You may want to check that. It’s a rare set of circumstances that gets the VA to kick in more than 750 for non combat related deaths.
It was $1,500 when my aunt died (between five and ten years ago).
They do supply a free plot for the veteran and spouse. Because of that my aunt’s estate came out a bit ahead. The cremation, burial, and ten death certificates was $1,000.
I won’t qualify for Social Security unless I put in a few quarters after I retire. The city pays into CalPERS, not into SS. It does pay into medicare, though.
I get a lot of “offers” for life insurance policies that come from companies that got my info from my credit union. I really wish they’d stop giving my info out like that.
Anyway, the first couple of time I got these offers, things looked a little hinky, so I ran the numbers to see what was going on. According to what they claimed they would pay, and the monthly premiums they were charging, it would appear that I would have to live to 150 or so for them to cover the payout by my premiums. There was just no way they could possibly make money on the deal being offered. It wasn’t even close.
I had to conclude that the business model was to NOT pay on claims. Presumably, they planned to collect a few years of premiums and then find some reason to cancel the policy.
A late payment; folks who stop paying once they retire and are on a fixed income and suddenly that $30 a month looks a lot larger; health conditions etc. Just take the money and run…
You weren’t looking at their whole life policies. The credit union policies are usually not (though they do have a pretty good whole life). Usually they are accidental death policies, but occasionally they are term. The business model of all term policies is to not pay the claim, but usually due to people out living them or converting them eventually to more cost sensible whole life. But the companies really don’t want people to cancel or lapse for the most part. A large book of business is very valuable to them.
At this point I always feel its important to bring up the story of my wife’s college roommate, whose husband didn’t believe in life insurance. Unfortunately, he also believed in fighting back against a carjacker with a gun, and left her a widow with three young children.
This statement is accurate.
Sure, at a young age, with young children and nothing in the bank, I can see forking over the small amount that term insurance will cost. If nothing else, it may give some peace of mind to all concerned. But for someone at my age, it’s rather pointless. I haven’t carried life insurance since my last child turned 18 and went into the workforce.
I guess I must be upper middle class (at least according to NAF1138), because this is exactly how I view life insurance as well.
I currently have lots of term life insurance, probably something in the range of $700-750K. This includes a $400K term policy not connected to my work that has less than ten years to run, and a policy through my work that is a multiple of my salary that will end when I stop working there. My son is graduating from college next month, and I plan to have our mortgage paid off by the time I retire in 15-20 years. Between now and then I plan to start dropping life insurance policies, starting by not renewing the term policy that is not connected to my work. The work policy will end when I leave or retire. After that I’ll hopefully have enough saved up to cover final expenses.
Now here is someone who absolutely should have had life insurance: a young person with lots of earning potential and lots of dependents. The insurance would also have been relatively cheap.
The closest I came to this point was a six year stretch right after I got out of the Navy when I only had $50K in life insurance. My wife and son would likely have struggled to get by if anything had happened to me then. On the other hand, her parents and my father would likely have helped her out back then – they’ve since all passed away.
Google is your friend. Whole life is the biggest rip-off of all.
The only people I knew who made anything form it were people who had purchased from a mutual insurance company (used to be big in Canada) and made a fortune from the share payout when the company went the buy-out route.
Many commentators online have shown that for longer term whole life, you are better off buying term for the times you need it and investing the rest. It’s more flexible too.
I’ll agree that the only real purpose of life insurance is insurance - if something happens to you, your debts are paid and your dependants have something to fall back on. If you want to leave a nest-egg for (great) grandchildren, etc - insurance in old age is going to be very expensive. As the discussions above note, the insurance companies have actuarial data on their side, you are more likely to pay them more than you collect. Better to save and invest, and see the joy on Junior’s face from your gifts while still alive. If you have debts and dependants, you haven’t planned well and probably the premiums are more than you can afford. The only way you can win is by dying unexpectedly soon; and if your health questionnaire or examination indicates this is likely, you’ll pay even more. (Some of these even have a “if you die within a year of buying this policy…” clauses that exclude anything expect accidental death.)
I’m not sure what you mean by this. The rest of the post that follows didn’t have anything to do with my quoted post which is talking about the various forms of life insurance offered through eith TruStage or CUNA mutual by credit unions.
I’m a licensed and experienced insurance agent. I’m happy to provide you with my license number if you question my credentials. I’m also happy to have a conversation about the pros and cons of whole life for people at various stages of their own life and with various wants/needs. There is no one size fits all insurance. That goes against the very nature of what insurance is. Be that life insurance or other.
Much the way you should not get medical advice from random people on the internet, or legal advice, you should not get financial advice from random people on the internet. Buy term invest the difference is a strategy that was developed to replace life insurance policies and make agents rich. It can work. It doesn’t mean it’s always the right choice. Every person is different.
I understand why this feels true, and it feels good to say, because we all hate insurance companies. It’s not correct. It’s a fundamental misunderstanding of the business model of insurance. It is, I will say, much more true with term insurance.
Most “old people” who buy insurance are not buying tk leave a significant legacy. Some are. If you are wealthy it’s a good idea. Again, happy to change the discussion to this topic, but let’s stay focused. Most seniors buying life insurance are doing funeral planning. Term is spectacularly bad at this. Like, breathtakingly bad.
If you have debts and you are over 85, yes you are screwed. If not, insurance is likely not too expensive. My average life insurance client lives off only social security.
This is really true of term, but that’s the purpose of term. This is not true of almost any other type of life insurance. Some policies (see colonial Penn, Aarp, Mutual of Omaha by mail, etc) that exclude non accidental death for two years. These are designed for people with serious health risks and paid for by the healthy. They are, usually, a rip off. It’s unfortunate.
I fully understand that there are a lot, A LOT, of shitty agents out there and that pretty much any insurance company that pays to advertise is likely ripping you off, because of this the insurance industry has gotten a, deserved, bad rap. It doesn’t help that agents cannibalize the industry to make a name for themselves (looking at you David Ramsay and AL Williams).
But, I’m a long time Doper. I’m not trying to sell you anything. I am, in fact, somewhat well respected in the industry considering I have only been in it for 5 years. So I’m happy to try to set the record straight. But you are misinformed or only seeing a partial picture about a lot of stuff.
When it comes down to it, we are all “random people on the internet.” 
I call B.S. on this. The only person who would tell you that “buy term and invest the difference” is a strategy that is designed to “make agents rich” is someone who is trying to sell you on a whole life policy.
The bottom line with any policy other than term insurance is that it mixes up life insurance with investments. No other insurance does this (not car insurance, renters insurance, or home insurance). The only reason this is done is to obfuscate the costs to the customer and/or to encourage them to buy something they don’t need.
Life insurance companies commonly try to sell policies to people who simply don’t need insurance, such as people with no dependents. That’s like selling car insurance to someone who doesn’t own a car. Life insurance companies do this by mixing in the idea of investing for the future in with their life insurance policy. IMHO, this is crazy. Besides the typically poor return on one’s investment with a whole life policy, the other reason this is crazy is that you don’t get both. In other words, if I have a whole life policy and die, my heirs get the death benefit but the insurance company keeps the investments! If I die with a term policy and an IRA, my heirs get the death benefit and the value of the IRA.
I don’t doubt that term life insurance is a poor way to plan for funeral expenses. I do doubt that a whole life insurance policy is likely to be any better, and is likely to be even worse.
True that! I would hope that I have a earned a certain level of trust as a member of the community. But don’t take my word for anything. You don’t know me. Skepticism is ok by me
AL Williams was a very good salesman. His story is great too. Look into it. But it’s 100% a replacement strategy. You can prove it to yourself by asking the question… The difference in what? It makes no sense unless you already have a whole life policy. I promise, almost no one actually follows this advice. When they do the agent gets very rich. Look into how fee based managed money pays and the fees that Primarica charges for their managed money accounts. That’s where the saying comes from.
I understand why you feel this way, but it’s inaccurate. We can put a pin in it and talk later.
Did you work for Primarica at some point? It’s like you are reading from their marketing materials.
This is against, a misunderstanding of what is happening sold in a way that makes Primarica agents money. Then it escaped into the real world. But it is a fundamental misunderstanding of what whole life is and how it works, as well as the reasons people buy it. It also ignores other forms of non term and non whole life insurance.
It’s not. There is, in fact, no way to pre pay a funeral that doesn’t utilize whole life. If you pre pay with a funeral home they take put a whole life policy on you (sort of, it’s slightly different but for our purposes not different enough). If you take out a final expense plan you cut out the middle man. If you don’t pre pay probate and taxes and stuff get involved.
I do this 15 times a week and have done for 5 years and I give seminars on the subject and have been interviewed and published. I can go as deep as you want. I’m not sure you actually want to.
You do have a point that the way the expression is phrased presents itself like a replacement strategy for someone who already has whole life, and that the amount one invests is premised on the cost of that existing policy.
A better strategy would be one that looks at how much you need to retire on and to set up a retirement plan that achieves the goal.
Nevertheless, it’s most important that one invests something for retirement, and the “invest the difference” shtick is just a shortcut for figuring out how much much one should invest. The thought is that the person is already spending that much on a whole life policy (assuming they have one), so it addresses the issue of someone thinking they don’t have any money to invest. There are other shortcuts you often hear, like the advice that someone should be investing 10% of their pretax income in a 401(k) or IRA. In any event, it’s just a shortcut. You ultimately need to follow the guidance in the previous paragraph.
Regardless, you haven’t convinced me that whole life is a way to achieve retirement goals, though.
That’s only true if you pay high fees for a retirement account. However, virtually all workplaces offer low-fee retirement funds, such as 401(k)s, and anybody can set up a low-fee IRA, either of which can be invested in low-fee mutual funds, such as index funds.
Why is it inaccurate? Serious question.
I did, actually, for a few months back in the mid '90s. Does it show? 
More seriously, I stopped working with Primerica because I dislike sales, disliked their whole multi-level marketing premise (and was annoyed at myself for letting myself get roped into it by a friend), and didn’t think they sold a particularly good term life insurance product or particularly good investments (with relatively high fees on both).
With that said, I thought (and still think) that their basic premise is sound – meaning buy good term life insurance (assuming you have a need for it), and keep retirement investments separate (through a good 401(k), IRA, or similar). This does not mean to necessarily buy from them, though.
OK, what is the fundamental misunderstanding? I’m genuinely curious.
OK, this is just splitting hairs, IMHO. If I pre-pay for a product, I don’t care what they do with the money (so long as they stay in business). They can invest it, buy a life insurance policy on me, whatever. What difference does it make?
You can also simply do what my father-in-law did when he was diagnosed with terminal pancreatic cancer and given a few months to live: take some money out of savings and pre-pay for all funeral expenses directly with the funeral home. I can say with confidence that no life insurance was involved.
Sure I do. Feel free to convince me what is so great about whole life insurance for the average person, if you care to do so.
The only plus I’ve ever heard about a whole life policy is that it may give some tax advantages to very wealthy people when they die. I’m not sure if this is still relevant with the recent changes in the estate tax, though.
P.S. It’s not just Primerica that advises against whole life. Consumer Reports has also advised for many years that one buy term life insurance and invest in index mutual funds.
And while Primerica may have popularized the idea, you can find it all over now, like here, for example:
I’d be interested in seeing anybody who recommends whole life insurance who isn’t either selling it, nor is funded by the insurance industry.
Yes you should. But then, like any advice medical, financial, legal or relationship, you should consider where it comes from, what the advice says, whether it makes sense, and whether it points you in a direction worth investigating.
I’ll agree with Robby - the problem with whole life is that it provides the same payout no matter what; they payout you need when you have a mortgage, young dependants, or children going to college is very different than the few thousand you need for a funeral. What, you need more than $10,000? WTF for? You’re dead, deceased, gone to meet your maker, rung down the curtain and joined the choir invisible. You are an ex-person. This isn’t a wedding where you get to bask in the glow of making your loved ones happy as you unload them on someone else. Leave enough for cremation, a nice spot to urn away eternity, and a nice luncheon for all who drop by for the wake. Investing enough to leave s medium to small fortune to the loved ones is a poor use of money compared to using it to make retirement cozy. Plus, with regular investments in mutual funds you can pick and choose based on risk and return, fund fee levels, etc.
Unless you step in front of a bus, the house wins in whole life, just like Vegas. You pay for an extended period of time. At a certain point, you pay so much that the premiums pay for themselves. Plus - the insurance company has been getting the equivalent of fund fees the whole time too. And with term, if circumstances change - your wife runs off or the house burns down - you can stop the current term insurance payments which have been minimal anyway.
(Speaking of changed circumstances… My bias comes from the situation where I was talked into whole life as a savings when I was working; then decided to go back to college after a few years only to find that over $3,000 of contributions was worth $650 if I pulled it out. Since I didn’t want the expense of the premiums simplest thing was to cut my losses and take it out. And invest in regular mutual funds, which now total almost half a million.)
You can’t handwave away that whole “unless you step in front of a bus” thing. The house always wins in Vegas because people always go back to the tables. People who get hit by buses don’t keep paying for life insurance. Whole life is not a substitute for investing, any more than repairing your car is a substitute for auto insurance.
This thread sort of fell off my radar. Sorry, to pick back up
This is because I’m not trying to.
Life insurance is not an investment vehicle. In the state of Pennsylvania any licensed individual who says otherwise has broken the law. This is triple true for the “old people” talked about in the OP. I spend more time than I would like fixing problems created by agents who sold life insurance as an investment vehicle to a senior. It’s almost always a bad idea and the people who will try to do it usually don’t know what they are doing and make it a breathtakingly bad idea.
Why is it inaccurate? Serious question.
Yes!
More seriously, I stopped working with Primerica because I dislike sales, disliked their whole multi-level marketing premise (and was annoyed at myself for letting myself get roped into it by a friend), and didn’t think they sold a particularly good term life insurance product or particularly good investments (with relatively high fees on both).
With that said, I thought (and still think) that their basic premise is sound – meaning buy good term life insurance (assuming you have a need for it), and keep retirement investments separate (through a good 401(k), IRA, or similar). This does not mean to necessarily buy from them, though.
Ok. I’ll do that in my next post. I’m working at it might take a bit. But I won’t ignore it.
If you have the ability to pay a lump sum to the funeral home to prepay your expenses, this is a good way to go.
The reality I deal with is that most people can’t do this. At least none of the people I meet with. My sample is skewed as I am usually meeting with people who are specifically looking for life insurance, but even my Medicare clients (in theory more affluent people) tend to just not have enough savings.
And if you are making payments to the funeral home you should care, because the funeral home has just become an expensive middle mad on what really is a terrible investment. The average person who makes payments on their plan will pay 2-2.5 times the cost of the funeral broken into monthly chunks. You get significantly better than that on a whole life policy which may not pay up as quickly but will usually take closer to 20 years to put you upside down. The premium payments are a fraction of the cost as well.
I’ll need to dig up a cite but I believe Dave Ramsay, who is famously anti whole life, has agreed on more than one occasion that final expense policies make sense.
But that might be apocryphal. I’ll check.
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I’m sure this is just crazy talk, but it seems to me that the best advice for people who can’t pay in a lump sum for their choice of funeral/barebones cremation* should be to establish an emergency fund/pick a funeral they can afford.
- It’s not clear which your clients can’t afford.
Yes, I guess I should have said “*you *only win if you step in front of a bus.” … provided it looks like an accident. The house always wins.
The house wins in Vegas because in all situations, the odds favour them. They also win bigly because people reinvest what they did win into additional house rake-offs. Gamblers are like that joke about the small business having a big sale… “I’m losing money on every transaction but I’m making up for it with volume.”
So yes, you’re right, same with life insurance. The house always wins because they’ve factored the occasional bus into their actuarial tables. Everyone else is paying for your close encounter of the bus kind.
Sadly, most of my clients could not afford a cremation in a lump sum. We are not a country of savers.
So, let’s assume you are a 70 year old in fair health, living off of social security with no savings to speak of anymore. Not how it was supposed to work, but this is a very typical situation for me.
You can afford $30 a month without it breaking you, but not a penny more.
Your choice, put it into a savings account and hope that in the 10 years it takes you to save 3600 you are 1)still alive, 2)havent touched the savings and 3) inflation hasn’t raised the average cremation cost from 3k to 6k as projected.
Or
Take out a 10k life insurance policy that will be guaranteed to pay even if you get hit by a bus tomorrow and you only put in $30, that has cash value to act as a safety net in case you miss a payment due to hard times, and that will pay out more than you put in unless you die after age 98, and if you don’t you have the option to take that cash value and pay off the policy.
Which sounds better?
Well in that case, what sounds better is tell my kids not to claim my body and let me be buried in potter’s field if I don’t leave enough to pay for anything else and for me to save the $30 a month, which can be used for any sort of emergency I might have- and if I can only afford $30 per month, my prescription copays being increased by $5 would be an emergency. And that will probably happen in less than 5 years.
In any event, I can get a barebones cremation in NYC for under $1000 ( I did find an advertised price of $495) , and I can’t imagine many places in the US are more expensive. That involves saving $30/month for between 16 months ( $495) and 33 months ( almost 3 years) , not 10 years.