I recently saw a TERM TO 100 policy - which made me wonder what role this would impact WHOLE LIFE other than of course the cash value aspect. I guess the theory is no one keeps this policies to death anyhow, so you could do TERM to 500, and the lapse rate would be so high it wouldn't matter.
I guess my problem with Whole is it is expensive and in the early years it is a really not a good deal. You don't even tip the scale until WAY later, I just see better options other than letting the insurance company "invest" your money after fees, etc., etc.,
Of course the "whole" aspect and refund at age 100, is another story... I know some agents that mix small whole with large term, not sure if that is to get two sales or if that is a viable strategy.
I view it as an irrational debate, WL Vs Term. I know a thing or two about irrational debate!
WL is for insurance needs that last your whole life as the name indicates. Term is for limited time need of insurance, as the name indicates.
UL is for those that are unable to actually make a choice.
Are whole life policies dead? Who here still sells them and why?
As I've said before...one of the jobs I do for local funeral homes is help people file death claims on all their insurance and benefits.
In 12-years and thousands of funerals, very very few people have died with term life in force.
I'd say about 3/4 have some sort of whole-life policies (not always good ones but at least they have them) 1/4 have nothing. Once or twice a year, someone dies with a term policy in force.
UL is for those that are unable to actually make a choice.
and how do you come to this conclusion?
I use UL because of the flexible design options, it fits with clients of all shapes & sizes. I use UL for everything from Estate Plans, Executive Compensation Plans & College Funding Strategies.
In 1991 one of my sub agents wrote a policy on himself. It was a ten year term (I do not know what the original premium was, he was 61 at the time). He never converted any of it although he needed the coverage.
After 10 years it became annually renewable. Here's his MONTHLY premiums for the past few years.
2005=232.76 month
2006=259.69 month
2007= 289.65 month (he died this year)
2008=322.96 month
2009=359.88 month
2010=400.84 month
At age 61 his premium for participating whole life would have been around 183.00 per month. Could he have afforded that? Much easier than he could have afforded the 289.65 per month in the year he died.
I use UL because of the flexible design options, it fits with clients of all shapes & sizes. I use UL for everything from Estate Plans, Executive Compensation Plans & College Funding Strategies.
My main use of UL (SGUL) is for the older group, more affordable then WL as in a pure DB and CV is of no concern. Don't write that many overall, find the guarantee along with the CV is better on WL.
Ps depending upon the UL used I can go for the yearly premium (its always worth a shot), you know if you are a second late with any one payment the guarantee of the SGUL or NLGP is out the window.
In 1991 one of my sub agents wrote a policy on himself. It was a ten year term (I do not know what the original premium was, he was 61 at the time). He never converted any of it although he needed the coverage.
After 10 years it became annually renewable. Here's his MONTHLY premiums for the past few years.
2005=232.76 month
2006=259.69 month
2007= 289.65 month (he died this year)
2008=322.96 month
2009=359.88 month
2010=400.84 month
At age 61 his premium for participating whole life would have been around 183.00 per month. Could he have afforded that? Much easier than he could have afforded the 289.65 per month in the year he died.
Can you take an educated guess on what he paid out total in his lifetime vs. what he would have paid with WL. (Not arguing, just asking.)
As I said I don't remember (read lost part of his file) what he paid in the first ten years. So let me assume he paid 70 per month.
1. 70 per month for 10 years equals 8400.00
2. I'm missing premium info from '02, and '03. Let's assume he averaged paying 185.00 per month for those two years. 185 per month for 2 years equals 4400.00.
3. 2004 he paid 2503.20.
4. 2005 he paid 2793.12.
5. 2006 he paid 3116.28.
6. 2007 he died 10/09/07. 289.65 x 10 =2896.65.
Total premiums = 24,109.25.
I'd say the insurance company did pretty well on this one. They used his money for 16 years. But he could have died after making 1 premium payment.
As I said I don't remember (read lost part of his file) what he paid in the first ten years. So let me assume he paid 70 per month.
1. 70 per month for 10 years equals 8400.00
2. I'm missing premium info from '02, and '03. Let's assume he averaged paying 185.00 per month for those two years. 185 per month for 2 years equals 4400.00.
3. 2004 he paid 2503.20.
4. 2005 he paid 2793.12.
5. 2006 he paid 3116.28.
6. 2007 he died 10/09/07. 289.65 x 10 =2896.65.
Total premiums = 24,109.25.
I'd say the insurance company did pretty well on this one. They used his money for 16 years. But he could have died after making 1 premium payment.
You said that had he bought a whole life plan the prem would be $183 a month. So for 190 months (16 years minus 2 months) he would have paid $34,770... or more than 10K more than the level term followed by the remaining annual age-based premiums.
Did I figure that right? So how would WL have been a better deal... which I believe was your original point (assuming my math is right.)
You said that had he bought a whole life plan the prem would be $183 a month. So for 190 months (16 years minus 2 months) he would have paid $34,770... or more than 10K more than the level term followed by the remaining annual age-based premiums.
Did I figure that right? So how would WL have been a better deal... which I believe was your original point (assuming my math is right.)
Al
Depends upon how the WL would of been set up, what is a key element in WL that causes the DB to rise Al? Plus, the premium difference would of quickly even out and Term becomes more expensive if the person lives longer, eventually becoming so expensive as to make it unaffordable in later years in life, as I believe David's initial point was about.
As I've said before...one of the jobs I do for local funeral homes is help people file death claims on all their insurance and benefits.
In 12-years and thousands of funerals, very very few people have died with term life in force.
I'd say about 3/4 have some sort of whole-life policies (not always good ones but at least they have them) 1/4 have nothing. Once or twice a year, someone dies with a term policy in force.
What about people who have group term from their employer whether they pay for it or not? That must amount to quite a few. Maybe you are talking only about funerals for the elderly?
Are whole life policies dead?
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