josephdegroff

Gandhis,

Your question is not directed towards myself, but I'm going to hop in anyway; I trust you shan't mind.

A term policy is great; in fact, there is nothing wrong with term insurance AND when people like Sturgbe view things as he does, ROP might even have its place (I repeat, when viewed in the manner he is speaking). Now, ought you only buy term or ROP and invest the rest? Let's consider a few things: Life insurance is not an investment. Similarly, investments ARE NOT life insurance. All the time figures are given that "at the end of your term your insurance will be zero dollars but given that you have invested the difference at a 12% ROR, you now have $700,000 tucked away to use and are now self-insured." There are a few things wrong with this mantra: for one, the people that say this most always complain of the high rates of permanent insurance and how the client can't afford the premiums. Amazingly though, these people DO have enough to invest the difference. For another, even if a person DID get 12% every year and a large amount of cash is sitting in an account for insurance reasons only, $700,000 in 30 years does not have near the purchasing power of the same amount today. Furthermore, that $700,000 is going to get taxed before it arrives into the hands of the beneficiary. Still further, someone that has invested as well as the "buy term, invest the rest" crowd champion is going to need some estate planning done later in life. Should I bother mentioning that life insurance is used to help plan the distribution of a person's estate in a tax-efficient manner? Or that when someone is 60 and planning their estate, their premiums are slightly more than if they had purchased a policy when they were 20? And often times, if a person has done as well as being mentioned, they usually donate to a few causes. This can be done wonderfully with permanent insurance. You see, the need for permanent insurance rarely, if ever, "goes away" and is cheaper than term (or ROP) in the long run. Given the tax favorable status life insurance proceeds have, it's an EXTREMELY beneficial and PROFITABLE tool to the people who own it.
I know this wasn't your question exactly, but here's what my point is: if you are going to invest your money into a policy and you don't know what to get, purchase some permanent coverage. Perhaps you can't afford your entire need in whole life-and that's okay-but you can do a mix of term and permanent and put yourself on a schedule to convert over. Talk to any successful agent that has been in the business for a number of years and I am sure they will tell you they don't have many clients regretting the purchase of permanent insurance, but they DO have many clients regretting the reliance on term.

In conclusion, and to reiterate myself, if you can afford the extra premium, go with Whole Life, you won't go wrong.

-Joe

__________________
For God so loved the world that He gave His only begotten Son, that whosoever believeth on Him should not perish but have everlasting life. (John 3:16)

For all have sinned and come short of the glory of God. The wages of sin is death, but the gift of God is eternal life through Jesus Christ, our Lord. (Romans 3&6:23)

Whosoever shall call upon the name of the Lord shall be saved. (Romans 10:13)