Archive for March 2nd, 2007

Women and life insurance!! What is Mellody Hobson thinking?

On ABC’s Good Morning America yesterday, they called on “financial contributor” Mellody Hobson to offer her thoughts on life insurance for women. After reviewing the article concerning her presentation, which you can find on http://abcnews.com/GMA, the only real common ground I found with her opinion is that women should seriously look at carrying life insurance for essentially the same reasons men should.

Her analogy of term insurance being “similar to a renter” and permanent insurance, whole life or universal life, being “similar to taking on a mortgage of a home” just shows why she is a “financial contributor” and not an indepedent life insurance agent. The whole idea that permanent policies are still used as a cash value accumulation vehicle is out of date and out of touch.

Her statement that the determination of whether to buy term insurance or permanent insurance is best evaluated by looking “at your current financial expenses” would leave a woman to believe that if she has more disposable income, she should buy more expensive insurance. Certainly no one, man or woman, should stretch their budget to the breaking point buying any type of life insurance. The budget will break. But, just because it can be afforded doesn’t mean that permanent insurance is the appopriate choice.

Mellody Hobson contends that “term insurnace is the way to go for women who have to take mortgages or tuition bills into account”. Term insurance is simply the most appropriate life insurance for the majority of needs, not just mortgages and tuition bills.

Her lean toward permanent insurance as the right product for those that can afford it left me wondering if her presentation was going to be followed by a New York Life commercial. Beware the false experts who run amuck on TV. They wouldn’t make it in the real world if they had to present, justify, place and keep in force what they claim to know all about for the sake of the audience.

Add comment March 2nd, 2007

Return of Premium term insurance. A perfect fit!

Life insurance on a good day is considered by many to be a necessary evil. On a bad day, just a waste of money. Consider the following on a young couple that had just received a quote for term insurance from, of all sources, an AFLAC agent. The wife and husband were quoted a whopping $200+ per month for $200,000 of 30 year term. At her age 25 and his age 31, the odds are well in their favor that they will live longer than that. That is a lot of money. $70,000 or so over 30 years.

An independent life insurance agent could present the same couple with an option of a return of premium term insurance policy. The same couple, for $250,000, would pay $250 a year for her, $19 a month and $350 a year for him, about $30 a month. Now we have already determined they will outlive a 30 year term. With this new direction they will spend about $600 a year, making their total outlay over 30 years come to $18,000.

If that’s not good enough, at that point they get their return of premium. A tax free check for $18,000. So, at the end of 30 years they can look back at the $70,000 they spent or forward to how they are going to spend their $18,000.

I won’t even go into what AFLAC wanted to sell them for children’s life insurance except to say that it was an equally bad deal. Kind of makes me dislike ducks…………….

2 comments March 2nd, 2007


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