Dec

11

for lifetime protection which insurance plan is best – whole life, universal life or variable life?

Filed Under Wealth Creation 

Charles C


i want a lifetime coverage for income continuation, & asset protection. which do you think is the best taking everything into consideration?

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9 Responses to “for lifetime protection which insurance plan is best – whole life, universal life or variable life?”

  1. PJ on December 14th, 2008 9:06 am

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    Age is a factor in this decision also but I would be leaning towards a variable universal life. You have to be willing to watch it every year. Also have your agent illustrate it at a Conservative rate of growth and with some increased front funding.

    and get ready for all the ‘term life’ people that will not answer your question

  2. Thin Kaboudit on December 15th, 2008 10:06 pm

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    “None of the above”

    Don’t waste your money. Insurance is not a savings plan!

    Research the premiums for Whole Life, then buy term life and invest the premium difference in Spiders or Diamonds or some other “broad market” tracking instrument. Unless you get hit by a truck next Tuesday, you’ll make out much better, and if you DO die in 5, 10, 20 or 25 years, your family will be left FAR more money.

  3. mbrcatz17 on December 17th, 2008 2:46 am

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    OK, you’re looking at three different products life insurance, investments, and liability insurance. That’s what you’re describing.

    I think your goals are too broad, and should be redefined.

    But keep in mind – if you don’t want to take on any responsibility for your own financial future – ie, if you want to use “annuities” instead of “investments” to generate future income, then you’re going to be paying a HUGE premium for a smaller return. You’re paying someone ELSE to make the investments, and THEY’LL keep most of the profits for their service.

  4. Michael J on December 17th, 2008 12:02 pm

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    I use Term life insurance. With the money difference I can invest and get better and more readily available income than thru any whole life plan.

  5. Doing the Right Thing on December 19th, 2008 9:11 am

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    From those three choices, I would pick whole life. It provides permanent protection and the premiums remain level to age 100.

    If you pick universal life, your policy will eventually self-destruct. In universal life, the protection element is always annual renewable term insurance. In the beginning, majority of your premiums goes toward cash value. As times goes on, the cost of the insurance element goes up. So less and less of the premiums goes toward cash value, and more toward the insurance. Eventually, all your premiums is going toward insurance and your cash value may begin to decrease.

    If you pick variable life, a portion of your premiums is invested in the stock market. If there is growth in the cash value, the death benefit grows too. If the cash value does poorly, you are guaranteed a minimum death benefit of whatever coverage you bought. This is the worst way to invest your money since life insurance policies have high expense ratios of 2-4% and possibly more. If mutual funds have an expense ratio of 1% and then you add life insurance expense ratio, you will be paying 3-5%. Lets say a mutual fund does an average rate of return of 10%. Deduct all these expenses, you are getting 5-7% on your savings.

    But you seem to buying life insurance for the wrong reasons. Life insurance’s only purpose is to protect your income. In the event of your death, life insurance will provide income to your family. If you are like many others who may have a mortgage to pay, have lots of debt, and have kids, then you should consider getting a 20-35 year term insurance. You should be able to afford the amount of coverage you need since premiums are very low compared to whole life, universal life and variable life. At the same time, you should be investing for the future. I would open an IRA account (try to get a Roth IRA) and invest on a monthly basis. If you invest $200/month and you get a 10% rate of return, in 20 years you can possibly have $153k. In 30 years, $456k. In 35 years, $765k.

    Keeping savings and life insurance separate is the best plan and only term insurance contains no savings in it.

  6. insuranceguytx on December 21st, 2008 7:10 pm

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    You need to talk with a financial planner. You won’t get a straight answer here.

    There are too many factors that affect an accurate answer.

    Be prepared to make changes in you insurance coverage throughout your life.

  7. puja j on December 22nd, 2008 8:07 pm

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  8. aaron p on December 23rd, 2008 2:10 am

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    Listen to insureguytx. There are guarantees to be had with universal life and variable life and there are non-guaranteed whole life policies. For less than you might expect to pay for only one year of permanent coverage, you can have a fee-only planner make an unbiased recommendation.

    Not the “I’m a financial planner but don’t charge a fee” guy. They have an obvious bias – to sell you. Check with the one that you pay and doesn’t take commissions or tells you exactly how much they make on their advice. That’s objective.

  9. bharani s on December 25th, 2008 1:43 am

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