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In Reply to: Re: Re: Re: whole life posted by hindi on August 11, 2001 at 07:29:34:
Wow. Thanks for all of the information. I'm planning on going out and buying some books on this, so I'm coming from a more educated stance.
: Life insurance is not an investment. It has a "floor" that you can't earn less than. A true "investment", on the other hand, has potential downside risk up to 100% of the money invested. Life insurance is a good supplement to real investments, especially tax-qualified plan investments like 401(k)/IRA/TSA/SEPP etc.
:: Especially if the funds are earning much higher rates than a whole life plan.
: Now you're comparing a 100% guaranteed financial product with a 100% risk product. There are too many distinct differences for any kind of honest comparison short of a 300 page book.
Well, here's how I've been educated. If you BTID, then there is a risk factor. However, this varies with people's ages. There are some people that are better off keeping a whole life plan. However, if you're young enough, you're better off buying an inexpensive term life and investing the savings in something with higher rates of return. Sure, there's risk, but that goes without saying if you want high growth. Rather than having a hefty life insurance plan, you will have some heftier assets, given that the record of the market keeps up through the next 30 or so years.
As people get older, their need for life insurance decreases, as their kids are on their own, houses are paid off, and they have enough assets generating income to live on.
That is, of course, if they have invested wisely and have good assets.
: Hope this has helped, Clint! hindi
It has helped. I greatly appreciate the information and your advice.