by albertduran » Tue Jun 12, 2012 03:27 pm
I've been working on an article to list the difference between term and universal life insurance. I'd appreciate some feedback from anyone that has some thoughts.
Universal and Term Life Insurance – Who Needs Them and Who Doesn’t
[Link removed per TOU]
Universal and Term Life Insurance – Who Needs Them and Who Doesn’t
[Link removed per TOU]
Posted: Tue Jun 12, 2012 07:00 pm Post Subject:
Your article has factually incorrect information. This is the type of article that would be expected from someone with very little insurance knowledge
Posted: Mon Jun 25, 2012 12:32 am Post Subject: Drawbacks
I would have liked to see some of the drawbacks of each policy such as outliving the term contract or underfunding the UL.
Posted: Mon Jun 25, 2012 10:51 am Post Subject:
outliving the term contract
This is not a "drawback" of term insurance, it is being successful at living.
Long before a person "outlives" his term policy, he generally has an opportunity to convert to a form of "permanent" life insurance (whole life or UL . . . whatever the company is offering as a conversion option). That could end at age 50 or 55 in some policies, or the option might have to be exercised by a certain date in a policy. And many term policies permit the owner to renew the contract to as late as age 90-95 -- if they are willing to pay the higher premiums.
Underfunding a UL policy, on the other hand, can be a serious matter. Unless the policy has certain "no lapse" guarantees which are being satisfied by the payment of the "planned premium", most UL policies will eventually collapse under the weight of the increasing Cost of Insurance (COI) as the insured ages -- especially if the owner is only paying the "planned premium". As many courts have said, Universal Life is just renewable term insurance with a cash accumulation component -- specifically not recognizing it as a form of "permanent" insurance.
One needs to learn to read and understand their annual statement to know whether they are properly funding a UL policy of any kind (UL, EIUL, VUL) or not.
Posted: Tue Jul 17, 2012 05:26 am Post Subject:
I think it's alright. It may be simplistic, but it does the job for the first time reader on life insurance. You may want to re-evaluate the reasons why people would buy term or whole because they're too generic and may be even untrue in most cases. The real reason why people buy whole life is because they have a need for permanent death benefit. It serves as a savings account during the life of the insured, which may be used also for retirement expenses. This holds true for families that want to leave behind a benefit no matter what.
Pat Cassidy
Disclaimer: I work for AccuQuote and this is my personal opinion.
Posted: Tue Jul 17, 2012 05:59 am Post Subject:
The real reason why people buy whole life is because they have a need for permanent death benefit.
I would tend to disagree with this thought. Many people end up with the life insurance they have, whether term, whole life, or UL in any of its forms, because that's what the agent sold them, regardless of what their actual need might have been.
For example, Primerica agents only provide term insurance, and many of them refuse to understand that term is not the single solution to a person's life insurance needs. Many times a cash value policy is better suited even though it is more costly -- such as for estate planning needs, where term would generally not be the best solution.
WFG agents tend to sell only EIUL or VUL, ignoring the fact that some of their clients cannot afford the products or that the products are unsuitable for their clients.
More experienced independent agents tend to do a better job of exploring a person's needs and making product recommendations consistent with those needs. But there are bad actors in every state, and these folks have the ability to abuse clients by selling them something that is not the right fit for their situation. And that really should never happen.
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