Life Insurance - Whole Vs. Term?

Discussion in 'Community Discussion' started by puma1552, Dec 15, 2015.

  1. puma1552 macrumors 601

    Joined:
    Nov 20, 2008
    #1
    So, I'm 31, my wife is 30. Married almost 5 years, bought a house this past spring.

    I have a year's salary worth of life insurance at work (pays triplicate upon death at work but I work in an office so small chance that happens) plus an additional $100k, which is the most supplemental I can buy without getting a physical. I bought some for my wife at work too, plus she has some from work. Not sure of the total of hers, maybe $50k-$60k? Not too much.

    So I'm starting to look at buying a large main policy from my own home/auto insurer; enough to pay off the house and any outstanding debts, so that if my income were gone my wife could still live comfortably on just her income. I have requested information and am waiting to hear back, but I figured I'd put this topic out there.

    From what I've read, whole life seems like the better policy, but I read an article that says that although it never goes up (and can you ever be cancelled? I know with term each time you re-up it gets more and more expensive and you can find yourself ineligible after all those years of paying for it), it can actually cost about what a mortgage costs, which isn't realistic for most people (definitely not for me). I also vaguely am understanding the life benefit of the whole policy, whereas term is strictly a death benefit (which is how I always thought all policies were, never knew there was a option that gave you benefits during life). I also realize though that a term policy can usually be converted to a whole policy without an exam, but people often don't know this? I would imagine if you did that later in life you would still pay way more for the whole life than if you had just gotten it from the start 20 years earlier or whatever?

    Talk to me about life insurance; benefits of each type, pitfalls, etc.
     
  2. Sun Baked macrumors G5

    Sun Baked

    Joined:
    May 19, 2002
    #2
    If you had read or bought "Total Money Make Over" you'd probably be buying Term Life.
     
  3. Huntn macrumors G5

    Huntn

    Joined:
    May 5, 2008
    Location:
    The Misty Mountains
    #3
    They say whole life is not that great of an investment and term is cheaper. When I had life insurance, when I was younger, it was term.
     
  4. maflynn Moderator

    maflynn

    Staff Member

    Joined:
    May 3, 2009
    Location:
    Boston
    #4
    The issue is with term, you pay and get nothing in return (if you don't die). Where as with whole life, the money is available to you and if you cancel or don't pay, you'll have access to some of those funds.

    Whole life is usually a lot better in a long term perspective, as term life gets more and more expensive as you get older.
     
  5. Tomorrow macrumors 604

    Tomorrow

    Joined:
    Mar 2, 2008
    Location:
    Always a day away
    #5
    Whole life is less an insurance policy and more of an investment - think of it as a retirement account of sorts.

    A lot of people buy term because once you're old, your kids are grown, and your house is paid off, you don't need as much income - so you're less dependent on a death benefit.
     
  6. Gregg2 macrumors 603

    Joined:
    May 22, 2008
    Location:
    Milwaukee, WI
    #6
    Whole Life is a BAD investment. If you want insurance, buy insurance. If you want to invest "excess" income, find some good investments.
     
  7. puma1552 thread starter macrumors 601

    Joined:
    Nov 20, 2008
    #7
    After much research, I ultimately just decided to max out the supplemental term I can get from work ($500k for me, $100k for my wife) which is very reasonable at around $55 a month. The age vs. premium scale really isn't that bad either, but I don't plan on working there forever so it doesn't matter anyway.

    I may re-evaluate again when I change jobs, but with this I know my wife will be able to pay off the house and then some and be able to live comfortably on her income if I kick the bucket. I figure I'll drop dead of a stroke between 40-50 anyway.
     

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