Comments on: Why Buy Whole Life Insurance? http://www.twintierfinancial.com/whole-life-insurance/ A Revolution In Financial Planning Tue, 15 May 2012 20:26:02 +0000 hourly 1 By: David C Lewis, RFC http://www.twintierfinancial.com/whole-life-insurance/#comment-1496 David C Lewis, RFC Wed, 11 May 2011 12:12:02 +0000 http://localhost/2010/07/whole-life-insurance.html#comment-1496 The main difference is that a custom or limited pay whole life has a set payment period which isn't affected by the dividend scale. Your dividends may be entirely devoted to building death benefit and cash value. An ordinary whole life, or any whole life, where dividends are being used to pay policy premiums is forcing the policy to try to do two things at once. With the custom or whole life policy, premiums contractually end after a set number of years. With ordinary whole life, they end at age 100 (or age 98 or 99, etc, depending on the policy). To answer your last question, yes, you are essentially prepaying your premiums with a limited pay or custom whole life if you want to think of it that way. You are putting up more money (up front) to pay for the death benefit. Incidentally, the money has a longer time to compound and this is why you always end up with more cash value with these policies--in many cases significantly more cash value. The main difference is that a custom or limited pay whole life has a set payment period which isn't affected by the dividend scale. Your dividends may be entirely devoted to building death benefit and cash value. An ordinary whole life, or any whole life, where dividends are being used to pay policy premiums is forcing the policy to try to do two things at once. With the custom or whole life policy, premiums contractually end after a set number of years. With ordinary whole life, they end at age 100 (or age 98 or 99, etc, depending on the policy).

To answer your last question, yes, you are essentially prepaying your premiums with a limited pay or custom whole life if you want to think of it that way. You are putting up more money (up front) to pay for the death benefit. Incidentally, the money has a longer time to compound and this is why you always end up with more cash value with these policies–in many cases significantly more cash value.

]]> By: Ben http://www.twintierfinancial.com/whole-life-insurance/#comment-1494 Ben Wed, 11 May 2011 11:21:57 +0000 http://localhost/2010/07/whole-life-insurance.html#comment-1494 In response to your question about dividends is that you can choose how your dividends are used. You can be paid in cash apply them toward premium payments or purchase paid up additions. Ideally you would use the dividends to purchase paid up additions on your policy, until the dividends became large enough to support your policy. In the case of buying paid up additions to your policy with dividends its similar to dividend reinvestment with stocks so that you receive compound interest. In response to your question about dividends is that you can choose how your dividends are used. You can be paid in cash apply them toward premium payments or purchase paid up additions. Ideally you would use the dividends to purchase paid up additions on your policy, until the dividends became large enough to support your policy. In the case of buying paid up additions to your policy with dividends its similar to dividend reinvestment with stocks so that you receive compound interest.

]]> By: No Name http://www.twintierfinancial.com/whole-life-insurance/#comment-67 No Name Thu, 29 Jul 2010 19:53:05 +0000 http://localhost/2010/07/whole-life-insurance.html#comment-67 Thanks for your article. Could you write a bit more about a standard WL policy vs a Custom WL Policy? I realize the number of payments is set with the Custom WL, but what are the other differences? I'm surprised in your article that it says that with the Custom WL, the dividends are not used to pay the premium. So where does the money that would have paid the premium from a standard WL come from? Are you in essence pre-paying the premiums that you would have paid until you were 100? Thanks! Thanks for your article.

Could you write a bit more about a standard WL policy vs a Custom WL Policy?

I realize the number of payments is set with the Custom WL, but what are the other differences? I'm surprised in your article that it says that with the Custom WL, the dividends are not used to pay the premium.

So where does the money that would have paid the premium from a standard WL come from? Are you in essence pre-paying the premiums that you would have paid until you were 100?

Thanks!

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