Term or Whole Insurance


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Mr_Right is offline Mr_Right Post #1  March 25,2010, 3:47pm
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Now that I'm looking into insurance, what are people's thoughts and experiences with term vs whole life insurance?
 
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TheThinker is offline TheThinker Post #2  March 25,2010, 4:15pm
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Mr_Right wrote :
Now that I'm looking into insurance, what are people's thoughts and experiences with term vs whole life insurance?
Both have their uses. typically, term is used when you have to pay off a mortgage, or perhaps a loan, such as a college loan, for an extended time, and then when you are done you can drop it. It also typically goes up at the end of the term....sometimes way up.
Typical terms are 10, 15, 20 & 30 year.
It is usually the cheapest form of insurance, but only about 2% of term policies actually pay out, so it may not be best for you.

Whole life or cash value costs more, but you have it your "whole life", hence the name..
It builds cash value that you can borrow against, but you will pay interest. It is usually stays the same premium, even as you age.
 
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j0hn8andy is offline j0hn8andy Post #3  March 25,2010, 4:45pm
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You also might want to think about moving this (or creating a new thread) to Finance Group.

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Lilycat is offline Lilycat Post #4  March 25,2010, 5:03pm
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To me it depends on your situation more than anything else.

If you are single, no children, there really is no need for it, unless you are looking at a small policy to cover burial costs. Even then, if you have any assets why bother? This is not a popular view with insurance companies by the way.

Married? Well you and your spouse would want to protect each other in case of the worst happening, so determine your purpose in having it. What's your future plan? If one of you were to die tomorrow, what would the other need to continue on with their lifestyle (at least) unchanged? In this case probably whole life would be your choice - it's a case of looking after each other, and that is a permanent thing I think.Mind you if it was just to cover an outstanding debt, for example, to pay off your mortgage should anything happen to you, well you might look at a term policy (might be cheaper for you) for the life of the mortgage.

Married with kids - similar to above, but you might also be looking at schooling costs too, and this might affect the length of the term, should you choose to go that route.

Single parent with kids - again, depends on your financial plan in the long term.

I guess what I am trying to say is that they both have their uses, what you need to seriously look at is why you are buying it, and your full long term financial plan to determine which one is right for you.

You know, you might be better off putting the $$ into a regular monthly contribution to a retirement fund, or some other investment rather than buying insurance.

I guess my answer in short is it depends lol. They are both good products, you just need to determine which one suits you best and just to confuse things a little further, there used to be a convertable type product offered too - you could buy the term, and for a certain period you could convert it to whole life..... there's a lot of fine print in insurance lol!

JMHO, and sorry for getting a little long winded there!

Lilycat
 
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tweet37 is offline tweet37 Post #5  March 26,2010, 6:58am
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It depends on how disciplined you are.

The best scenario is buy term insurance and invest the cost difference.
 
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landstar59 is offline landstar59 Post #6  March 26,2010, 9:57am
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I had term insurance until last year and changed it over to whole life. I can tell you one thing, don't wait until you're 50 to buy whole life. The older you are the more expensive it is and not only is age a consideration but so is your state of health which you will be asked to prove through blood tests etc...
 
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Mr_Right is offline Mr_Right Post #7  January 17,2012, 6:14pm
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So now that the baby is coming, it looks like it's time to get insurance.

I'm thinking 30 year term insurance ought to cover it... but how much should I get, that's the tricky part.
 
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suzyque is offline suzyque Post #8  January 17,2012, 7:38pm
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Mr_Right wrote :
So now that the baby is coming, it looks like it's time to get insurance.

I'm thinking 30 year term insurance ought to cover it... but how much should I get, that's the tricky part.

More if your wife is planning on being a stay at home mom, less if she is going to work full time. At least a full years salary I would think. I dunno, my ex was an insurance salesman so we always had huge policies. Too huge i always thought. (Costly monthly premium)
 
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tweet37 is offline tweet37 Post #9  January 18,2012, 7:18am
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Mr_Right wrote :
So now that the baby is coming, it looks like it's time to get insurance.

I'm thinking 30 year term insurance ought to cover it... but how much should I get, that's the tricky part.
Speaking from experience, go for the $1 million. You'll probably think it's over-insurance....until you need it.

Your financial situation will probably be something like mine; two professionals drawing two incomes, upscale house, cars, vacations, kids, college, hobbies, vacation home. Can you afford that on one remaining income?
 
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suzyque is offline suzyque Post #10  January 18,2012, 7:45pm
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tweet37 wrote :
Speaking from experience, go for the $1 million. You'll probably think it's over-insurance....until you need it.

Your financial situation will probably be something like mine; two professionals drawing two incomes, upscale house, cars, vacations, kids, college, hobbies, vacation home. Can you afford that on one remaining income?
$1mil is too much. I say 100k on him and 100k on his wife as I believe she is a doctor. You can both support yourself just fine and don't need that much. The monthly premium would be well over $200 a month. The money you save on premiums could go toward a monthly college saving account for the baby. (A must have saving account you will HUGELY appreciate at college time!)
 
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