First of all, life insurance is not an investment vehicle. As to whether you now need permanent insurance depends on what you are calling wealthy and the tax situation where you live.
Millennials most 'at risk' generation when it comes to life insurance
- Thread starter Insurance Forums Staff
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- 24,940
You may be waiting for a while. I do not imagine any experienced agent is going to make a blanket statement about how one type of insurance is best for you with out knowing you.
Life Underwriter,
According to the life insurance industry, their own statistics show LESS than 1% of term polices ever pay the death benefit. The insurance company makes billions of dollars on term life policies. If the insurance companies make billions on term life policies logic says consumers are LOSING billions of dollars buying term life. Wouldn't that be true?
Why do insurance companies make $billions on term life?
Because, people are living longer. Even if term life policy holders keep up with their premiums, which most do not, they will out live their policies.
What happens when they out live their term life policies? They have no insurance. And, they are 20 or 30 years older. Sure they can buy another term policy. But, being 30 years older their premium is no longer cheap.
Here's another little statistic. Today the chances of getting cancer are 1 in 2 for men and slightly better for women. Fifty three percent of men born in 1960 will get cancer. For women born in 1960 47.5% will get cancer.
That means HALF of the people you sell term life to will get cancer. When half of your term life policy holders get cancer you can bet your last commission check they will NEVER miss a premium until their term expires. And what about heart attacks while they have the term policy? Strokes?
Then what do they do? Buy more insurance? Nope. Not with cancer. Or a history of heart attacks. Or a stroke. If they manage to find a company who will write them they will not be able to afford the premium.
What happens to the monthly premiums of a whole life policy if the insured gets cancer? Normally, the premium stays the same. And, even after the insured holder gets cancer the insurance company can NOT cancel the policy. Besides that, the insured can borrow the cash value tax free to pay for incidental costs of his cancer treatment. And, NOT have to pay the cash value back. Or let the cash value make the premiums.
So, how are you doing a favor to people by selling them term life? How are you doing them a favor by selling price instead of value?
Dave Ramsy loves term life. He says to buy term and invest the difference in the premium cost over UL or WL. Ramsy KNOWS the vast majority will NOT invest the difference. And, what he doesn't tell his naive viewers is he makes millions of dollars a year from his advertisers to promote term life.
Someone else may also be naive to the facts.
Have a great day!
tinman
According to the life insurance industry, their own statistics show LESS than 1% of term polices ever pay the death benefit. The insurance company makes billions of dollars on term life policies. If the insurance companies make billions on term life policies logic says consumers are LOSING billions of dollars buying term life. Wouldn't that be true?
Why do insurance companies make $billions on term life?
Because, people are living longer. Even if term life policy holders keep up with their premiums, which most do not, they will out live their policies.
What happens when they out live their term life policies? They have no insurance. And, they are 20 or 30 years older. Sure they can buy another term policy. But, being 30 years older their premium is no longer cheap.
Here's another little statistic. Today the chances of getting cancer are 1 in 2 for men and slightly better for women. Fifty three percent of men born in 1960 will get cancer. For women born in 1960 47.5% will get cancer.
That means HALF of the people you sell term life to will get cancer. When half of your term life policy holders get cancer you can bet your last commission check they will NEVER miss a premium until their term expires. And what about heart attacks while they have the term policy? Strokes?
Then what do they do? Buy more insurance? Nope. Not with cancer. Or a history of heart attacks. Or a stroke. If they manage to find a company who will write them they will not be able to afford the premium.
What happens to the monthly premiums of a whole life policy if the insured gets cancer? Normally, the premium stays the same. And, even after the insured holder gets cancer the insurance company can NOT cancel the policy. Besides that, the insured can borrow the cash value tax free to pay for incidental costs of his cancer treatment. And, NOT have to pay the cash value back. Or let the cash value make the premiums.
So, how are you doing a favor to people by selling them term life? How are you doing them a favor by selling price instead of value?
Dave Ramsy loves term life. He says to buy term and invest the difference in the premium cost over UL or WL. Ramsy KNOWS the vast majority will NOT invest the difference. And, what he doesn't tell his naive viewers is he makes millions of dollars a year from his advertisers to promote term life.
Someone else may also be naive to the facts.
Have a great day!
tinman
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Those that knock AD&D plans and promote term fail to consider both plans are actuarially priced according to the probability of the event occurring so there probably is not that much difference in payout in relation to premiums paid. .
- 1,405
I certainly hope so. Have you seen how CHEAP term life insurance premiums are?
I went to my website:
TERM4SALE | Term Life Insurance Quotes - Free & Unbiased - 100 companies
And ran a 20 year term quote for a 35 year old male non-smoker, in preferred plus health. The lowest premium was:
$400
That's $1m of term life insurance protection for $400 per year.
Assuming a life insurance company is just a charity, and not in business to make ANY money, they would need 2,500 people to buy that policy, in order to collect $1,000,000 in order to pay ONE, and only ONE death benefit that year.
1 over 2,500 is .04 percent. .04 would be less than 1. And that's for a life insurance company which wouldn't be making a dime.
If you add up ALL the premiums any one person pays for that 20 year term, from age 35 to 55, the total premiums collected over the 20 years on those 2,500 products would be:
$400 X 20 (years) X 2,500 (people) = $20 million dollars.
That means over 20 years, the life insurance company can ONLY afford to pay out 20 death benefits. That's 20 death benefits, over 20 years, for 2,500 people. That's .8%. (8/10 of one percent). And that's with the life insurance company making NO MONEY - paying out ever dime it collects.
The less than 1% comment better be accurate, or life insurance companies would go broke at these incredibly low prices.
As to this comment:
I would like to know where you got the facts underlying your claim. I note you said "company" and not "industry". Please, pick the biggest fattest company you can, and tell me how many "billions" they have made on term life insurance.
Anybody ever realized that the reason term premiums are so cheap is that term polices very seldom pay out?...
- 1,405
Anybody ever realized that the reason term premiums are so cheap is that term polices very seldom pay out?...
That would be a nice summary of what I said.
However, most whole life policies never pay a death benefit either.
Robert,
Of course you are correct.
I know, and should have said "the insurance industry".
Thanks for pointing it out to me.
About YOUR comment that says "whole life policies never pay a death benefit either".
I looked searched for the percentage of WL policies that paid the death benefit and can't find a source. Do you have one? "Most" is relative but I have a hunch the percentage isn't very high.
tinman
Of course you are correct.
I know, and should have said "the insurance industry".
Thanks for pointing it out to me.
About YOUR comment that says "whole life policies never pay a death benefit either".
I looked searched for the percentage of WL policies that paid the death benefit and can't find a source. Do you have one? "Most" is relative but I have a hunch the percentage isn't very high.
tinman
True but many that don't pay a death benefit pay a cash benefit so there is balance against the premium difference. It would be interesting to actually know if there is a difference in the plans profitability, which would be most profitable to the company.. No guesses, just the facts Ma'am.. I can say one thing for sure.. "Of the plans that are carried to maturity, there will be no difference in the percentage of death benefit..I am also willing to say that more WL reach that point .than term because of the increase in the term premiums after the inital term premium.
I, myself am hanging onto a $50K 15yr term.that I bought many years ago for $25 per month.. It is now $200 per month and increasing annually.. Ask me if I wish I had gone ahead and paid the WL premium back when I bought the term...
I found this on a blog but he doesn't give a source for his numbers.
"Still, a broad percentage at least offers some insight into the fairness behind the juxtaposition of term life insurance to whole life insurance, so simply knowing the percentage of policies that wind up paying a claim is useful, and that answer is somewhere between 15 and 20% for whole life insurance"
