life insurance

[ducatiz]

how are whole life policys self funding?

you buy it with a large sum of money, i.e. lump sum payment:

http://www.life-cover-quotes.co.uk/Whole-of-life-Insurance.html

[He Man]

how much are we talking about here? Like 100grand?

Ive never had any type of insurance in my life except auto (not even health)

[ducatiz]

how much are we talking about here? Like 100grand?

Ive never had any type of insurance in my life except auto (not even health)

depends on the full amount of insurance and number of years.  100k of coverage will probably cost around 20-25 lump sum if you buy it when you're in your 20s and it comes due when you're 65.

whole life policies develop cash value, so you can cash it out for the policy amount when you're 65 (or when the policy says).

[CDawg]

Whole life plans are good if you have a good bit of money to put into them initially so they can become self funding.  Cash value whole life are good too if you care to cash it out later. 

I have a personal problem with Whole Life insurance.  Whole life is really two product tied into one: 1 part investment, 1 part life insurance.  Personally I hate bundleded products as you are always better off (assuming you have financial discipline) buying term and investing the difference yourself.  The rate of return on the investment portion of whole life is paltry....however, I will conceed that for folks who need additonal nudge to save money, it is an okay idea, just recognize that the insurance comapny is making a premium on your lack of discipline.

[/ax-grind]

[ducatiz]

I have a personal problem with Whole Life insurance.  Whole life is really two product tied into one: 1 part investment, 1 part life insurance.  Personally I hate bundleded products as you are always better off (assuming you have financial discipline) buying term and investing the difference yourself.  The rate of return on the investment portion of whole life is paltry....however, I will conceed that for folks who need additonal nedge to save money, it is an okay idea, just recognize that the insurance comapny is making a premium on your lack of discipline.

[/ax-grind]

i agree if you are buying it for yourself as an adult.

my dad bought me 2 whole life policies when i was 8 and 10 years old.  he put a very small amount in the lump sum, but the return over 55 years will be pretty good.  not to mention, it is a way of giving your kids some retirement help for a small amount up front.

but don't forget the insurance co's premium is a lot less than what you'd pay in taxes on interest if you invested the money yourself.  if you invested yourself, you'd only have the interest minus taxes as a benefit, whereas that $50-100/month interest will buy you a significant amount of additional coverage -- and you still only pay taxes on the interest, not the benefit.

[triangleforge]

Don't know about other insurance co's, but FWIW State Farm didn't have anything about motorcycles (despite the fact that I have two bikes insured with them) on their standard list of questions for life insurance applicants as of two or three weeks ago when I started a new term policy.

They did interrogate me EXTENSIVELY about possible plans to go attempt an unsupported winter ascent of K2 without supplemental oxygen and using just my body hair for warmth (gotta top Reinhold Messner somehow...) -- all based on my honest answer that, yeah, I do a little top-rope rockclimbing with the 13 year old daughter.