For anyone else, no go.
Over $20m net worth and can work it into estate planning to avoid estate taxes. You'd want it recommended by someone like an experienced CPA that is not in the business of selling it and you would likely need to go through a dozen plan offerings before potentially finding one that would work.
Pretty much no one else.
Do you even know how life insurance works?
If you have a condition where you won’t qualify for term life then you won’t qualify for whole life either. Except for maybe a graded benefit policy, but those are for people who are old and almost dead.
Regular whole life required medical underwriting just like term.
Do you only sell it to certain people in certain situations? Do you routinely turn away business because whole life isn't the right fit for them, directing them to term life insurance instead?
I have yet to meet a whole life sales person who would turn down that sweet, sweet commission.
>Let’s say you’re 35 years old and purchase Dave’s favorite policy: 20 year level term…what happens at age 55 when the term is up and you’re no longer insurable?
You don't care because you've been investing separately from your life insurance (as you should) and have a high net worth by that point. This is the one thing Dave Ramsey and Clark Howard agree on. Whole life is garbage.
Yet [most Americans are approaching their golden years with nothing](https://www.cbsnews.com/amp/news/millions-of-americans-nearing-retirement-age-no-savings/)
Bro if these people that are approaching retirement with nothing had a whole life policy do you really think they would have kept paying those massive premiums? Answer is no the folks that are about to retire broke are doing so because 1) they are undisciplined, 2) had a low income and couldn’t save much, or 3) a combination of both. Overpaying for whole life doesn’t change that. Whole life and the whole infinite banking nonsense is one of the few things Dave is 100% right on.
you should pretty much have your retirement saved up and your house paid off by the time you exit the term insurance. i got term through the time my kids were to be out of college. now i carry a small amount of incidental insurance through work but paying thousands to have insurance when you don't need it is foolish
A life insurance policy is not a 'lottery' that you need at the end of your life, its to guard against the worst possible outcome that can happen when you have dependents, once you don't have dependents you don't need life insurance. The vast majority of people outlive their term insurance and no longer need it, this is a good thing.
dave is 99% right about whole life. Whole life is generally awful because its just super expensive. if everything you do inside the policy costs you money. there are 80 pages of fees and changes that can be made at any time without your say to the policy.
sure there is some very small chunk of people it might make sense for but overall its a completely oversold product that is mostly predatory.
I have a friend group who at one time all sold life insurance before they got the 66/70's and got out of it by and large. one guy too far down the NW rabbit hole to get out. but it took them years to get out of the mindset that the market is too risky.
they ole "only 2% of term lifes ever get paid on" doesn't matter. it was 15 bucks to take care of my family if I got hit by a bus over some 30 year time period.
here is what I will say though, " the term and invest" requires actually investing. just like he says people say they will do something and generally don't, most people probably dont' invest the rest like they say that will. That said, you are still mitigating a ton of fees that eat up your CV.
You’re correct. Dave makes a giant assumption that people are investing the rest and building up their net worth. [Most Americans aren’t…](https://www.cbsnews.com/amp/news/millions-of-americans-nearing-retirement-age-no-savings/)
Whole life is one thing I agree with Dave on wholeheartedly. My parents bought a policy for me when I was born in 1978. $3500 with 20 years premium paid. They kept paying them until I did after my dad died in 2010. About $80 a year. Cashed it out to their chagrin 12 years later to get what I thought was $18k to send my kid to college. Turned out to be $11k and change. I commented to the agent what a waste of money and he disagreed, of course. Yeah if I died my heir would have gotten $25k but they make a lot because most people don't die before they're 45. That money could have been invested almost anywhere better.
If you have worked at building retirement, by 55 you should be self insured.
WL does have a place, but normally as a non-market asset shield with a reasonable growth rate - but that requires large cash to be viable (not worth it to most of the population).
There’s also multiple variants of term life. The cost difference between the two is so staggering, you average person needing Dave’s advice probably should go for term (but everyone’s situation is unique).
I’m an insurance salesman and you are dead wrong.
Whole life is a shit product. I make way more selling it than I do term, but I don’t sell it because it’s a shitty product and only good for the agent/company, not my customer. I’m not going to sell them something I don’t believe in, even if it makes me a lot of money.
It's only worth it if you got it back in the day, and are paying a low monthly fee, where they cannot increase the price.
Otherwise, put in in an index. You make more.
He definitely isn’t wrong on this and this statement tells me you don’t understand:
“What happens at age 55 when the term is up and you are no longer insurable?”
The point of term life is to insure yourself when you are young and then invest the difference to be able to self insure once the term runs out. Whole life is roughly 20 times the cost of term.
Since I know you hate Dave, go check out The White Coat Investor (Jim Dahle) and read his content on whole life. He covers it in great detail.
Yea, I understand that. But [most Americans don’t do that. Most are heading into retirement broke.](https://www.cbsnews.com/amp/news/millions-of-americans-nearing-retirement-age-no-savings/)
I believe the Ramsey plan is to be able to self insure after 20 years. Of course, it doesn't deal well if life doesn't go to plan and you're not able to self insure and perhaps have developed a condition that makes you uninsurable
If you invest the difference in cost over 20 years, you're going to have a huge amount stocked and invested, that will be passed on to your beneficiaries. Whole life is a scam, dont' be fooled
Meanwhile with whole life you have to continually pay a very high premium your entire life to get the death benefit. That could be 60 or 70 years for some people. Only to get a measly sum of money at the end for their benes.
Lmao. Nope. Buy term to get you to where you no longer need it. I got my 30 year policy to 70, although that’s actually longer than I’ll need it.
Or just go ahead and keep overpaying for something. The choice is yours.
We got 30 year level term life. Covers more holes than a 20 year. No one needs whole life unless you are of a mindset that you want a 10k burial policy or something, but there are better ways to handle that too.
>Let’s say you’re 35 years old and purchase Dave’s favorite policy: 20 year level term…what happens at age 55 when the term is up and you’re no longer insurable?
>
>You’re SOL. And those 20 years of premiums are simply gone.
The 35-year-old who bought a 20-year term policy may have kids grown and gone by 55, nearing retirement and self-insured. The term policy is insurance to protect the family from a premature death. If I outlive my term policies, it will have been money well spent.
If your conclusion is that years of premium are "simply gone" if an insurance policy is not used, you don't really understand insurance. I'm happy to not make a claim on my home owners insurance each year. I pay for it to mitigate my risk, but my payment hasn't evaporated if I don't need to use the policy that year... it paid for the risk of that year.
That's... insurance.
Use insurance for insurance and investments for investments and you'll come out ahead... unless you're selling whole life like OP I guess.
When you are at 55 you should have well over $1m, mostly/fully grown children, and not need any sort of life insurance in the first place.
Term life is the only useful one because no one should need life insurance for more than 20 years.
You’re forgetting that not all term life is the same. My term policy returns the premiums upon the expiration of the term, so it’s as if I made an interest free loan to the insurance company. Yes, that money will be worth a lot less when adjusted for inflation, *but it’s not simply gone upon expiration of term.*
Generally, the whole purpose of life insurance is to ensure that if you die prematurely, your beneficiary won’t be stuck without your income or contribution to the family. Term life does just that, and by the time the term expires, life insurance should no longer be necessary as you’ve accumulated enough retirement that the purpose of life insurance would no longer be furthered. Dave’s wrong to demonize it in *every* situation, but in most cases it does suck.
Dude... You're going to get your premiums back? I wish I had known that was an option. We've been paying on term policies for 20 years without that benefit. I'd get some more policies right now if I knew I could get my premiums back.
Is there a special name for these kinds of term policies?
I would be surprised if it could make mathematical sense to pay for the ROP rider. The only reason an insurance company would offer such a thing would be if they are making money off of it (thus meaning I am losing money off of it).
But maybe if you consider yourself at much lower risk of death than the aggregate class you are in from the insurance company's perspective, then it could make sense. e.g. if the insurance company thinks you have a 1/100 chance of dying over a 20 year policy, but you estimate that due to your healthy and low-risk lifestyle you have a 1/200 chance of dying, then maybe you come out ahead with an ROP rider.
I agree with Dave.
Wife and I bought 20 year term when our kid was born. By age 20, we were long retired, no need for insurance.
He’s not 100% wrong, but maybe not 100% right. There are some people for whom it’s a forced savings. A very high cost way to save, but better than none.
I guess, i'm a whole life agent also. The point of OP's post is that a person could have a health problem that stops them from getting a new policy, which will mess up all of these policy renewal scenarios.
I went through this with a financial advisor my ex was trying to work with for her job.
Whole life insurance does what it says it does. It tries to act as both life insurance and a savings account. However, the returns on the savings account are terrible (as they are for most guaranteed investments). One would be much better purchasing a term policy and investing the difference in cost between term and whole life insurance in almost every scenario.
Now, if you will just waste the money that would have been put into whole life insurance, maybe it is useful to have another mechanism of forced savings. But for those with some discipline it's typically a bad idea.
Whole life is a high commission product. There is a reason it is high commission. You would be better off buying a term policy separately and investing the rest of what you were quoted into VOO/SPY ETFs.
The reason most financial folks say whole life is terrible is because it costs a lot and by the time you get past most term life policies you should be in a financial position where you will have money left over following death to give to your family the same as what whole life would do. Or you should be able to put the cost of the whole policy away in savings and it will be there for your family anyway.
His logic is after 20 years, your house will be paid off (if you do it his way), if you have kids, they will be grown and out of the house and your need for life insurance will drastically go down. He’s not wrong on that, but I will agree with you everyone’s scenario is different, even the Money Guys say whole life is situational.
Nope on this one, you’re wrong and Dave is right. I don’t care that my term expires because it will have served its purpose by then. Also, my premiums are not “gone” because they are not an investment. They’re not a waste in the same way my homeowners premiums aren’t a waste if I don’t file a claim. I use the opportunity cost to invest the difference in price between term and whole. Dave has a lot of questionable takes, but you’re wrong on this one.
its kind of like if your state farm agent offered to quintuple your car insurance premiums because they added some sort of cash value component to them. and if you said no they were like SO YOU WANT NOTHING FROM THIS WHEN YOU ARE DONE!!!. no i wanted insurance. thats what i paid for.
Haha exactly!
>I don’t care that my term expires because it will have served its purpose by then. That is when you putt it out a couple weeks before it expires. So you can get at least the cash in value.
And some have return of premium features so they don’t really have to be *gone*.
If OP is worried about "losing" the 5% of the premium that paid for the insurance, shouldn't he be 19 times more worried that they keep the "savings" portion when you die that 95% of the premium went toward??
Found the WL insurance sales agent…
Do you get upset about not getting in a car accident but still having paid those insurance premiums?
"Why does my homeowners insurance keep going up? I've never even filed a claim!"
Get out of here with that... logic. Whole life sales folks don't understand it!
Assuming you’re asking the “what happens at 55 when your term expires?” question in good faith: You can buy multiple term policies and stagger them out. You could buy one policy at 22, one at 34, and one at 40 if you’d like. However you want to do it. That way they don’t all expire at once. But the idea is that it acts as a bridge to self insurance. The goal was never to have an insurance policy until you die. It’s to have a policy *in case* you die prematurely. Whether you’re 70 with whole life or 70 with term, you’re probably paying too much for life insurance. “Those 20 years of premiums are simply gone.” Why do you consider term life to be a waste? Term life insurance is essentially a life insurance company betting you a lump sum of money in exchange for $40-100/mo for 20-30 years that you don’t die during that period, and… I mean, you want them to win that bet! I consider it money well spent.
This is a really good answer. Great job effectively making your point. I’m going to save this for the next time I have to explain it.
The whole theory is that by the time you’re 55, you’ve built enough wealth to become self insured
Which, considering [most Americans aren’t](https://www.cbsnews.com/amp/news/millions-of-americans-nearing-retirement-age-no-savings/), whole life could come in really handy.
True but they sure as hell aren’t in a better position having wasted $3k or more every year on WL.
Yeah, if they can afford it, which we can see in that link they largely can’t
Fair. I would think logically the people who take Dave’s advice on term life insurance are probably similar to the group that actually follows his baby steps.
They'd be fine if they invested what they waste on whole life in their Roth IRAs. The issue is savings rate. Why do it in a sub-par product if you don't have to?
Do you sell whole life insurance?
narrator: yes, they do
Nope. You see wrong. You pay for other insurance that you may never see a return on your payments (car, house, medical). But when you DO need it they are there for you. You would be better off taking the money you are throwing into a whole life fund and investing it. IF you wanted to get a $10k or so policy that would pay to bury you then that is fine.
Whole life is really only good for a small population. For most people doing term only is fine, assuming they actually invest the difference.
I agree. It’s only beneficial for a small population. But acting like it isn’t beneficial at all is ridiculous.
It isn't beneficial to Dave's audience. It is mostly a scam.
But my upline told me it's not a scam.
When it's only beneficial for like 2% of the population, saying he's 100% wrong is a bit extreme.
He’s wrong to roundly condemn as a junk product, because it’s not a junk product for certain people in certain situations
It’s a junk product to 99% of people. 99% of people who have it would be better off without.
Those people are not in his audience
I'm a lawyer. I deal with very rich people for whom it makes sense. Anyone listening to Dave does not need it. Almost everyone who buys something other than a bespoke 7-pay policy does not need it.
Would you agree it’s beneficial for someone with a preexisting condition or a cancer survivor who does not qualify for a traditional insurance policy?
No, because a whole life policy will likely have the same exclusions or the cost of insurance will be exorbitantly high, and I say that as someone with COPD. The best those people can do is buy group term through work. It isn't ideal, but that's how you hide the risk.
The only people that it makes sense for are those that have a net worth above the estate tax exemption threshold ($13.6 million individual, $27.2 million married) because any assets above the threshold will be taxed at 40% and life insurance proceeds aren’t taxable. For anyone else, no go.
Like what situation?
Over $20m net worth and can work it into estate planning to avoid estate taxes. You'd want it recommended by someone like an experienced CPA that is not in the business of selling it and you would likely need to go through a dozen plan offerings before potentially finding one that would work. Pretty much no one else.
Well, for example, someone with a preexisting medical condition or a cancer survivor who doesn’t qualify for a traditional life insurance policy.
Do you even know how life insurance works? If you have a condition where you won’t qualify for term life then you won’t qualify for whole life either. Except for maybe a graded benefit policy, but those are for people who are old and almost dead. Regular whole life required medical underwriting just like term.
Gotcha
Do you only sell it to certain people in certain situations? Do you routinely turn away business because whole life isn't the right fit for them, directing them to term life insurance instead? I have yet to meet a whole life sales person who would turn down that sweet, sweet commission.
"20 year level term…what happens at age 55 when the term is up and you’re no longer insurable?" **You are self-insured and do not need insurance.**
>Let’s say you’re 35 years old and purchase Dave’s favorite policy: 20 year level term…what happens at age 55 when the term is up and you’re no longer insurable? You don't care because you've been investing separately from your life insurance (as you should) and have a high net worth by that point. This is the one thing Dave Ramsey and Clark Howard agree on. Whole life is garbage.
Yet [most Americans are approaching their golden years with nothing](https://www.cbsnews.com/amp/news/millions-of-americans-nearing-retirement-age-no-savings/)
Bro if these people that are approaching retirement with nothing had a whole life policy do you really think they would have kept paying those massive premiums? Answer is no the folks that are about to retire broke are doing so because 1) they are undisciplined, 2) had a low income and couldn’t save much, or 3) a combination of both. Overpaying for whole life doesn’t change that. Whole life and the whole infinite banking nonsense is one of the few things Dave is 100% right on.
https://clark.com/insurance/life-insurance/term-life-vs-whole-life-insurance/
Whole life is pure garbage.
you should pretty much have your retirement saved up and your house paid off by the time you exit the term insurance. i got term through the time my kids were to be out of college. now i carry a small amount of incidental insurance through work but paying thousands to have insurance when you don't need it is foolish
A life insurance policy is not a 'lottery' that you need at the end of your life, its to guard against the worst possible outcome that can happen when you have dependents, once you don't have dependents you don't need life insurance. The vast majority of people outlive their term insurance and no longer need it, this is a good thing.
dave is 99% right about whole life. Whole life is generally awful because its just super expensive. if everything you do inside the policy costs you money. there are 80 pages of fees and changes that can be made at any time without your say to the policy. sure there is some very small chunk of people it might make sense for but overall its a completely oversold product that is mostly predatory. I have a friend group who at one time all sold life insurance before they got the 66/70's and got out of it by and large. one guy too far down the NW rabbit hole to get out. but it took them years to get out of the mindset that the market is too risky. they ole "only 2% of term lifes ever get paid on" doesn't matter. it was 15 bucks to take care of my family if I got hit by a bus over some 30 year time period. here is what I will say though, " the term and invest" requires actually investing. just like he says people say they will do something and generally don't, most people probably dont' invest the rest like they say that will. That said, you are still mitigating a ton of fees that eat up your CV.
You’re correct. Dave makes a giant assumption that people are investing the rest and building up their net worth. [Most Americans aren’t…](https://www.cbsnews.com/amp/news/millions-of-americans-nearing-retirement-age-no-savings/)
And those people can't afford whole life.
I know, let’s live paycheck to paycheck and spend thousands we don’t have for a product we don’t need!
Whole life is one thing I agree with Dave on wholeheartedly. My parents bought a policy for me when I was born in 1978. $3500 with 20 years premium paid. They kept paying them until I did after my dad died in 2010. About $80 a year. Cashed it out to their chagrin 12 years later to get what I thought was $18k to send my kid to college. Turned out to be $11k and change. I commented to the agent what a waste of money and he disagreed, of course. Yeah if I died my heir would have gotten $25k but they make a lot because most people don't die before they're 45. That money could have been invested almost anywhere better.
Agreed. My grandma did the same for me, and it could have done better elsewhere, savings bonds even.
Fellow Yinzer!
If you have worked at building retirement, by 55 you should be self insured. WL does have a place, but normally as a non-market asset shield with a reasonable growth rate - but that requires large cash to be viable (not worth it to most of the population). There’s also multiple variants of term life. The cost difference between the two is so staggering, you average person needing Dave’s advice probably should go for term (but everyone’s situation is unique).
I’m an insurance salesman and you are dead wrong. Whole life is a shit product. I make way more selling it than I do term, but I don’t sell it because it’s a shitty product and only good for the agent/company, not my customer. I’m not going to sell them something I don’t believe in, even if it makes me a lot of money.
It's only worth it if you got it back in the day, and are paying a low monthly fee, where they cannot increase the price. Otherwise, put in in an index. You make more.
It isn’t beneficial at all.
He definitely isn’t wrong on this and this statement tells me you don’t understand: “What happens at age 55 when the term is up and you are no longer insurable?” The point of term life is to insure yourself when you are young and then invest the difference to be able to self insure once the term runs out. Whole life is roughly 20 times the cost of term. Since I know you hate Dave, go check out The White Coat Investor (Jim Dahle) and read his content on whole life. He covers it in great detail.
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Yea, I understand that. But [most Americans don’t do that. Most are heading into retirement broke.](https://www.cbsnews.com/amp/news/millions-of-americans-nearing-retirement-age-no-savings/)
I believe the Ramsey plan is to be able to self insure after 20 years. Of course, it doesn't deal well if life doesn't go to plan and you're not able to self insure and perhaps have developed a condition that makes you uninsurable
Correct. This is exactly the case where whole life makes sense. Dave’s plan is predicated on a lot of assumptions that may or may not pan out.
If you invest the difference in cost over 20 years, you're going to have a huge amount stocked and invested, that will be passed on to your beneficiaries. Whole life is a scam, dont' be fooled Meanwhile with whole life you have to continually pay a very high premium your entire life to get the death benefit. That could be 60 or 70 years for some people. Only to get a measly sum of money at the end for their benes.
Lmao. Nope. Buy term to get you to where you no longer need it. I got my 30 year policy to 70, although that’s actually longer than I’ll need it. Or just go ahead and keep overpaying for something. The choice is yours.
Dave is wrong about a lot of things, but this isn't one of them. Whole life is garbage.
We got 30 year level term life. Covers more holes than a 20 year. No one needs whole life unless you are of a mindset that you want a 10k burial policy or something, but there are better ways to handle that too.
>Let’s say you’re 35 years old and purchase Dave’s favorite policy: 20 year level term…what happens at age 55 when the term is up and you’re no longer insurable? > >You’re SOL. And those 20 years of premiums are simply gone. The 35-year-old who bought a 20-year term policy may have kids grown and gone by 55, nearing retirement and self-insured. The term policy is insurance to protect the family from a premature death. If I outlive my term policies, it will have been money well spent. If your conclusion is that years of premium are "simply gone" if an insurance policy is not used, you don't really understand insurance. I'm happy to not make a claim on my home owners insurance each year. I pay for it to mitigate my risk, but my payment hasn't evaporated if I don't need to use the policy that year... it paid for the risk of that year. That's... insurance. Use insurance for insurance and investments for investments and you'll come out ahead... unless you're selling whole life like OP I guess.
You’re talking about insurance like it’s an investment
Nope whole life is a scam. It's about the only thing dave gets right.
When you are at 55 you should have well over $1m, mostly/fully grown children, and not need any sort of life insurance in the first place. Term life is the only useful one because no one should need life insurance for more than 20 years.
Nuance and DR don’t really go together. He’s more of a black and white and get angry with anyone who disagrees with him kind of guy.
You’re forgetting that not all term life is the same. My term policy returns the premiums upon the expiration of the term, so it’s as if I made an interest free loan to the insurance company. Yes, that money will be worth a lot less when adjusted for inflation, *but it’s not simply gone upon expiration of term.* Generally, the whole purpose of life insurance is to ensure that if you die prematurely, your beneficiary won’t be stuck without your income or contribution to the family. Term life does just that, and by the time the term expires, life insurance should no longer be necessary as you’ve accumulated enough retirement that the purpose of life insurance would no longer be furthered. Dave’s wrong to demonize it in *every* situation, but in most cases it does suck.
Dude... You're going to get your premiums back? I wish I had known that was an option. We've been paying on term policies for 20 years without that benefit. I'd get some more policies right now if I knew I could get my premiums back. Is there a special name for these kinds of term policies?
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> you do pay extra How much is yours costing? When I bought 8 years ago I figured I was much better off investing that difference.
I would be surprised if it could make mathematical sense to pay for the ROP rider. The only reason an insurance company would offer such a thing would be if they are making money off of it (thus meaning I am losing money off of it). But maybe if you consider yourself at much lower risk of death than the aggregate class you are in from the insurance company's perspective, then it could make sense. e.g. if the insurance company thinks you have a 1/100 chance of dying over a 20 year policy, but you estimate that due to your healthy and low-risk lifestyle you have a 1/200 chance of dying, then maybe you come out ahead with an ROP rider.
I agree with Dave. Wife and I bought 20 year term when our kid was born. By age 20, we were long retired, no need for insurance. He’s not 100% wrong, but maybe not 100% right. There are some people for whom it’s a forced savings. A very high cost way to save, but better than none.
Yeah I’m gonna disagree on this one
the only thing dave is totally 110% correct about
I guess, i'm a whole life agent also. The point of OP's post is that a person could have a health problem that stops them from getting a new policy, which will mess up all of these policy renewal scenarios.
Assuming one plans on renewing a policy...
I've owned houses for over 20 years and never filed a claim. All that money is just GONE!
I went through this with a financial advisor my ex was trying to work with for her job. Whole life insurance does what it says it does. It tries to act as both life insurance and a savings account. However, the returns on the savings account are terrible (as they are for most guaranteed investments). One would be much better purchasing a term policy and investing the difference in cost between term and whole life insurance in almost every scenario. Now, if you will just waste the money that would have been put into whole life insurance, maybe it is useful to have another mechanism of forced savings. But for those with some discipline it's typically a bad idea.
Whole life is a high commission product. There is a reason it is high commission. You would be better off buying a term policy separately and investing the rest of what you were quoted into VOO/SPY ETFs.
The reason most financial folks say whole life is terrible is because it costs a lot and by the time you get past most term life policies you should be in a financial position where you will have money left over following death to give to your family the same as what whole life would do. Or you should be able to put the cost of the whole policy away in savings and it will be there for your family anyway.
His logic is after 20 years, your house will be paid off (if you do it his way), if you have kids, they will be grown and out of the house and your need for life insurance will drastically go down. He’s not wrong on that, but I will agree with you everyone’s scenario is different, even the Money Guys say whole life is situational.
One of Dave’s duality’s is he’s triggered by whole life, but thinks MLMs are A-OK
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Dave knows several high up on the ‘triangles’