Term vs Whole. Need inputs.

[WinoBlues]

I've done my homework, but just curious what others have to say.

1. Parents are 60 and in decent health right now. Bought each a 25k whole life insurance policy. Nothing huge. Just to cover funeral expenses. I expect them to live for at least another 20 years. Currently paying $220/month total for both policies.

2. Sister just joined Primerica and she said Term life is better. She is able to get a 15 year (20 yr not available for people 60+) term life (25k each) for around $100/month. And since I am already willing to pay $220 for whole life, I can take the $120 and invest it. According to her, $120 invested over 15 yrs at a interest rate of 5-9%, I would accumulate around $40-50k.

My main problem here:

- If my parents live pass the 15 year term, which I think they will, the policy is done and renewing would be extremely costly. Accumulating 40-50k over 15 years is not a guaranteed. If I somehow landed in the 30k or under when my parents pass away, I'm screw. Yes, I will be paying more than 50k for the whole life policy if my parents pass away at 80+, but 50k is guaranteed no matter what. I don't think about how much I've paid over the years, but what I'm guaranteed at the moment.

So why is she trying to convince me that the term life + investment is a better idea? Seems to me like, term life policies were created to lapse just before the insured dies and that is why my parents do no qualify for a 20 yr term. If I need to invest extra just to cover my ass then the whole life makes sense. Who's the say the stock market will not crash to the ground on the 14th year from now?

male and female age 60 - 20 year level term at $95mo for $50,000.00 If Only Standard health Issued non med - No exam.

male and female age 60 - 20 year level term at $78mo for $50,000.00 If Preferred health. Issued non med - No exam or phone interview.

male and female age 60 - 20 year level term at $91mo for $100,000.00 If Preferred health. With a paramed.

Now if we talk small permanent coverage on healthy 60 year old We can bring in GUL.

This is just an example of what an independent Life Insurance agent has. None of these are offered by Primerica.

 

[rousemark]

I've done my homework, but just curious what others have to say.

1. Parents are 60 and in decent health right now. Bought each a 25k whole life insurance policy. Nothing huge. Just to cover funeral expenses. I expect them to live for at least another 20 years. Currently paying $220/month total for both policies.

2. Sister just joined Primerica and she said Term life is better. She is able to get a 15 year (20 yr not available for people 60+) term life (25k each) for around $100/month. And since I am already willing to pay $220 for whole life, I can take the $120 and invest it. According to her, $120 invested over 15 yrs at a interest rate of 5-9%, I would accumulate around $40-50k.

My main problem here:

- If my parents live pass the 15 year term, which I think they will, the policy is done and renewing would be extremely costly. Accumulating 40-50k over 15 years is not a guaranteed. If I somehow landed in the 30k or under when my parents pass away, I'm screw. Yes, I will be paying more than 50k for the whole life policy if my parents pass away at 80+, but 50k is guaranteed no matter what. I don't think about how much I've paid over the years, but what I'm guaranteed at the moment.

So why is she trying to convince me that the term life + investment is a better idea? Seems to me like, term life policies were created to lapse just before the insured dies and that is why my parents do no qualify for a 20 yr term. If I need to invest extra just to cover my ass then the whole life makes sense. Who's the say the stock market will not crash to the ground on the 14th year from now?

ven if term were the appropriate product, the Primerica term is a poor choice. There are other term companies that are much cheaper and there are term companies that will write 20 year term at their ages. Primaerica makes their fortune recruiting part time neophyte agents and force feeding them the kool-aid.. Most of their agents write their families and a few of their friends and then are out of the business. They often do people quite a bit of harm by replacing permanent insurance polices with term. when term is not appropriate for the need.

 

[WinoBlues]

BTW, my post was not advocating term for funeral expenses. It was just showing there are 20 yr term plans and at more coverage for the premium dollar.

 

[WinoBlues]

Soulless, on your sister. It sounds like you have a pretty good handle on the situation. Her managers are pretty much telling her what they tell all of their recruits, what their manager told them and what their manager told them. Does not matter the insureds wants or needs the answer is term insurance.

Now the other question. Is she actually licensed yet? If not and her manager may be having her set up "training" meetings.

Expect the trainer to ask you to pull out your policies.

 

[62Dodd]

Term is purchased for temporary coverage needs and the whole life your parents currently have is purchased for permanent needs, like funerals and last expenses. You do not say how long they've had the WL? There could be dividends in the policies to increase the death benefit or used to reduce the costs. Tell your sister that you want to think about it, she will be out of the insurance business shortly...

 

[Newby]

Your agent may have been captive (not a broker). Fidelity is not a very price competitive company. Most brokers are not going to sell them just because they are very easy to beat on price.

Check for yourself. Use this quoter. Put in your state and your parent's age and smoking status. It will show you the rate comparisons. If you want to re-shop it, find a local broker in your town to work with. Could be a good one on this forum if you let us know what city you are in. But don't engage with any one who is private messaging you. Those are the scammers.

The quoter will let you pull up 5-quotes per day and will then cut you off unless you subscribe. You don't have to put in any identifying information at all.

Final Expense Quotes

 

[jdeasy]

I've done my homework, but just curious what others have to say.

1. Parents are 60 and in decent health right now. Bought each a 25k whole life insurance policy. Nothing huge. Just to cover funeral expenses. I expect them to live for at least another 20 years. Currently paying $220/month total for both policies.

2. Sister just joined Primerica and she said Term life is better. She is able to get a 15 year (20 yr not available for people 60+) term life (25k each) for around $100/month. And since I am already willing to pay $220 for whole life, I can take the $120 and invest it. According to her, $120 invested over 15 yrs at a interest rate of 5-9%, I would accumulate around $40-50k.

My main problem here:

- If my parents live pass the 15 year term, which I think they will, the policy is done and renewing would be extremely costly. Accumulating 40-50k over 15 years is not a guaranteed. If I somehow landed in the 30k or under when my parents pass away, I'm screw. Yes, I will be paying more than 50k for the whole life policy if my parents pass away at 80+, but 50k is guaranteed no matter what. I don't think about how much I've paid over the years, but what I'm guaranteed at the moment.

So why is she trying to convince me that the term life + investment is a better idea? Seems to me like, term life policies were created to lapse just before the insured dies and that is why my parents do no qualify for a 20 yr term. If I need to invest extra just to cover my ass then the whole life makes sense. Who's the say the stock market will not crash to the ground on the 14th year from now?

As others have said, if term fits the need and want then Primerica is not the answer. Don't worry about sis, she won't be with them long anyway.

For the whole life, you are overpaying by a considerable amount.

You could get whole life for each, $25K face , in the $150/mo range. Less if they are in really good health.

 

[jboussea]

..Wow ... this is what the term vs whole life thing has come to. Term is used to cover a temporary need like income replacement. For example when you were born .. your parents were younger and if one was to pass away, the other would need the income replacement to take care of you and your siblings.

A funeral expense is not a temporary need. It will happen eventually.

 

[walthamny]

You also need to factor how much they are receiving in pension income. You already figured out, term insurance works only during the term. If they are both receiving Social Security and the amounts are close to each other, permanent policies also help replace income. If they are each going to get $1500 a month in Social Security, when one of them passes away, the household income drops by %50. Sometimes that is a big adjustment. 25K policy will give time for the other spouse to adjust.

Buy term and invest the difference crowd is probably going to look worse under Trump tax plan anyway. When they take away Estate tax, they are also going to take away step up of basis. That will make their calculations look much worse.

 

[10X]

Not to mention the human factor...most people don't have the will or commitment necessary to invest the difference over time.