Fara Insurance - Do I need both term life insurance and universal life insurance?

Do I need both term life insurance and universal life insurance?

My Statefarm rep is suggesting I transfer my 5 year term insurance (which is over at the end of July) to two different life insurances - a 20 year term insurance and a universal life insurance policy - does anyone else have both? I don't see why I can't just get the universal life insurance, since I'll get money back from it later and you get nothing from the term life insurance. I don't necessarily want the universal life insurance because I may be able to get money back on it later - I just want what I'll need in case something happens to my husband or myself while our children are under 18. This may sound like a dumb question, how do I find an independent insurance agent?

Public Comments

I'm not sure what the phrase Universal Life means. I had always thought there was either Term or Whole Life policies. I have also (back when I was looking into this closer, for myself) discovered that you don't normally get a very good return on investment with Whole Life policies. You would be better-advised to invest the difference in Premiums in some sort of money-market or other REAL investment. One advantage of the Whole Life policy is that you get used to paying the higher premiums, and are not tempted to stop investing the difference. Get some performance data from your State Farm guy on what the returns have been on the investments related to that policy and compare them to typical investment programs.
Check with your Statefarm rep.....Yearly premiums for Universal life may be higher then for term. Also, face value of the policy (amount beneficiary gets when you die) may decrease over the life of the policy. As a general rule term insurance has lower premiums then Universal life and you get a highr face value then a universal policy. Universal policies are "savings accounts"...you may get a better retun for your money through good long term investments.
There's nothing wrong with having both types. Term is less expensive so you can get more coverage when you need it the most. (when you have kids and a mortage). When you get older you may want a smaller permanent policy because in 20 years your health may not allow you to qualify for an additional term. Then again you may not need a policy in twenty years. Nobody here can answer that for you. Don't get the UL just because you get money back; only get it if you want the coverage as you get older. The return on permanent life is not a good investment.
Stick with a term policy to cover you incase of death. Universal is just a poor investment. Put that money into a mutual fund instead.
Not me. I'm a "straight term" kinda gal. It's teh cheapest, best buy. For the Universal, you don't get ALL the money you pay into it . . . it costs about 10X a much as term. Compare the costs. Compare the benefits. And understand that the "growth" is NOT guaranteed, and you can do better on your own.
I like both, but it really depends on your needs. Really look into it, and talk to your agent about what your needs are. Like some already said term will cover you for cheaper and a lot more coverage, but will go up in price with age. Some people like universal as a form of retirement as well. My suggestions is make an appt with your agent make him/her go over everything and see what works best for your needs!
If you can afford the premium go with all Universal, Like you said you'll build cash for later. Combining Term and Universal will keep your premium lower than just the Universal policy. The Universal policy is more flexible than regular permanent insurance, in that you can adjust the death benefit and premium over time if you need to, but it doesn't build cash as fast as regular whole life.
We don't really know your goals, so it's hard to give advice. If you have a permanent need and a short term need, then this strategy makes sense. Who told you you get the money back later? Was it phrased more like you 'could' get all your money back? If you are considering UL because of some "money-back guarantee" and the illustration you have does not show the cash surrender value equal to the amount you paid in on the guaranteed side, I would run. Life insurance should be bought and sold primarily for death benefit. All this other stuff is just extra if it happens. Also State Farm agents are 100% captive and cannot write business outside of their company. This doesn't mean that State Farm is the best deal for you, but with all the competition out there, the odds are in your favor, not your State Farm rep's. Talk to an independent agent or two. I'm not saying your agent isn't personally trustworthy. He may be a great guy who you go hunting with or whatever, but check his statements against what you have in black and white. Very often, captive agencies insulate their agents from what is really going on which results in a large knowledge gap. If he or she is really good, they won't mind a little friendly competition.
I do not believe so. Term should be enough for your needs and the difference between term premiums and Universal premium should be invested in mutual funds. My reasons: Universal life insurance is split 2 ways, 1) cost of insurance- based on your current age. Initially, lower premiums but it goes up each year because you get older. This is annually renewable term insurance, the highest costing term. 2) Into an account that earns interest. However, there are some rules that apply: A) No money is in cash acct. for the first couple of years; B) When it does begin earning interest, it will be in the range of 1-4%; C) You can take a loan out, BUT you will have to pay the company 6-8% interest when paying the loan back; D) You can wait up to 6 months before getting your money; and E) Your beneficiaries will choose EITHER face amount OR cash amount, unless you pay more for the option that they get both. As your cost of insurance goes up, more of your money is being directed toward insurance and away from savings. About twenty years later, cost of insurance will exceed premiums you are paying. The company begins to take money from cash to pay the premiums. This continues until there is no cash left and no insurance at this point. And the cost of reinsuring is drastically higher. I suggest buying term and investing the difference. Why? It is level term I suggest- premiums stay the same for length of term. You can get the most coverage for the least amount of money. Actually, I can customize programs just for your needs. And, I can take the difference between term and UL and invest that for your retirement. We would use mutual funds that have earned at 10% for the last several decades. But, I would need to complete a financial survey. In the course of which, we will find exactly how much you need and for how long. We will find out what you want paid for and what you don't. Your spouse would be covered on this ONE policy- eliminating policy fees for each one you have and your children, both present and future, would be covered for one premium on the same policy. One policy for an entire family, covering what YOU say you want covered and for how long. All based from a confidential financial survey, put together to see where you are now, where you want to be for retirement and HOW to get there.
If you want coverage JUST for a certain time period, then stick with term. It is cheaper, for now. If you want coverage for your entire life, then go with the UL. It may seem more expensive now, but that is beacause it averages the cost based on your life expectancy. When the term insurance expires and you want to continue with coverage, expect to pay a lot more for premiums and go through all the medical underwriting again. I would also suggest finding an independant agent. Most State Farm reps can only sell what corporate tells them they can sell. An independant can find the best rates from multiple companies.
As others have mentioned, both permanent and term insurance have their place. If you're going tp get a permanant policy, I'd suggest you also look into an equity indexed universal life (EIUL) or a variable universal life (VUL) rather than a simply Universal life (UL). Both the EIUL and VUL have much higher potential rates of return than do the simply UL. Most EIUL's that I've seen are averaging about 8% over time while VUL's are averaging 12%. The term insurance could be a good idea as some have said to add additional coverage while the kids are in the home, or you could also add additional term within the VUL itself. Addendum: Hope and Opportunity is talking about buy term & invest the difference. He/She is right that WL is a waste, however, he/she is still living in the past and doesn't realize that a VUL does EXACTLY what he/she suggests in the buy term invest the difference AND also has tax advantages that the simple buy term invest the difference (say in a mutual fund) doesn't.
Let me try and tell you that you will NOT get both. What that agent is trying to do is this he will sell you a 20 yr term lets say, and after the 20 yrs are up it will automatically convert to a whole life. and get rid of the universal, it is a terrible policy. buy term only...keep the term cancel the universal, and put the money in a higher rate of return. remember the rule of 72...72 divided by whatever interest rate you get will tell you when money will double. IE., 72divided by 10 = 7.2 yrs. Stay away from ca shh value, read the consumer reports book on "how to buy life insurance" Listen to what Mark said. I know that he is 100% right. So dont listen to any cash value agents if you want to have some money in later years. period.
Go for term. Universal life is a rip off. You can take the money they tell you you need to pay for the universal premiums and invest it in a mutual fund and after 10 years make a whole lot more than the universal policy will be worth. Term insurance is cheap and you can get a large amount for a small sum if you are relatively healthy. Good Luck
not really
Universal Life combines Insurance with investment but it is very expensive (but pays your agent well). Term is just plain, cheap insurance and usually pays the agent less and often just at the time of sale. Most agents don't have incentive to sell you term. The purpose of insurance is to pay for expenses in case of your death. Your funeral, medical expenses and to pay the rent and food etc .You seem to have the right idea that you want to cover until your children reach "adulthood". Many people also want to provide for their children's college education. Try to determine the amount of death benefit you need e.g. a rule of thumb might be 5 times your yearly income. You can get hundred's of thousands of coverage for a few hundred dollars per year. You want coverage - so don't be distracted with investments etc. Term seems to be your best option. One problem with term is that it expires and when it does you will pay a much higher premium (because you are older) for another term policy - if you are still insurable (i.e. are in decent health). So, make sure the length of the term coverage is enough for your needs. There is guaranteed renewable term insurance where the premium goes up every 5 year renewal period until a certain age. You might consider that. You can get so much more coverage with term for much less than you would pay for Univeral Life. Take some of the money you saved by getting term and save/invest it yourself - have it automatically taken from your paycheck or bank account . Since life expectancy has been increasing term insurance rates have been coming down. You want to buy from a financially sound company since you maybe relying on them paying your beneficiaries 10 or more years from now. I'm sure if you do an internet search on term insurance you will get a lot of sources. If not, the major insurance companies Prudential, MetLife, AXA, etc should be easy to find. If you go with another company AM Best rates the soundness of insurance companies you can check on the company you pick on line or at the library. Good Luck
just get one policy and invest difference on your own.you agent is tring to get more commision
No, you don't need both. The Universal Life Insurance policy will gain divends over time. I am an individual insurance agent for Indiana and have additional connections. Let me know if I can help.