Life insurance investment?

Hi,
I recently got life insurance and illness insuance. I'll be paying around $225/month. Ouch,
im only 20 and my dad said after 20 years my life insurance would be free and i'll be able to collect all the money back which i gave to the insurance company plus interest. I asked the insurance company and they said if i take out the money when im 40 than they would give me about 30K or something, but if i take it out when im 65 years of age, the money i'll be able to take out would be around 300k.
Is this how most insurance companies work or is this something fishy? i still don't have anything in writing since i just signed papers last friday i believe.

thanks

Life insurance is NOT an investment. Your dad is likely WRONG. They DON'T PAY INTEREST, even those "paid up" ones. The insurance company keeps the interest.

They are WAY overcharging you. Do the math. If you INVESTED $225 a month (use this calculator, that's what I'm plugging in http://www.msfinancialsavvy.com/calculat... ) at a VERY modest 8% (the market averages 12%), you'd have over $133,000 after 20 years. And at 65, you'd have almost $1.2 MILLION. So the insurance company is investing YOUR money, and giving you a PALTRY 25% of it back, keeping 75%. If you did it at 12%, the stock market average, you'll retire at 65 with almost FIVE MILLION DOLLARS.

Yes, that's how they work, the LION'S SHARE of the profit goes to them.



ALWAYS DO THE MATH. And remember, life insurance is NOT NOT NOT NOT an investment! Or rather, it's a crappy one.

Nooooooooooooooooooooooooooooooooo!

Your dad steered you to whole life?!?!?!?!?!!?


Read ANY financial planner's website, listen to ANY financial guy talk show and they will tell you to never ever buy whole life. It is a rip off.

Instead, pay $20 a month for your life insurance and invest the other $205 in a quality mutual fund. You will make far far more.

Go buy good 20 year LEVEL TERM insurance.

Insureance companies sell insurance, not investments. Buy your insurance from an insurance company. Buy your INVESTMENTS from an INVESTMENT broker.

Get out of this horrible deal now!!!!


Note that if you invest $205 a month for the next 45 years you will have MUCH more than 600K if you invest it well.



You say if you take the money out when you are 40 you would get around $30K. BUT you would have put in $54K!!!!! Where is the 8% to 10% annual return on that?!?!!?!?!

That same money in a mutual fund would be several 100K!!

never use insurance to invest.

Life insurance is NOT an investment, and Insurance marketed this way is ALWAYS just a "legal scam". I am surprised your Dad doesn't see that! (It's a favorite product of agents to SELL, because it PAYS them huge commissions..).

You should only buy life insurance to insure your life! At 20, if you are unmarried with no kids, YOU DON'T NEED IT. If you put $225/month into a very average mutual fund, by the time you are 40 it will be worth $170K....if you "take it out" at 65, it will be worth about $2.1 MILLION

If you additionally purchase "term life insurance", it will cost you pennies a day instead of $200+ a month, and if you die, your heirs will get enough money to live on for a little while.

Life Insurance investment isn't "fishy", it's just a legal scam...they just take your $225/month and invest it for themselves...if you die, they'll have plenty of cash to pay your heirs;if you don't die, when you reach 65 they'll give you $300,000 and keep the other million and a half for themselves!

Life insurance is a tool to protect against eventualities (actually it protects against the thoughts of eventualities) that would make you cry if they happen. Since it pays on your death, it is of benefit only to those you leave behind. At your age with no dependents, it makes no sense whatever unless someone else is paying the premiums.

HOLY MACARONI!! I am an insurance agent and a financial advisor and would not have recommended this avenue. At your age, invest in a VUL which is a variable universal life insurance policy. You will see your investment grow at a much faster rate of return as you put your money in each month and it is a combination investment. Part of your money has a guaranteed rate of return and the other portion is invested in mutual funds which have the potential for a far greater return on investment. Ask for an illustration on the plan your father helped you choose and then ask for the optional VUL illustration. Life insurance has a 10 day free look period so you are not obligated to stick with the plan you chose. You have time once the policy is delivered to return the entire policy and reject the terms of the agreement for a full refund and nullification of its terms and conditions set forth.

You should have something in writing. You should have needed to sign a sales illustration. Read over it.

I haven't run any competitive illustrations to verify, but my gut tells me that even if you wanted $30000 of paid-up insurance when you're 40, $225/m is a lot. Life insurance is not an investment, and there are problems with pulling cash value out of them which is usually over-simplified by the agent at the time of sales. Even if you wanted $300000 at 65, there is probably a better way to do this.

Since he's your dad, maybe the best way to handle this is to tell him your concerns and be more involved in deciding the type of coverage you take out with him. If he was not your dad, I'd say look elsewhere.

Tell you what: you deposit that $225 per month into something that gets 5% interest and, guess what? By age 65, it will be worth a half million! And the insurance company says 300K?

I don't think so!

What you do is buy TERM insurance to pay a death benefit, say $50,000. That'll be CHEAP. Then invest the rest and make some actual money.

End of story.

Life agent 25 years, would NEVER suggest to a client that they do the deal you've signed.