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Life Insurance for Aviators?

exNavyOffRec

Well-Known Member
Permenant and whole life insurance policies are essentially high expense investment options wrapped in insurance paperwork. Life insurance is best done as term and invest the rest of your money elsewhere, such as in index funds with Vanguard.

Depends on the company and the type of whole life insurance, with mine I can change what funds I invest in, I have a minimum contribution each month but I can invest more, essentially it is just like my mutual funds but if I die there is a guaranteed payout.
 

Schnugg

It's gettin' a bit dramatic 'round here...
None
Super Moderator
Contributor
Try USAA. I use them. If I kick off, my wife and kids are filthy rich.

Hey wait a second...
 

Tycho_Brohe

Well-Known Member
pilot
Contributor
Permenant and whole life insurance policies are essentially high expense investment options wrapped in insurance paperwork.
Good point, I hadn't thought of it like that. It'd probably be better to buy term and put the difference in a Roth IRA/Roth TSP; it'd be more liquid, and you can invest it in almost anything.
Of course, if one were in the enviable position to be able to max out both the IRA and the TSP and still have money left over, then a permanent life insurance policy could offer further tax deferral possibilities. But I would imagine most people probably don't have that much disposable income until they're getting close to retirement.

Also, some food for thought: the Universal Life policy from USAA gives you a $150,000 guaranteed benefit starting at $95 a month. As the cash value grows:
the first 10 grand grows at 4.5%,
the next 40 grand at 4.75%,
the next 50 grand at 5%,
and anything more earns 5.1%.​
So essentially, if you don't think you can do better investing in the stock market than an average return of about 5% annually, this plan might be worth considering.
Given a 5% return and $95 payments made monthly, you'd reach $150,000 in about 40 years, so this policy is almost like a bond that matures in 40 years (except the payments and lump sum are reversed). Which means that buying a policy like this when rates are now at historic lows would probably be ill-advised, to say the least.
[/dissertation]

Sorry, I'm a business minor and my dad's a CFP, I could talk about this stuff all day. TL;DR, buy term and invest the rest.
 
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