Term costing more than whole life?

[Gin1984]

Seriously, WTF?
My employer offers both and at age 30 I pay .77 per annual salary bimonthly for term and .63 for whole life.  Anyone have any idea what the catch is?

[Gone Fishing]

Cents?

[dsmexpat]

Presumably the payout is different. Whole life is normally vastly lower.

[Gin1984]

Cents?

Yes, cents. 

[Gin1984]

Presumably the payout is different. Whole life is normally vastly lower.

No, whole life is normally much more expensive than term which is why I am confused.

[Jags4186]

Presumably the payout is different. Whole life is normally vastly lower.

No, whole life is normally much more expensive than term which is why I am confused.

The payout off the Whole Life policy is normally much lower than term. For example you might be paying $0.66 for $10,000 of whole life coverage and $0.77 for $100,000 of term coverage.

[Gin1984]

Presumably the payout is different. Whole life is normally vastly lower.

No, whole life is normally much more expensive than term which is why I am confused.

The payout off the Whole Life policy is normally much lower than term. For example you might be paying $0.66 for $10,000 of whole life coverage and $0.77 for $100,000 of term coverage.

As I stated in the OP, these are the costs for the same payout amount, one year's gross salary. 

[JoJo]

maybe they're subsidizing one but not the other?

[Gone Fishing]

The difference is negligible, just a few pennies that no one bothered to even out.  Maybe the one of the CPA's can say for sure, but I think there is some tax advantage to having the employee pay some portion of the premiums out of pocket, otherwise they wouldn't bother to charge you at all. 

Given the prices, I am assuming you picked the whole life. Just curious, how much cash value have you built up over what period?

[Gin1984]

The difference is negligible, just a few pennies that no one bothered to even out.  Maybe the one of the CPA's can say for sure, but I think there is some tax advantage to having the employee pay some portion of the premiums out of pocket, otherwise they wouldn't bother to charge you at all. 

Given the prices, I am assuming you picked the whole life. Just curious, how much cash value have you built up over what period?

I started Monday so I have not picked anything yet.  Still in planning stages.

[immocardo]

Seriously, WTF?
My employer offers both and at age 30 I pay .77 per annual salary bimonthly for term and .63 for whole life.  Anyone have any idea what the catch is?

Without seeing any of the math behind it, I'm assuming it is because of the up front costs.  There are costs associated with drafting a life insurance policy.  At your age the mortality rate will be quite low and won't contribute very much to the premium that you pay. 

Due to this a larger portion of the cost is tied up in the up front costs.  A term policy has a shorter period to recoup those costs whereas a full life policy expects to regain those costs over a longer period.

[Gin1984]

Seriously, WTF?
My employer offers both and at age 30 I pay .77 per annual salary bimonthly for term and .63 for whole life.  Anyone have any idea what the catch is?

Without seeing any of the math behind it, I'm assuming it is because of the up front costs.  There are costs associated with drafting a life insurance policy.  At your age the mortality rate will be quite low and won't contribute very much to the premium that you pay. 

Due to this a larger portion of the cost is tied up in the up front costs.  A term policy has a shorter period to recoup those costs whereas a full life policy expects to regain those costs over a longer period.

Given that term policies when sold directly cost less than whole, that makes no sense.

[lackofstache]

No idea. This doesn't seem to add up. If death benefit is actually the same & permanent is cheaper than term I'd advise you to go with the Whole, though.

[Eric]

So what'd your employer say about it?

[aj_yooper]

If you changed jobs, will you be able to continue the policies and what would the costs then be.  If you are interested in life insurance, you might also explore term life options paid directly by you. 

It is baffling that whole life would be cheaper.

[Gin1984]

So what'd your employer say about it?

Our HR people did not seem to understand that whole is normally more expensive so I am not sure they are of use.

[Gin1984]

If you changed jobs, will you be able to continue the policies and what would the costs then be.  If you are interested in life insurance, you might also explore term life options paid directly by you. 

It is baffling that whole life would be cheaper.

They saw I can yet, I cannot for the life of me FIND the cost then or how much I will accumulate in the cash account.  Thanks for reminding me to find that out.  :)