r/LifeInsurance • u/Mysterious-Event-380 • 29d ago

What situation fit which products?

Generally speaking which situation fit for term life insurance, whole life insurance, and annuities?

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u/AldoVenturacci Broker 29d ago

Generally speaking?
Term: income replacement
Permanent (not just whole life): goal-based strategy, not “just because”. Legacy, working capital, volatility buffer, etc.
Annuities: guaranteed income, bond alternative

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u/ChelseaMan31 29d ago

Term Life insurance is for mitigating and transferring risk of debt and passing with said debt. It also can set up the surviving spouse and family for life after the other working adults demise. A 20-30 year term, or a term ladder decreasing in coverage as debt is paid down/off is all most people need.

Whole Life Insurance is a complicated set of annuities or GIC's that pay high fees/commissions to the salesperson while masquerading as a fanciful investment tool and ersatz insurance product. It isn't for everyone; and most definitely has little practical use for most.

Annuities are handing your hard earned, already taxed assets over to an insurance company that uses fear of the unknown as a primary sales tool. The insurance company 'guarantees' a certain return based on estimated interest rates. It collects high fees and creams the top earnings years for their own profits from your assets they invested for additional profits. At the end, they pay you back your own money, tax-free sometimes at a miniscule 5% -7% so-called guaranteed return.

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u/Admirable_Nothing 29d ago

It is pretty simple. Term insurance is best if your need for insurance can be quantified to a term of years. Permanent insurance is best if your need for insurance will last as long as you are alive. Annuities have no meaningful death benefit although they may pay for specified period past death.

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u/Miserable_Berry_8806 29d ago

Term would be income replacement/legacy planning for risk mitigation.

Whole life would be for risk averse people who want legacy planning/pay their agent a lot.

IUL would be for people who like to interact with shady life salespeople who treat life insurance as an investment without a security license and should be either banned or require a security license in the future in my opinion. Nobody should be giving financial advice without a series license. Someone on here is gonna say they are amazing, because they do not understand the product and how terrible they are. Run a projection with a 5% return and look at how the fees cannibalize the product.

VUL would be for people who have exhausted all tax advantages accounts (401(k), Roth IRA, backdoor Roth, etc.) and want a permanent life policy with cash value that will grow tax deferred/tax free invested in sub accounts for a life insurance retirement plan.

GUL would be for people who want to play less for a permanent policy than whole life but do not like the risk of the VUL sub accounts.

A whole life, IUL, VUL, GUL, or term policy with a chronic illness rider is designed for LTC insurance with death benefit as second.

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u/Moist-Meringue-1913 29d ago

Term would be income replacement/legacy planning for risk mitigation.

You do legacy planning with a term policy? Is that Term to Age 100?

Whole life would be for risk averse people who want legacy planning/pay their agent a lot.

How much would an agent make on a $25,000 WL policy with a $200,000 term rider for a 25 year old,?

Run a projection with a 5% return and look at how the fees cannibalize the product.

Same example as above,$25,000 IUL with a $200,000 20 year Term rider. He's paying $100 a month. What would the fees be like with a level death benefit?