I dealt with over 150 clients in my career and haven’t found a single reason why someone would need permanent life insurance. All my clients have term insurance b/c I don’t see why anyone would need life insurance forever. I believe someone needs life insurance at the time when they need it most, which is when they have little savings and lots of debt to pay (such as a mortgage). While I protect the client’s income with term life insurance, I also help them save money for retirement by opening IRAs and/or variable annuities or tax-exempt mutual funds. For kid’s education, I use either a 529 Plan, Coverdell, or UGMA. For estate planning, I setup trust funds.
Insurance_Pickle_com said:
May 27, 09 at 3:20 amThere aren’t many reasons for low and middle income earners unless they continue to work through their retirement years.
Gowen said:
May 27, 09 at 11:10 amFor most people out there, especially young families, term is almost always the best option. Term, for younger people, is about 10 times cheaper than most whole life policies. However, there are some times when whole life coverage makes sense. After someone turns 60 it becomes difficult to find competitive term coverage, assuming you can even find it at all. When I was in the business, I had several clients in their 50-60s who purchased a small whole life policy to avoid paying estate taxes. (I heard that 2010 is the last year that there is no cap on estate taxes, then the cap is $1 mil…not sure about this though.) A small whole life policy, CAN help people avoid paying a substantial amount of estate taxes, depending on a person’s financial situation. If you’re under 35, term is the way to go. If you are over 50, it might be worth taking a look at if you’re interested in avoiding paying estate taxes. But again, it depends on you’re individual situation.
Jim_D said:
May 27, 09 at 11:47 amPersonally, I think whole life insurance is a gimmick…
mbrcatz said:
May 27, 09 at 4:17 pmIf you own a family business, and want the business to be passed down to a family member, instead of being sold to pay estate taxes.
When you are very ill, and want to pass money tax free to someone, instead of paying heavy estate taxes to uncle sam (tax avoidance).
If you have a belief that you want to leave an inheritance to your kids, and don’t trust that your estate will be enough to cover your last years of skilled nursing and final medical expenses.
When you have a child who’s permanently handicapped, and need to make sure that regardless of your nursing and final medical expense needs, there’s enough to fund a trust to pay for THEIR skilled nursing care the rest of their life.
Don’t get me wrong, I’m a ‘buy term invest the difference’ kinda gal myself. But I’m also a ’spend it while you’ve got it, let your adult children forge their own way, after I put them through school the rest is up to them’ kinda gal.
But there ARE circumstances when it’s necessary.
car253 said:
May 27, 09 at 11:22 pmYou already answered your own question.
I agree with both.