Term vs. whole life

We just had a life insurance agent visit us a few days ago, because we
thought of buying a certain term life insurance.

The agent kept pushing a "whole life" policy on us and he just would
not shut up. I had to tell him, perhaps, ten times to stop talking
about it before he got the message.

He just kept on going, talking, pushing this whole life product on us,
and he was clearly very interested in selling us that.

>From this alone, I conclude that he gets a much fatter commission from
selling us this product. This, alone, suggests that it is not in my
interest to buy this product.

I think that whole life insurance is, first and foremost, a very
complicated financial instrument, that mixes up two things (savings
and life insurance) together.

It would be a more rational approach to save money separately from
protecting one from a catastrophe.

Any thoughts?

i

On 4/29/11 11:26 AM, Igor Chudov wrote:

> It would be a more rational approach to save money separately from
> protecting one from a catastrophe.
>
> Any thoughts?

The groups charter prohibits making remarks about the way these fold
make their living, no ad hominem attacks.

My best friend happens to be an insurance salesman. So in a rare moment
for me, I'll give you his side.
"I tried to sell Chuck a whole life policy 20 years ago. He said he'd do
better investing on his own. We just had drinks and the topic came up.
His kids are starting college, he has no savings to speak of. Some
people need that monthly bill to come in. I'd not sell you such a
policy, Joe, you and Jane max out your retirement accounts and fund Jane
2.0 college savings. Most people aren't so disciplined."

Igor - I've seen you here awhile now. You are not Chuck.

On 4/29/11 12:09 PM, JoeTaxpayer wrote:

> The groups charter prohibits making remarks about the way these fold
> make their living, no ad hominem attacks.

typo - "these folk" sorry.

On Apr 29, 10:09*am, JoeTaxpayer <JoeTaxpa...@comcast.net> wrote:
> The groups charter prohibits making remarks about the way these fold
> make their living, no ad hominem attacks.

Not really - it actually says "And except in flattering terms,
reference to another poster or group of people is inappropriate."

The insurance agent that Igor talked about is neither a poster here,
nor is he a *group* of people.

On Apr 29, 9:09*am, JoeTaxpayer <JoeTaxpa...@comcast.net> wrote:

> The groups charter prohibits making remarks about the way these fold
> make their living, no ad hominem attacks.

Does the groups charter prohibit me from mentioning that Igor's
experience reminded me of the last time I bought a car? The salesman
kept pushing a model I didn't want. Pushing and pushing. And after I
finally did get the car I wanted, he pushed undercoating, extended
service warranty, and tinted windows.

On 2011-04-29, bo peep <> wrote:
> On Apr 29, 10:09?am, JoeTaxpayer <JoeTaxpa...@comcast.net> wrote:
>> The groups charter prohibits making remarks about the way these fold
>> make their living, no ad hominem attacks.
>
> Not really - it actually says "And except in flattering terms,
> reference to another poster or group of people is inappropriate."
>
> The insurance agent that Igor talked about is neither a poster here,
> nor is he a *group* of people.
>

Thanks for clarifying, I would hate to run afoul of any rules, this is
a great newsgroup and I have nothing except flattering to say about
all posters here.

i

On 4/29/11 8:04 PM, Igor Chudov wrote:
> Thanks for clarifying, I would hate to run afoul of any rules, this is
> a great newsgroup and I have nothing except flattering to say about
> all posters here.

Sorry, I didn't mean to imply that you were guilty of this. It was more
a preface as to why I, myself, was choosing to answer the way I did.

On 4/29/2011 8:26 AM, Igor Chudov wrote:
> We just had a life insurance agent visit us a few days ago, because we
> thought of buying a certain term life insurance.
>
> The agent kept pushing a "whole life" policy on us and he just would
> not shut up. I had to tell him, perhaps, ten times to stop talking
> about it before he got the message.

These categorical dismissals of whole life don't recognize that there
are valid reasons to buy it - it's not strictly an oversold overpriced
product. Whole life lives at both ends of the financial spectrum - at
low net worth, in many cases because of pushy selling directed at
uninformed consumers, and at high net worth, because it fills a need.

One of the whole-life scenarios is "significant net worth tied up in
illiquid assets." Igor I think you've mentioned owning a sub-s and
looking at rental real estate. These sound like relatively illiquid
assets. Maybe they're not worth much now but long-term, you might end up
having a need for a big lump of cash at death, even at age 102, that is
best provided for by life insurance. That may one to talk through with
an agent and attorney who deals with these kinds of cases - small
business owners, estate & succession planning, etc.

-Tad

On May 2, 12:28*pm, Tad Borek <bore...@pacbell.net> wrote:
cial spectrum - at

> One of the whole-life scenarios is "significant net worth tied up in
> illiquid assets." Igor I think you've mentioned owning a sub-s and
> looking at rental real estate. These sound like relatively illiquid
> assets. Maybe they're not worth much now but long-term, you might end up
> having a need for a big lump of cash at death, even at age 102, that is
> best provided for by life insurance. That may one to talk through with
> an agent and attorney who deals with these kinds of cases - small
> business owners, estate & succession planning, etc.

But couldn't an executor get a quick loan using real estate or other
illiquid assets in the estate as security? Would not the interest on a
short-term loan be less than the cost of an insurance policy over the
years?

On 5/2/2011 2:24 PM, Don wrote:
> But couldn't an executor get a quick loan using real estate or other
> illiquid assets in the estate as security? Would not the interest on a
> short-term loan be less than the cost of an insurance policy over the
> years?

To generalize it, the scenario is: large lump of cash needed at death,
irrespective of when you die. A loan doesn't really do that. It isn't a
certainty that you can even get a loan - e.g. borrowing against a
closely-held business is not a straightforward transaction and might not
even be possible. And even if available, you have to pay the loan back
somehow and that isn't always what you want to do.

Think of a business owned by a few principals, where there is a buy-sell
agreement designed to cash out heirs - the spoiled-brat kids who would
just run the company into the ground. When one owner dies, their share
gets bought out and the heirs get the cash so they can blow it on
whatever they want. That would typically be funded with a life insurance
policy, otherwise the other principals would need to pony up the money
somehow - at an unpredictable time.

And keep in mind that life insurance has tax advantages that can be
weighed against the policy costs.

-Tad