Anyone buy whole life insurance for young adult dc?

[Anonymous]

Anonymous wrote:Suspicious to get life insurance on a kid with no income and no dependents to support with you as beneficiaries.
Honestly just put it in an account for them to use later in life

The old reasoning used to be, was to ensure you had some insurance should you ever become "uninsurable" later in life (cancer, etc). So I had the $50K plan my parents paid on from age 8+ and I sold it at 25 once on my own, after purchasing Term plan to get us thru 30 years. It was a waste of money. And we ditched the 30 year term once our kids were into college (and college fully funded) as we are now UHNW and it's not a need at all.

[Anonymous]

Anonymous wrote:Suspicious to get life insurance on a kid with no income and no dependents to support with you as beneficiaries.
Honestly just put it in an account for them to use later in life

Again, it's a way to give your kid even more money about the $18k per year gift without triggering taxes.

You can stuff cash in these whole life policies above the premiums (there are tax rules...I can't remember how much) so if you take out a policy when they are 10 or something, by the time they are 30 they have a ton of cash accumulated and it is tax-free.

It's super HNW kinds of problems.

[Anonymous]

My grandpa signed my dad up for life insurance when he was eight weeks old, so that he could not be denied for pre-existing conditions. My dad 87 and it's now worth 1.5 million when he dies.

So no, I don't think you are crazy. Cheaper to do it now that when he gets to be forty with kids and realizes he needs it and already has high blood pressure.

[Anonymous]

For people who are saying it's a waste of money, how? To me it just likes another investment tool that grows. Unlike term, you actually get your premiums back even if you don't die because the money is growing and it's yours.

[Anonymous]

Anonymous wrote:For people who are saying it's a waste of money, how? To me it just likes another investment tool that grows. Unlike term, you actually get your premiums back even if you don't die because the money is growing and it's yours.

The waste is if you build up cash value, never tap that cash value, and then you die. If you have a $500k whole life policy, with $100k of cash value (which may have meant say $35k in premiums paid over say 25 years), and you get hit by a bus tomorrow, then your beneficiary gets $500k, but the insurance company keeps the $100k.

So, you will often receive some analysis that shows you use tap that cash value as additional retirement $$$s (say you convert that into an annuity starting at 60 for 25 years). However, you might consider starting to tap the cash value earlier.

[Anonymous]

Anonymous wrote:

Anonymous wrote:For people who are saying it's a waste of money, how? To me it just likes another investment tool that grows. Unlike term, you actually get your premiums back even if you don't die because the money is growing and it's yours.

The waste is if you build up cash value, never tap that cash value, and then you die. If you have a $500k whole life policy, with $100k of cash value (which may have meant say $35k in premiums paid over say 25 years), and you get hit by a bus tomorrow, then your beneficiary gets $500k, but the insurance company keeps the $100k.

So, you will often receive some analysis that shows you use tap that cash value as additional retirement $$$s (say you convert that into an annuity starting at 60 for 25 years). However, you might consider starting to tap the cash value earlier.

If you are taking out the policy on your kid, in theory you would be the beneficiary until they reach an age when they have spouse/dependents.

So, not to be morose, but if your kid dies, you will likely get back more money than you ever paid in premiums from the death benefit.

[Anonymous]

Only the dumb dumbs

[Anonymous]

Anonymous wrote:My grandpa signed my dad up for life insurance when he was eight weeks old, so that he could not be denied for pre-existing conditions. My dad 87 and it's now worth 1.5 million when he dies.

So no, I don't think you are crazy. Cheaper to do it now that when he gets to be forty with kids and realizes he needs it and already has high blood pressure.

OK, can you calculate how much the same amounts would be worth now if they had been invested in the stock exchange instead?

Yes, you are crazy. This is only for the UHNW or the ignorant.

[Anonymous]

We have one of these and used it when we needed cash—buying a car, house, etc. It has been a really nice cushion and meant we took out fewer loans, never had credit card debt, etc.

[Anonymous]

Anonymous wrote:My grandpa signed my dad up for life insurance when he was eight weeks old, so that he could not be denied for pre-existing conditions. My dad 87 and it's now worth 1.5 million when he dies.

So no, I don't think you are crazy. Cheaper to do it now that when he gets to be forty with kids and realizes he needs it and already has high blood pressure.

But how much was paid on the policy since your dad was 8 weeks old? In reality, you most likely could have invested that money (minus the cost to buy a 30 year term when you are 25/30) have much more than $1.8M now.

only reason to really do it is pre-existing conditions issues (especially if you have family issues that could happen)

[Anonymous]

Anonymous wrote:

Anonymous wrote:My grandpa signed my dad up for life insurance when he was eight weeks old, so that he could not be denied for pre-existing conditions. My dad 87 and it's now worth 1.5 million when he dies.

So no, I don't think you are crazy. Cheaper to do it now that when he gets to be forty with kids and realizes he needs it and already has high blood pressure.

But how much was paid on the policy since your dad was 8 weeks old? In reality, you most likely could have invested that money (minus the cost to buy a 30 year term when you are 25/30) have much more than $1.8M now.

only reason to really do it is pre-existing conditions issues (especially if you have family issues that could happen)

I have no idea how old this person's dad may be, but the stock market was lower in 1983 than it was in 1967. You are assuming the market always goes up, but I would not be shocked if this person's grandfather was alive during the great depression when the market didn't return to 1929 levels until 1953, and again the market was lower in 1983 vs. 1967.

[Anonymous]

Not wise.

[Anonymous]

Anonymous wrote:We have one of these and used it when we needed cash—buying a car, house, etc. It has been a really nice cushion and meant we took out fewer loans, never had credit card debt, etc.

You would have had more $ if someone had invested what they spent in premiums into the stock market. Whole life isn't a good financial deal for most people, unless you are the insurance salesperson.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:It’s inexcusable at their age, and they can borrow against it, right?

No. Instead buy a 30 year Term Life Insurance policy for a substantial amount and invest the difference into an index fund.

Say your WL premium is $1000/m for a $200K insurance and lot of other promises, buy them a $1M policy for $100-150/m and invest the remainder $850-$900 into an index fund. Do that for 30 years and you'll be way ahead of any WL policy.

I don't disagree...but your numbers are crazy off.

Dave Ramsey's example for a healthy 25-year-old male for $1MM of insurance is $234/month for whole life and $29/month for term.

I don’t like life insurance either - but all of these numbers assume you live - life insurance is inherently a bet that you underperform the actuaries expectations.

[Anonymous]

Anonymous wrote:

Anonymous wrote:We have one of these and used it when we needed cash—buying a car, house, etc. It has been a really nice cushion and meant we took out fewer loans, never had credit card debt, etc.

You would have had more $ if someone had invested what they spent in premiums into the stock market. Whole life isn't a good financial deal for most people, unless you are the insurance salesperson.

But (and this is me not understanding, and generically for this type of insurance --not just for young adult but any adult)
If you just took the money and put it into the stock market you also don't have the insurance component, correct? The insurance component is to protect against a tragic income loss (for an adult or a spouse).