Whole Life or Term? Help!

[Raiden256]

Ok, so my wife is a physician and I do fairly well in IT, and we're working with a Northwestern Mutual guy on things like life insurance, disability, college savings for out daughter, etc....

He's really trying to convince us that whole life (as opposed to term) is the way to go. I'm getting opinions from multiple people on both sides of this. So I'm wondering -- for a late-20's professional couple with a 1.5 year old, doing well income-wise, what is the best choice? And why?

I know that whole life is like an investment (~8% return over NWM's history), but are there better ways to invest that would make term more logical? I know that this would have been true in the 90's, but today's markets aren't those of the 90's....

I hate this stuff!

 

[Monkey muppet]

Just remember

Company sponsored and even the Independant Financial advisors will be offered bonusess for selling a particular type of savings/investing/lending. No matter how friends and helpfull they seem - remember he is a salesman

Giving you hype and upselling, take no $hit from him, tell him straight, ask closed questions don;t let him cunfuzle you with terimologies and acrynoms.


Remeber some user-car salesman sell you $hit, they don't car - they have your money.

Banks can, and have done that

 

[kranky]

High earner or not, kids or no kids, do not mix investments with insurance. There is no advantage.

- Another insurance company may offer lower rates down the road and you may want to switch.
- It's highly unlikely that one company will offer both the best insurance rates and the best investment options.
- You are limiting your investments to whatever the insurance company chooses to make available.
- If they suck at managing investments, you can't move your money.
- Their investment fees (money which is pulled out of your investments each year to pay the people who manage the investments) will be high because their customers are a captive audience.
- Your insurance agent will get a huge share of your first year's "investment" money as a commission - money that could be working for you somewhere else.

That being said, it's still important to invest for the future. There are some people who do not have the self-discipline to invest, and if the only way they can set money aside is to do it through an insurance policy, then that's better than nothing. But those are generally the same people who let their insurance policy lapse for non-payment the first time that they'd rather use the money to go to Cancun.

 

[CPA]

I went with $750K term at $35/month. A hell of a lot cheaper than whole life and I only need it until my kids are out of the house (another 15 years).

 

[cyclistca]

Get term. The only people that gain with whole life are the investment companies. If you want to invest do it outside of an insurance vehicle. Get a good mutual fund or soem blue chip stocks.

Are you guys self employeed? If not don't you have some sort of coverage with them?