MM201 Whole Life

[Deleted]

Generally whole life insurance doesn't make sense for most people, but when does it make sense?

I've read a little about using it as a tax deferral vehicle, etc for high income folks.

We need to up our life insurance and didn't know if this made sense. 

[hockeywife]

I dont know all the ins and outs, but I have lots of clients who have whole life policies as part of their portfolio. Most of the policies (I see mostly Northwestern Mutual ones) have guaranteed rates of return/growth above 5% with the option to tap into the cash value if necessary.

Of course, I also have clients who buy policies and set up an ILIT for estate tax protection.

[Deleted]

We have a million total (500 K on each) as part of our portfolio. It is a safe tax advantaged way to get some guaranteed growth. Ours is through NW Mutual. I think it can make sense if you are looking for another way to diversify. Obviously, we consider this to be "retirement" savings-- not money we plan to access any time soon.

[Deleted]

You're one of the few (you, Lilly, RnV, v and Sarajoy in a few years, for instance) on the board for whom I'd recommend it.

You already save as much as possible in the tax-advantaged way, I believe your DH gets some deferred comp too (right?), and you still probably need to save more to get to 15% of your gross.

Go for it.

[SJ]

We will likely convert some of our term insurance (with NW Mutual) to whole life insurance if our income continues to rise and DH's business continues to expand quickly. My basic pre-reqs are:

-Maxing out all available tax-advantaged options
-Having healthy taxable investment accounts
-Having comfortable cash savings

If/when we have additional funds to build wealth, I would consider slowly converting some to whole just for portfolio diversification.

I would never buy whole life or convert to whole life if the other ducks weren't in a row. I still don't think it is the best insurance for most people who are simply looking to insure their life. We aren't there yet, but I'm not closing the door for the future.

[cjeanette]

Jan 31, 2013 10:44:32 GMT -5 SJ said:

I would never buy whole life or convert to whole life if the other ducks weren't in a row. I still don't think it is the best insurance for most people who are simply looking to insure their life. We aren't there yet, but I'm not closing the door for the future.

This.  If you are looking for another tax deferred vehicle this is an option.  As is an annuity and most of those come with death benefits as well. 

[Deleted]

I agree that you probably fall in to the group of people for whom this is a good idea.

[Deleted]

It is funny you all mentioned NW Mutual.

My neighbor is a rep/agent/advisor and when I was practicing we used to get a lot of referrals from NW Mutual.

[barefootcontessa]

I do not consider us high-income but we have whole life insurance on my DH ($500K).  We have had it for some time now (since 2006) and the returns have averaged 5 percent a year.  Unless you start saving very young, it seems difficult to fund retirement using simple IRAs alone, especially when you consider the market today is worth less than it was in 2006.   

[barefootcontessa]

Jan 31, 2013 18:31:05 GMT -5 @septimus said:

It is funny you all mentioned NW Mutual.

My neighbor is a rep/agent/advisor and when I was practicing we used to get a lot of referrals from NW Mutual.

Ours is through NWM as well. 

[kimibrighteyes]

We have whole life as well.(1 million on each of us). We have maximized our other tax deferral options. I also consider it as part of our estate planning.

[doobeedoo]

Can anyone point me to some good info about it?  Or give me a high level overview of whole life?  I am unsure how it differs from term...we also need to up our insurance.  thanks!

[Deleted]

Jan 31, 2013 19:24:46 GMT -5 doobeedoo said:

Can anyone point me to some good info about it?  Or give me a high level overview of whole life?  I am unsure how it differs from term...we also need to up our insurance.  thanks!

Whole life builds cash value you can borrow against, and it never expires, unlike term insurance.


money.usnews.com/money/blogs/On-Retirement/2010/08/26/5-life-insurance-strategies-for-retirement-planning

www.investopedia.com/articles/pf/07/permanent_life_insurance_taxes.asp#axzz2JboRfAPw

www.forbes.com/2007/03/09/insurance-taxes-protection-pf-estates-in_pk_0309money_inl.html

[nickyd2006]

Jan 31, 2013 5:49:07 GMT -5 @septimus said:

Generally whole life insurance doesn't make sense for most people, but when does it make sense?

I've read a little about using it as a tax deferral vehicle, etc for high income folks.

We need to up our life insurance and didn't know if this made sense. 

We were wondering the same thing. I just got a term policy with NWM, and got info about whole life recently. We need to talk to our accountant though. These policies are through our financial planner but I'd rather do independent research about it first.