Life Insurance (Term or Whole)
Hello. I’ve watched the DVD and read the Retirement Planning Road Map. I know Ed talks about life insurance being a huge part of passing along wealth to beneficiaries. However, I have not gotten specifics on whether to purchase term life insurance or whole life insurance from Ed Slott’s information. What is recommended (term or whole)? Thank you.
Permalink Submitted by BruceM on Mon, 2008-10-13 19:22
[quote=”[email protected]“]Hello. I’ve watched the DVD and read the Retirement Planning Road Map. I know Ed talks about life insurance being a huge part of passing along wealth to beneficiaries. However, I have not gotten specifics on whether to purchase term life insurance or whole life insurance from Ed Slott’s information. What is recommended (term or whole)? Thank you.[/quote]
I’m not sure I’d infer that LI is a huge part of estate transfer, as much as I’m sure the life insurance industry would like us to believe it is.
But for those who wish to use LI as an estate transfer method, using an irrevocable life insurance trust and annual gifts to heirs (usually children) to pay the annual premiums….the only feasible insurance product would be permanent (cash value) insurance, as the premiums for a term policy would be prohibitive in later years.
Using an ILIT is an expensive and potentially risky way to transfer one’s estate and has several potential land-mines along the way, that if run afoul of, may pull the LI contract back into the estate, defeating the purpose of its original creation.
Other alternatives such as aggressive gifting strategies, a QPRT, grantor retained trusts, charitable remainder trusts, 529 plan contributions and for property assets, SCINs and private annuities are other methods that could be considered in bringing down the value of a large estate.
BruceM
Permalink Submitted by Robert Goffee on Fri, 2013-10-18 17:42
Mr. Slot, this is piss poor advice. You are perpetuating this idea that term is very expensive in the later years. Well, you should know that the cost of insurance goes up no matter what type of insurance you have. With WL, it is paid out of the CV. So, it may look less expensive to the owner. But in fact, owning any form of CV product is ALWAYS far more expensive than term. Plus, owners of CV products never get their “savings” when they die. What could be more expensive and a bigger waste of money than that?
Permalink Submitted by Viet Do on Mon, 2008-10-13 20:07
Thank you so much for the reply. Am I assuming incorrectly that Ed says to use the tax exemption for life insurance as one of the three biggest benefits in the tax code (for income and estate tax free)? In doing so, we are to leverage taxable money now to buy life insurance to provide for loved ones later when we die with the life insurance pay out income and estate tax free.
That is why I ask my original question is one should purchase term life or whole (permanent) life. But if I am assuming wrong of Ed’s recommendation to purchase life insurance then term or whole may be a mute point entirely.
Please more explanation on this matter. I want to make a good decision on if 1) to purchase life insurance and 2) what type of life insurance.
Vdo
Permalink Submitted by Al Fry on Mon, 2008-10-13 20:55
Just remember, term insurance is designed to expire prior to the insured.
Permalink Submitted by Viet Do on Tue, 2008-10-14 20:51
Hello. I did a little more research last night and still unable to find the answers I’m looking for as it pertains to life insurance. I have decided to purchase life insurance that’s for sure. However, term or permanent is still the question that lingers for me.
Most people, other than the insurance companies themselves, are telling me that term life is the best way to go. But these people look at life insurance as just that insurance. IN CASE something happens to me and I die, then my beneficiary is taken care of by the insurance. The program Ed Slott talks about seems to tell people to get permanent life insurance so WHEN I die then there is definitely a payoff possibly many many times what I paid for the insurance and that it’s sometimes income and estate tax-free. Ed Slott’s program seems to suggest this as an investment not just insurance.
So, term or perm? Please help. Thanks.
Vdo
Permalink Submitted by Al Fry on Wed, 2008-10-15 00:02
With Whole Life and some forms of UL, you can never pay in more than the DB. With term to age 100, you certainly can pay for more than the the DB, unless you get lucky and die early. Some gamble!
Permalink Submitted by Bruce Steiner on Wed, 2008-10-15 23:58
It depends on your objectives, and on what you are comparing it to.
Permalink Submitted by charles lore on Thu, 2008-10-16 04:24
Ed does talk about life insrance as a way tom insure the stretch. It is one of 3 biggest benefits in tax code ..LI, Unified Credit and Stretch. He talks about how to own Li and that is in an ILIT to keep it out of esate . A good estate attorney can draft it for you with language that will keep you safe from inclusion. I disagree with the comment that it’s risky. Thats a comment I might expect to see for an FLP but an ILIT done correctly is straight forward.
Permalink Submitted by BruceM on Mon, 2008-10-20 06:59
[quote=”[email protected]“]With Whole Life and some forms of UL, you can never pay in more than the DB. With term to age 100, you certainly can pay for more than the the DB, unless you get lucky and die early. Some gamble![/quote]
Sure…if one ignores the time value of money.
BruceM
Permalink Submitted by Meggy Brookson on Mon, 2011-02-07 20:55
hey vhd3 – a site that might help you out a lot: http://www.termlifeinsurance.org – has a few really informative articles on there about the differences between term and other kinds and what’s best for each person’s individual situation. Hope that helps a bit mate.
Permalink Submitted by Lee Martinson on Tue, 2011-02-08 01:46
YOu’re are going to need a permanent plan, but you can find a universal life plan that is designed to have permanent guaranteed for life premiums with a guaranteed death benefit and is way less expensive than whole life. It will have less cash value than a whole life policy but that is not the focus here any way.
Not all universal life plans are designed the same and yo have to make sure you get the right guarantees in it.
Permalink Submitted by donna crews on Thu, 2011-08-04 16:04
I wouldnt consider life insurance as anything but a way to protect your family if you die, there isnt really an inheritance there. Buy term and invest the difference, but you actually MUST invest the difference for it to count.
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