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Term insurance or universal?

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Zemfik
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Term insurance or universal?  Reply with quote  

Probably a topic that has been overkilled, but which type of life insurance do most of you recommend? I'm in my late twenties, married, and do not max out my RRSP's yet.

Any suggestions?
Post Sun Mar 02, 2008 6:23 pm
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pf101
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Term. No question.

But, do you really need life insurance? Do you own a home or have any other large debt? If the answer is no and your spouse works and makes enough to be self supporting there's a chance you don't even need insurance.

Personal Finance 101
Post Mon Mar 03, 2008 5:41 am
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cbass1017
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I also agree with pf101. Term is much cheaper and holds no cash value but serves its purpose if needed. On the other hand if you are looking for something that will build cash value over time you're better off looking into annuities or mutual funds or some type of retirement vehicle... although just so you know, I'm no licensed financial consultant. Maybe you should speak with one.
Post Tue Mar 04, 2008 3:18 am
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Busta00
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hi!

the question here is which life insurance type is better. so to answer that question...it depends. most savy investors will buy term and invest the difference. when it comes to life insurance, that is basically what you get in universal life insurance. the cost of term will be the same if you buy it by itself or if you decided to combine it with investments in universal life insurance. if you want to kill two birds with one stone, then do universal life. this is great for those who would rather have someone else do the investing for them. if you like to be hands on, then do term and invest the difference yourself. one thing to consider is that the death benefit will also go up as your investment portfolio gains value. so lets say you die at a time when your portfolio gains a considerable amount, then your beneficiaries will get more death benefit "taxed free"! versus doing the term and investing the difference, where your death benefit will remain constant. i hope you make the right choice and don't let others impose their wisdom (or lack of) on you.

kim
Post Wed Mar 05, 2008 4:22 pm
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pf101
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Insurance is not an investment and should not be treated as such. Universal policies charge very high fees for underperforming products. The only person who really benefits from a Universal policy is the person who sells it to you. If you do the term and invest the difference in cost the benefit over the long run will be much higher than the wonderful death benefit that people who love Universal always tout.

Personal Finance 101
Post Wed Mar 05, 2008 6:14 pm
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Busta00
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hi!

the cost between term and term insurance within the universal policy are almost close in cost when you compare it within a set amount of years weather it be 5, 10, or 20. after 20, the cost does go up, but then again your 20 year term would need to be renewed anyway (if you keep it) at a much higher cost. how your universal life performs depends on the funds you decide to choose. i would prefer a variable universal over a traditional universal. and if you decide to stop paying into it after 13-20 years, it can run inself with the cash value. where then, you can use the premium payments to further fund other investments if you like. BUT then again, it is all preference and nothing is guaranteed except a death benefit that is taxed free.

kim
Post Thu Mar 06, 2008 3:31 am
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jack222
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RE  Reply with quote  

It completely depends on why you are buying the insurance in the first place.

Quick suggestions:

1) If you are buying the insurance to cover a temporary need (IE: paying out debts, making sure the kids are taken care of until they can fend for themselves, etc) of less than 20 years, go with term.'

2) If you are buying insurance to cover a perminent need that may/will never go away whether you die tomorrow or 50 years from now (IE: Funeral costs, probate fees, final taxes, charitable donation, etc), go with whole life or universal. Over the long term, the cost of a U/L or Whole Life policy will be FAR cheaper in total amount paid in premiums.

3) If you are buying insurance as a tax shelter (depending on what country you live in) go with U/L.

4) If you are very young, like less than 30, consider U/L over term: #1 The additional cost of U/L over term will be VERY low (like $20-$30) depending on the amount you need and #2 the buy term and invest the rest strategy has been disputed and debunked several times and is typically promoted in my opinion by people/companies that have limited experience/knowledge of ALL aspects of financial planning and the full benefits of insurances other than term.

There are several pro's and con's to both depending on your situation and needs. Go see a licensed insurance broker that can do a proper needs analysis, explain the differences between term and U/L (and offers both...not just one or the other or they will squeeze you into their mold to sell you on the only thing they offer) as applicable to your situation and then shop the market for the best offers that suit you exact needs (go to a broker...make them do the work of shopping around instead of doing it on your own).
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Post Tue Jul 06, 2010 6:40 pm
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littleroc02us
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Two things to consider:

1. If you have Universal/Cash value coverage and you die, did you know that the insurance company pays the death benefit, but keeps the cash value that was invested. This is highway robbery.

2. Get term insurance for 20 years because by then your house should be paid off, your debt free and the kids have moved out and there is no reason to support them anymore. They will hopefully have jobs and have moved out in their 20's. If you still have debt in 20 years you are in trouble already.

Risk comes from not knowing what you're doing. (Warren Buffet)
Post Wed Jul 07, 2010 8:23 pm
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siestakey
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choose team insurance tht gives so many benefits tht universal life insurance .....

team insurance charges less as compared to universal insurance.......
Post Mon Jul 12, 2010 5:15 am
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mukeshkkashyap
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No investment is 100% safe.
Post Mon Jul 12, 2010 7:00 am
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