I’m a single, 24 yr old male with no dependents. Was presented with a whole life policy with divdends and wanted to know if this would give me any unique advantages instead of investing in capital markets or simply saving the capital that would be spent on this policy.
I’ve never considered insurance before. Didn’t think it would be beneficial at this “stage” in life. I could just save the capital and pass it on to parents/siblings in the event of my demise. Any advice on this?
If I were single with no dependents, I would only buy enough life insurance to cover final expenses.
Insurance programs almost always have negative NPV. People buy life insurance when they have dependents who would suffer from the loss of the person’s income. If this is not the case for you, then it’s probably not worth it.
No, whole life isn’t a good deal unless you’ve got a ton of cash and you’re looking for a tax shelter.
Once you buy a house and have a family you have to get term, and disability is always good to have. Those are really the only two you need.
The other one I’d throw out as something worth looking into is Long-Term Care insurance. It’s something most of us will probably end up buying at some point and it’s way cheaper to do so in your early 20’s than your early 40’s.
My opinion (From someone who did financial sales and was licensed to sell insurance among other products).
Buy insurance if you want/need insurance. Don’t buy insurance as an investment. If you want to invest, invest.
As a single, 24 year old with no dependents, you really don’t have a huge need for life insurance. Sure, you can lock in a cheaper rate now becasue you are young, but the only beneficial policy would be whole life which is expensive and you might not have the discretionary income to purchase a large enough policy to make it worth while when you die. (Meaning, you can buy $250k worth of insurance now, but saying you live for another 50 years, assuming 2% inflation, that 250k in 50 years is only equivalent to ~92k in today’s dollars… to “set your dependants up” with a nice piece of coin you will need a fairly large policy… which could be very expensive). Term insurace at this point is basically useless to you, unless you plan on dying in less than 30 years.
If you had a mortgage, spouse, or dependants, then yes you should have insurance. Also, if you are worth a large sum of money and want to avoid estate taxes, then you can use insurance to your advantage… other than that, I’d say pass right now and re-evaluate your situation when you have a major life event (have a kid/get married/buy a house).
But, this is just my opinion.
Bah, it never fails me to see filthy insurance salesmen pushing sht down people’s throats. I was at the bar awhile back and this young buck engineer and I struck up a conversation. He told me that a financial advisor (from a big crappy company) told him to pay $12k/year in premiums for a whole life insurance policy. He was 24 with no kids or mortgage.
I asked him, “Do you know the purporse of life insurance?” He was like, “Yeah, it’ll settle up my debts in the event I die.” I then said, “If you’re like me, do you really give a rip if your Visa bill or student loan debt get squared away in the event you die!?” He was like, “Hmm, not really. Fck’em!” I gave him my card and said let me know if you have any more questions. He then bought me a drink and that was that.
Listen to the brotha here; there is NO reason for you to get life insurance. None. Sure they will spin it and say you’re more insurable, you’ll get a return on your investment, and so forth. Don’t buy the snake oil. Insurance is a RISK MANAGEMENT product, not a CAPITAL APPRECIATION product. Don’t get it twisted. Whole life is very expensive; get term and invest the difference if you really want insurance.
Insurance is a binding CONTRACT riddled with fees, clauses, and legality that even the lawyers who wrote it don’t understand. If you miss a payment due to a rough patch, job loss, etc, you lose out on all of those premiums you paid and you forfeit the cash value and get a surrender value. You will be married to the contracted life insurance policy forever if you ever want to see the benefit.
Do not get life insurance, you don’t need it! Now Paypal me $16 so I can get a shot of Patron later tonight.
Well OP, it seems you were contacted by a “financial advisor” AKA: salesman trying to ram down life insurance/equity products to everyone and their pet goldfish.
NO, you don’t need it. When you settle down, have a wife and kids, have a mortgage, have college payments to make, and you suddenly have a lot more to lose with people depending on you. THEN you have a reason to.
Until then, tell that financial advisor to find the nearest hacksaw
I calculated the IRR on a policy statement that I saw. It was awful.
I’m going to differ from the crowd and say that it may be a good idea to buy life insurance. Because, what if you die?
I’ll agree with the posters above who say no, especially without dependents.
Why don’t you answer that one for us, Brain?
Is it cheaper at 24 vs 50? But I’ve never considered doing life insurance – all that cash surrendor value tax stuff I don’t care to learn.
^ Yes. It’s not hard brah, you pay a premium, and in the event you die, your beneficiary gets a payout. When you’re older, you’re more likely to die, thus, a higher premium is needed.
The cash value is a common benefit of Whole Life where the policy holder can dip into their insurance proceeds after a certain number of years. I don’t a whole lot more about this, but it’s a shtty deal all around.
The surrender value is what you’d get if you stop paying the policy. Say the cash value was $10k and 3 years out until the policy holder can dip in. The surrender value would probably be $2k that you’d get after paying in over $10k in premuims. Nice return, huh.
Feel me my nigga, no homo.
Appreciate all of the feedback guys. These were my sentiments towards life insurance but just wanted some confirmation from those with more experience. I love AF, its like one huge family lol. ilu guys 
More like a dysfunctional familia.
I got this same sh*t on Tuesday. Don’t know how this guy from got a hold of me, but I figured I’d give him 10 minutes if he was meeting me outside the office. Tried to get me to buy whole life and disability insurance.
Let me guess, it was one of your friends that got a job working as a salesmen for northwestern mutual or AXA or some other place.
Only buy insurance if you have dependents that you want to take care of in the even of an untimely death.
Always buy term insurance. It is cheap and you wont need it after a period of time anyway.By the time your term policy is up, your kids will be out of college and out of the house.
If it is cheaper at 24 in a PV sense and you are reasonably confident you will have dependents at some point, why wouldn’t you buy it while you are young?
Look, it assured that everyone is going to die with 100% certainty. I find it ridiculous that most places require drivers to have auto insurance but do not require everyone to have life insurance, even though a life is more valuable than a car.
^ Once again, insurance is a RISK MANAGEMENT product, not a CAPITAL APPRECIATION product. The premium cost will be marginally different from 24 to 30. When you start looking into $1mm policies, the premium can vary a ton along with the contingencies of health exams. I was quoted $80/month for a whole life policy which had a payout of $100k and did not require a medical exam during open benefit enrollment at work.
Given I don’t have any dependents, I said no. The policy is not going anywhere and I can sign on later should kids start popping out.
As others have said above, the NPV of all life insurance products are negative. All of them!