# Whole Life Isn't An "Investment"

Kelly and her husband have whole life insurance. It's really expensive, and Kelly wants to get rid of it, but what should she be paying for term insurance?

QUESTION: Kelly in New York and her husband have whole life insurance. It's really expensive, and Kelly wants to get rid of it, but what should she be paying for term insurance? Dave gives her some calculations to compare term life with whole life insurance.

ANSWER: You will not find Northwestern's life insurance of any kind to be cheap. Their term insurance is twice as expensive as anyone else's. You're going to find your Northwestern agent to be throwing a fit. They're a classic whole life agent, and they're going to tell you you'll have taxes and all of this stuff, and you're not going to have any taxes. A five-year-old whole life policy has not made a profit. If there's no profit, there are no taxes. Your basis for tax purposes is the total of everything you've paid into this policy.

Five hundred dollars a month is \$6,000 a year—for five years. If I take \$345 a month for four years, I get \$16,560, plus you put over \$500 in for a year, which is another \$6,000. So you've put \$22,000 in. You're going to get \$6,000 out. That's a great investment you've got, Kelly. That's what's known as a loss, so you will not have any taxes.

You need to get some term life insurance and cancel this crap as fast as you possibly can.