Originally Posted by
Xtrema
Term or Whole is usually the decision.
Figure out what liability you are covering for (mortgage? spouse? spouse and kids?)
Term:
It's just like car insurance, it's throw away money but it's cheap. $1M policy will usually be in the $100/mth range for someone in the 20s/30s that is healthy. But premium will increase as you age.
Whole:
It's expensive. Usually buys you 1/10th of the coverage for the same price as Term. But the premium is usually fixed as you age and there is a redeem value to you want to stop. But the redeem value will always be less than what you put in in the 1st 20 years of the policy. And your policy is valid even if you stop paying once the commitment is made. Like Max said, it's almost like forced saving, except you will never see a dime, it's your dependents that get to benefit from it.
The problem with Whole life is that you may be under insured later in life. I started a $100K policy in the 90s and back then you can buy a house for that. 20 years and $20K later, $100K is barely a down payment for the same house.
The problem with Term is that if you have liability late in life, ie having kids in your 30s and 40s, paying premium well into your 60s will be very expensive. But you can also drop it as your liability lessens (house paid off, won lottery etc).
To me, if you have asset that will cover your liability, you don't need insurance. It's basically for people with young kids and mortgage payments that in case one parent passed, whoever left behind is sitting on a pile of cash to draw on until kids are grown and start generating income.