Opened minded to Whole Life

I've read many posts about whole life and whether is is worth it or not. I understand that it is more expensive than putting 100% of monies into a mutual fund, etc. but again that isn't comparing apples to apples. I understand this.
Most posts that have the word whole life in them end up being a board for debat over companies selling it or who's ripping who off. I just want the facts and nothing more or less. Is this is good "investment" vehicle for me. General situation. 30 yrs old, married, plenty of 20 year term coverage, 16% to 401k (w/ match), outlook for savings in Roth and 401k to increase each year until we're at 15% 401k and maxing Roth IRA. Very brief but gives you an idea anyway. So only facts or personal opinions but no bashing other companies or telling a story on how badly your agent ripped you off......I've read those posts that's why I'm asking myself and really need to know if this is a weakness I'm not considering.

Thanks in advance.

whole life is not an investment ... per se.

if you need insurance AND if you would benefit from a portion of your investment portfolio being in conservative to moderate allocation then perhaps whole life is a very valid option.

however, another serious consideration is how long will you need insurance protection. if 10 years or more, whole life should be considered. if 20 years or more it is almost surely the most cost effective choice. if for 30 years or for your "whole life" then whole life is a must.

we can run facts and figures till we are blue in the face. at this point i have done all the research that can possibly be done (with the current fact model) and i am confident in the supremacy of whole life for long term economical and guaranteed insurance protection. in my family we spend in excess of 1200 per month on insurance protection. the bulk of that payment goes toward whole life. the bulk of my insurance protection is in term. mine is an anecdotal example, but i walk my talk.

finally, what if i am screwed up. what if i was wrong and this whole buy term and invest the difference thing was right all along. the only thing that is bad is i am a little less "rich". i max all of my tax deferral opportunities. i defer my compensation, i have one pension already and will have another from my present company when eventually i retire. i am working my ass off to have an estate issue. please, wish me luck.

uh oh, what if the BTIR all term all the time guy was wrong. well, then he doesnt have an estate issue, he has an estate PROBLEM. and that problem can have an enormous impact on his family.

what if we both died and we had no investments at all cause of some catastrophe. well, i died at 70 and my wife has loads of money infused to her from my insurance. the term dude canceled his years prior cause he couldnt afford to keep it.

you see, if i am wrong ... so what. if the term only crowd is wrong they are risking total devastation to their families.

by the way, if you were thinking "sure, 1MO sounds rich, he can afford that coverage".

i retired from the army and my last pay statement was paying over 800 per month to my insurance by allotment. so even when i was obviously not rich (and i am still not), i was committed to permanent insurance for permanent needs.

ps. for a more technical analysis for some of the whole life considerations, please read more here: http://forums.kiplinger.com/showthread.php?t=5493

whole life is not an investment ... per se.

if you need insurance AND if you would benefit from a portion of your investment portfolio being in conservative to moderate allocation then perhaps whole life is a very valid option.

however, another serious consideration is how long will you need insurance protection. if 10 years or more, whole life should be considered. if 20 years or more it is almost surely the most cost effective choice. if for 30 years or for your "whole life" then whole life is a must.

1MO - I do not view this as an investment like my 401k or Roth but it is an investment in our overall financial picture. So I do agree with you on that.

As I mentioned we do have term insurance right now and are well protected at this moment if one of us had to collect it on our spouse. It would cover all debt and then leave roughly 8.5 times one spouses annual salary. This assumes there are no taxes taken from a term policy (I might be a moron and get totally blasted for assuming this, please correct me if it does get taxes).

To be honest I think we will always need insurance and can say I think we'll want it for atleast 20 years but really, why would we every say "No thanks we don't need insurance anymore."?

Finally, is there a specific type of whole life or a company that stands above the rest with whole life?

The mutual companies are the ones to stick with:

Northwestern Mutual
Mass Mutual
New York Life

Long term I believe Northwestern Mutual has better returns than Mass Mutual (which are still pretty good).

-Joe

i agree that NW Mutual is superior to Mass Mutual (a fine company nonetheless). NY Life is the oldest, places more insurance than ANY company, and has the strongest financial situation of all the mutuals (it also has the highest ratings from EVERY independent rating agency)... but you can ONLY get it from NY Life. the others you may be able to acquire from others.

Does Nationwide or American Family offer these? When shopping for our term policies Nationwide came in very competitive.
I will look into those mutual companies you suggest as well. I'm not sure what presence New York Life has in my area, can I call another city or rep if there isn't one close to me?

I believe that I have never heard anyone mention MetLife here. I felt like Snoopy had me on a choker while I had a Universal policy with them a decade or so ago.

Who mentioned Met Life?? I'm not in the know with the insurance industry so sorry if it is one of the three that were mentioned.

I mentioned that nobody else had ever mentioned them. At least that's what the post above yours says.

Should it be mentioned? Because I haven't heard anyone mention Ohio National either.

I've been zinged! :eek: Touché!

I assumed Met Life was a major player in the insurance realm (I do not know how large Ohio National is) and my intention was not to hijack your thread. Sorry!

met life was originally founded as a mutual company and remained so for many decades. remember that when a mutual company earns a profit it almost ALWAYS reflects in that profit being distributed (known as dividends) back to its policy holders.

in the year 2000 met life "demutualized" and then went to a stock company with an initial public offering on the open market (ticker: MET). if you look at the returns of this stock you will notice two things. first, it has done quite well. in seven years it has had about 200% cumulative returns.

on the face of it, that would seem a good thing. however, when you do a review of its historical standing (where back in the early 1900s it was the PREMIER company of its kind (market share of a whopping 20% of the adult population)), it has expanded and contracted and expanded and contracted its business model so much it appears that it has certainly lost its way.

it SOLD state street (dumb), it bought Travelers (i think dumb, but i am not sure). it closed aspects of its business and opened others (like banking). it has also hugely increased its non-core investing into other areas. lets look at travelers for a second.

in the purchase of Travelers it put MetLife in the position of being the LARGEST insurer and the following year it had the highest volume of sales in the industry. in less than 2 years, all of those "bragging rights" were swept away. it seems to me that they intentionally "bought" those bragging rights. in making the corresponding profits, they of course paid those to their stock holders. two years later, the stock suffered as a result.

this is ONE of the big reasons to stay away from stock companies for a product that is population based. they MUST take extraordinary risks to make short term profits. short term profits are what drive stock price. there is an inherent conflict of interest between stock holders and clients of ANY product or service. ie. the client wants more value for their hard earned dollar and the company wants to cut costs as much as they can get away with.

again, lets revisist the stock returns of MET over the last 7ish years. if it had been making those returns as a mutual company ... it would have been paying them to its policy holders. now, it pays it to stock holders. the policy holders, for the most part, fund this profit. dont you think they would want to have it returned to them?

additionally, the volatility in both the business model and in the pricing and placement of MetLife has resulted in SUBSTANTIALLY lower ratings from every one of the independent rating companies. so, while MetLife may still remain in a position to pay its obligations (even with the lower ratings), i fail to see where it is EVER in a company's best interest to be considered weaker in its financial strength and business model.

all of that said, MetLife is still a decent company. if i had a family member who had a policy from them i wouldnt tell them they need to worry. but i would never personally purchase a policy from them from this point forward since they are obviously on the decline (no matter how gradual that decline appears).

finally, there are other smaller "mom n pop" mutual insurance companies. i am HUGE fans of these. however, a significant draw back is their distribution model. they are either very small and cover small portions of the country and therefore you cannot find an agent or they are internet based so you have to do everything over the phone or internet ... and thus cannot meet in person with an agent.

i know it is in vogue to speak poorly of the lowly and slimey "life insurance agent" but the first time you think you have a problem with the policy, or you need additional education on the mechanics of your policy, or someone who was insured passes away ... you will WISH to high heaven you had an agent to be there personally for you. if you think to yourself, "i am pretty savvy, i know all i need to know about insurance." then you are deluding yourself. i am in the business and the sheer volume of what i DONT know about insurance can be overwhelming. i learn something new routinely. so puhleese ... i dont want to hear any layperson touting their knowledge on this subject matter. much in the same way i dont want to hear a layperson explain the intricacies of nuclear fission over the opinions of a nuclear engineer.

was this helpful?

Thanks, 1MO! That was some in-depth background!

I had my Metlife policy for about 12-15 years and it was one bad experience after another, from a change to the original rate I was quoted, to their customer service lying to me (it was in regards to some of those very same dividends you mentioned), and everything in-between. Needless to say, I sold the policy, and received a cash value plus stock options worth about what I put in over my tenure of ownership. I turned around and invested it in some no-load mutual funds! ;) .

thanks for the feedback dingo. glad to hear your ship was righted! lots of other "clients" of met were offered settlements which included stock. no recommendation here, but it looks pretty high. if it were mine, i would be thinking about capturing those gains and making more gains somewhere else. and you know me, my investment philosophy is pretty much never ever ever sell off an equity. so, there you go.