Comments on: Does universal life insurance make sense for us over term?

By: mbrcatz

mbrcatz — Mon, 22 Feb 2010 08:09:36 +0000

It’s impossible to say which you should pick, because from what I see, you’re "trying to get a deal". You haven’t done the MOST important thing, when buying life insurance - SET THE GOAL.

What’s the GOAL you want the life insurance to acheive?

Keep in mind, life insurance is primarily a DEATH planning tool, and a for most people, a crappy investment tool.

Always RUN THE NUMBERS. Then, check the guarantees. Many agents sell Universal Life based on the BEST possible scenario - which leaves many, many MANY unhappy insureds when the market is down - like now.

Set your goal. Compare UL products based on minimum GUARANTEED returns. I think when you read the small print, the amount that’s GUARANTEED, is NOTHING.

And compare to average stock market returns here:http://www.msfinancialsavvy.com/calculators/monthly_deposit_savings_calculator.php

$30 a month for 30 years at 10% - stock market average - adds up to $$69,000. Compare that to the GUARANTEED amount on the UL, and verify that the PREMIUMS are guaranteed level, also.

By: Finance1o1.blogspot.com ®

Finance1o1.blogspot.com ® — Mon, 22 Feb 2010 08:09:36 +0000

The way universal life insurance work is that it is annual renewable term that builds cash value. While premiums may remain level for awhile, the cost of the insurance goes up every year. That means less and less of your premiums is going to the cash value and more toward the insurance. Several years down the road, all your premiums will be going to the insurance and none toward the cash value. If you don’t pay more premiums, the money to pay the difference will come from the cash value. So the cash value will soon be depleted and your policy will lapse.

You should get term insurance and invest the difference. If you do the right thing with your money by investing it in the right investments, you can build a nice nest egg for retirement. I suggest opening a Roth IRA and investing in mutual funds.

By: car253

car253 — Mon, 22 Feb 2010 08:09:36 +0000

Finance 1 has it right. And, rarely do I hear the right explaination that Finance 1 gave.

Did the agent give you an illustration of the Universal life policy? If not ask for one. That will show you what the policy would do in the future.

I strongly suggest you listen to Finance1. That is the right advice.

By: Blake

Blake — Mon, 22 Feb 2010 08:09:36 +0000

It’s nice to see people giving some good advice for a change when it comes to insurance! I am an insurance broker myself, and have yet to sell a universal policy. I just don’t like them, and never spin them as a so-called investment.
Being that you’re so young, you might want to also inquire about a return of premium option with the term product. Most of the life companies out there offer them. It’s a cheap rider when you’re young…..not so cheap when you’re older. There are even several carriers out there that offer term insurance to a certain age, say 65, instead of 10,20,30 years. Being that your husband is a pilot matters to some carriers for some reason (even though flying is safer than driving!), but not all of them.
Hope this helps