I think that's pretty fair. I've had whole life for like 18 years and I pay in every year like a good little lad but I still have no idea if it's really worked out well for me. At this point, the cash value is more than the amount I've paid in, so I'm "ahead" in that respect, but BECAUSE I DIDN'T DIE, I would've done much better by not having the policy at all and instead just investing it. MUCH better.

But if I had died, whatever, 15 years ago, my wife and young kids would've been fucked, so that doesn't seem like an option.

At a point in your life where you have people depending on you, unless you're independently wealthy and your family could take the hit, you need to have life insurance. Now you need to decide term vs whole.

I do kinda like, now, that my policy could pay for itself and keep going indefinitely (dividends/interest equals the premium pretty much) and that whenever I do pass the entire cash value will be there plus the death benefit.

But was it worth missing out on 18 years of stock growth? Meh. Maybe. But again, only because I didn't croak.


If I had to do it all again, I probably would've gotten alot more term life and just suck up the fact that if I don't die it will have been "wasted" money, just like house and car insurance are for any given year where nothing bad happens.
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I have a 25-year term life policy, whatever that means. I think it expires at some point, and I'm trying to talk the wife into not having life insurance after that. We have no kids and our house is paid off, and by the time we need to buy insurance again we'll be close to retirement. We can cover funeral costs and that sort of thing, so I'd rather save the relatively large cost of buying life insurance for two retired people. I'm not sure she's buying into it yet, though.
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I bought a 30 year Term life insurance policy in my mid 20’s. It expires when I’m 56. Worth $1M and I pay $70/month. After that I should have enough saved for my family if I die. You shouldn’t buy full life insurance if you can plan for the future, that’s why term life insurance is recommended for younger people. Term is a stop gap until you build to that point and it’s cheap for large coverage.

Rainman, I’d say you’re right on with your recommendation.
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This is definitely the smartes way to do it; now you just need a trust to help with potential future tax liabilities.
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Yes, getting one in place for our assets next year. Can get lawyer services from work for $20/month and it includes trust and will writing. Already have living Will but do need the trust.
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So term vs whole is pretty easy. Term life you can think of just like car insurance. The years (in your case 25) means that the price you pay per year is flat. Each year you pay X, and you get Y as a death benefit if you die during the term. If you don't die during the term, congratulations, you get NOTHING for paying in all those years. The upside is that it's MUCH cheaper than whole life.

I can think of no sane reason whatsoever why someone in your shoes would pay for term life insurance once your current policies lapse. Honestly, I don't know why you're paying for it now. It's kinda simple to me -- if the survivor does not need the money from life insurance if the spouse dies, then what are you "insuring".

I deal with this in my professional life in many different ways, but insurance literally protects against risk. It's what the freaking word MEANS. What risk are you protecting against by paying this money? If there is no risk that matters, why would you waste money protecting against it "just in case"?

If she thinks of it that way, rather than as something you have to have, like car insurance, then that may help her realize she doesn't need it at all. She can live and retire comfortably without it even you do pass away.

Also, the premiums are going to be hella high once you come off that flat rate policy you're on now.
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What tax? Estate taxes? Federal estate tax threshold is $5.6 million so it's alot of cheddar before you need to worry about structuring your estate plan around tax issues. A brief bit of online research suggestst hat Missouri has no estate tax, though if you're in another state your mileage may vary.

Obviously, good estate planning can be critical for many other reasons, but unless you have pretty serious coin, estate taxes isn't likely to be a key driver.
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Good point on the taxes. Avoiding any court concerns/probate is probably the best reason for the trust. Having the trust own real estate and life insurance policies make a smoother transition than a living will, but most living wills are actually trusts now.

Besides that unless you don’t have the discipline or can’t automatically have your 401k money taken out of your paycheck I don’t see why you’d want a whole life policy.

That said, if you make too much money to invest in a Roth can you buy a whole life policy that is effectively a Roth? Maybe have the death benefit a negligible number and put a lot of money into the whole life policy??
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READ YOUR POLICY

This is where I decided not to do it.

The way it was neatly laid out in columns of numbers by the salesman I thought, "Oh, I will have all this cash to draw from in my later years, and still have $500,000 to leave my kids when I die, because the thing is paying for itself at this point"

NOPE

THE CASH VALUE IS THE CASH VALUE OF THE DEATH BENEFIT. Meaning, once you start to draw on the cash value (say you want to pull $40K a year out to supplement your retirement or $20K each year to go on a two-month trip.) that amount is deducted from your death benefit.

Once you pull a bit from your cash value, not only does the death benefit go down, the dividends go down and you have to start paying the premiums again, as the dividends are no longer enough to cover the payments.

That was never explicitly explained to me by the guy and I tried to remain as polite as possible (it was hard) when I told him we weren't going with any of his recommendations.

PLUS, the proposed policy had a $450,000 Long Term care rider, meaning if one of us needed long term care, we could get $9000 a month for that for up to 50 months. Again, I asked questions ,ran some scenarios by him and he told me that the Long term care money would be withdrawn from the death benefit as well!

So, it felt like additional coverage when in fact it was sold like the but really just re-naming activating the cash withdrawal or depletion of the death benefit.

After this was all clear to me, and I was rejecting him he started to say "well nothing is for free, these companies can't stay in business by giving you $950K for a $250 K investment."

Amnorix, you have a death benefit now, and your assertion may be right that if you had chosen term and invested the rest you might be better off, but you have no idea what you would have put that into. Or if you would have forced yourself to invest that much all those years.

Be happy that you have a death benefit and lump sum to pull from but you don't have both -- at least my policy didn't. Check yours. I wouldn't want you to think you have both and come find out years from now what I learned asking all these questions and running multiple scenarios past the guy.
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This might have been addressed earlier in this thread, but I don't want to read through all of it.

Which weed company would be recommended to invest in?
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Whole life typically pays the agent the largest commission of any product they can sell. There usually isn’t anything that generates more money for the insurance company than whole life.
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You're better off just buying a bag and smoking it. either way you're money goes up in smoke.
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Also put everything in a trust.
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Interestingly, I'm working up my will and estate plan right now (yeah, I procrastinated), and the attorney said that in Colorado it's not necessary to do a trust. Apparently we have pretty straightforward estate laws so a simple will works well. I was surprised since I'd planned on doing a trust and having the various annoyances that come with setting it up.
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A trust allows you to control your assets from the grave. If you have a complicated life (multiple divorces/kids, tons of money, kid with needs etc), you should have a trust (make sure you fund it). It also avoids probate thus private.

Everyone should have a will and powers of attorney (health DNR, financial)

When discussing your will, ask if you should have a trust as well.
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