Question-re:Whole Life Insurance

I am interested in hearing opinions on Whole Life Insurance from people qualified in finance or life insurance.

I've heard so many people say not to put money into Whole Life Insurance .. like Suzie Orman .. and I'm seriously thinking about getting rid of the Whole Life policy we have .. but then I'm worried getting rid of it will turn out to be a mistake since we've been paying into it for quite a while now.

I'm very confused!

Your reasoning for Whole Life is the reasoning we followed in going with the policy .. we also have both Whole & Term .. we had Term first .. then got the Whole Life .. and we've kept both. It just gets hard sometimes when thinking like some of the financial 'experts' think .. like not to over-insure .. that Whole Life should not be used as an 'investment' path .. it all gets so confusing sometimes .. trying to properly manage money.

After consulting a financial advisor, we're thinking of taking out both whole and term policies.
The reasoning between whole life makes a lot of sense because term expires after 30 years and you lose whatever you invest, whereas with whole you get your money back.

However, we were advised, because of the amount of coverage we want, a whole life policy would be around $2500/month.
We were told that we'd be better off taking out the majority in term (which is the cheapest), a small amount in whole life for the guaranteed earnings and over 30 year coverage, and then investing the difference in a retirement fund where we'd get a greater return than what they guarantee with whole life (4%)

That way if, god forbid, anything happens to DH in under 30 years, we still get the full amount of coverage at the lowest amount paid, the house is paid for and I have enough to live since the term policy wil be cashed out.

However, since we pretty much ASSUME that he'd live past the age of 65, we still have some in whole life (which we can then withdraw or keep paying) plus an investment portfolio which has grown at a better rate.

Also we figure that if DH is still alive and kicking at 65, by then our kids would be grown up and financially dependent themselves, so my having to support them is no longer an issue, should he pass before I do. I would then live solely off the retirement fund and the amount of the whole life policy that covers him after the 30 years.

Susans has the right idea with both types of policies. You purchase the policies based on what they need to cover. Term expires at a certain point, and gets very expensive as you age. Whole life INSURES that you'll have something later in life, for burial expenses at the very least.

Term is often used to cover a need that will expire over a period of time - ie: should the income earner die, their policy would cover a mortgage, loans, college education for children, etc. After a child graduates from college or a mortgage is paid off, that need is no longer there, so you can let the term policy lapse. It's a less expensive way to cover a short term need.

Whole life is to insure you have something till the very end. They also build equity and at some point the dividends can be used to pay the premiums so they are self supporting. The equity won't build as fast but you won't be paying out of pocket.

Usually, when you hear someone say Buy Term, Invest the Rest, it's because they want you to invest the rest with them - they are selling stocks or mutual funds.

Insurance is to INSURE that money is available for a specific need - to cover an expense if the insured should die. Investments in higher risk instruments may return more, but there is no guarantee that the money would be available when the need presented itself. They both have their place in a financial plan, but one should not replace the other.

DH is in the industry and teaches the insurance course that is required for the licensing exam, so if you have any questions send us FM.