At 23 I signed for a whole life policy, now 31 I am being told I was "took" and to cancel the policy, help?

Question

Should I switch to term insurance and invest for retirement with a roth ira?

Answer 1

I don't know how much premiums you are paying for whole life, but I'm guessing its over $1000/year. Let's say you are paying $1000/year for $100,000 coverage.

Which would you prefer? Paying $1000/year on whole life or $350/year on a 30 year term for the same amount of coverage?

If you invest the difference at whatever rates, even at 0%, this money will grow larger than what is in your cash value in 30 years.

Answer 2

Absolutely not! Since you were so young when you took it out, I am sure it will have awesome cash values on the policy when you want to retire. You can then "borrow" from that to enjoy life and retirement! It is a loan, so it is not subject to income tax, and you also do not have to repay the loan. I wish I had taken out a whole life policy when I was 23! Be careful of the advice you are getting. Life insurance people do not make any money on the sale of the policy except for the 1st year. So, some agents will try to get you to surrender your policy to buy another so they can get commission on the first year policy again. It is not an ethical thing to do, something I would never do to my clients.

Answer 3

If you look at the whole life policy as an investment than you will feel "taken".

Before you cash out your policy, think about this..
Say you cash it in and take out a 30 year level term policy. You pay on it every month for 30 years and then the premiums jump through the roof. (Just ask an agent to see the illustration on what the premium will be in year 31) So now your 61 years old. Some people will say that you don't need life insurance at that age. I say thats crap. I see people buying second homes and having other liabilities much further into life. If you retired, your little bit of life insurance you had at work is gone. So you call around for a new term life policy only to find that its going to cost you a ton, for two reasons. First is because your 61 years old and second because most people tend to pick up a few health problems as they get older.

So my point is that it can be real easy to jump ship when you see the upfront price difference between term and whole life insurance, but make sure that that is really what you want. I know many people that wish they kept their policy they had 40 years ago.

Answer 4

Whole life insurance costs more money because of the financial security that it provides for your family when you die. A whole life policy will build cash value which can be used to increase the face value. While term insurance does have its place it is important for all consumers to have at least a small whole life policy that can be used for final expenses. I have read the responses from some of the "enlightened few" and to say that you need to cancel the WL policy for a term policy is obsured. They obviously are ignorant to the fact that less then 15% of all term policy's will ever pay a death benefit. The problem with paying for a term policy is that eventually it will end and to convert or continue coverage will cost you more then you are paying now. The advice to put the extra money into a retirement plan which can also be used as a death benefit if you die. Is a bit of a risk for the financially intelligent individual. Retirement is set up to be used for retirement and life insurance as a detah benefit for you loved ones. What happens if you die after most of your retirement savings are exhausted. The reason people purchase life insurance is to eliminate the financial strains a death can put on a family. My advice to you would be to keep your WL insurance and invest in your company's 401k, or 403b program. I would not do business with the agent he is acting unethically and looking for a quick commission. My family has been in the insurance business for over 50 years. While I am in a different line of work I would be happy to forward any additional questions you may have. For example a Variable anuity may be in your best interest. [e-mail] Good Luck hope this helps

Answer 5

First of all, I compliment you on taking a serious look at life insurance at a young age. Keep what you have, you'll never regret it. I say this from 34 + years as a financial services officer, a CE educator, and a person with multiple professional credentials.

The person telling you that you were "took" should be reported to the insurance department.

"Buy term and invest the difference" is an old scam that some unscrupulous agents tell just to get you to buy their policy (usually a little lower in price), so they can make a commission.

A Roth IRA is a great way to save toward retirement; and, you should have one. But, you also need life insurance, and you'll need it long after your low priced term insurance runs out, or is renewed at a higher and higher price - where will this new agent be when your term renews at twice or three times the price, and you can't afford the amount you need? Your whole life policy will not increase in premium, and will be around no matter how long you live.

There are lots of reasons to keep the policy you have. Don't ever listen to an agent who uses language like "took." They're trying to "take" you, and they are implying that you're not very smart. It is they who are not smart.

Answer 6

I was a life insurance agent for 15 years. Both types of policy have their uses.

I always recommended to my clients a combination of Whole Life and Term. A smaller Whole life policy that you keep forever to start, then - when you have a family and a mortgage and college to worry about - supplement with term insurance so you have more coverage at a lower cost. 20 or 30 years down the road, when your life insurance needs are likely to be less, you can cancel the term and you still have this lovely, inexpensive (it will seem that way 30 years from now!) Whole Life policy that you were smart enough to take out at the ripe young age of 33.

It just made sense to me.

Opinions are like tushies. Everyone has one.

Good luck!

Answer 7

you are just getting to the point where you are probably going to start building up a nice cash value,and now they are telling you to drop it?

i am 32 and i wish i had thought to buy permanant insurance when i was 23, i wouldnt be able to afford it now,
term has its uses like all other insurance, but something like only 5% of policies that are paid out (death benefit) are term policies, they usually run out when the person is under 60, perm. whole life insurance you know sooner or later your beneficiaries will get the money

Answer 8

A) Don't blame anyone else. You made that decision.
B) Switching to term ins. and Roth IRA would be an excellent idea.
c) Consider your experience as tuition in the school of business "smarts"

Answer 9

Yes term is the best... Simply learn from this and do NOT repeat it. Do not let any of your friends and family get whole life either. The only person who benefits from it is the agent, though agents will protest.

Never trust anyone to invest for YOUR future besides YOU !!

Get into a Mutual Fund within an IRA.

=^,,^=

Answer 10

Whole life insurance is NEVER a good investment. You will ALWAYS do better, switching to term, and investing the difference.

HOWEVER. I assume it's some guy who wants you to buy HIS mutual funds to invest in. You don't have to do that! Contact your local, independent agent, to get a variety of term life insurance quotes. And open your own account with Schwab, and pick your OWN mutual funds (consumer reports does an annual report on good funds). They'll probably perform better than whatever this guy is trying to sell you, and with Schwab, you aren't tied in with just one family of funds.