Life Insurance and other growing up problems Vol. School Me.

[sole searchin]

Background:

Recent graduate from a professional school, 26 years old, perfectly healthy.
I will be basically working under my own businesses (sole proprietorship with a personal S-corp), so no 401K, retirement fund (unless I set it up), etc.
About 200K in debt (which is actually below average for people in my field)

Recently, I've looked up and had in interest in my future retirement funding, investments, etc and although I have spoken with some advisors, I figured NT had a good amount of people from every field imaginable. I'll take any advice to further my knowledge is this aspect.

My question is in regards to safe investments with whole life policies. I am relatively young so I see no point in term life for myself at the moment but I've looked up several pros and cons. As of now, if I can lock in a low premium due to my age and health, I figured that would be okay, and whatever else money I have that I can afford to lose, I can place into more riskier investments. From my understanding, the only real risks of a whole life policy is the rate of a return and how it could be better invested for a greater growth. The thing is, that would be at a more of a risk no? I understand the importance of diversifying my portfolio, but a whole life policy would be more so my retirement fund that I can pull out at a future date if needed.

2 random links I read that are kind of arguing the opposites of the same points.

http://www.dailyfinance.com/2014/03/05/whole-life-insurance-why-to-buy-policy/
http://momanddadmoney.com/why-whole-life-insurance-is-a-bad-investment/


Correct me if I'm wrong with any of this information, this is more to learn any information I can.

Thanks NT.


P.S. Don't grow up. It sucks.

 

[dh1water]

If you are bound and determined to get life insurance and are looking at it as an 'investment tool,' you have the right overall view at your current age.

I'm not going to say you are too young for life insurance, because you aren't at all by a long-shot, but something to consider: you ARE young enough to go with high-risk and aggressive investment opportunities.  Think of possibly scaling down the LI and investing in other higher-risk, faster growing investments if you have some freed up income.  Every investment platform isn;t for everyone.  Depends on your funds, your goals, your disposable income, etc.  Juts food for thought.

What do you mean by 'professional school?' if you don't mind me asking?

 

[crcballer55]

Background:

Recent graduate from a professional school, 26 years old, perfectly healthy.
I will be basically working under my own businesses (sole proprietorship with a personal S-corp), so no 401K, retirement fund (unless I set it up), etc.
About 200K in debt (which is actually below average for people in my field)

Recently, I've looked up and had in interest in my future retirement funding, investments, etc and although I have spoken with some advisors, I figured NT had a good amount of people from every field imaginable. I'll take any advice to further my knowledge is this aspect.

My question is in regards to safe investments with whole life policies. I am relatively young so I see no point in term life for myself at the moment but I've looked up several pros and cons. As of now, if I can lock in a low premium due to my age and health, I figured that would be okay, and whatever else money I have that I can afford to lose, I can place into more riskier investments. From my understanding, the only real risks of a whole life policy is the rate of a return and how it could be better invested for a greater growth. The thing is, that would be at a more of a risk no? I understand the importance of diversifying my portfolio, but a whole life policy would be more so my retirement fund that I can pull out at a future date if needed.

2 random links I read that are kind of arguing the opposites of the same points.

http://www.dailyfinance.com/2014/03/05/whole-life-insurance-why-to-buy-policy/
http://momanddadmoney.com/why-whole-life-insurance-is-a-bad-investment/


Correct me if I'm wrong with any of this information, this is more to learn any information I can.

Thanks NT.


P.S. Don't grow up. It sucks.

Whole Life policies are TERRIBLE investments. You're basically investing in a cash value policy that if you die, your beneficiary will get the face value of the policy and the insurance company will keep the cash value. Sure, it's "safe", but so are CD's, Money Market accounts, and mattresses. As far as investing, it's terrible. The only reason an agent would talk you into buying whole life vs. term is because the commissions are about 4x. If I were you and had no dependents, I would just forego life insurance at this point unless someone helped you cosign your loans, in which case I would definitely take out a Term policy. It's MUCH cheaper, and will cover them as the beneficiary in the event you die.

On the same note, forget investing right now. Focus the profits from your business on building up retained earnings of at least 6 months, then blasting away your loans over the next 5-8 years. At least then, you're getting a guaranteed rate of return, which will be much safer than investing it.

 

[paliplaya2010]

If you are bound and determined to get life insurance and are looking at it as an 'investment tool,' you have the right overall view at your current age.

I'm not going to say you are too young for life insurance, because you aren't at all by a long-shot, but something to consider: you ARE young enough to go with high-risk and aggressive investment opportunities.  Think of possibly scaling down the LI and investing in other higher-risk, faster growing investments if you have some freed up income.  Every investment platform isn;t for everyone.  Depends on your funds, your goals, your disposable income, etc.  Juts food for thought.

What do you mean by 'professional school?' if you don't mind me asking?

Hes a doctor

 

[sole searchin]

If you are bound and determined to get life insurance and are looking at it as an 'investment tool,' you have the right overall view at your current age.

I'm not going to say you are too young for life insurance, because you aren't at all by a long-shot, but something to consider: you ARE young enough to go with high-risk and aggressive investment opportunities.  Think of possibly scaling down the LI and investing in other higher-risk, faster growing investments if you have some freed up income.  Every investment platform isn;t for everyone.  Depends on your funds, your goals, your disposable income, etc.  Juts food for thought.

What do you mean by 'professional school?' if you don't mind me asking?

Agreed. At my age I do think I am more cut out for more riskier investment options BUT the fact that I have that massive school loans is what is kind of holding me back. I'll explain that next. By professional school, I meant Dental School. In my state, the tuition is in the lower 5% for our state, but it's still a hefty loan (in comparison, other states or out of state can be in the 500K+ range easily).

Whole Life policies are TERRIBLE investments. You're basically investing in a cash value policy that if you die, your beneficiary will get the face value of the policy and the insurance company will keep the cash value. Sure, it's "safe", but so are CD's, Money Market accounts, and mattresses. As far as investing, it's terrible. The only reason an agent would talk you into buying whole life vs. term is because the commissions are about 4x. If I were you and had no dependents, I would just forego life insurance at this point unless someone helped you cosign your loans, in which case I would definitely take out a Term policy. It's MUCH cheaper, and will cover them as the beneficiary in the event you die.

On the same note, forget investing right now. Focus the profits from your business on building up retained earnings of at least 6 months, then blasting away your loans over the next 5-8 years. At least then, you're getting a guaranteed rate of return, which will be much safer than investing it.

I've heard the same thing as far as investment purposes go. But at the same time, I've heard the positives of it also. You can lock in a lower much cheaper rate that just builds up compound interest with possible dividends with little to no risk. Also, you can pull out that money at "any" time. In regards to CD's, MM accounts, I've looked around and could possibly settle with the 10yr-30yr ones correct?

And yeah, commissions for life insurance policies are huge in comparisons. As of now, i have no other dependents but my worry is also in regards to if something does happen to me, that 200K+ debt becomes my families which is the last thing I want. No one has cosign my loans and it's all from the government around ~6%. For now, I want to knock off basically 80-100% of that figure in the next couple of years. I've lived liked a student then, I can manage another couple of years the same way. At the same time, the extra money that I do have, if the whole life policy is within reason in regards to my monthly budget then I figured why not to lock it in for the rest of my life, but I get what you're saying also, just trying to figure out the pros and cons.

Also, what about a term policy for my pops, about 60yrs. old, and I understand things happen. Whole Vs. Term in cases like this? Thoughts?

 

[dipsetgeneral]

At first I was like "professional school"?!

Your doing well, my dude. I'm 25 and need to start thinking more like you...

 

[Kaleo15]

I'm considering getting life insurance on my parents and in laws.... Is this a good idea fambs?

 

[nazdrowie]

As of now, i have no other dependents but my worry is also in regards to if something does happen to me, that 200K+ debt becomes my families which is the last thing I want. No one has cosign my loans and it's all from the government around ~6%. 

if you think that this will happen, term life is your best bet...if you are healthy like you say, you can get large policies for lower amounts per month...

my dad cosigned some loans for me and took out a 100k policy for about $20-25 a month, if i recall

 

[johnnyredstorm]

I'm considering getting life insurance on my parents and in laws.... Is this a good idea fambs?

i'd say so

 

[teamjordan79]

live in the NOW

 

[crcballer55]

 

Whole Life policies are TERRIBLE investments. You're basically investing in a cash value policy that if you die, your beneficiary will get the face value of the policy and the insurance company will keep the cash value. Sure, it's "safe", but so are CD's, Money Market accounts, and mattresses. As far as investing, it's terrible. The only reason an agent would talk you into buying whole life vs. term is because the commissions are about 4x. If I were you and had no dependents, I would just forego life insurance at this point unless someone helped you cosign your loans, in which case I would definitely take out a Term policy. It's MUCH cheaper, and will cover them as the beneficiary in the event you die.

On the same note, forget investing right now. Focus the profits from your business on building up retained earnings of at least 6 months, then blasting away your loans over the next 5-8 years. At least then, you're getting a guaranteed rate of return, which will be much safer than investing it.

I've heard the same thing as far as investment purposes go. But at the same time, I've heard the positives of it also. You can lock in a lower much cheaper rate that just builds up compound interest with possible dividends with little to no risk. Also, you can pull out that money at "any" time. In regards to CD's, MM accounts, I've looked around and could possibly settle with the 10yr-30yr ones correct?

And yeah, commissions for life insurance policies are huge in comparisons. As of now, i have no other dependents but my worry is also in regards to if something does happen to me, that 200K+ debt becomes my families which is the last thing I want. No one has cosign my loans and it's all from the government around ~6%. For now, I want to knock off basically 80-100% of that figure in the next couple of years. I've lived liked a student then, I can manage another couple of years the same way. At the same time, the extra money that I do have, if the whole life policy is within reason in regards to my monthly budget then I figured why not to lock it in for the rest of my life, but I get what you're saying also, just trying to figure out the pros and cons.

Also, what about a term policy for my pops, about 60yrs. old, and I understand things happen. Whole Vs. Term in cases like this? Thoughts?

Yes, with a Whole or Universal Life policy, you can pull out the money at any time. But that's because you're grossly overpaying for the policy in the first place. All they're doing is investing the money for you, then giving you back a tiny portion of the money they've earned on your behalf (and keeping the rest). Same thing with Annuities. A rep came to our house pitching my wife on an annuity (she was 26 at the time) because she couldn't lose money and could earn up to 7% in a year. I told her the market averages over 10% and we would be giving up hundreds of thousands over her working life for "safety". Don't worry about the pricing. Run some numbers, but your premium shouldn't be too much more if you decide to buy it in 4-5 years vs. today. Term insurance is pretty cheap anyways, so will probably be less than $5/mo. more (if that).

As I said before, with the MASSIVE loans you have, I would mainly focus on throwing everything I could towards the loans for now. You're a dentist, but there's no guarantee your business will do well, so just play it safe for how and keep Sallie Mae as far away as possible. No need for life insurance at this point since there's nobody who would need the money to survive in your absence after you die.

For your parents, I wouldn't worry too much about life insurance at this point, especially if you're taking out the policy for them. It should be up to them to take care of themselves. If you want to help them, look into long term insurance. If they're in relatively good health, 60 is the perfect age to get it. It will probably be more beneficial since the last months of someones life can be a HUGE hit to any financial plan.

 

[Chopper]

Bout to start looking into life insurance.

Currently I’m “self insuring” and I’m good if I were to die unexpectedly, but if I have kids in the near future I’ll want wifey and kids to get more than my current net worth.

I figure I’ll go term. Much cheaper and if I get a 30 year policy, that’ll take me to 65 (past my planned retirement age), at which point I should have enough saved up that self insuring again won’t be an issue.

Those that know, is my logic sound?

 

[nawghtyhare]

Bout to start looking into life insurance.

Currently I’m “self insuring” and I’m good if I were to die unexpectedly, but if I have kids in the near future I’ll want wifey and kids to get more than my current net worth.

I figure I’ll go term. Much cheaper and if I get a 30 year policy, that’ll take me to 65 (past my planned retirement age), at which point I should have enough saved up that self insuring again won’t be an issue.

Those that know, is my logic sound?

yes
but also doesnt hurt to have an additional policy

 

[supersaiyangod]

when i die **** it i wanna go to hell cuz im a piece of **** and it aint hard to tell

 

[crystalmethod]

Doggie...you 26 and got almost a quarter mill in debt.

Priority should be paying all that off