3 The above example is based on a scenario for 20‐year term life insurance (domicile state) that includes the following benefit conditions: $50,000 death benefit, $50,000 accidental death benefit, and $12,500 seatbelt benefit. Benefits may vary by state, benefit option, and level of coverage selected. Review your state‐specific brochure below for a “How It Works” scenario customized for your state.
Deciding whether to purchase whole life or term life insurance is a personal decision that should be based on the financial needs of your beneficiaries as well as your financial goals. Life insurance can be a very flexible and powerful financial vehicle that can meet multiple financial objectives, from providing financial security to building financial assets and leaving a legacy.
Hey Mark. Thanks for the kind words and you make a great point! That’s a big reason for #5 in the article. With the speed at which life can change, locking yourself into paying those premiums for decades is just so limiting. And you go even further than that here with simply wanting to invest the money you’ve already put in differently, and I couldn’t agree with you more. It adds a lot of inflexibility to your planning which can make figuring out the other pieces a lot more difficult. 

In the United States, the underwriting loss of property and casualty insurance companies was $142.3 billion in the five years ending 2003. But overall profit for the same period was $68.4 billion, as the result of float. Some insurance industry insiders, most notably Hank Greenberg, do not believe that it is forever possible to sustain a profit from float without an underwriting profit as well, but this opinion is not universally held.

Terrorism insurance provides protection against any loss or damage caused by terrorist activities. In the United States in the wake of 9/11, the Terrorism Risk Insurance Act 2002 (TRIA) set up a federal program providing a transparent system of shared public and private compensation for insured losses resulting from acts of terrorism. The program was extended until the end of 2014 by the Terrorism Risk Insurance Program Reauthorization Act 2007 (TRIPRA).

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The first life table was written by Edmund Halley in 1693, but it was only in the 1750s that the necessary mathematical and statistical tools were in place for the development of modern life insurance. James Dodson, a mathematician and actuary, tried to establish a new company aimed at correctly offsetting the risks of long term life assurance policies, after being refused admission to the Amicable Life Assurance Society because of his advanced age. He was unsuccessful in his attempts at procuring a charter from the government.
3 The above example is based on a scenario for 20‐year term life insurance (domicile state) that includes the following benefit conditions: $50,000 death benefit, $50,000 accidental death benefit, and $12,500 seatbelt benefit. Benefits may vary by state, benefit option, and level of coverage selected. Review your state‐specific brochure below for a “How It Works” scenario customized for your state.
Often a commercial insured's liability insurance program consists of several layers. The first layer of insurance generally consists of primary insurance, which provides first dollar indemnity for judgments and settlements up to the limits of liability of the primary policy. Generally, primary insurance is subject to a deductible and obligates the insured to defend the insured against lawsuits, which is normally accomplished by assigning counsel to defend the insured. In many instances, a commercial insured may elect to self-insure. Above the primary insurance or self-insured retention, the insured may have one or more layers of excess insurance to provide coverage additional limits of indemnity protection. There are a variety of types of excess insurance, including "stand-alone" excess policies (policies that contain their own terms, conditions, and exclusions), "follow form" excess insurance (policies that follow the terms of the underlying policy except as specifically provided), and "umbrella" insurance policies (excess insurance that in some circumstances could provide coverage that is broader than the underlying insurance).[32]
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Each type of life insurance product has its advantages and disadvantages. You can’t say term life is the best, whole life is the best or universal life is the best. It depends on what an individual client need and his or her situation. As a client, they should know all the advantages and disadvantages but of course, they are under the supervision of a certain type of insurance agent that can be biased and try to sell what they have to offer to form their companies. Avoid an agent that focuses on selling one type of product. Talk to an agent who can provide the knowledge of each type and you can choose what best for you.
This shift to universal life by insurance companies has made premiums cheaper but removed many of the guarantees that came with traditional whole life insurance like guaranteed face amounts, guaranteed premiums and guaranteed cash values. The result is that there are a lot of underfunded universal life insurance policies out there which aren’t really permanent policies anymore since they can’t support themselves and will lapse instead of paying out.
Thank you for your article and really speaking to the “lay person.” A lot of things in your article really make sense! I only wish I had read it before my husband and I both purchased whole life policies just last week fronting nearly $20,000 with annual payments of $10,000 for the next 24-years. Shame on us for not understanding the details better!

Captive Agents - Captive insurance agents represent just one insurance carrier. In essence, they are employees of the carrier. The upside of working with a captive agent is that he or she has exceptionally thorough product knowledge. The downside is that he/she cannot provide access to products or pricing from outside their respective company. For this reason, you must have a high tolerance for carrier-specific terms, since each carrier and its in-house representatives may use language that is tough to compare across several companies that you encounter. Nevertheless, tap into that exceptional product knowledge and get smarter along the way as you search. The surge in online insurance websites offers consumers yet another option to use as part of their selection strategy. It is easy to find an insurance agent online, particularly one from a national insurance provider. Moreover, with 24-7 online access and quick comparison of policies, these web services are convenient, quick and a great way to ballpark quotes and to give you exposure to a wide variety of insurance providers. When you find one that is appealing to you, give them a call or fill out an agent request online.
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As for it being undiversified, NO investment by itself is completely diversified. Cash value life insurance can ADD diversity and security to a portfolio (the top companies have incredible financial strength, good policies can have a solid conservative return while meeting a life insurance need). Diversification is an issue with cash value life insurance if it makes up a good portion of your assets, and if it would, you shouldn’t be buying it.
1) I believe that when done correctly, it is insurance that CANNOT BE TAKEN AWAY. One of the most important things about whole life is that the annual premium is FIXED at a constant level FOREVER and the death benefit cannot be taken away if you continue paying in (these are the basics but I think worth repeating). I bought my policy at age 32. If I get heart disease, diabetes, or any of thousands of exclusionary conditions over the rest of my life, it does not matter. My insurance will not go away. If you rely on term insurance, then even if you get a 20 year policy as a 30 year old, then at age 50 there is a good chance you will either i) have to pay MUCH higher premiums to continue your coverage or ii) not be able to get coverage at all. It is just like health insurance before ACA. If you think you can keep rolling over term life, you are taking a very big gamble. This is probably fine if you are only insuring to protect your family in your early working years. But if you want to make sure your heirs eventually get a benefit on your death, term life is a bad gamble. Which leads into #2… 

Save your money… don’t invest it… unless you’ve first insured that even if those investments don’t work out. Life is a big enough investment as it is… especially if others are dependent on you and particularly if you become wealthy. Term insurance won’t cut it. It will almost certainly be lapsed by the time you really need it. Too many opportunities over a lifetime to miss a payment and then poof… it’s gone.
Brokers are not appointed by insurers. They solicit insurance quotes and/or policies from insurers by submitting completed applications on behalf of buyers. Brokers don't have the authority to bind coverage. To initiate a policy, a broker must obtain a binder from the insurer. A binder is a legal document that serves as a temporary insurance policy. It usually applies for a short period, such as 30 or 60 days. A binder is not valid unless it has been signed by a representative of the insurer. A binder is replaced by a policy.
I have a joint term life insurance policy with my husband and a universal life insuranc for my self. The term life face value is $100,000 and the uni is $25,000. The latter cash value is $761.00 apparently they were taking the monthly premiumout of it without my knowledge. They asked me if I would like to close it out and take the closed out value of $700.00. I need advice on what to do. I am paying $135.00 a month for the joint policy and I also have a whole life insurance on my 22 years old child in college. I pay $50.00 a month for that. I think the term life is too expensive and I am concerned that with my husband an I whom are in our fifties that we may need to die just before we reach 80 so that our child can have some financial stability times are tough and we are poor people. Poor people take out insurance to cover their death and to leave something for their children. There just aren’t enough money to invest in stocks and bonds or other things and the little retirement money is needed to live off.

Backdoor Roths – 1) These vehicles are still capped at $5,500 on an annual basis (LI has no restrictions on contribution amounts.) 2) Roth IRAs are still exposed to market risk and can experience losses in account value (whole life policies are not and cannot). 3) Doing a backdoor conversion year after year is an administrative pain in the ass and will have tax implications if you hold a traditional IRA.

Regarding pension vs registered accounts: It is hard to know what is better, relying on your pension or relying on an individually held mutual fund account (or some variation thereof using other securities). This would require a close reading of the pension and securities legislation in your region. For us in Canada, a defined benefit pension (prescribed benefits upon retirement based on a formula where the employer is responsible for funding any shortfall) can be incredibly enticing due to the guarantees attached to them. It is the preferred pension and stacks up really well against defined contribution pensions (where employers match the contributions of employees to at least a certain degree and where the account grows until retirement and the pensioner draws down the account and is burdened with any shortfall) but defined benefit plans are going the way of the dodo over here. It’s still available to government employees but most private employers don’t want to take on the risk of having to meet funding requirements. That’s a huge liability on the balance sheet. In any case, pensions have a few benefits over individual savings vehicles. First, they benefit from reduced management fee pricing, thereby improving returns marginally over the course of fund accumulation. Second, they benefit from a longer investment horizon since they are always looking many years in the future as their pension liabilities are long-term by definition. Third, actuaries are required to evaluate pensions regularly to make sure funding targets are established and followed.

Now that you have a better picture of the difference between term and whole life policies, you probably want to compare term life versus whole life insurance costs. To do so, you will need to directly compare the short and long term costs of a whole life policy and a term policy, based on factors like your age, the face value of the policy you want to buy, and whether or not you are a smoker.

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