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What type of life insurance do most wealthy people prefer ? Whole life, Variable Universal Life, or Term?

Term Life Insurance & Whole Life Insurance Discussion

What type of life insurance do most wealthy people prefer ? Whole life, Variable Universal Life, or Term?

Postby birke26 » Sun Apr 10, 2011 9:50 am

We don't carry life insurance. The intent of insurance is to support your family when you die. Since assets are more then sufficient to provide a great standard of living, insurance is a waste.
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What type of life insurance do most wealthy people prefer ? Whole life, Variable Universal Life, or Term?

Postby keri » Sun Apr 10, 2011 9:58 am

I love how she says "we." "Wealthy" people carry life insurance and they carry MORE life insurance because their needs are greater. Most truly wealthy people have estate tax problems which are more cheaply and efficiently paid with life insurance. To each his own still applies, but they'll more than like have a combination of the above.

Retirees who don't have estate tax issues and have sufficiently planned for retirement are among the few that really don't have much of a need at all.
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What type of life insurance do most wealthy people prefer ? Whole life, Variable Universal Life, or Term?

Postby matherson » Sun Apr 10, 2011 10:04 am

I love how she says "we." "Wealthy" people carry life insurance and they carry MORE life insurance because their needs are greater. Most truly wealthy people have estate tax problems which are more cheaply and efficiently paid with life insurance. To each his own still applies, but they'll more than like have a combination of the above.

Retirees who don't have estate tax issues and have sufficiently planned for retirement are among the few that really don't have much of a need at all.
It depends entirely upon their situation and what job the policy will do. If it is to leave a legacy to a non-profit organization or for tax purposes they'll get a permanent policy. If they only have a job for the policy for a set time period they'll get term. The examples of any of the policies are endless.
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What type of life insurance do most wealthy people prefer ? Whole life, Variable Universal Life, or Term?

Postby platt » Sun Apr 10, 2011 10:07 am

Majority of people don't have a clue how life insurance works, whether they are poor or wealthy. They are sold on it. Agents prefer to sell whole life or universal life than term insurance because of the big commissions they can earn from it. Commissions are base on annual premiums that the client pays, so that means that whole life or universal life insurance have very high premiums compare to term insurance. You should be very careful when someone recommends whole life or universal life insurance. If you do get it, read your policy and you will see how crappy the product is.

Most wealthy people I know don't see the need for life insurance. Some agents will argue that life insurance is great way to pay estate taxes. However, they don't know that there are other ways to handle estate taxes. An estate planner have full knowledge on this, not life insurance agents.
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What type of life insurance do most wealthy people prefer ? Whole life, Variable Universal Life, or Term?

Postby chizkia57 » Sun Apr 10, 2011 10:15 am

The truth may be out there, but "The truth is out there" is just "out there" on this one. If "most" wealthy people he knows don't see a need for life insurance, he either doesn't know many wealthy people, or the ones he knows became wealthy in a way that didn't involve using their brains. He does make one good point, however, by differentiating between estate planners and insurance agents. As a long-time financial and estate planner, I recognize that there are many ways to approach these issues, and every scenario is unique enough that there are no hard-and-fast rules. In most cases, there is no instrument more efficient than life insurance for dealing with estate taxes or for transferring wealth; however, there are always more variables to consider. These are among the reasons that insurance agents are not typically qualified to sell life insurance.

"Truth out there" states that a "majority of people don't have a clue how life insurance works." He has made it clear that he is among that majority. He seems to imply that permanent insurance is expensive and that the price tag is the only reason for its existence. Anyone who truly understands life insurance knows that there is no such thing as "expensive" life insurance. Actuarially, all types of life insurance are priced identically. In other words, premiums only vary based on actuarial factors (age, health, intended duration of the policy). The only "crappy" life insurance products are issued by companies that happen to produce a poor rendition of an otherwise good insurance product. In other words, company A may issue a poor quality whole life, but most whole life products are wonderful. You should be extremely careful when dealing with an advisor or agent who says that any type of life insurance is "better" than any other type.

Bottom line: There is no good, bad, cheap, or expensive TYPE of life insurance. Anyone who says otherwise lacks a basic understanding of life insurance, or they're lying to support an agenda. The best product is the one that most effectively and efficiently addresses the objective, and that's never a particular product all the time.
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