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Author: dhodson Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 17930  
Subject: Re: Disability Insurance Date: 3/30/2012 9:00 PM
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no you have not seen that. There is no such thing as a whole life policy with the same premium indefinitely for the same death benefit as term.

i will agree that one should do research. unfortunately i didnt do enough before purchasing my whole life policy.

The majority of people lose money on whole life based on having to surrender or inflation alone.

You need to understand how it works. The insurance company doesnt have magical investments. Because they need to be pretty good on their "guarantees" they buy treasuries/high quality bonds. In essence when you buy whole life you are in essence buying these bonds but paying for a very expensive middle man and reducing your liquidity. A standard whole life contract doesnt have premiums equal to cash surrender value for at least 13 years and that doesnt even account for inflation. about 1/3 of people surrender whole life within 5 years, around 50% have done so by year 10 and about 75% or so never keep it till death. Whole life has had decreasing dividends for a very long time bc those safe investments arent returning much. If we stay in a low interest rate environment for a very long time, you are going to see more insurance companies in trouble.

Now there is term UL where the premium is guaranteed for a certain time period and can be the same as term premiums but the cost of insurance sky rockets right after the term period. It is also a very bad idea for permanent insurance but fine if you know you will cancel at the end of term or if you unfortunately develop a very bad health condition near the end of the term then its worthwhile to pay the huge increase.

I know a lot about permanent life insurance and most people are unhappy they every got involved with it. Unless you have some sense that the insurance company has greatly under appreciated your risk of death then on average its a very poor investment decision unless you absolutely need a permanent death benefit.
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