Life Insurance: Term vs. Whole Life

Term vs. Whole Life?

This is a no brainer... TERM! Now, I can guarantee if you have ever asked an insurance agent with a company other than Primerica then you have probably be told the opposite. Why do I single out Primerica from my attack on whole life? Because, Primerica doesn't offer anything other than term!

Now for an explaination on my opinion. Term is cheaper for more coverage (much, much cheaper). Why is this, well term life will cover you for X years and pay out X amount. That being said, here's an example... if you buy a $300,000 policy for 35 years when you are 30 years old then, you (or your beneficiary to be more exact) will be paid $300,000 if you die before the age of 65. If you outlive the policy, then there is no cash value. That probably doesn't sound very good if you don't die. But, hey what is insurance for? It is an insurance if something unexpected happens.

And what about whole life? Or, other names could include Universal Life, Term to 100, etc.

Here is an example of a whole life policy: $100,000 coverage, small cash value (very small... say a few thousand saved within a decade or so) if you decide to withdraw it. How does this work? Well, when you die (at any age) your beneficiary receives $100,000. Now this may sound good on the surface... death benefit paid at any age, small cash value! But, you forgot to ask one question! How much is the premium? Well, the premium for these two examples would be drastically different! The whole life policy could cost upwards of 10 times as much as the term policy for 1/3 the coverage!

FAQ:

Q: So, if I buy term not whole life, then what happens if I outlive the policy?
A: Buy term and invest the rest. What does this mean? Buy term insurance and invest the difference between what you pay for term and what you would have paid for whole life. This strategy, if paired with your RRSP or 401K will ensure that by the time your 35 year term insurance expires you will have more than enough in your RRSP to ensure all postmortem obligations are covered. In essence... you will be self insured! That's a pretty good place to be!

Q: If term is so much better, why does my insurance agent suggest whole life?
A: His commission! I'll tell you right now, it isn't with your bet interest in mind. He stands to make 10 to 100 times the commission on a whole life sale as he would on a term life sale. Find a new agent! If you live in BC call me, if you need a referral outside BC I can recommend someone.

Cheers,
R

PS. Here's another opinion on this subject from someone you probably know... Suze Orman (Bestselling auther and TV personality). Take a quick look at this 3min video clip:

Book Review: The Millionaire Maker by Loral Lengemeier

The Millionaire Maker by Loral Lengemeier - 2.0 STARS
Personal Finance, Entrepreneurship, Investing


Basically, what Ms.Lengemeier is doing with this book is providing some basics (very elementary basics) on how to become financially independent.

I would place this book in the "business self help" or "business motivational" categories. I know they don't exist in traditional book stores, but hey that's where this book belongs. Right there beside Robert Kiyosaki, Anthony Robbins and Donald Trump.

Now for a brief review of this product. It isn't bad, I read it from cover to cover and even tried to do some of the activities outlined throughout the book. This book focuses on the merits of building a "cash-machine" (which Loral writes about in a later book in greater detail), and the importance of employing experts to assist along the way. She truly believes that no-one becomes a millionaire "alone", in otherwords she does not believe in the so called "self made millionaire". Loral's focus with this book is to show an overview of her successful coaching program: Live Out Loud. Her strategies include: starting a cash-machine (even if that requires qutting your job), investing in rental real estate, investing profits in more cash producing assets and creating a maze of tax-reducing business entities.

I think her system is sound and the formula would work. My main issue that I had with her throughout this book was her constant pitching of her own coaching programs and other pricey services offered by Live Out Loud.

All this being said, if you follow her advice religiously, and hopefully have a small retirement account to jumpstart your efforts... her system can make you financially independent. I did give this 2.0 stars because I felt that the pitching and the overly motivational and less technical nature of it was less than useful and a little insulting to the reader.

I could be completey crazy, because 93 people have given this an average score of 4.0 stars at Amazon.com (at the time of this writing). Check it out:
The Millionaire Maker: Act, Think, and Make Money the Way the Wealthy Do

If you are looking for a good beginner text on investing, business and entrepreneurship I'd still stick with Rich Dad, Poor Dad by Robert Kiyosaki over this one. You can get Rich Dad, Poor Dad here:
Rich Dad, Poor Dad: What the Rich Teach Their Kids About Money--That the Poor and Middle Class Do Not!

Thanks for reading and please if you don't agree with my review... post a comment! Gotta love free speech!

Cheers,
R

Book Review: The Coming Economic Collapse by Stephen Leeb

The Coming Economic Collapse by Stephen Leeb - 4.0 STARS
Economics, Investing


Stephen Leeb has some VERY thought provoking and insightful points to make on the state of the economy and especially the price of oil.

I have been recommending this book since it came out almost 2 years ago. This is a fantastic book and a great quick read if you enjoy reading about the financial markets, oil, commodities, politics or general business.

The interesting thing is how much of what Stephen has to say has already come true... Also, it is interesting to see how accurate he will turn out to be, considering he is predicting oil at $200+ per barrel.

Get it here:
The Coming Economic Collapse: How You Can Thrive When Oil Costs $200 a Barrel

What do you think? Is oil really going to go through the roof? Or, is it all bullshit and there is more than enough oil to last until... the day we blow ourselves up... Or, the oceans rise and all of us drown except those sky bunnies in Colorado and Switzerland?

R

Book Review: Rich Dad, Poor Dad by Robert Kiyosaki

Book Review: Rich Dad, Poor Dad by Robert Kiyosaki - 3.0 STARS
Personal Finance, Investing, Entrepreneurship


Well, where do I start?

This book is on so many people's "must read", "top 25", etc., etc. lists that I'm sure all of you have heard at least one friend, family member, personal finance guru, TV personality or some other expert tell you that you "MUST" read this book. Well, what am I going to say? Well... I can't say that I haven't recommended that people read this, and I definitely can't say that is is without merit. What I can say is... if you have read many Personal Finance, Investing, Success, Self Help, Entrepreneurship and Business books then I'd steer clear of this one. This isn't in anyway implying that it is bad... I'm just saying that it is more motivational than it is practical or technical.

On the other hand, just to make myself as hypocritical as possible. This book is a MUST READ! Why do I move on to say this? Well, if you are just getting into reading Personal Finance books then this is a great place to start. It will broaden your thinking, provide motivation and get you excited about further expanding your knowledge on the subject. As you can see, I gave this book 3.5 stars... not spectacular, but by no means poor either. This book is still to this day one of the books I would suggest as a 1st or 2nd read for anyone just beginning to read Personal Finance books.

Get your copy at your local library or here at Amazon.com
Rich Dad, Poor Dad: What the Rich Teach Their Kids About Money--That the Poor and Middle Class Do Not!

Happy Reading!
R

Book Review: The Wealthy Barber by David Chilton

The Wealthy Barber by David Chilton - 4.0 STARS
Personal Finance


I finally read this book a few years back. For me I can't say that I learned too much new information, but in no way does that discount the validity of it.

I personally believe that this book is a MUST READ for anyone interested in the Personal Finance or Success genres. I think that this should be one of the first 3-5 books one reads on personal finance and investing.

I am so tempted to outline a bit of David's advice here, but it really wouldn't be fair to you if you decide to read it. But, since I really do enjoy ruining your fun and being a bit of a spoiler... it has to do with saving and investing! I know... you already knew that. But, believe me, whether you have read 100 Personal Finance books (though, you would probably have already read this one) or this is your very first one... I can guarantee that you will feel it was worth your time.

This book isn't long, and it isn't technical, but it really is worth a few hours of your time! If you haven't read this... I truly recommend it!

Let me know what you think!

Get your copy here at Amazon.com
The Wealthy Barber, Updated 3rd Edition: Everyone's Commonsense Guide to Becoming Financially Independent

Enjoy!
R