NLIC.org

Constance Said:

Where can I go to get whole life insurance for my spouse and I?

We Answered:

Any carrier with an AM Best rating of A+ or higher will do. More important than the company is who you purchase it through. Use a qualified financial advisor who determines your insurance need based on a comprehensive financial needs analysis. For most people, some permanent coverage, such as whole life, is advisable; but for working age adults, most of your coverage should normally be term.

Life insurance is a complex financial instrument to be acquired for specific purposes. As such, an insurance salesman is not qualified to advise you. Never purchase life insurance from an insurance agent or over the internet.




Added: In response to james m's edit, I am trying to do nothing but differentiate legitimate financial practitioners from salespersons who generally (many agents excepted) lack the knowledge, qualifications, and objectivity to engage in financial advisory services.

In all but a very few states, james' allegation of illegal use of the term "financial planner" is incorrect. The CFP designation is a registered commercial trademark, and not a credential regulated by any governmental body or law. A financial planner is an individual who is generally qualified in all major areas of personal financial management and makes his living offering objective, comprehensive, and independent financial advice. The FPA (the originator of the CFP designation) is not a legal authority in dictating who is qualified to engage in financial practice. I'm not convinced that they would even be competent to do so. I've known and worked with several fine CFPs, but none of them make the list of the best financial advisors I have known. In fact, few who top that list have any designations at all.


.

Lance Said:

What is the safest way to invest other than whole life insurance?

We Answered:

There is always a lot of ways that you could invest Your money for growth and estate planning.

The answer to this question depends on a number of factors:
Your age and your spouses age
Your risk tolerance
Amount of life insurance coverage you have in place
The amount of money you are planning to invest
Your financial objectives

You will see a lot of comments from people who say to buy term and invest the difference, but this is naive talk. Many of the insurance policies and annuities that I sell provide interest rates that are higher than todays CD's and Mutual Funds. Additionally, this comment is based on the assumption that you or your financial advisor are actively managing your investment accounts and able to beat the indexes. If you want long term insurance protection, than Universal Life is the way to go: I calculated that a male who wants $200000 coverage for 50 years (age 30-80) using term life insurance would spend over $76,000 and have no coverage after age 80; while a male would spend $66,000 over the course of 50 years for a Universal Life Policy and have cash value...this allows him to keep the same coverage while paying premiums or switch to paid up life insurance and have a reduced death benefit.

If you are interested in riding the market, than variable universal life insurance policies and/or variable annuities may be the way to go; however, you will be subject to downside potential if the investments don't predict market crashes like the one in 2007-2008. If you are opposed to these types of risk, than you may be more interested in indexed universal life policies and/or indexed annuities as they will offer growth potential linked to certain indexes (like the S & P 500); provide you a minimum interest rate guarantee; and eliminate downside potential. The final option is Universal/Whole Life and/or fixed Annuities, which will offer you fixed rates of return...currently 5.8 percent for a Universal Life Insurance Policy offered by one of the companies I work with.

Life insurance provides you a number of riders that regular investments don't such as the ability to access up to 75% of the death benefit if you become terminally ill...and many other useful riders. Life insurance can also provide you access to tax free loans, providing it is not classified as a material endowment contract. With a loan, only the amount of the loan and unpaid interest will be deducted from the face amount. So (I love my job :) --- A 65 year old woman could fund a life insurance policy with $50000, and get almost $100000 of coverage. She can borrow $25000 of that, and not be subject to tax penalties related to a MEC because she is over 59.5 and there has been no cash value build-up. She will be able to pay a low interest rate on the borrowed money, not even paying back the principal, and leave her hiers $75,000.

Any questions, hit me up at the blog I am started at http://floridalifeandhealth.info/

Mathew Said:

How does whole life insurance work?

We Answered:

All of these answers missed the mark to a degree. Insurance Pickle clearly provided the best response. Finance101, as usual, gave the worst. The reason F101's was poor is not because it was "wrong," but because it was unnecessarily wordy and irrelevant to a true understanding of whole life. As he summed up the post in a brief pro/con section at the end, this is what I'll address.

The pros are what they are; enough said.

The "cons," however, show his complete lack of comprehension of the product:


1) It builds cash value, which makes this type of life policy very expensive.

Premiums for whole life are higher than term for the same reason that premiums for a 20-year level term are more expensive than for a 10-year. They are the result of averaging mortality costs over the remainder of the insured's lifetime (including when he is very old and expensive to insure) rather than a shorter period ending at a younger age. To say that whole life is "more expensive" than term is akin to saying that a new car is more expensive than a candy bar. Apples and oranges.

2) Cash value grows at a low rate of return

Not at all. Cash values in whole life policies have historically grown at a rate extremely favorable for fixed instruments. They are right in line with any well-managed high-grade bond portfolio.

3) If you want to use the cash value, you have to borrow it and pay loan interest of 5-8%

Yes and no. When you borrow against cash value, you are NOT removing that cash value from the policy, you are merely collateralizing the loan with the cash value. While you are paying very modest interest on the amount borrowed, your entire cash value is still receiving a similar amount of interest within the policy. It is nearly a wash (typically no more than a 2% difference). Comparing that with taxes you would pay on gains in a conventional investment vehicle; the whole life policy comes out far ahead.

4) If you die, the insurance company keeps your cash value.

The insurance company doesn't keep anything that wasn't an actuarial cost of insuring the insured's life. For any level premium policy, be it whole life or term, excess premium is paid early in the policy's existence in order to compensate for insufficient premium paid later. This is further calculated actuarially to ensure that the early accumulation of cash value does not constitute an excessive windfall to the insurer. If this is a great concern, simply purchase a universal life policy instead, using the increasing death benefit structure, where the policy pays the face value plus the cash value.

If an insured dies in year two of a 20-year term policy, is the excess premium refunded? Of course not. This is the same principle.

Brett Said:

Is lawsuit protection a reason to get whole life insurance?

We Answered:

No. LIABILITY insurance is lawsuit protection. Life insurance is DEATH protection.

Life insurance is a CRAPPY investment.

And I bet that saleman didn't mention that your retirement accounts are also protected from lawsuits here in Texas.

If the goal is protecting your assets from lawsuits, you probably need to talk to an estate planner who can set up a trust.

Nicholas Said:

What exact is whole life insurance, and how do life insurance companies profit from selling it?

We Answered:

Basically insurance only works when a large groups of people own that particular insurance. Everyone pays to protect their income, but not everyone is going to use their insurance. So that's how basically insurance companies stay in business, unless something extraordinary has happen in this country where there's lots of people are filing for claims and the insurance company can't pay them all (such as the Hurricane Katrina event).

What is whole life insurance?
1) Its a level term insurance to a specified age (usually to age 95, 98 or 100) plus cash value.
2) It is very expensive when compared to term insurance
3) Cash value grows at a very low rate of return. In the first 10 years, you see a negative return on your money. But long term average is anywhere between 1-4%, depending on the company.
4) If you want to take money out, you have to borrow it and pay loan interest of 5-8%.
5) If you die someday, the insurance company pay the face amount of the policy (minus loans and missed premiums) to the beneficiary, but they keep all the cash value.
6) If you do get to live by the end of policy date (when you around age 100), the insurance company pay you the cash value, but you lose the insurance.

There's only one reason why that agent is trying to sell you whole life insurance: MONEY!
Next thing you'll know, that agent would try to sell you universal life insurance, a product that is more horrible than whole life, but it pays out more commissions.

Go with your instinct and find a different company who would listen to your needs. Try this site
http://free-best-life-insures-comparator-usa.blogspot.com/


Here you can get quotes from different life insurance companies in your area, its the best way to find an affordable life insurance with a reliable company.