Is a life insurance policy worth it for me? ?

Question

i have a life insurance policy with a very trustworth company..the premium is to pay for 12 yrs, annual payments, and it last my entire lifetime and i able to 'cash out' when the policy is has a certain amount meaning i could actually enjoy the money i pay every yr..but not for another 20 yrs..

anyone else have a similar policy?

Answer 1

The best thing to do is buy term and invest the difference. Term is the cheapest policy for the most coverage for a certain length of time 10-35 years. You should have an investment going as your policy goes, then after your term is up you'll have more than enough money to do whatever you need to do. That's what I did, I was being SCREWED big time with the whole life c**p. Now i'm paying $100 less but triple the coverage. If you need any more info feel free to contact me @ [e-mail].

Answer 2

after my mom just passing suddenly at 50 I think a life insurance is worth it.. it will help pay for funeral costs and any outstanding bills that you may have so that your loved ones aren't stuck paying for all of that.

Answer 3

You can't "cash it out".  You get to "borrow" cash value, about 10% of what you've paid in on it.  It's CERTAINLY not a good investment - it's geared to pay out, if you DIE.  

It's also possible, that it's not GUARANTEED paid up after 12 years.  In other words, it's possible, that you'll have to pay 20 years.  Or maybe you'll have 2 years you don't have to pay, then you'll have to start paying again.

Me, personally, I don't buy this type of policy.  I've run the numbers, and can acheive my goal by buying term insurance, and making regular contributions to my investment account with Schwab.

Answer 4

I don't know what mbrcatz17 is talking about.  I've notice in a lot of her answer's that she seems to really dislike permanent insurance.  

Don't listen to her, what you probably have is a 12 pay life.  This means that instead of paying the premiums until you reach 100, you only have to pay for the next 12 years.  So it's quite expensive for 12 years, but then you're done paying.  They can be nice for somebody who has excess cash right now, but may not in the future.  It's also nice that if you keep the policy, you'll have it in place when you're elderly and likely on a fixed income but you won't have to pay the premium.

Furthermore, with whole life policies, you do have to option to borrow against the cash value, but you can usually borrow 90%, not 10%.  Plus you have the option of doing a cash surrender.  This means that you take all of the cash you have earned in the policy, but the policy cancels when you do so.  Some policies even let you do partial surrenders where you would only take out a portion of the cash value (some don't allow that though).

I'm not sure what insurance company mbrcatz17 sells for, but it's a poor representation of how whole life policies (and all permanent life policies for that matter) are intended to work and be used.

There are some good reasons for certain people to buy term and invest the difference, but there are definitely good reasons to buy permanent as well.

You may want to read "Becoming Your Own Banker" by R. Nelson Nash.  It might show you the value of whole life policies.

Answer 5

More information regarding the policy would be nice.  But I would say that life insurance is extremely important to anyone, just depends on which type of policy is all.

There are a couple of different policies that allow cash out.  

-  Cash Value Whole Life:

This policy is a good policy when you obtain it at an earlier age, in good health.  It allows for you to obtain a rate of return cash value wise within the policy.  Thus, avoiding any taxation on the monies used in the future.  The rate of return will vary, but is equal to a 5-6% annual return.  Even thought the policy may only require for you to pay a premium for 12 years, have your agent calculate the policy with you paying that premium over 20 years.

There should be a huge difference.

This is the best cash value whole life policy in my opinion.  Why?  Cause a variable or Universal Variable whole life 90% of the time will not be in place when you turn 65 years of age.  Why?  Because the investment vehicles or sub accounts under perform, which require you to pay more in premium each year to keep it afloat.  If you stop paying on your premium, then it slowly eats away at the cash value to supplement for the premium short comings.

In addition a variable whole life has sub accounts, which are equivalent to mutual funds as the investment vehicles.  Because they are within an insurance policy, legally they cannot be called mutual funds.  But, because they are within an insurance policy the mgmt fees are usually 3-4 times more than the mutual fund.  Which is a bad investment.

Just my opinion.