Agent vs. Dave

Dear Dave, My life insurance agent recently sold me a universal life policy. When I mentioned your name and asked if term life insurance was better, he laughed and said term insurance is horrible. I'm a little confused right now. What's the truth here? Guy Dear Guy, The truth is that universal life insurance is one of the worst financial products on the planet. You need to find yourself another insurance agent! If a 30-year old buys $125,000 of universal life for 20 years it will cost around $145 a month. That same person can buy $400,000 of 20-year level term insurance for about $15 a month. That's a savings of $130 a month! The term life may not have a savings program attached, but you can do your own saving using good, growth stock mutual funds and get a much better return. Within the first three years you'll generate nothing with universal life, because it all goes to fees and commissions. Plus, studies show that the average net yield on universal life is only two to five percent. That stinks! The 30-year old who bought universal life will turn around 20 years later to find it has a cash value of about $27,000. By the time he or she is 70, the cash value will only be about $66,000. On the other hand, if you buy good, level term insurance and invest the difference you'll see in savings in good, growth stock mutual funds, it will be worth $133,000 at age 50. By the time you're 70, it will be worth about $1.5 million! Which one sounds better now? Dave
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