The problem with advice to the masses is that it does not take into account the individual situation.

Whole life, if used properly, can be a great product. There are many companies out there that have bad returns and a few that have returns that rival the S&P. So pick your company well.

But the bottom line is this – Life Insurance should be purchased for one reason only – - THE DEATH BENEFIT!!!!! Make sure you get the proper amount of coverage.

Then, if at that point you have maxed out your 401k or IRA or other qualified plans, a life insurance policy MIGHT be a great place to get tax deferred growth. It could be another place to save money for retirement, college education, a boat, TV, or whatever you want to use it for.

BUT MAKE SURE IT WORKS WITH YOUR BUDGET AND YOU ARE BUYING FROM A TOP NOTCH COMPANY WITH A STRONG HISTORY OF PAYING HIGH DIVIDENDS (New York Life, Northwestern Mutual, Mass Mutual – to name a few).

Term is great and I own mostly Term. Because my situation requires me to carry 3 million of death benefit, of which I cannot afford that much in Whole Life. I also dont have a need for 3 million when I am 75 years old, so term is a great fit now. But 500k of that 3mil is permanent WHole Life (for estate planning purposes).

Good luck and make sure you talk to an advisor!

We are taking a risk with the 10-year, and not being insurable after it ends. But by that time, I hope that we are in a much better position financially so having a policy in place won’t be as important.

I’ve had a few freinds who all have taken out whole life. I tried to talk out of a whole life policy but he was soooo impressed with the fact that after 30 years he’d get a whopping 90,000 dollars back (this was 20 years ago). Needless to say when he got married had kids bought a house (which he paid 112,00 for) he started re thinking the costs. Once the house values jumped he realized how little that money was going to be worth in 30 years and how much it was costing him he canceled the policy. This seems to be a typical thing people buy whole life young and then cancel it when they get older and wiser.

You may want to looking into increasing your coverage within a couple of years to a higher amount that provides more depth of coverage, as well as locks in your rate for a longer period – maybe shop around for a 25 or 30-year term policy?

IRS 1031 info

From that article, it looks like it is for real-estate only?

We’ve paid in over $1,500 ourselves for this policy (that does not include the amount my husband’s parents paid in premiums before my husband and I got married). By surrendering it we are getting less than what we’ve paid in. It’s not a policy that is connected to a retirement account (which I’ve read that those can have tax consequences).

I have a good booklet that came with the policy and according to it we would have no tax liability because our premium payments were more than the surrender value. Of course, come tax time that will be verified by our tax preparer.

Definitely consult with your policy holder and accountant to make sure for your situation.

I enjoy your site and seeing it show a new post on my reader. It reminds me to keep myself in check, too. Keep on keepin’ on!

Her “cash out” value was about 1% more than the total premium she had put in. I think its important to have a nice term policy in your early years, when you have few assets, and then long term disability/nursing care insurance later on.