A view on whole life on bogleheads.org

to an comment on "...throwing money away right now on term life insurance......

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.....Since when is money on insurance "thrown away?" It is in the very nature of insurance that you hope it will never pay off.

I estimate we've spent close to $100,000 on car insurance, and, let me see, we've probably gotten back between $5,000 and $10,000. (Four or five fender-benders). I think that's a terrific deal and I wouldn't want it any other way.

I don't believe we're going to get a single penny back of the thousands and thousands of dollars we've spent on home insurance. I sure hope not.

And the fact that I'm posting this tells you we never got a penny out of my term life insurance.

People understand this for every other kind of insurance, what is it about life insurance that turns brains to mush? Insurance is not an investment, it's insurance.

There's no benefit at all in mixing up the two. Whole life insurance is not greater than the sum of its parts. There's nothing about its being a package deal that enables the insurance company to do anything special.

Our local supermarket runs "Pick Four" promotions--"Pick any four of the items with stickers and pay just $20"--which sounds way better than the simple "10% off" it amounts to. (12% if you annoy everyone by rummaging through all the packages of chicken to find the heaviest one). An insurance company can cook up such a complex brew of insurance and investment components that it would take three MBAs, two Ph.Ds and an actuary in a pear tree to evaluate it, but the bottom line is they do not have access to any special, magic, safe, high-yielding investments that you or I can't easily get for ourselves...."


http://www.bogleheads.org/forum/viewtopic.php?t=52895