Thursday, April 25, 2019

Is a custom whole life policy a good retirement deal?

October 19, 2013 by  
Filed under Life Insurance

life policy
by Moyan_Brenn

Question by kajal: Is a custom whole life policy a good retirement deal?

I am 35, husband is 36. Only child is 4. We own a town home with a 15 yr mortgage, about 275K left on it. Financial planner bought me a Custom Whole Life policy last month, and now I see a Suze Orman article saying I basically squandered my money on a bad deal. Any opinions on this?
Is it still a bad deal if we both already have life insurance through our jobs at 2x our base salaries each, have maxed out our 401(K)s, have a stock portfolio with a decent amount in it and have a 529 plan for the kid? I was told this would be an additional source of diversification to our entire portfolio.
Thank You to all the people who have already responded to my first question last week.

Best answer:

Answer by HEATHER
Whole life insurance is not a good deal. You should have bought term life insurance instead.

What do you think? Answer below!


5 Responses to “Is a custom whole life policy a good retirement deal?”
  1. Caren says:

    you’re not the first person to make that financial mistake. never trust ANYONE trying to sell you anything again. they don’t care about you. whole life policies make them a lot of money. get term life for 20 years until that girl is fully out of college. i worry about your investments, etc, since you trusted this person. google how much life insurance should i have. if wifey does not work, you need enough to cover all bills

  2. Rob says:

    RUN Away !!!!
    great waste of your money.

    husband needs term life 20 yrs at four times
    his yearly income.

    you need two times his yearly income.

    find and study – total money make over,
    dave ramsey to learn from others dumb
    mistakes , not your own.

    it faster, cheaper,easier that way

  3. mbrcatz says:

    No, life insurance is a DEATH planning tool; but a crappy investment.

    If you want a RETIREMENT deal, aka investment, max out your 401k and IRA.

    Using life insurance as an investment, is like using a Prada heel like a hammer. It will get the job done, but in the most expensive (to you) way as possible.

  4. Insurance says:

    It’s no wonder people get confused about this stuff. Who the heck is recommending a 35 year old get a 20 year policy? That doesn’t even get them to 65 (assuming a “normal retirement age”). And, who the heck is recommending 4 times income? Seriously? So, the guy makes $100,000 and they have a 4 year old, he dies tomorrow and they have income until the kid is 8 years old? Not prudent advice.

    Generally speaking, your transaction was likely dumb. If you want insurance forever, then look into a universal life policy with a guaranteed premium. It’ll give you life insurance forever at a lower rate than whole life. If you’re buying whole life as an investment, then you’re going to get about a 2% rate of return on your money. That wouldn’t get many people very excited.

    Another type of policy that can split the difference is a return of premium term policy. That will give you a lump sum back at the end of the time (30 years), give you some options if you need to extend coverage further, AND get you the equivalent of about 4-5% guaranteed and tax free rate of return on the additional cost over the standard term insurance.

    Go talk to another financial advisor who is going to be honest with you and make recommendations that are in your best interest.

  5. Chris says:

    Do whatever it takes to get out of it
    Complain to the salesman’s manager about him. Stop your payments

    Whole life policies only pay on death of the insured.
    I hope that won’t happen in the next 20 years.
    They are good for the salesman because the commission is high on a policy that’s unlikely to pay out.

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