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WCI has covered the topic of whole life quite well, but I thought I'd post this as an additional word of warning about these kinds of insurance policies. 5.5 years ago I was sold a universal life policy for $1M, guaranteed if I met my $642 monthly payments for 15 years. I curse the day I signed that paperwork. Emotions and sunk costs aside, I did my due diligence and analyzed different rates of return that would leave my wife/children with the same amount of money if I took the cash surrender value and the remaining premiums and invested them in a portfolio mimicking the S&P 500. Earning anywhere close to the long-term geometric mean return of the S&P 500, even after discounting for taxes/fees, I should come out ahead in my late 60's. Being more conservative with my estimates, the UL policy actually looked to win out in most death scenarios. But despite all these possibilities, I decided to cancel the policy - tomorrow.
I think the goal of many of us, myself included, is to not work any longer than is necessary, retire with comfortable savings, and enjoy that chapter of our lives with our loved ones. The UL policy can never provide that in any robust form, and that value is immeasurable. I have enough term insurance without it. My kids shouldn't need this money if I teach them to learn from my mistakes and learn about finance at an early age. I would say beware to all those being sold these policies, who still have these policies, or who are even thinking about these policies. Per WCI's posts, there is a niche segment for which these might be beneficial, but that population is slim at best. Curious if anyone else has faced this same dilemma. How did you justify canceling your policy? Anything else you considered that I hadn't? Did you decide to keep it? Why? Thank you for your comments.
I think the goal of many of us, myself included, is to not work any longer than is necessary, retire with comfortable savings, and enjoy that chapter of our lives with our loved ones. The UL policy can never provide that in any robust form, and that value is immeasurable. I have enough term insurance without it. My kids shouldn't need this money if I teach them to learn from my mistakes and learn about finance at an early age. I would say beware to all those being sold these policies, who still have these policies, or who are even thinking about these policies. Per WCI's posts, there is a niche segment for which these might be beneficial, but that population is slim at best. Curious if anyone else has faced this same dilemma. How did you justify canceling your policy? Anything else you considered that I hadn't? Did you decide to keep it? Why? Thank you for your comments.
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