IF you NEED Life insurance, buy the CHEAPEST. Level term is the way to go, IF it has the option of guaranteed renewable/convertable. Most are.
Whole life is plain and simple THEFT!
As an example:
You come into Turbofabricators First National Bank (TFNB) and tell me you want to open a savings account. I tell you that I will put your money in a interest bearing account at 1.3%. (sound good?...WAIT...it gets BETTER!!!) If you need a loan from my bank, I will loan you money at a very reasonable rate of 7%, and I will loan you as much money as what's in YOUR savings account. (sound good?.....WAIT.....it get's BETTER!!!!) If you die, I keep the money that is in YOUR savings account. After all, your wife didn't put anythig into the account!
Would you do business with TFNB? Why not? (What if I gave you a toaster oven?
) If you own a Whole Life policy, you are doing business EXACTLY the same way. With Whole Life (aka Cash Surrender Value Insurance Policy), you pay for THREE things:
1) Insurance (VERY expensive coverage)
2) A savings plan (the FTC found that the average return was <1.3%) and when you DIE, they DO NOT give you the savings aspect of the policy, they KEEP IT!!!! READ THAT AGAIN!!!! ...........Your spouse will NOT recieve anything except the death benefit, less any loan that you took out to send your kid to college, buy a boat.........
3) A loan plan. You can borrow what ever is in your "cash value". BUT.......if you die, they DEDUCT the amount of your existing loan from the death benefit!!!! AND you get to pay interest to borrow your OWN money!!!
You are paying for three things, but can only ever get ONE!!! Kinda like buying a pair of shoes and getting home to find only one shoe in the box (and it is missing the lace). You call them up and say "HEY!! where's my other shoe and lace?!?!" They tell you "Well, sir, that's our policy. Didn't you read the fine print?"
If any of you think I am wrong, pull out your policy and read just the first 5-6 pages. You will then reach over and grab the phone and call a DIFFERENT agent, and tell them that you want to buy a term life policy. (Do NOT drop your policy until you have a new one, though!)
Universal Life/Variable life is just a COMPLEX version of a Whole life policy.
My advice is to buy a term policy and invest your savings in a SEPARATE fund. (Mutual fund ect. NOT tied to the insurance company) DO NOT bundle the two. You LOOSE control. Most Universal Life policies have thier savings rates based on a board of directors, NOT a investment portfolio. (hence the rason your agent called to tell you that you owe MORE money!) Again, read the fine print. Most, if not all, life insurance agents NEVER go over the policy, page by page, with you when they drop it off. There is a reason they don't.
I am NOT in the insurance business, so please don't call me asking for a policy. I am also not a securities dealer either. I do have many years in both, though.
I'm sure there are a few insurance sales people on here, and sorry to rain on your parade. If you feel that I am incorrect, please scan YOUR personal policy (black out your personal info) and post the ACTUAL policy on here. I will gladly review it for you.
I have NOTHING to gain in this post. Just what I have learned over the years. There are many, many great books out there that cover this info in DEATAIL. Take the time to read some of them. It will save you possibly MILLIONS of dollars.
The insurance industry is the largest industry in the world. The golden rule applies here. He with the gold, makes the rules. The life insurance industry use to be a 70 trillion dollar business. And that was MANY years ago.
I have been threatened by life insurance agents before. THAT was professional
Now......why would a agent knowingly sell you a Whole Life/Univeral Life policy? Because of ONE thing.................COMMISSIONS!!! The average agent makes MORE than 40% IF he is REAL new, low on the totem pole. Many make more than 100%. Yep......100% commission. They have to pay the money back if you cancel the policy, and they also make renewal comisions, too. Some get retention bonuses'. That's why your agent gets all out of shape if you tell them that you want to cancel your policy and buy a term policy.
They will ask you questions like: "Do you want to own your home, or do you want rent your own home?" Then they ask you "Do you want to own your insurance, or do you want to rent your insurance?" "You want to gain equity in your policy then, don't you?" "Well, if you buy term insurance, you will not gain any equity in your policy. That's like renting your house. The landlord makes all the money, and you get NOTHING!....You don't want to do THAT do you!" They will spend HOURS trying to get you to keep your policy. It gets pretty comical (or violent
) if you want to lead them on. Just ask them to show you their OWN policy, then open it, and read the fine print in their policy and ask them if THEY knew that, and if so, you don't want to deal with someone THAT "smart"
The agent stands to loose $2-3000+ on a 750K policy if you cancel it! They WILL try to talk you into keeping it. Thier commission level (%) will drop if they have a poor retention rate, too. My feeling is, WHY did the guy sell you that policy to begin with? M-O-N-E-Y, The root of all evil? 30 years of it. You make the call.