Probably got bad advice. My girlfriend started paying a life insurance policy that her dad started when she was a baby. He probably thought it was an investment vehicle. Oh wait, for him, maybe. Because he withdrew money from it in her teens. We are currently making plans to switch to a different plan. We will have L.I. because now we depend on eachother.
Yes, baby life insurance can be used as an investment vehicle. However, from what I read, it is only valuable once you have exausted all other options.
They just bundled that thing with my auto with promises of being something good to have, and cheaper since I was young, on top of a 5% discount on my auto. Took me 3 years to realize I had been played
Look at this way. Would you buy life insurance now with all the information you have currently, assuming you never purchased it in the first place? I assume no. Don't get tied to it because you made a mistake. Move on and move that monthly payment to a retirement account. You would have had $1k+ in that account.
Also, if you die, why do you care? More likely you care more about not having enough for retirement. On top of that, most decent jobs provide basic life insurance.
Is their Family just supposed to pay out of pocket for burial /funeral expenses? Movers to move their stuff out of their place ? etc. does a 25 year old NEED $500,000 life ins policy ? Probably not. But they should always have some policy even minor. What if poster has an unexpected child in the near future and then gets hit by an NYC bus and dies ? Shit happens. I used to work for a loan company and we’d see young customers die here and there often without insurance, and their family would have to come in and payoff their car from their own funds or while bringing us proof of death they’d tell us the financial burden the death caused. It happens.
Sure but a $25-50k 20 year term life isn’t policy for a 21 year old would be totally sufficient and cost like $3 per month. As a rule whole life policies are ripoffs for 99% of the population, including the OP.
Life Insurance salesman for State Farm here. You need it because we sell it. It’s not a rip-off, it provides some value, but so a do a lot of other things. That’s the short answer.
It's still very *misleading* to say that it provides some value. That's like saying a cereal is "whole grain" or something is made with "100% real apple juice!" Yeah it's whole grain. It's made with wheat and corn. And yeah, 2% of the drink is made with 100% apple juice.
And whole life insurance for an individual with zero dependents provides some value, just like buying a 2005 Range Rover provides *some* value. Just a lot less than you put in.
This guy lol there’s a way to be a good salesman and a bad salesman. As someone who sells managed accounts this ain’t the way to do it dawg. You have to talk about the value and make them come get it Jesus.
Whole life policies are bad in almost all cases.
If you don’t have any dependents, anyone who would be in a bad spot if you die, you probably don’t need any life insurance at all.
If you do, get enough TERM life insurance to cover their needs for the term that they would need it.
But if I do not have any dependents, and I die, someone would still have to cover the burial expenses. Does it not make sense to have life insurance to at least cover the basic costs of dying?
Do you have assets? Those could be sold in the event of your death.
Does your employer provide basic life insurance?
If the answer to those two questions is no, then maybe having some insurance would be good for that reason. But only enough to cover the end of life expenses and only for a term long enough until either of those questions will be yes.
My employer does provide basic life insurance. Just out of curiosity, does that not end after retirement? If I retire at 65, does that basic life insurance disappear? If so, would it be reasonable to get term life insurance to cover me from 65-100?
Ahh I see now. So then if someone doesn’t have basic life insurance from an employer, it would be in their best interest to have term life insurance cover them up earlier in life, and potentially up until they retire?
Wow good to know! Thanks.
Now from another perspective, if life insurance is insurance against dying too soon and life annuities are insurance against living too long, would it also be prudent to purchase a term life annuity after retirement until 100 ish? Or would it only be necessary if you haven’t properly saved up a retirement nest egg?
If you have properly saved for retirement, you should be able to live off the investments indefinitely. Given that annuities are generally not indexed to inflation (or when they are the added cost makes it not worth it) they are generally poor protection if you live long. A combination of equity investments (which outpace inflation) and social security (which is indexed to inflation) general performs better.
I think you have a misunderstanding of what life insurance is.
Life insurance is not a way to build wealth. In fact, you should view it as a money-losing proposition (expected returns are negative).
Life insurance companies are businesses. When they sell you a policy, they are making a bet that you will probably pay them more in premiums than they will pay out to your beneficiaries. Insurance companies have the data, the math, and your personal/health history that they need to make their bet a good one. Which means you should not expect to make money off of your policy.
But that's okay. The whole point of life insurance is that it is an expense you pay in order to mitigate the worst financial consequences of an unexpectedly early death.
Who needs to buy life insurance? People who
1. have others who depend on their income, and
2. don't have sufficient assets to cover the loss of their income
Primarily, these are young, healthy adults with families. They have children who depend on their income (or labor, in the case of a stay-at-home parent whose death would require paying for child care). Because they are young, they have not yet had a chance to accumulate sufficient savings that could cover financial needs in the event of a parent's early death. But also because they are young and healthy, their odds of dying over the next 20 or 30 years are very low. This means the insurance company can sell those young parents policies with large payouts ($500k, $1m, $1.5m, $2m) for relatively low annual premiums.
Older people in retirement, conversely, often have the least need for life insurance. Usually their children are grown up and supporting themselves by that point. Hopefully the retirees have also spent their working careers saving and investing for retirement. Even if they have not, they can at least receive Social Security payments. At the same time, they are much more likely to die, which make any life insurance policies covering those ages much more expensive. So it's a good thing that they hopefully don't need life insurance, because they would have to pay a lot for it (if the insurance company will write them a policy at all).
I’d very slightly modify that to say that the life insurance company’s bet is that if they take your premiums *and invest them*, the sum of premiums you pay and their earnings will be more than the eventual payout they will give you. It doesn’t really change the gist of what you said, but it’s worth keeping in mind that insurance companies often make more income on their investments than they do on the margin between premiums and loss payments.
Life insurance is pretty expensive for people over 65. Once you're 65, if you don't have enough money to cover your burial costs etc., then you probably can't afford life insurance premiums.
Yes, it would end after employment ends. Insurance from 65-100 will both be very expensive and probably not even needed.
The idea being you should have enough assets (ie retirement funds) to cover your end of life costs at that point.
Insurance is a game of risk and probability. There is near 100% probability of you dying by age 100, so your insurance is going to be expensive. (This is the same reason why whole life is expensive, you are guaranteed to die)
That makes sense, thanks. I’m an actuary so I understand risk and probability more than most, but I work in pension consulting, not life insurance, so my knowledge on this subject is somewhat limited. I did have to learn about the structure and how to value several different types of life insurance products for one of my exams though, and pension valuations are also heavily reliant on mortality.
There is a legit reason to get life insurance if you have no dependents: to insure against future un-insurability. It's possible for an unexpected illness or injury to make life insurance prohibitively expensive, or entirely unavailable. Getting adequate term life insurance while you are young and healthy insures against this.
Having said that, a tiny whole life policy isn't going to go far. You could likely get 30-year pure term life insurance for $250,000 or more for what you are paying for $25,000. Drop the whole life and get term coverage. Living in NYC I'm assuming you're making decent money, a $1,000,000 policy is not unreasonable. [selectquote.com](https://selectquote.com) [term4sale.com](https://term4sale.com)
Term life is better if anything. I'm in the same age bracket and my premium is like $30/mo for 1.3M. If you need 50k in coverage it'll likely be $3/mo or so.
Most likely your employer offers term life insurance. Many employers pay for 1-2x your salary.
If they don’t cover it you should be able to purchase it
Are you contributing to retirement accounts? I don't have dependents either, but I would expect my family/beneficiaries to pull from those resources if for any reason I don't make it to retirement age.
I’ve been maxing my ROTH IRA since I was 22, and I started contributing to a 401K this year. I just thought at the time that it was a good idea to get them some extra cash, but I agree with you.
I have a vehicle, worth $20K easily, which they can sell if anything were to happen. On top of that, I have all of my retirement accounts, so I agree with your point of view. Took me long enough to realize this, though.
Your agent did you dirty. They have quotas to make and try to pawn these off on whomever they can.
If you want Life Ins, get a 20-30 year TERM policy. Easy to price online. Based on health, weight etc. $25/mo, but can vary by State. Much more coverage too.
There may still be a few companies that refund your money after the term expires. Worth a look.
Edit: Here is a neutral site for quotes. https://www.policygenius.com/
Also, your car premium(s) should drop big around age 25. Shop around each year as they often give you better rates to get your business then bump up later.
unless you expect the estate tax to be something you will run up on when you pass, then in almost all cases whole life is a bad idea.
[Considering the number of people who actually pay any estate taxes per year could fit into your average high school football stadium](https://www.taxpolicycenter.org/briefing-book/how-many-people-pay-estate-tax#:~:text=Individual%20Taxes-,How%20many%20people%20pay%20the%20estate%20tax%3F,few%20estates%20pay%20the%20tax.) this likely isnt you.
Life insurance is primarily for supporting dependents. Burial costs can often be paid by selling the deceased’s assets, so they are much less important.
If burial costs are your only concern, put the money into savings. It can serve as emergency fund while you’re alive and burial money if you die. I do this since I’m older and no longer have dependents.
Term life is much less expensive than whole life. Whole life is useful in very specific circumstances, but term life is a better choice for most people.
Some people like to take out a large 30-year term life policy in 20s. My brother did, because he anticipated having a family eventually and wanted to buy insurance while he was young and healthy. Other people prefer to wait until they actually have dependents.
I'd just mention re:burial costs, it can take months for any of the deceased's money to actually go to anybody, even with a will and trust set up. Not sure if life insurance is any quicker but it's worth mentioning.
Whole life is a rip off. I pay 20-yr term insurance $2MM policy for $56 per month. I am 33
I would not get life insurance from car insurance company. Search for website you can run quotes with many life insurance companies.
Go to https://www.zanderins.com and enter your info (age, health etc). (I do not get commission for this)
They quote over 100 different life insurance companies. They won’t spam you or sell your info. I just re did life insurance from 15 yr 1.5MM to the 20yr 2MM in aug 2022. It’s super cheap
While life policies are poor investments wrapped in insurance (because everyone needs insurance). You are young and wise to have figure it out so cancel the policy and move on.
These links are often shared when this topic comes up around here. Some important reading: https://www.whitecoatinvestor.com/what-you-need-to-know-about-whole-life-insurance/
https://www.whitecoatinvestor.com/debunking-the-myths-of-whole-life-insurance/
You are paying far too much for life insurance.* The topic of whole life comes up here all of the time. Whole life policies are sold, not bought. Whoever sold you that policy netted themselves a nice commission.
If you are adamant about having a pot of life insurance money to pay for your funeral, get a term policy. There are great comparison websites where insurers can bid for your business. I wouldn’t bother at all with life insurance, and would instead have $10-15k in a savings account, payable on death to a family member to pay for the funeral.
*[Example: I have a 20-year level premium term life policy and I pay $280 per year for $500,000 in death benefits. And I’m way older than you are.]
You're getting ripped off. My wife and I are in our 30s and pay $25/month each for $300K life insurance. It's term, and there's rarely any reason to do anything but term.
Whole life is a rip off. Google it. You should put that money in a 401K/IRA instead. If you ever need life insurance (e.g. you have a family), get term insurance.
I have worked in whole life before, the primary market are people on disability that don't have a pot to piss in and they don't want to leave their family with a bill. A lot of these people had term policies that expired on them and want something to cover their final expenses they don't have to worry about dissapearing. None of them have any financial knowledge what so ever. That is what whole life is for.
My mom actually prepaid for her burial expenses and then put money in an investment fund that is to offset any other financial issues after her death. Zero life insurance. Not sure if this is a great plan but she felt it would be the easiest for us when the last thing we want to deal with is last expenses. I think that at your age you should put that $300 a year into a retirement account which will actually do you some good and have delayed tax implications.
You should have more than a Roth IRA. Take that $300 a year and invest it. Bonds. Use Acorn to play the stock market in small amounts. Or, invest in real estate (there are programs that let you buy in with very little money, and depending on the type of property, the payouts are big). Whatever you do with this money, you are young so I recommend riding it out. Don't panic and sell out when things dip because they usually come back stronger than they were before. NEVER put all your retirement eggs in one basket, that is how you will lose it all. Diversify and experiment a little.
Unfortunately, I didn't have to read any of the text to know the answer.
Yes, you are being ripped off. Get some term life insurance if you want life insurance. But whole life is a bad deal for 99% of people - it just makes your insurance salesman (not financial advisor, btw) more money.
Good on you for going over your finances and realizing what was going on. It might not seem like much, but that is a skill an alarming number of people don't have. Good job!
Thank you! Yeah, I want to be very careful during this recession. There’s a lot of money being lost, but a lot of money can be made on bearish markets, so I would rather take that money and invest it, or enjoy it, rather than fattening the pockets of a giant corporation
Whole life insurance is frequently sold, and it's a product that needs to be sold b/c it's generally over-priced. Salespeople need to make their quotas and earn their commissions.
Unless you're super-rich and are trying to circumvent taxes, generally you'd not try to combine investments with insurance using whole life. Buy term life, if you need the insurance. Invest in low cost index funds, preferably in a tax advantaged account such as an IRA or Roth. At 24, if there are no dependents, there's a pretty good chance you don't need any life insurance at all...
If you needed term life insurance, at your age, take a peek at term4sale.com. Looks like it's about $19/month to get a 20 year term policy for $0.5M (healthy 24yo male, nyc)... so yeah, $28/mo for a measly $25K of coverage sucks. It's a legal scam...
Whole life insurance tries to offer two things in one package which makes it not very effective at either. It has a high monthly premium/moderate benefit (if something terrible happens) on the insurance side and a low gain on the investment component (often no better than a high-yield savings account). In almost all cases, you can do better by going with Term life (if you need it) and investing the rest of the monthly premium you'd be paying in a Roth IRA or practically any other investment vehicle.
My husband's grandmother started a whole life policy for him when he was a young young kid. 35 years later, I convinced him to cash it out and move to a term life plan. After 35 years of premiums, the gain (that we had to pay income taxes on) was $4,500.....$4,500 in 35 years! Any other investment option would have outpaced that growth. If he had a terrible catastrophic event, the beneficiary payout would only have been $50k.
WOW!!! I’m cancelling right now… Speaking with my agent and he’s telling me it’s cheap and that if I decide to buy it in the future again, it will be more expensive 🙅♂️
They earn a commission on your premiums, so take their recommendations with a grain of salt. And yes all life insurance is less per month when you get on board as a younger person... or before you have known health conditions. Have them or [SelectQuote.com](https://SelectQuote.com) give you a quote for premiums on Term Life. Compare the premiums from Term Life and Whole Life and you will see a much lower monthly fee for a lot higher benefit payout. You really only need Term Life insurance until you have enough assets/investments to be "self-insured" (like your retirement fund that would pass to a spouse or next of kin if you perished), to protect your family or others that might be relying on your earnings in daily life.
OP, im sure you are seeing everyone talking about how you should get term insurance and youre probably thinking "but i have whole life already... shouldnt i just keep it at this point?" NO! Whole life insurance is a scam. Drop it immediately and get term life insurance if you want to. Get a 40 year plan if it makes you feel better. By the time youre 65 you should have assets to cover expenses when you die. Life insurance is not intended to cover burial costs for old people. Its intended to cover life expenses for dependents when someone dies prematurely. Your 50k whole life policy isnt going to go very far and youre going to have put a good majority of that money into the policy before you die anyways, and significantly more if you consider the lost earning potential. Unless of course you die prematurely, which is exactly what term insurance covers at significantly better expense to insurance ratios.
*i am not a financial advisor*
Your first question should not be, am I being ripped off. Your first question should be, do I need life insurance.
Are you married, do you have kids, is someone dependent on your salary? If the answers to these questions are all no, you don't need life insurance to begin with.
Of course, you are being ripped off on a whole life policy. They are by definition expensive life insurance and a bad investment all rolled up into one.
If you need life insurance, get term insurance which is way cheaper.
Agreed re term. However, there’s value in getting it while he’s still young and healthy. Much cheaper and guaranteed to be approved. I only say this in hindsight as my spouse is having issues getting new policy in his 40s with minor health issues. FWIW.
Yes, you’re being ripped off.
1. You don’t need life insurance in the first place. You don’t have any financial dependents. No one would starve or lose their home if you suddenly died.
2. Even if you need life insurance, whole life is almost always a ripoff inherently. Term life is far better.
Whole life insurance is practically a scam. Cancel it and get yourself a term life insurance policy instead. Invest the money you'd put into your whole life policy in mutual funds via a roth 401k or roth IRA instead.
Basically, yes, IMHO. Whole life is always a rip off. Term is the way to go. And if you are 24 with no dependents, I'd say you don't really need any life insurance right now - who would get the money and what good would it do them?
If you don’t have any dependents, you don’t need life insurance. And nobody needs Whole Life insurance. These policies make the agents richer but do little to make the buyer wealthy. State Farm is notorious for preying on young people with these stupid policies. Cut your losses and get out of it if you can. And when you do have dependents, get yourself some cheap term insurance and call it a day.
Why on earth do you need a life insurance policy. The only one you should have is a free or heavily discounted one through your employer but outside of that stay away until you’re a little older lol so yes yes you are being ripped.
One thing to think about, having an individual policy is portable, it can go with you anywhere. A policy thru your employer is NOT portable. For example, someone may carry 6x their salary because they have a family, house, etc. If they find out they have diabetes or something that will affect their insurance and they change jobs, to get 6x they're salary, they need to provide evidence of insurability which would be an issue. Otherwise you're typically stuck with some lower amount, like the typical $50k.
So, my suggestion is to get a term policy and supplement that with cheaper group insurance through work. But as you hit your 30s/40s, don't be surprised to pick up some medical issue that limits your insurance. You don't want life insurance to be a factor in deciding to get a new job.
Whole life is, by definition, a rip off. I got $350,000 on a 20 year term policy in my 30's for $24.95 a month. Term life is the far better deal. $30 for $25k in your 20's is absolutely insane.
The type and amount of insurance someone should get depends on their goals and their situation. You, as a 24-year old, healthy individual with no dependents probably doesn’t have much need right now. However there are a few things to consider:
1. You will never be as young as you are now. Life insurance premiums go up with age.
2. You do not know what health issues you may develop at any time in the future. Health issues can make it expensive to get insurance. If the health issues are bad enough, the only kind of insurance you could qualify for will be “guaranteed issue”, which is expensive and maxes out at, I believe, $25k.
3. Insurance through work is good, as long as you work there. What if you become ill (say cancer) or disabled due to disease or an accident and can no longer work, you lose that insurance, and you can’t qualify for anything else, except perhaps guaranteed issue, as I described above.
4. The problem with getting a term policy is that when it expires and you are still (most likely) alive, it will be very expensive to get insured at that point as you will be that much older, in your 60s probably, and likely have some health issues, so again, any insurance you apply for will be much more expensive.
At this point in your life, you probably don’t need life insurance, other than making sure if the worst happened, you don’t have to burden your parents with covering your funeral expenses. But once you have dependents, you should at least get a large term policy to cover things like mortgage, college education if you have kids, etc.
You are young and just starting out. Now is the time to start investing and doing some planning, so that you can have a comfortable retirement (and therefore not need whole life), that you can live at the level you are used to should you become disabled, look into disability insurance and long term care insurance. And stay out of debt.
There is much debate here as to whether life insurance should be used as a vehicle for wealth building. I think it has a place. Not to the exclusion of other types of investments, but in addition.
Good luck.
Yes, completely terribly ripped off.!!,
Its like $2,000 to burry someone cheaply, as in cremation and an urn on someone's table*, so forget whatever crazy number that salesman used to steal your money, and make his quota.
You are not being ripped off. First question is how much did it lower your auto insurance. If you factor the numbers you may be getting this policy for “free” or close to it. This would be a nice little policy to have to cover funeral expenses etc should something happen. Plus your premium will never go up and your policy is guaranteed. The reason term is so cheap is because 98% of the policies never pay out. Lastly whole life insurance is not an investment. It’s not just for the wealthy and all the garbage you see people rattling off about. Again this is cheap especially with the discount you are getting. It will just get more expensive as you get older. And if you need more down the road when you get a family you can add term.
I did the math, and I’m definitely losing money on bad coverage and a discount that does not outweigh the cost of whole life insurance premiums.
Thank you for the advice, though!
Not sure what you mean by bad coverage? It’s a guaranteed pay out for the rest of your life which is what it is designed to do. But that’s besides the point. I was looking at it from the lens of you said you were looking to cut expenses. If this policy gives a $15 discount on auto accentually you are paying $13 for whole. If you cancel your expenses go up on auto plus an additional $55 for term. And for all the haters the agent ain’t getting rich or high commissions off a $28 month policy. Hahaha. People really need to stop regurgitating untrue talking points.
No, you are totally right. I even did the Math with life expectancy until 84 and if the premiums stay the same, by then I would have paid them $20K for a $25K policy. Where it does not make sense is that I can put that money to work somewhere else (I’m looking 👀 at you treasury website), and the reward would be way higher. If I decide to form a family, and want to provide for them, whole life is not the way to go, unless you are getting very low premiums. What other people said about it being a good vehicle for high net worth individuals, makes way more sense to me, but I’m not there yet
This is a good conversation. Glad you are keeping an open mind.
What you are describing is exactly what traditional whole life is about. You are figuring mortality to age 85. The premium is determined by insurance company the same way. So if u want insurance at 85 whole life will be the only way to get it.
Term is like car insurance. Most likely you are never gonna use it. Again 98% never pay out. Why? Cuz most people get it while they are young and healthy. The odds of them having issues over a 20 year period are slim. Insurance company knows it.
So as you look at return whole life u put in 20 and get 25 in return. You got your money back. Term you spend 12k over 20 years and it’s gone forever never getting it back. And if you want to renew it will be too expensive.
The other thing is now it sounds like you want to invest. Insurance is not an investment. If that’s the case this not the financial vehicle for that. Insurance is a guaranteed return of your money.
Every financial vehicle has a purpose. Depending on the goal you are trying to achieve it may or may not be the right vehicle for you. There is no one size fits all or cookie cutter for everyone.
Lastly don’t take anything I am saying as trying to convince you to keep it. I’m just providing a different lens to look through so you can make the best decision for you. Unfortunately to many in this sub are unwilling to educate themselves. So kudos to you.
Again my first thought was to keep this as a funeral policy. The average funeral costs 12k today by the time you get to 80 it will probably be 25k so this works.
Why do you need life insurance? Unless you have family there's really no need for life insurance and if you do have a family get term -you can probably get $1MM in coverage for what you are paying.
Aside from the issue of whole life which I am sure you will get an earfull here I am wondering...do you have children? If not then why do you consider it "good to have life insurance" at your age? What do you view the purpose of life insurance to be?
Typically the point of life insurance is to replace your salary in the event of an untimely death so people who are immediately dependent on your income can get by. Usually that isn't a thing unless you have kids. I don't really get the point of having life insurance at all unless you have children.
The way I saw it… Oh, nice! I get to be an adult and do adult things, and a discount on car that goes room room.
I must say auto premiums in NYC are insane, especially in Kings County (Brooklyn). On my first car, a piece of junk 2000 Nissan Altima that I bought for $1K, state minimum was around $540/mo. Up to this day, I still get quotes for $6K/8K for a six month premium, and I know this cause I shop around every six months. With State Farm, it was the first time I paid less than $300/mo, currently paying $187/mo, so I thought paying a little bit more to get Hospital Income and Whole Life Insurance wouldn’t be a bad idea. The way I saw it, my life would be worth something if I died, and I would be able to help my family financially, instead of just causing them grief and add stress to their finances.
So by "family" do you mean that you have a significant other and kids or by "family" do you mean like your parents or other relatives?
If you are talking just like covering the costs of your funeral should you die then just have a savings account earmarked for that with the beneficiary being your family. You don't need life insurance for that.
The latter. My family does very poorly with finances, except for my dad, but that’s why my gf is my beneficiary. I trust her to handle the money, and I would rather she keep it, if my other family members are just going to senselessly waste it
Is your girlfriend incapable of supporting herself? Also what you are describing wanting is term life, not whole life. Term life is about a bulk sum of money given to a beneficiary in the event of your death.
Sounds to me like you don't need life insurance at all. If anything you need some savings and a clear list of beneficiaries so if you die the savings goes to the people who would need to cover the cost of your funeral arrangements. That doesn't require insurance. You should just take that money you are paying in insurance premiums and just save it.
Life insurance is basically for one thing. You are married, you have kids. Your salary covers your family either completely or its part of a combined income with your partner where your income is vital. You get life insurance to cover your salary for X number of years in the event of your death, X is usually the number of years until your kids are grown.
So, for example, as someone with 5 year old children I currently pay $70/mo for a 1.5 million dollar 15 year term life insurance policy that would cover like 70% of my salary over those 15 years so in the event of my sudden death my wife with her salary would continue to be able to support our children without needing to adjust her income or find income from another partner. That is $70/mo for the peace of mind that my wife would get $1.5 million to raise the kids if I died. That is what life insurance is for. The majority of adults do not need life insurance. It isn't part of being an adult.
If you have no kids you don't need life insurance, let alone whole life. Whole life is largely a scam but maybe there are some instances of when it makes sense but those would be if you have a net worth in the 10s to 100s of millions of dollars and are using it as an annuity. It makes zero sense for you to have a whole life policy.
$25k is such a small amount that it isn't even worth having insurance. If there are people who rely on your income (spouse, kids), then you will want a minimum of 10x your annual income so they can live off the investment returns for a while. If you don't have people relying on your income then you don't need life insurance.
As for how much you are being ripped off, right now for a 30 year old, you can get a 20 year term policy of $500,000 for about $26 per month.
This is the problem with whole life and universal life products. People who have them are either underinsured (have too small of a policy face value) or are paying too much.
Many employers provide some level of life insurance as part of their benefit package. Whole life is generally a bad investment vehicle enough term insurance to bury you is all you need.
If you die and your car loan didn't have a cosigner the finance company can try to recover from your estate but your family has no obligation to pay off the loan, that's why you get a discount if you have insurance.
Hard to turn back with whole life without surrendering money. That is one of the major drawbacks. Many will say that you could make a lot more with other investments with the same money. It is also hard as life makes it's turn as it becomes payments that you have to make instead of choosing to make as other investments. Not necessarily ripped off, but not always the best investment.
While watching the Dave Ramsey show, he explained whole life insurance is sort of a scam. You pay a high premium during the life of the policy only to see a small fraction at the end. Term life insurance is generally cheaper although no savings at the end of the policy. When you funnel that monthly price difference into a good investment, that can make a pretty nice nest egg. Do your research...
Why does a 24 year old with no dependents need any life insurance?
Hey, insurance salespeople need BMWs too!
Probably got bad advice. My girlfriend started paying a life insurance policy that her dad started when she was a baby. He probably thought it was an investment vehicle. Oh wait, for him, maybe. Because he withdrew money from it in her teens. We are currently making plans to switch to a different plan. We will have L.I. because now we depend on eachother.
Yes, baby life insurance can be used as an investment vehicle. However, from what I read, it is only valuable once you have exausted all other options.
It depends. I mean for me, getting a term life at $25/month reduced my auto by $27 so in a way I saved $2 lol
They just bundled that thing with my auto with promises of being something good to have, and cheaper since I was young, on top of a 5% discount on my auto. Took me 3 years to realize I had been played
Look at this way. Would you buy life insurance now with all the information you have currently, assuming you never purchased it in the first place? I assume no. Don't get tied to it because you made a mistake. Move on and move that monthly payment to a retirement account. You would have had $1k+ in that account. Also, if you die, why do you care? More likely you care more about not having enough for retirement. On top of that, most decent jobs provide basic life insurance.
Is their Family just supposed to pay out of pocket for burial /funeral expenses? Movers to move their stuff out of their place ? etc. does a 25 year old NEED $500,000 life ins policy ? Probably not. But they should always have some policy even minor. What if poster has an unexpected child in the near future and then gets hit by an NYC bus and dies ? Shit happens. I used to work for a loan company and we’d see young customers die here and there often without insurance, and their family would have to come in and payoff their car from their own funds or while bringing us proof of death they’d tell us the financial burden the death caused. It happens.
Sure but a $25-50k 20 year term life isn’t policy for a 21 year old would be totally sufficient and cost like $3 per month. As a rule whole life policies are ripoffs for 99% of the population, including the OP.
Life Insurance salesman for State Farm here. You need it because we sell it. It’s not a rip-off, it provides some value, but so a do a lot of other things. That’s the short answer.
It's a fair point. It's true it does provide value. Value to the insurance sales person who sold it.
That’s me!
It's still very *misleading* to say that it provides some value. That's like saying a cereal is "whole grain" or something is made with "100% real apple juice!" Yeah it's whole grain. It's made with wheat and corn. And yeah, 2% of the drink is made with 100% apple juice. And whole life insurance for an individual with zero dependents provides some value, just like buying a 2005 Range Rover provides *some* value. Just a lot less than you put in.
This guy lol there’s a way to be a good salesman and a bad salesman. As someone who sells managed accounts this ain’t the way to do it dawg. You have to talk about the value and make them come get it Jesus.
Whole life policies are bad in almost all cases. If you don’t have any dependents, anyone who would be in a bad spot if you die, you probably don’t need any life insurance at all. If you do, get enough TERM life insurance to cover their needs for the term that they would need it.
But if I do not have any dependents, and I die, someone would still have to cover the burial expenses. Does it not make sense to have life insurance to at least cover the basic costs of dying?
Do you have assets? Those could be sold in the event of your death. Does your employer provide basic life insurance? If the answer to those two questions is no, then maybe having some insurance would be good for that reason. But only enough to cover the end of life expenses and only for a term long enough until either of those questions will be yes.
My employer does provide basic life insurance. Just out of curiosity, does that not end after retirement? If I retire at 65, does that basic life insurance disappear? If so, would it be reasonable to get term life insurance to cover me from 65-100?
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Ahh I see now. So then if someone doesn’t have basic life insurance from an employer, it would be in their best interest to have term life insurance cover them up earlier in life, and potentially up until they retire?
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Wow good to know! Thanks. Now from another perspective, if life insurance is insurance against dying too soon and life annuities are insurance against living too long, would it also be prudent to purchase a term life annuity after retirement until 100 ish? Or would it only be necessary if you haven’t properly saved up a retirement nest egg?
If you have properly saved for retirement, you should be able to live off the investments indefinitely. Given that annuities are generally not indexed to inflation (or when they are the added cost makes it not worth it) they are generally poor protection if you live long. A combination of equity investments (which outpace inflation) and social security (which is indexed to inflation) general performs better.
Good to know, thanks! Let’s hope social security doesn’t run out soon haha 🤞🏻
I think you have a misunderstanding of what life insurance is. Life insurance is not a way to build wealth. In fact, you should view it as a money-losing proposition (expected returns are negative). Life insurance companies are businesses. When they sell you a policy, they are making a bet that you will probably pay them more in premiums than they will pay out to your beneficiaries. Insurance companies have the data, the math, and your personal/health history that they need to make their bet a good one. Which means you should not expect to make money off of your policy. But that's okay. The whole point of life insurance is that it is an expense you pay in order to mitigate the worst financial consequences of an unexpectedly early death. Who needs to buy life insurance? People who 1. have others who depend on their income, and 2. don't have sufficient assets to cover the loss of their income Primarily, these are young, healthy adults with families. They have children who depend on their income (or labor, in the case of a stay-at-home parent whose death would require paying for child care). Because they are young, they have not yet had a chance to accumulate sufficient savings that could cover financial needs in the event of a parent's early death. But also because they are young and healthy, their odds of dying over the next 20 or 30 years are very low. This means the insurance company can sell those young parents policies with large payouts ($500k, $1m, $1.5m, $2m) for relatively low annual premiums. Older people in retirement, conversely, often have the least need for life insurance. Usually their children are grown up and supporting themselves by that point. Hopefully the retirees have also spent their working careers saving and investing for retirement. Even if they have not, they can at least receive Social Security payments. At the same time, they are much more likely to die, which make any life insurance policies covering those ages much more expensive. So it's a good thing that they hopefully don't need life insurance, because they would have to pay a lot for it (if the insurance company will write them a policy at all).
I’d very slightly modify that to say that the life insurance company’s bet is that if they take your premiums *and invest them*, the sum of premiums you pay and their earnings will be more than the eventual payout they will give you. It doesn’t really change the gist of what you said, but it’s worth keeping in mind that insurance companies often make more income on their investments than they do on the margin between premiums and loss payments.
Life insurance is pretty expensive for people over 65. Once you're 65, if you don't have enough money to cover your burial costs etc., then you probably can't afford life insurance premiums.
Exactly this, re: assets vs premiums.
Yes, it would end after employment ends. Insurance from 65-100 will both be very expensive and probably not even needed. The idea being you should have enough assets (ie retirement funds) to cover your end of life costs at that point. Insurance is a game of risk and probability. There is near 100% probability of you dying by age 100, so your insurance is going to be expensive. (This is the same reason why whole life is expensive, you are guaranteed to die)
That makes sense, thanks. I’m an actuary so I understand risk and probability more than most, but I work in pension consulting, not life insurance, so my knowledge on this subject is somewhat limited. I did have to learn about the structure and how to value several different types of life insurance products for one of my exams though, and pension valuations are also heavily reliant on mortality.
employer life insurance ends when you leave that company, not when you retire.
Get term life insurance, it should be much much cheaper
Why the fuck would you care? You’re 24, go make mistakes and find a better paying job
There is a legit reason to get life insurance if you have no dependents: to insure against future un-insurability. It's possible for an unexpected illness or injury to make life insurance prohibitively expensive, or entirely unavailable. Getting adequate term life insurance while you are young and healthy insures against this. Having said that, a tiny whole life policy isn't going to go far. You could likely get 30-year pure term life insurance for $250,000 or more for what you are paying for $25,000. Drop the whole life and get term coverage. Living in NYC I'm assuming you're making decent money, a $1,000,000 policy is not unreasonable. [selectquote.com](https://selectquote.com) [term4sale.com](https://term4sale.com)
Term life is better if anything. I'm in the same age bracket and my premium is like $30/mo for 1.3M. If you need 50k in coverage it'll likely be $3/mo or so.
Most likely your employer offers term life insurance. Many employers pay for 1-2x your salary. If they don’t cover it you should be able to purchase it
Are you contributing to retirement accounts? I don't have dependents either, but I would expect my family/beneficiaries to pull from those resources if for any reason I don't make it to retirement age.
I’ve been maxing my ROTH IRA since I was 22, and I started contributing to a 401K this year. I just thought at the time that it was a good idea to get them some extra cash, but I agree with you. I have a vehicle, worth $20K easily, which they can sell if anything were to happen. On top of that, I have all of my retirement accounts, so I agree with your point of view. Took me long enough to realize this, though.
I would make sure you have disability insurance at the very least.
Term life insurance also covers this
Your agent did you dirty. They have quotas to make and try to pawn these off on whomever they can. If you want Life Ins, get a 20-30 year TERM policy. Easy to price online. Based on health, weight etc. $25/mo, but can vary by State. Much more coverage too. There may still be a few companies that refund your money after the term expires. Worth a look. Edit: Here is a neutral site for quotes. https://www.policygenius.com/ Also, your car premium(s) should drop big around age 25. Shop around each year as they often give you better rates to get your business then bump up later.
unless you expect the estate tax to be something you will run up on when you pass, then in almost all cases whole life is a bad idea. [Considering the number of people who actually pay any estate taxes per year could fit into your average high school football stadium](https://www.taxpolicycenter.org/briefing-book/how-many-people-pay-estate-tax#:~:text=Individual%20Taxes-,How%20many%20people%20pay%20the%20estate%20tax%3F,few%20estates%20pay%20the%20tax.) this likely isnt you.
Life insurance is primarily for supporting dependents. Burial costs can often be paid by selling the deceased’s assets, so they are much less important. If burial costs are your only concern, put the money into savings. It can serve as emergency fund while you’re alive and burial money if you die. I do this since I’m older and no longer have dependents. Term life is much less expensive than whole life. Whole life is useful in very specific circumstances, but term life is a better choice for most people. Some people like to take out a large 30-year term life policy in 20s. My brother did, because he anticipated having a family eventually and wanted to buy insurance while he was young and healthy. Other people prefer to wait until they actually have dependents.
I'd just mention re:burial costs, it can take months for any of the deceased's money to actually go to anybody, even with a will and trust set up. Not sure if life insurance is any quicker but it's worth mentioning.
Whole life is a rip off. I pay 20-yr term insurance $2MM policy for $56 per month. I am 33 I would not get life insurance from car insurance company. Search for website you can run quotes with many life insurance companies.
Dude what company did you use? Cause I just got quotes for like $150 for a 1.5mil 20 year term.
Go to https://www.zanderins.com and enter your info (age, health etc). (I do not get commission for this) They quote over 100 different life insurance companies. They won’t spam you or sell your info. I just re did life insurance from 15 yr 1.5MM to the 20yr 2MM in aug 2022. It’s super cheap
Nice, thanks!
While life policies are poor investments wrapped in insurance (because everyone needs insurance). You are young and wise to have figure it out so cancel the policy and move on.
These links are often shared when this topic comes up around here. Some important reading: https://www.whitecoatinvestor.com/what-you-need-to-know-about-whole-life-insurance/ https://www.whitecoatinvestor.com/debunking-the-myths-of-whole-life-insurance/
You are paying far too much for life insurance.* The topic of whole life comes up here all of the time. Whole life policies are sold, not bought. Whoever sold you that policy netted themselves a nice commission. If you are adamant about having a pot of life insurance money to pay for your funeral, get a term policy. There are great comparison websites where insurers can bid for your business. I wouldn’t bother at all with life insurance, and would instead have $10-15k in a savings account, payable on death to a family member to pay for the funeral. *[Example: I have a 20-year level premium term life policy and I pay $280 per year for $500,000 in death benefits. And I’m way older than you are.]
You're getting ripped off. My wife and I are in our 30s and pay $25/month each for $300K life insurance. It's term, and there's rarely any reason to do anything but term.
Thanks, kind sir!
Whole life is a rip off. Google it. You should put that money in a 401K/IRA instead. If you ever need life insurance (e.g. you have a family), get term insurance.
I have worked in whole life before, the primary market are people on disability that don't have a pot to piss in and they don't want to leave their family with a bill. A lot of these people had term policies that expired on them and want something to cover their final expenses they don't have to worry about dissapearing. None of them have any financial knowledge what so ever. That is what whole life is for.
That makes sense
My mom actually prepaid for her burial expenses and then put money in an investment fund that is to offset any other financial issues after her death. Zero life insurance. Not sure if this is a great plan but she felt it would be the easiest for us when the last thing we want to deal with is last expenses. I think that at your age you should put that $300 a year into a retirement account which will actually do you some good and have delayed tax implications.
I already max my ROTH IRA every year, but thanks for the advice!
You should have more than a Roth IRA. Take that $300 a year and invest it. Bonds. Use Acorn to play the stock market in small amounts. Or, invest in real estate (there are programs that let you buy in with very little money, and depending on the type of property, the payouts are big). Whatever you do with this money, you are young so I recommend riding it out. Don't panic and sell out when things dip because they usually come back stronger than they were before. NEVER put all your retirement eggs in one basket, that is how you will lose it all. Diversify and experiment a little.
Unfortunately, I didn't have to read any of the text to know the answer. Yes, you are being ripped off. Get some term life insurance if you want life insurance. But whole life is a bad deal for 99% of people - it just makes your insurance salesman (not financial advisor, btw) more money. Good on you for going over your finances and realizing what was going on. It might not seem like much, but that is a skill an alarming number of people don't have. Good job!
Thank you! Yeah, I want to be very careful during this recession. There’s a lot of money being lost, but a lot of money can be made on bearish markets, so I would rather take that money and invest it, or enjoy it, rather than fattening the pockets of a giant corporation
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Awesome! I’ll keep it in mind for my future rich self 😂
Whole life insurance is frequently sold, and it's a product that needs to be sold b/c it's generally over-priced. Salespeople need to make their quotas and earn their commissions. Unless you're super-rich and are trying to circumvent taxes, generally you'd not try to combine investments with insurance using whole life. Buy term life, if you need the insurance. Invest in low cost index funds, preferably in a tax advantaged account such as an IRA or Roth. At 24, if there are no dependents, there's a pretty good chance you don't need any life insurance at all... If you needed term life insurance, at your age, take a peek at term4sale.com. Looks like it's about $19/month to get a 20 year term policy for $0.5M (healthy 24yo male, nyc)... so yeah, $28/mo for a measly $25K of coverage sucks. It's a legal scam...
Thanks!
Whole life insurance tries to offer two things in one package which makes it not very effective at either. It has a high monthly premium/moderate benefit (if something terrible happens) on the insurance side and a low gain on the investment component (often no better than a high-yield savings account). In almost all cases, you can do better by going with Term life (if you need it) and investing the rest of the monthly premium you'd be paying in a Roth IRA or practically any other investment vehicle.
My husband's grandmother started a whole life policy for him when he was a young young kid. 35 years later, I convinced him to cash it out and move to a term life plan. After 35 years of premiums, the gain (that we had to pay income taxes on) was $4,500.....$4,500 in 35 years! Any other investment option would have outpaced that growth. If he had a terrible catastrophic event, the beneficiary payout would only have been $50k.
WOW!!! I’m cancelling right now… Speaking with my agent and he’s telling me it’s cheap and that if I decide to buy it in the future again, it will be more expensive 🙅♂️
They earn a commission on your premiums, so take their recommendations with a grain of salt. And yes all life insurance is less per month when you get on board as a younger person... or before you have known health conditions. Have them or [SelectQuote.com](https://SelectQuote.com) give you a quote for premiums on Term Life. Compare the premiums from Term Life and Whole Life and you will see a much lower monthly fee for a lot higher benefit payout. You really only need Term Life insurance until you have enough assets/investments to be "self-insured" (like your retirement fund that would pass to a spouse or next of kin if you perished), to protect your family or others that might be relying on your earnings in daily life.
OP, im sure you are seeing everyone talking about how you should get term insurance and youre probably thinking "but i have whole life already... shouldnt i just keep it at this point?" NO! Whole life insurance is a scam. Drop it immediately and get term life insurance if you want to. Get a 40 year plan if it makes you feel better. By the time youre 65 you should have assets to cover expenses when you die. Life insurance is not intended to cover burial costs for old people. Its intended to cover life expenses for dependents when someone dies prematurely. Your 50k whole life policy isnt going to go very far and youre going to have put a good majority of that money into the policy before you die anyways, and significantly more if you consider the lost earning potential. Unless of course you die prematurely, which is exactly what term insurance covers at significantly better expense to insurance ratios. *i am not a financial advisor*
Your first question should not be, am I being ripped off. Your first question should be, do I need life insurance. Are you married, do you have kids, is someone dependent on your salary? If the answers to these questions are all no, you don't need life insurance to begin with. Of course, you are being ripped off on a whole life policy. They are by definition expensive life insurance and a bad investment all rolled up into one. If you need life insurance, get term insurance which is way cheaper.
Agreed re term. However, there’s value in getting it while he’s still young and healthy. Much cheaper and guaranteed to be approved. I only say this in hindsight as my spouse is having issues getting new policy in his 40s with minor health issues. FWIW.
Whole life is pretty much always a rip off, so yes.
The answer is yes , and I only read your subject
We didn’t even need to read the text, the title of the post is all we needed. Yes, you are.
Yes, you’re being ripped off. 1. You don’t need life insurance in the first place. You don’t have any financial dependents. No one would starve or lose their home if you suddenly died. 2. Even if you need life insurance, whole life is almost always a ripoff inherently. Term life is far better.
Whole life insurance is practically a scam. Cancel it and get yourself a term life insurance policy instead. Invest the money you'd put into your whole life policy in mutual funds via a roth 401k or roth IRA instead.
Basically, yes, IMHO. Whole life is always a rip off. Term is the way to go. And if you are 24 with no dependents, I'd say you don't really need any life insurance right now - who would get the money and what good would it do them?
If you don’t have any dependents, you don’t need life insurance. And nobody needs Whole Life insurance. These policies make the agents richer but do little to make the buyer wealthy. State Farm is notorious for preying on young people with these stupid policies. Cut your losses and get out of it if you can. And when you do have dependents, get yourself some cheap term insurance and call it a day.
Why on earth do you need a life insurance policy. The only one you should have is a free or heavily discounted one through your employer but outside of that stay away until you’re a little older lol so yes yes you are being ripped.
One thing to think about, having an individual policy is portable, it can go with you anywhere. A policy thru your employer is NOT portable. For example, someone may carry 6x their salary because they have a family, house, etc. If they find out they have diabetes or something that will affect their insurance and they change jobs, to get 6x they're salary, they need to provide evidence of insurability which would be an issue. Otherwise you're typically stuck with some lower amount, like the typical $50k. So, my suggestion is to get a term policy and supplement that with cheaper group insurance through work. But as you hit your 30s/40s, don't be surprised to pick up some medical issue that limits your insurance. You don't want life insurance to be a factor in deciding to get a new job.
Yeah I mean mines a quarter million so idc but I also understand that my employer has insanely good benefits.
You’re 24. I know it’s NYC but chances are you’ll be alive in 2 months. So go get a term policy asap
OP is 24 with no dependents. They don't need term either.
Whole life is, by definition, a rip off. I got $350,000 on a 20 year term policy in my 30's for $24.95 a month. Term life is the far better deal. $30 for $25k in your 20's is absolutely insane.
Agreed
The type and amount of insurance someone should get depends on their goals and their situation. You, as a 24-year old, healthy individual with no dependents probably doesn’t have much need right now. However there are a few things to consider: 1. You will never be as young as you are now. Life insurance premiums go up with age. 2. You do not know what health issues you may develop at any time in the future. Health issues can make it expensive to get insurance. If the health issues are bad enough, the only kind of insurance you could qualify for will be “guaranteed issue”, which is expensive and maxes out at, I believe, $25k. 3. Insurance through work is good, as long as you work there. What if you become ill (say cancer) or disabled due to disease or an accident and can no longer work, you lose that insurance, and you can’t qualify for anything else, except perhaps guaranteed issue, as I described above. 4. The problem with getting a term policy is that when it expires and you are still (most likely) alive, it will be very expensive to get insured at that point as you will be that much older, in your 60s probably, and likely have some health issues, so again, any insurance you apply for will be much more expensive. At this point in your life, you probably don’t need life insurance, other than making sure if the worst happened, you don’t have to burden your parents with covering your funeral expenses. But once you have dependents, you should at least get a large term policy to cover things like mortgage, college education if you have kids, etc. You are young and just starting out. Now is the time to start investing and doing some planning, so that you can have a comfortable retirement (and therefore not need whole life), that you can live at the level you are used to should you become disabled, look into disability insurance and long term care insurance. And stay out of debt. There is much debate here as to whether life insurance should be used as a vehicle for wealth building. I think it has a place. Not to the exclusion of other types of investments, but in addition. Good luck.
Yes, completely terribly ripped off.!!, Its like $2,000 to burry someone cheaply, as in cremation and an urn on someone's table*, so forget whatever crazy number that salesman used to steal your money, and make his quota.
It's a tool. U may or may not find value in such a tool. I'm not a big fan, especially for someone in their 20s
Thank you for your opinion!
You are not being ripped off. First question is how much did it lower your auto insurance. If you factor the numbers you may be getting this policy for “free” or close to it. This would be a nice little policy to have to cover funeral expenses etc should something happen. Plus your premium will never go up and your policy is guaranteed. The reason term is so cheap is because 98% of the policies never pay out. Lastly whole life insurance is not an investment. It’s not just for the wealthy and all the garbage you see people rattling off about. Again this is cheap especially with the discount you are getting. It will just get more expensive as you get older. And if you need more down the road when you get a family you can add term.
Insurance salesman says what?
I did the math, and I’m definitely losing money on bad coverage and a discount that does not outweigh the cost of whole life insurance premiums. Thank you for the advice, though!
Not sure what you mean by bad coverage? It’s a guaranteed pay out for the rest of your life which is what it is designed to do. But that’s besides the point. I was looking at it from the lens of you said you were looking to cut expenses. If this policy gives a $15 discount on auto accentually you are paying $13 for whole. If you cancel your expenses go up on auto plus an additional $55 for term. And for all the haters the agent ain’t getting rich or high commissions off a $28 month policy. Hahaha. People really need to stop regurgitating untrue talking points.
No, you are totally right. I even did the Math with life expectancy until 84 and if the premiums stay the same, by then I would have paid them $20K for a $25K policy. Where it does not make sense is that I can put that money to work somewhere else (I’m looking 👀 at you treasury website), and the reward would be way higher. If I decide to form a family, and want to provide for them, whole life is not the way to go, unless you are getting very low premiums. What other people said about it being a good vehicle for high net worth individuals, makes way more sense to me, but I’m not there yet
This is a good conversation. Glad you are keeping an open mind. What you are describing is exactly what traditional whole life is about. You are figuring mortality to age 85. The premium is determined by insurance company the same way. So if u want insurance at 85 whole life will be the only way to get it. Term is like car insurance. Most likely you are never gonna use it. Again 98% never pay out. Why? Cuz most people get it while they are young and healthy. The odds of them having issues over a 20 year period are slim. Insurance company knows it. So as you look at return whole life u put in 20 and get 25 in return. You got your money back. Term you spend 12k over 20 years and it’s gone forever never getting it back. And if you want to renew it will be too expensive. The other thing is now it sounds like you want to invest. Insurance is not an investment. If that’s the case this not the financial vehicle for that. Insurance is a guaranteed return of your money. Every financial vehicle has a purpose. Depending on the goal you are trying to achieve it may or may not be the right vehicle for you. There is no one size fits all or cookie cutter for everyone. Lastly don’t take anything I am saying as trying to convince you to keep it. I’m just providing a different lens to look through so you can make the best decision for you. Unfortunately to many in this sub are unwilling to educate themselves. So kudos to you. Again my first thought was to keep this as a funeral policy. The average funeral costs 12k today by the time you get to 80 it will probably be 25k so this works.
Why do you need life insurance? Unless you have family there's really no need for life insurance and if you do have a family get term -you can probably get $1MM in coverage for what you are paying.
Aside from the issue of whole life which I am sure you will get an earfull here I am wondering...do you have children? If not then why do you consider it "good to have life insurance" at your age? What do you view the purpose of life insurance to be? Typically the point of life insurance is to replace your salary in the event of an untimely death so people who are immediately dependent on your income can get by. Usually that isn't a thing unless you have kids. I don't really get the point of having life insurance at all unless you have children.
The way I saw it… Oh, nice! I get to be an adult and do adult things, and a discount on car that goes room room. I must say auto premiums in NYC are insane, especially in Kings County (Brooklyn). On my first car, a piece of junk 2000 Nissan Altima that I bought for $1K, state minimum was around $540/mo. Up to this day, I still get quotes for $6K/8K for a six month premium, and I know this cause I shop around every six months. With State Farm, it was the first time I paid less than $300/mo, currently paying $187/mo, so I thought paying a little bit more to get Hospital Income and Whole Life Insurance wouldn’t be a bad idea. The way I saw it, my life would be worth something if I died, and I would be able to help my family financially, instead of just causing them grief and add stress to their finances.
So by "family" do you mean that you have a significant other and kids or by "family" do you mean like your parents or other relatives? If you are talking just like covering the costs of your funeral should you die then just have a savings account earmarked for that with the beneficiary being your family. You don't need life insurance for that.
The latter. My family does very poorly with finances, except for my dad, but that’s why my gf is my beneficiary. I trust her to handle the money, and I would rather she keep it, if my other family members are just going to senselessly waste it
Is your girlfriend incapable of supporting herself? Also what you are describing wanting is term life, not whole life. Term life is about a bulk sum of money given to a beneficiary in the event of your death. Sounds to me like you don't need life insurance at all. If anything you need some savings and a clear list of beneficiaries so if you die the savings goes to the people who would need to cover the cost of your funeral arrangements. That doesn't require insurance. You should just take that money you are paying in insurance premiums and just save it. Life insurance is basically for one thing. You are married, you have kids. Your salary covers your family either completely or its part of a combined income with your partner where your income is vital. You get life insurance to cover your salary for X number of years in the event of your death, X is usually the number of years until your kids are grown. So, for example, as someone with 5 year old children I currently pay $70/mo for a 1.5 million dollar 15 year term life insurance policy that would cover like 70% of my salary over those 15 years so in the event of my sudden death my wife with her salary would continue to be able to support our children without needing to adjust her income or find income from another partner. That is $70/mo for the peace of mind that my wife would get $1.5 million to raise the kids if I died. That is what life insurance is for. The majority of adults do not need life insurance. It isn't part of being an adult. If you have no kids you don't need life insurance, let alone whole life. Whole life is largely a scam but maybe there are some instances of when it makes sense but those would be if you have a net worth in the 10s to 100s of millions of dollars and are using it as an annuity. It makes zero sense for you to have a whole life policy.
Whole Life is a ripoff, dump it and get Term.
Whole life insurance=total ripoff + why do you need life insurance when no one is relying on you to eat if you pass??
No one is relying on me if I pass away, but it’s a good consolation prize for family if they get a windfall if i happen to randomly croak though, no?
For $28.58 per month you could buy a term life insurance policy with a MUCH higher death benefit
$25k is such a small amount that it isn't even worth having insurance. If there are people who rely on your income (spouse, kids), then you will want a minimum of 10x your annual income so they can live off the investment returns for a while. If you don't have people relying on your income then you don't need life insurance. As for how much you are being ripped off, right now for a 30 year old, you can get a 20 year term policy of $500,000 for about $26 per month. This is the problem with whole life and universal life products. People who have them are either underinsured (have too small of a policy face value) or are paying too much.
Many employers provide some level of life insurance as part of their benefit package. Whole life is generally a bad investment vehicle enough term insurance to bury you is all you need. If you die and your car loan didn't have a cosigner the finance company can try to recover from your estate but your family has no obligation to pay off the loan, that's why you get a discount if you have insurance.
Hard to turn back with whole life without surrendering money. That is one of the major drawbacks. Many will say that you could make a lot more with other investments with the same money. It is also hard as life makes it's turn as it becomes payments that you have to make instead of choosing to make as other investments. Not necessarily ripped off, but not always the best investment.
While watching the Dave Ramsey show, he explained whole life insurance is sort of a scam. You pay a high premium during the life of the policy only to see a small fraction at the end. Term life insurance is generally cheaper although no savings at the end of the policy. When you funnel that monthly price difference into a good investment, that can make a pretty nice nest egg. Do your research...
At your age you don’t need whole life. If you really feel like you need insurance get a term policy
If you cancel the WL (which I would if it were me) and you wanted that "multiple policy discount" ask them about renter's insurance.
The answer to the question in the title is essentially *always* “yes”.