August 21st, 2007 | 
Author: 
parkerindy asked:
I just switched from Cash Value insurance to Term. Wow what a savings I have on premiums. Does anyone else feel like cash value insurance is an extremely bad idea perpetuated by an insurance industry?
Karren Khairallah
I just switched from Cash Value insurance to Term. Wow what a savings I have on premiums. Does anyone else feel like cash value insurance is an extremely bad idea perpetuated by an insurance industry?
Karren Khairallah
Posted in Insurance & Registration | 
Tags: Bad Idea, Cash Value Insurance, Insurance, Insurance Industry, Life Insurance Term, Premiums, Wow
Yes, it is a product designed to stuff their coffers, I don’t care what anyone else says. In my case we had an agent/friend that had provided a $100,000 protection and turned our $6400 into $2800 cash value all while taking many various fees and expenses. Since his dismissal, we now have $250,000 term and our cash value has been invested with Fidelity under our control and is now $19,000 in just ten years all for the same premium investment.
That depends on YOUR circumstances AND the type of cash value insurance you have or may buy. Whole Life usually only pays about 3-6% and the money is put into the general accounts of the insurance company and is liable to creditors if for any reason the company should go under.
On the other hand, there are equity indexed products which over time are averaging 8% and there are variable products where they are averaging 12% on the cash value, plus having some tax advantages to the pull outs, which some other investments don’t allow. Also, the cash value money in most variable insurance products is placed into subaccounts which aren’t liable to be seized by creditors in the event of the company’s failure.
You might want to check your library to see if they have a copy of the NEW edition of Ben Baldwin’s, “The New Life insurance Investment Advisor” to read for yourself about various products and their uses.
BTW – Term can be very good insurance and it has its place, but I’ve also realized that my heirs would prefer that my insurance actually be IN force when I do die. Most term policies never pay out
I think cash value life insurance is a scam. Not only they are very expensive, they also have a low rate of return. If you ever wanted to use it, you have to borrow it and pay it back with interest. Keep in mind, this interest you pay does not go back into your cash value. Rather, it is kept by the insurance company! And if you were to die before age 98, you lose all the cash value (unless the policy states that your beneficiary will get the death benefit and the cash value upon your death).
Buying term and investing the difference is the best way to protect the family. Some say term isn’t great if you outlive it because premiums goes up after the term expires. Well, if you invested your money on a consistent basis since the day you got the term, you probably won’t need life insurance when term expires or you don’t need as much coverage as to 20 years ago. If you bought a 20-30 year term, in 20 to 30 years, your financial obligations are decreasing. Your kids are all grown up, your mortgage should be almost or is paid off, and you are or nearing retirement. Do you need life insurance when you retire? If you do, what for?