Whole Life Insurance

[wa3more]

Assuming he is mortgage free and no other large expenses, insurance at 24 , generally speaking , is a waste.

I would also not advise him to get insurance now because he might be uninsurable in 10 years. There are always going to be exceptions.

I worked in wealth management for one of the largest investment banks. We would never advise someone at his age to buy life insurance. Most employers include 1 or 2 times salary as a benefit. That should be enough to settle expenses should something happen.

[Anonymous]

Insurance is a legalized scam. Basically you're paying 1,000 people to guarantee that you don't have to pay out-of-pocket. Instead, it makes more sense to invest the money young. There's a way better average return, and it's a higher odds in your favor. With insurance there's a REASON they are a good investment... they are paying out a lot less than people are paying them. Think about it.

[wa3more]

I agree. its a game of odds and probability.

At 24, the OP should be saving and building wealth.

life insurance is to replace lost income. If the OP is 30 with no family and has a mortgage, who cares ? If the OP...expires, the parents/family then sells the house and keeps anything in excess of the mortgage.

Same with any other expenses. They are paid out of the estate , if there are any funds.

[Jazzzy]

What about the young person who DOES buy term....has massive heart attack at 40 y/o and survives....term policy expires....now uninsurable.

This is my son...with two little girls. He now has no life insurance because he bought term only.

[wa3more]

Jazzy,

sorry to hear about your son.

Why did the policy lapse ? If he bought a 20 year level term policy and it was renewed yearly he would be ok.

Most fee- based financial advisors would advise buying term.

[BluePoodle]

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@Jazzzy wrote:

What about the young person who DOES buy term....has massive heart attack at 40 y/o and survives....term policy expires....now uninsurable.

This is my son...with two little girls. He now has no life insurance because he bought term only.

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I am sorry to hear about this. This is why for a term policy you would want to make sure it has a conversion provision. That would insure that one would be able to convert any or all of the term insurance into a permanant policy.  He would not have to prove insurablity for the conversion to take place.  The age of the insured at the time of the conversion is the only consideration. That is why getting the policy when you are young/healthy is great because that is how it would have been underwritten.  That is why I do think there is value in getting a term life in your 20's. It is cheap and the right policy would have prevented something like this from happening.  I did quite a few conversions for people with health issues. No underwriting...they were gauranteed the conversion to a permanate life insurance product.  My father was one of those individuals, although he was not in his 20's when we started his policy.

[heyitsyeh]

Hey guys,

I really appreciate your input, I'm gonna have a talk with the insurance agent tomorrow to talk about the term + conversion option, that option makes alot more sense to me now.

[Anonymous]

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@BluePoodle wrote:

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@Jazzzy wrote:

What about the young person who DOES buy term....has massive heart attack at 40 y/o and survives....term policy expires....now uninsurable.

This is my son...with two little girls. He now has no life insurance because he bought term only.

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I am sorry to hear about this. This is why for a term policy you would want to make sure it has a conversion provision. That would insure that one would be able to convert any or all of the term insurance into a permanant policy.  He would not have to prove insurablity for the conversion to take place.  The age of the insured at the time of the conversion is the only consideration. That is why getting the policy when you are young/healthy is great because that is how it would have been underwritten.  That is why I do think there is value in getting a term life in your 20's. It is cheap and the right policy would have prevented something like this from happening.  I did quite a few conversions for people with health issues. No underwriting...they were gauranteed the conversion to a permanate life insurance product.  My father was one of those individuals, although he was not in his 20's when we started his policy.

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What providers offer this conversion policy? I am interested in life insurance currently and you seem highly educated on the topic. Reviving is better than a new thread imo

[youdontkillmoney]

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@heyitsyeh wrote:

Hey guys,

I'm a young guy (24) and have been told by my buddies in the financial planning biz that it is prime time to put money in a permanent life insurance to build cash savings. According to them, it would grow guaranteed better than bonds, about 5-7%, while being even safer than bonds in terms of risk. Also it would give me tax advantages while being completely liquid to withdraw (no penalties) unlike the traditional retirement savings plans. What are your thoughts on this?

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^^^^

which of your buddies get the commission from selling to you? Any reputable agent will tell you that need depends on the individual, at 24 do you have a family or children to care for after your passing, and you do not have sufficient cash reserves when you pass for them, then absolutely, as a loving husband, father....buy life insurance. If you are single and no one to care for, unless you want to rain on someone a huge windfall that is tax free for the heck of it, do not get life insurance at this stage of your life.

As a post said below, separate insurance from investing, insurance is for what I said above. If you buy it, buy term for 30 years, often through employers they offer insurance. The savings you have, invest in stocks, being 24 you have time to ride out fluctuations, but again, investment begins with the person, are you risk averse or not, etc; this determines what to invest in. If you really hate the swings at 24, put the money in CD's.

[Kenny]

Term life is where it's at.