I'm a 34 year old physician who is looking at life insurance policies now. I've always read that whole life is expensive and doesn't make sense for someone who is financially savvy, so I always assumed I'd just buy 30 year term and forget it.
However, now that I'm breaking down the expenses it doesn't really make 100% sense to me.
For instance, if I buy term I'm planning on buying $1M for 30 years and $1M for 20 years. If I keep my disability insurance company (for simplicity and because the rates are nearly the same), that's $125 per month for 20 years and $47 per month for 10 years. Let's just assume I have FI at 20 years and cancel it, that's $30k in expenses over the life of the plan.
With whole life, I'm looking at a monthly premium of $1146. That's 13k in expenses in the first year. Basically the first year covers the expenses for the duration of the plan. After the first year, as you all know, the premium is stored in cash value and accrues a small interest payment throughout the life of the plan (low percent - around 3 to 4%). The cash value can then be withdrawn tax free in retirement.
Am I overthinking this? Why can't I get it through my head that whole life doesn't make financial sense? Thanks.
Submitted July 29, 2021 at 05:40AM by Occams_ElectricRazor https://ift.tt/3C2H6zZ
