What whole life insurance policy is best for a 24 year old?

Question

I have a policy from New York Life, but 2 of my friends who are financial planners, say Mass Mutual would be better... there's a bunch of baloney I'm not understanding i.e. guaranteed benefits, crap about withdrawing money for retirement. Altogether, it doesn't seem like I am getting that much from death benefits with the amount I am putting in ($1K/year until pretty much I'm 65). I don't want to pay forever for this... where in my policy does it say when I can stop paying?

Answer 1

Life insurance is not an investment contract. It is a insurance contract in which you agree to pay your premiums on time in order for your beneficiary to receive the death benefit in case you die. So your life insurance is never paid up. The only way its paid up is if you selected a payment option and it says 20-Pay Whole life or Life Paid at 60, which is not normal. This is where you pay more premiums now so that the premiums you would of paid for lifetime would be enough so that you can stop paying in the future date. If your whole life policy doesn't say this, then it is never paid up. There is nothing free in this world. Something has to give. If you stop paying at age 65, your cash value will be used to pay for the life insurance. As your cash value goes down, so does the death benefit.

Some things you should know about whole life insurance:
1) No cash value is accumulated in first 2 years, so you have negative rate of return in the beginning.
2) Your cash value grows at a low rate of return of 3-4%.
3) You may borrow the cash value with a loan interest of 6-8%. This will lower the death benefit.
4) Cash value grows tax-deferred.
5) You lose all cash value when you die.

For your situation, you should consider a 30 year or 35 year term insurance for yourself. I personally own a 30 year term insurance and bought it age 23. For $250,000 coverage, it only cost me around $30/month for it ($360/year). Even though I'm single and no one is dependant on my income, I bought it anyway for my parents. In case I die, they can use the extra money for retirement.

You said you want to save money for retirement. You should open an IRA (depending on your income, you may qualify to open a Roth IRA as long as your Adjusted Gross Income is below $110,000 (if you are single. If you are married, it has to be below $160,000). I own a Roth IRA and put only three mutual funds into it. You can fund your IRA with any kind of investment as long as it is offered at the financial institution (you can put bonds, mutual funds, money markets, maybe CDs, and maybe even stocks). Though I don't recommend you put CDs or stocks into your IRA. CDs have a low rate of return of 3-5% and stocks are highly volatile. What I mean by volatile is that you can make lots of money or lose lots of money.

Before investing into mutual funds, you should read the prospectus carefully. First you should find out what you want from your investments. Do you want high growth (for your age, this should be your objective)? Do you want the mutual fund to generate income while having some growth (meaning it pays out dividends and capital gains often)? Then you can narrow the choices of mutual funds that meets your investment objective.

Now you need the prospectus. What to look for in the prospectus:
1) What is the mutual fund investment objective?
2) How did it perform in the past?
3) What is its expense ratio? (you want to pick the ones that has a low expense ratio)
4) What is its turnover ratio? (again, pick the ones that has a low turnover ratio)
5) Who manages the mutual fund and how much experience do they have?
6) What is its sales charge?

To sum this all up, get rid of your whole life policy. Buy term insurance. Open an IRA (Roth or Traditional). Invest consistently, no matter how the stock market performs.

Answer 2

I suggest you to visit this web site where you can get quotes from the best companies: http://insure-cheap.info/index.html?src=2YAcrbavVN50

RE :What whole life insurance policy is best for a 24 year old?
I have a policy from New York Life, but 2 of my friends who are financial planners, say Mass Mutual would be better... there's a bunch of baloney I'm not understanding i.e. guaranteed benefits, crap about withdrawing money for retirement. Altogether, it doesn't seem like I am getting that much from death benefits with the amount I am putting in ($1K/year until pretty much I'm 65). I don't want to pay forever for this... where in my policy does it say when I can stop paying?
2 following 20 answers

Answer 3

Just as a heads up - almost all of the above answers that say "never" or "always" are probably a little bit shaky because they do not have any information on your particular situation other than the one paragraph that you provided.

Generally speaking, whole life or any other type of "cash value" life insurance product only makes sense in certain unique situations. Chances are that at 24 years old you are not too interested in doing any heavy duty estate planning (nor should you be) so whole life is probably not the best choice for you at this point - especially if you are still at all fuzzy about some of the features.

Depending on your particular goals, why not maybe compare some term life insurance quotes (which will be much much cheaper) and see if that can meet your life insurance need?

Answer 4

Get and compare quotes from different companies at - INSURERATESME.INFO-

RE What whole life insurance policy is best for a 24 year old?

I have a policy from New York Life, but 2 of my friends who are financial planners, say Mass Mutual would be better... there's a bunch of baloney I'm not understanding i.e. guaranteed benefits, crap about withdrawing money for retirement. Altogether, it doesn't seem like I am getting that much from death benefits with the amount I am putting in ($1K/year until pretty much I'm 65). I don't want to pay forever for this... where in my policy does it say when I can stop paying?

Answer 5

Even a cheap life insurance or life term insurance policy can protect your family's prosperity in a time of crisis and if you are sure you want to have a family it's never to early to start building up a financial protection. Especially young people get very cheap rates when signing a life insurance policy.

I helped my daughter to find a life insurance that focuses on young adults with rather lower income deciding to sign up for a policy.

http://young-adult.life-insurance-check.com

Please use the search box in case the information you need are not displayed right away.

Take care and good luck with your research!

Tarsha
Life is beautiful

Answer 6

The problem with term insurance is that if you don't die, all that money is wasted. Also, when you get older the premiums massively increase. With whole life, the value of your policy goes up each year which means your death benefit goes up. Your premiums stay the same.

Answer 7

I'm probably gonna get the business from another damned insurance salesman for saying this, but: DO NOT buy stupid whole life insurance. It is UNIVERSALLY OVERPRICED CRAP. If you are any good at managing your finances, a good 20yr term policy will be enough. Save for your own long-term needs & you will not need some dumb cash-value piece of junk that you have to pay on until hell freezes over. Get a copy of Dave Ramsey's "Total Money Makeover". He explains very clearly how to manage your finances so that you do not need insurance that lasts until Kingdom come. People (insurance salesmen & other hacks) will make fun of you & tell you Dave is a simpleton, but let's face it: Dave is a multimillionaire, your insurance salesman probably is not. I'm sticking w/ Dave.

One last thought: If you do not have a family that depends on your income, you probably don't even need any life insurance. Dave talks about that in his book, also, I think.

Answer 8

I don't care what these other folks say. I like whole life policies. I'll go as far as to say, they make MORE sense than term at a certain point. At some point your mortality exposure will become great and therefore cause term insurance premiums to go up so there is a time when taking on the extra mortality earlier makes sense. There are a lot of options when it comes to life insurance. GMDB, GMWB, UL, VUL... and the list could go on.

I hate to be the one to break it to you like this, but if you want life insurance you've got to pay for it... unless you're like me and work for an insurance company then you get some for FREE.

Answer 9

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Answer 10

Best life insurance policy would be https://tr.im/LifeInsurance as you said you are 24 yrs old.