Is there advantage on having 2-3 Life Insurance Plan (Whole Life)?

[Majal]

Just want to ask what everyone's take on this (not to get too personal). I'm set, just wondering if any of you encountered any issue with having multiple.

[Art, just a re(tired) Fil-Am]

A 2-3 whole life Insurance Plan? Why ever for? I know something about it, but I just had to find about it again.
Nah, I can't afford a Whole Life Insurance Plan, back then and or now!

http://www.diffen.com/difference/Term_Life_Insurance_vs_Whole_Life_Insurance

The main difference between term life insurance and whole life insurance is that term life insurance serves as insurance only, whereas whole life insurance is actually insurance plus investment.

A term life insurance policy has 3 main components - face amount (protection or death benefit), premium to be paid (cost to the insured), and length of coverage (term). The policy expires at the end of the term. If the insured person dies during the term of the policy, the beneficiary is paid the benefit (face) amount. If the insured person is alive after the term (duration) of the policy, no benefit is paid and the policy expires. So in a sense, it is like car insurance, where if you have a six-month policy and you get into an accident during this period, you get compensation from the insurance company. But at the end of the period if no accidents happen, you do not get any money back.

Whole life insurance on the other hand is a form of permanent life insurance, which means that in addition to insurance, the policy also has a savings component. A part of the premiums paid by the insured person goes towards insurance, while the remainder is invested and builds a "cash value". If the insured lives beyond the policy expiration, the cash value is paid out to the insured. The cash value can also be used to borrow money against. The cash value is invested (in bonds and stocks or money-market instruments), and therefore there is a gain. This gain is tax-deferred if the policy is cashed in during the life of the insured. (If the insured person dies, the proceeds are usually tax-free to the beneficiary.)

[Hestecrefter]

I have a temperamental antipathy to enriching life insurance companies more than they already are.

The "investment" value of a whole life policy is minimal.  It takes little investment savvy to achieve a superior return elsewhere.

Also, I am a poor sport when it comes to betting my life.  It goes like this:  Me (the insured):  I bet you I'll die during the policy period!   Big insurance company (the insurer):  Bet you won't!   Who usually wins?

To top it off, should one have the good fortune to die during the policy term, there's no assurance that the beneficiary will ever see a dime, especially if the policy is large.  The insurer will subject the claim to microscopic scrutiny and come up with some excuse such as misrepresentation or non-disclosure in the initial application (eg., you never said you experienced feeling faint one day in 1984) and find a way to deny the claim.  The insurer has at its disposal a well-paid army that has mastered the art of ducking and weaving and woe betide those who seek to pit their resources against the insurer.  Who do you suppose usually runs out of money first?

[bigrod]

I sold for MONY when I first retired from the military.  If you plan on dying soon by insurance.  If not then invest what you would have paid out in premiums and you will come out ahead.

Chuck

[Lee2]

I feel that insurance is for those who need to leave something to a husband, wife or children who may not otherwise have anything once the insured is gone. I had term insurance when I first married Nila, it ran out years ago and I never bothered to buy anything else because I feel that she will be okay with what I have set up for her, at least I hope so.

[Majal]

I have a temperamental antipathy to enriching life insurance companies more than they already are.

The "investment" value of a whole life policy is minimal.  It takes little investment savvy to achieve a superior return elsewhere.

Also, I am a poor sport when it comes to betting my life.  It goes like this:  Me (the insured):  I bet you I'll die during the policy period!   Big insurance company (the insurer):  Bet you won't!   Who usually wins?

To top it off, should one have the good fortune to die during the policy term, there's no assurance that the beneficiary will ever see a dime, especially if the policy is large.  The insurer will subject the claim to microscopic scrutiny and come up with some excuse such as misrepresentation or non-disclosure in the initial application (eg., you never said you experienced feeling faint one day in 1984) and find a way to deny the claim.  The insurer has at its disposal a well-paid army that has mastered the art of ducking and weaving and woe betide those who seek to pit their resources against the insurer.  Who do you suppose usually runs out of money first?

I'm sorry to hear you sound like somehow you had a bad luck with insurance. I feel you about the fact that hardly ever we get to rip the benefits of insurance whether we are talking about car insurance, renters insurance but 'tis the way of life and you just never know when the need for it will hit you....I can tell you a TRUE story on how tragedy strikes a friend of mine (I think I mentioned her in one of my post) Fil-Am from Cebu (own a house in Mandaue city, and if it weren't for her husband insurance she would have had a hard time along with her  two (5-10 yrs old) sons  to survive  after her husband died of car accident here in the States.  So, I know it sucks to pay for insurance but unfortunately it has become a necessity to be prepared for the things that could happen out of our control.

[Majal]

A 2-3 whole life Insurance Plan? Why ever for? I know something about it, but I just had to find about it again.
Nah, I can't afford a Whole Life Insurance Plan, back then and or now!

http://www.diffen.com/difference/Term_Life_Insurance_vs_Whole_Life_Insurance

The main difference between term life insurance and whole life insurance is that term life insurance serves as insurance only, whereas whole life insurance is actually insurance plus investment.

A term life insurance policy has 3 main components - face amount (protection or death benefit), premium to be paid (cost to the insured), and length of coverage (term). The policy expires at the end of the term. If the insured person dies during the term of the policy, the beneficiary is paid the benefit (face) amount. If the insured person is alive after the term (duration) of the policy, no benefit is paid and the policy expires. So in a sense, it is like car insurance, where if you have a six-month policy and you get into an accident during this period, you get compensation from the insurance company. But at the end of the period if no accidents happen, you do not get any money back.

Whole life insurance on the other hand is a form of permanent life insurance, which means that in addition to insurance, the policy also has a savings component. A part of the premiums paid by the insured person goes towards insurance, while the remainder is invested and builds a "cash value". If the insured lives beyond the policy expiration, the cash value is paid out to the insured. The cash value can also be used to borrow money against. The cash value is invested (in bonds and stocks or money-market instruments), and therefore there is a gain. This gain is tax-deferred if the policy is cashed in during the life of the insured. (If the insured person dies, the proceeds are usually tax-free to the beneficiary.)

Art, so if you could back then ...would you have gone for a whole life insurance?

[Art, just a re(tired) Fil-Am]

Art, so if you could back then ...would you have gone for a whole life insurance?

No, not really. I go along with Hestecrefter's description of insurance companies where "the insurer has at its disposal a well-paid army that has mastered the art of ducking and weaving and woe betide those who seek to pit their resources against the insurer".
They have ways to nickle and dime you to death with their so called expert service and managing skills of you premiums and investments, which in the end does not amount to much for your elected beneficiaries. Once you discover their trade secrets and want to terminate your policy, they will make so many excuses in the delay of returning your money and end up eating away at your principal investments and or profits and gains and end up paying a hefty tax on top of that, which normally that only happens when you're dead and not around to find out other than your beneficiaries ending up not what was promised in the policy.
So as the French's term/phrase goes, 'Caveat Emptor', which is primarily used in real estate property transactions. Essentially it proclaims that the buyer must perform their due diligence when purchasing an item or service!




Edit by Steve: Fixed the quote.

[Hestecrefter]

I'm sorry to hear you sound like somehow you had a bad luck with insurance. I feel you about the fact that hardly ever we get to rip the benefits of insurance whether we are talking about car insurance, renters insurance but 'tis the way of life and you just never know when the need for it will hit you....I can tell you a TRUE story on how tragedy strikes a friend of mine (I think I mentioned her in one of my post) Fil-Am from Cebu (own a house in Mandaue city, and if it weren't for her husband insurance she would have had a hard time along with her  two (5-10 yrs old) sons  to survive  after her husband died of car accident here in the States.  So, I know it sucks to pay for insurance but unfortunately it has become a necessity to be prepared for the things that could happen out of our control.

Actually no, Majal, no bad luck with insurance, I am happy to report.  But, I have seen a few, like your friend from Mandaue, whose claims in similar circumstances have been denied.  Always sad to see.  I have witnessed cases of the dutiful husband who takes out a policy, lulled into thinking that his wife and kids will be provided for on his demise, only to die not knowing that the intended safety net was made of gossamer.

I am aware of a number of such cases because of my work as an attorney.  I'll not go so far as to say the insurer is always wrong and that there is no such thing as a properly denied claim.  All I say is that the protection afforded is sometimes more illusory than real.

My situation is probably not dissimilar to that of many here.  My Filipina wife is significantly younger than I, comes from a modest background (well, let's just call it poor and have done with it) and, while she has held employment from time to time, her income-earning capacity is also modest.  She is a hard worker, but never had the chance to have 23 years of full-time schooling - and the income that tends to follow - like me.  So, of course, I must have in place a financial plan that will see her taken care of when I am gone.  By "taken care of" I mean she should not have to live in substantially reduced circumstances after I depart. Some see life insurance as the cornerstone of such a plan.  I do not.  It costs more money, but I prefer to create a safety net for my wife out of more tangible assets. 

Another difficulty with insurance as saving the day for family left behind, is it is more difficult to control how the funds are deployed.  If my wife received a check for $1 million hard on the heels of my leaving, I am not confident she would be able to invest it to last. 

[Majal]

I'm sorry to hear you sound like somehow you had a bad luck with insurance. I feel you about the fact that hardly ever we get to rip the benefits of insurance whether we are talking about car insurance, renters insurance but 'tis the way of life and you just never know when the need for it will hit you....I can tell you a TRUE story on how tragedy strikes a friend of mine (I think I mentioned her in one of my post) Fil-Am from Cebu (own a house in Mandaue city, and if it weren't for her husband insurance she would have had a hard time along with her  two (5-10 yrs old) sons  to survive  after her husband died of car accident here in the States.  So, I know it sucks to pay for insurance but unfortunately it has become a necessity to be prepared for the things that could happen out of our control.

Actually no, Majal, no bad luck with insurance, I am happy to report.  But, I have seen a few, like your friend from Mandaue, whose claims in similar circumstances have been denied.  Always sad to see.  I have witnessed cases of the dutiful husband who takes out a policy, lulled into thinking that his wife and kids will be provided for on his demise, only to die not knowing that the intended safety net was made of gossamer.

I am aware of a number of such cases because of my work as an attorney.  I'll not go so far as to say the insurer is always wrong and that there is no such thing as a properly denied claim.  All I say is that the protection afforded is sometimes more illusory than real.

My situation is probably not dissimilar to that of many here.  My Filipina wife is significantly younger than I, comes from a modest background (well, let's just call it poor and have done with it) and, while she has held employment from time to time, her income-earning capacity is also modest.  She is a hard worker, but never had the chance to have 23 years of full-time schooling - and the income that tends to follow - like me.  So, of course, I must have in place a financial plan that will see her taken care of when I am gone.  By "taken care of" I mean she should not have to live in substantially reduced circumstances after I depart. Some see life insurance as the cornerstone of such a plan.  I do not.  It costs more money, but I prefer to create a safety net for my wife out of more tangible assets. 

Another difficulty with insurance as saving the day for family left behind, is it is more difficult to control how the funds are deployed.  If my wife received a check for $1 million hard on the heels of my leaving, I am not confident she would be able to invest it to last.

I certainly agree that life insurance should not be the ONLY cornerstone when it comes to planning for the "what if' of life. But, it can also serve its purpose. In my friends case, it pulled through for her for 2 million dollars. Afforded her to pay off their house and buy 2 condo's for his son's in Cali, owned a house there in Mandaue and put herself, and two sons to college. She is currently an RN here in San Diego. So you say you've dealt with this before as a lawyer, One of the reason why I was asking was that with Whole Life insurance policy  I could take it out once it mature on my choosing before or when I reach 65 I can cash it out tax free. I don't lose everything even when the market goes down, there's a cap where I don't completely lose my money, either a million dollar when I die go to my beneficiary or I take the cash value at 65 (which is by genes, seem to hold much longer pass 80 yrs old)....
I already have the SGLI (military)  and me and hubby got Whole Life also. I am thinking of moving some money,  I noticed there are  more returns from this than the traditional saving account hence for the future.... what's your take on that?

[Hestecrefter]

Majal, you said, in part:

One of the reason why I was asking was that with Whole Life insurance policy  I could take it out once it mature on my choosing before or when I reach 65 I can cash it out tax free. I don't lose everything even when the market goes down, there's a cap where I don't completely lose my money, either a million dollar when I die go to my beneficiary or I take the cash value at 65 (which is by genes, seem to hold much longer pass 80 yrs old)....
I already have the SGLI (military)  and me and hubby got Whole Life also. I am thinking of moving some money,  I noticed there are  more returns from this than the traditional saving account hence for the future.... what's your take on that?

To be honest, I have no take on that, not having much familiarity with insurance products.  I have expressed views here from the standpoint of one who has seen first hand and, more frequently from the files of attorneys around me, the difficulties one can encounter when it comes to collecting on insurance policies.  That extends not only to life insurance, but fire insurance, disability insurance and other varieties are often the subject of litigation.  So I have nothing of value to offer in response to your query.  I see that bigrod posted to this thread that he sold insurance, maybe he can offer some comment.

I will certainly accept the proposition that for some, carrying some form of life insurance can make sense.  It certainly seemed to make sense for your friend.  A $2 million payout or inheritance is more than most widows can expect to receive.  Not many would want to pay the premium on a term policy of that magnitude, at least not later in life. 

I can see where, for some, carrying a sizeable policy early in life can be of some utility.  An example would be the case of a "traditional" marriage where the husband works outside the home and the wife does not, remaining instead as a homemaker and caring for kids.  Not many like that any more, but, in such a case, the couple usually have little in the way of an asset base early on and, if the husband dies young leaving a young family, insurance might save the day.