Is Whole Life Insurance a Good Value?

Video Transcript

"This is John Pinelli, financial representative, talking to you today about is whole life insurance a good value? So is whole life insurance a good value? Well depending upon who you talk to, people have a lot of different opinions about whole life insurance. Some people such as Suzie Ormon, believe that you should buy term and invest the difference. Well o'kay this is nice but this will only provide you a coverage for a short period of time and whole life insurance should not be viewed as an investment anyways it is more of an estate planning tool and a means for passing on money to your family in a tax free way that is available immediately upon death and can provide a significant portion of the money to your children fairly easily. There are a lot of benefits to having a whole life insurance policy. Number one is it covers you for your whole life until you die. It will guarantee that you will pass on this amount of money to your family and the insurance amount will continually increase year after year after year so you will have more insurance coverage without having to go through additional medical exams. In addition whole life policies do build a cash value. Now the purpose of a whole life policy is not to have an investment where you are building all this cash value and its a great investment and you can take this money out and all of a sudden you have earned a ton of money. You can earn money in your cash value in excess of what you paid in premiums but whole life insurance is typically not viewed strictly as an investment because the main reason you purchased it is to provide for your family or loved ones in the event of your death. Now whole life will guarantee that somewhere along the line you will pass on this amount of money to your children or loved ones and realistically this amount of money can be far, far, far more than what you paid in premiums so maybe over the course of 40 years you have put in $100,000 in premiums and all of a sudden your family is getting one million dollars of death benefit when you pass and this not atypical. This is often what you would see in a whole life policy if you look at the total premium outlay over the life of the policy and then the amount of death benefit paid upon death. Typically the death benefit paid is far far greater than the amount of premiums that you have put into the policy. Typically if you talk to an insurance agent they will generally guide you in the direction of whole life because they are getting more commissions, it is more expensive and in some cases this may be the best idea for you and in some cases it may not. If you are young starting out and don't have a lot of money often times just getting the most amount of coverage that you have for your family is more important than having that coverage for your entire life and with term policies you can always convert the policy to a whole life policy as long as you do so within the certain number of years defined by the policy. So you are able to cover that if you choose to do so and it will provide you with a great deal of coverage if you were to meet it. Now in recent years it is funny, actually whole life insurance has out performed the dividends, paid by whole life insurance has out performed many of the stocks and the mutual funds out there. There are companies out there with some great whole life products, companies like Northwestern Mutual, Mass Mutual, New York Life, all offer great whole life products and what I mean by that is they will offer you more and more insurance each year, greater cash value and basically offer you some return on your policy for what you are putting in. So it is important to look at one of these three I would say if you are looking at whole life coverage because they will provide you with the best policy term you can find just about anywhere and it can be very cheap as well. This has been John Pinelli, financial representative, talking to you today about is whole life insurance a good value?"