Whole Life Versus Term

[WinoBlues]

Your post have always been answered. You however do not want to listen to the answers.

You seem to be aggressively getting ready. As has been posted to you MANY times. Find someone in your country to help you sell a policy. Or maybe re access your skill set.

Im increasingly impressed by how non helpful this forum is...

 

[Robert Barney]

Haha that's awesome, Rick.

To the OP - this argument has been done to death. The handy search function works quite well. But to give a simple answer: Nobody needs life insurance at all. But they may want term or permanent based on what it will do for them. Just so happens that permanent can do a lot more things than term can.

Well I am just going to have to disagree with you here.

You have taken the argument term-ites make (that would include me), that term is a need product and whole life is a want product, and tried to diffuse it by saying no one "needs" life insurance. Nice try but my experience is that most people with financial dependents, particularly those with children, feel the "need" to provide for them if the breadwinner should die. It's pretty much the same instinctive drive that make the breadwinners work and earn money in order to pay for other things they don't "need", like housing, food, clothing, etc.

The need to provide for financial dependents goes down as you get older. Your children grow up, leave and become financially independent. Further, as you get older, you will have accumulated assets that you did not have when you were younger. The need to have life insurance protection goes down. And if you expect to retire, you will need to accumulate liquid assets that will support your spouse if you die (after you retire), simply because you were expecting those same assets to take care of two of you while you were alive, not just one of you after you die.

So what form of life insurance costs the least when you are younger, and need the insurance the most, and gets more expensive when you get older, and need it much less:

Term life insurance.

And if the cost difference between term and whole life was small, many people might swing over to whole life but here is an example for a 30 year old non-smoker.

$500,000 of 30 year term - $405 per year.

$500,000 of no lapse UL - $1,682 per year.

The whole life is four times the cost of term and there isn't a cheaper whole life product to be found. Most whole life products are much more expensive. It doesn't make the decision very complicated assuming the consumer is offered the alternatives.

Term gets the job done and it is very affordable. And if the buyer think's $1,682 is affordable, they probably need $1 million on insurance, not $500,000.

But here is the thing that ticks me off. Agents routinely sell less than the amount of insurance needed, in order to end up with a premium for whole like that the client can afford. This is done in order to sell as big a whole life premium as possible, with the purpose of generating maximum commission.

The client looks to the agent for advice, how much money will my family need if I die, and the agent gives them a face amount number that is TOO SMALL just so they can crank a whole life sale. That kind of conduct, which occurs far too often, is the most embarrassing and troubling behavior in our business. When I was selling insurance, I routinely enjoyed rectifying that problem.

The best I can do now is point consumers to my income replacement calculator which you will find next the face amount here:

Term4Sale.com - Term life insurance comparisons (over 100 companies)

I have also shared the articles that I have written on the subject for Canadian MoneySaver. Here they are:

Term4sale.com - Income Replacement Calculator

With over 900 visits per day to term4sale.com, I take some satisfaction in believing I am doing my part to educate the public as to the problem of underinsured consumers.

 

[Death Cab For Tootie]

Need = something one cannot live without. Examples include food, clothing, shelter. Can also be referred to items that are legally required to own. Car insurance comes to mind, for example.

Want = something that will enrich the life of someone or avoid loss. This includes ALL forms of life insurance.

Nobody has been prevented from dying because they didn't own life insurance. But many consumers buy life insurance because they want what it will do for them and their families.

To clarify, term has a handful of functions. It provides a level death benefit with (generally) a set number of years of guaranteed, level-premium coverage. Most policies now offer accelerated death benefits if the insured is terminal and is expected to die within a set timeframe. Depending on the company, they offer riders that enhance the policy (waiver of premium, guaranteed purchase benefits, etc.).

Whole life offers guaranteed, level-premium coverage for life. WL policies offer all the above features plus cash that can be accessible throughout the life of the insured. There are non-forfeiture options in case the insured wishes not to pay additional premiums. When used properly, the permanent death benefit can be leveraged to give the insured additional income options in retirement (pension maximizations, CRTs, spend-downs, etc.) that are either not available or cannot be maximized without a permanent death benefit.

Now, many of my clients WANT WL based on the features I mapped out. However, based on current cash flow, most can only afford term insurance (with, perhaps, a smaller amount of WL to start). Still others I encounter don't WANT life insurance at all. That's ok - I can help them in other ways. But to imply I don't offer my life insurance coverage maxiumum coverage just for the sake of buying a WL policy is wrong, and a gross generalization of agents who offer WL to their clients. If my client only wants term, I give them term. I let them know they've made a good purchase, and I work on getting them to convert. Why? Because I know and feel in my heart of hearts that even having some WL as part of their financial picture is GOOD.

And to clarify, Robert: UNIVERSAL LIFE IS NOT WHOLE LIFE. If I said that to a client or prospect, I run the risk of having to file an E&O claim. Are you licensed? My guess is you're not. Because a competent agent wouldn't make that most elementary of mistakes.

 

[arnguy]

Excellent post, Death Cab!

 

[Robert Barney]

No lapse Universal Life to age 121 meets all the criteria for being a whole life policy.

Whole life is insurance that is in force for the whole of your life, with a level premium.

 

[Death Cab For Tootie]

No lapse Universal Life to age 121 meets all the criteria for being a whole life policy.

Whole life is insurance that is in force for the whole of your life, with a level premium.

BZZZZZZZZZZZZZZ

Wrong.

NLG to 121 has two of the components WL has: Guaranteed Premium and Guaranteed Death Benefit. What it doesn't have is Guaranteed Cash Value.

Once again: Universal Life is NOT Whole Life.

 

[dgoldenz]

BZZZZZZZZZZZZZZ

Wrong.

NLG to 121 has two of the components WL has: Guaranteed Premium and Guaranteed Death Benefit. What it doesn't have is Guaranteed Cash Value.

Once again: Universal Life is NOT Whole Life.

No-lapse UL does have guaranteed cash value, even though the number may be $0 for much of the policy....it's still guaranteed. You could also set up the policy to have higher guaranteed cash values, but it would cost you more than the bare minimum. Just saying.

 

[Norwayguy]

But here is the thing that ticks me off. Agents routinely sell less than the amount of insurance needed, in order to end up with a premium for whole like that the client can afford. This is done in order to sell as big a whole life premium as possible, with the purpose of generating maximum commission.

Robert first I am a very happy Compulife user however the part about agents selling a smaller death benefit so it fits the clients budget to make more commission makes no sense. If the client can only afford say $100 a month for Life Insurance and Agent A sells 100% Term and Agent B does a blend of Term & WL the oop costs are the same and the commission is either the same first year or less for agent B.

One last thing how much of your belief that WL should not be used is due to the fact that you can't quote it in Compulife...yes I know you can quote GULs but WL and regular ULs can not be quoted in your product.

Do you truelly believe every client has the exact same needs? And that no one can benefit from some form of permanent LI? The vast majority of my clients buy term but I would never say everyone shout BTID just life I would never tell everyone to invest 100% in MF,CD, Annuities, or any other single asset class.

I hate these term/WL threads because I don't believe anyone comes away with a different focus...The people that believe term is the only thing that should be sold won't listen to others viewpoints and leave with the same impression. Those that have an open mind probably already believe that permanent LI can have a place in their clients LI portfolios.

 

[jdeasy]

No lapse Universal Life to age 121 meets all the criteria for being a whole life policy.

Whole life is insurance that is in force for the whole of your life, with a level premium.

There is a place for term, a place for UL and a place for whole life.

One need to understand all three to provide good service to the clients. If you understand all three, you sure as hell don't demonstrate it.

Your constant blabbering that term is the only way to go is not only tiresome, it's wrong.

 

[Norwayguy]

There is a place for term, a place for UL and a place for whole life.

One need to understand all three to provide good service to the clients. If you understand all three, you sure as hell don't demonstrate it.

Your constant blabbering that term is the only way to go is not only tiresome, it's wrong.

Since he doesn't sell insurance anymore he probably no longer runs into 74 year olds with little savings a new 50 year old second wife and a home with a new 30 year mortgage and without the husbands pension and SS the wife won't be able to keep the house. In the real world things do not always turn out as one hoped or planned for.

You are so right Term, UL and its variations and WL all have their place.