Life Insurance??

   / Life Insurance?? #21  
IMHO, Don't mix insurance and investments. Buy term insurance for the period when you need it, then quit renewing it when your kids are grown up and you have retired. Term insurance is very competitively priced and can be purchased on line.

Invest for retirement in separate accounts with a low cost provider like Vanguard or Fidelity. When you "invest" with an insurance company, they win with smoke and mirror distortions that muddy up the waters to the point where you can never really figure out your returns or the cost of the service that you think you are buying.
 
   / Life Insurance?? #22  
Ever see those life insurance buildings? Wonder how they got all that money? Wonder how an agent (k0ua's wife for instance) makes money? They have all of the statistics and play them to their advantage.

If it is such a wise choice then why do the insurance companies advertise life insurance with such tear-jerking emotional commercials. Scare tactics are also an effective theme. A good deal does not have to be advertised.

To me, life insurance is a losing bet. You bet you'll die, the insurance company bets you will live (term insurance) and then they get to keep your money. If you die the payout money is of no use to you, after all, you're dead.

It will come as no surprise that neither my wife nor I have life insurance.

Someday I'll tell you how I really feel about it. :laughing:

I have life insurance for a couple reasons. The original was because it was free and was a $50k policy (well not really free but by getting it I gained a multiline discount and that discount covered the life policy). I worked construction which is kind of dangerous. I also started farming which is another kind of dangerous profession (not that I try to do anything that will kill me but accidents can and do happen). So I know have $350k of total life insurance. The main factor in carrying it isn't because I want the money, it is because my daughter is 8 and her mom is out of the picture so if something happens to me I want to be able to provide for her even though I am gone. Have a will drawn up addressing how the money gets used and when she will have access to it. When she is grown up and established I will look at things again and decide if it makes sense to continue paying. But I know my situation is different then others and I really dislike how much money I pay each year to insurance for all the policies I have but it is worth it for me.
 
   / Life Insurance?? #23  
I have always viewed my insurance as a benefit to others. Not me.

The only person(s) crying at my funeral will be from the insurance companies.
 
   / Life Insurance?? #24  
Don't forget life insurance on your spouse. I wish I didn't have to claim it but was thankful it was there. You always think it can never happen to you.
 
   / Life Insurance?? #25  
Also purchased survivors benefit for my spouse that will pay her half of my retirement for life ($260.00 per month). Insurance is a rip off, but I would never leave my spouse and child without a income if at all possible.

Eddie

I don't mean to get too personal Eddie, being in the military and 5 years from my 20, I was curious. Did you mean that half of your retirement would be 260.00 dollars a month? Or did you mean that purchasing survivors benefit costs you 260 a month?
 
   / Life Insurance?? #26  
some thoughts from a guy who spent his professional career mostly in insurance and financial planning:

Buying term insurance to cover a specific time period is incredibly important for most families that are not blessed with a huge trust account.
It used to be one could only buy ten or twenty year term life, now it goes out to thirty years and more.
If you have kids, and aren't rolling in dough, you need life insurance, plain and simple. But like car insurance, you need the right coverage, and for term insurance, if you buy from a long standing A+ rated insurer, you want to pay as little as possible. Not smoking cuts the cost about in half. Paying a higher premium for term insurance is usually just wasted dollars; shop around, but then buy the policy, don't procrastinate. I will not bore you with the stories of folks who came to me after they had the medical event that scared them big time and the cost of finding insurance then was simply prohibitive.

Most folk want their families to be able to stay in their current homes if a spouse dies, either one. What is super important is understanding the surviving spouse's ability to earn a decent living on their own. If your wife is a doc or engineer, or even a hair dresser, the work is out there. But so many spouses do not have marketable skills, often from choice (home schooling kids for example) and have been out of the work place so long that leaving the surviving spouse with the equivalent of one or two years of income is no bargain.

There are many reasons where term insurance is totally inappropriate. So many local farms have been lost because the surviving generation did not have the cash to pay estate taxes or handle the maintenance overhead previously provided by the deceased. The older generation had let their insurance lapse, too costly to maintain certainly if it was term. It doesn't make any difference how many years you paid into someone's policy; it only counts if that policy is in force and works when your family needs it. Just like a life preserver, you need to wear it.

Here's a simple little rule. One child or a spouse with serious physical problems, $500K. Two kids, $1M. Sound crazy? It's not... One million bucks will allow an approximate $50K withdrawal for a long time, and that will keep most of us out of the poorhouse. You are trying to recreate an income stream that has stopped, not hit it big with a huge payday. Take your current income, multiply by 20, and if you want to make sure your kids get to go to college, or your wife doesn't have to marry that loathsome neighbor out of despair to feed your kids, then you need AT LEAST that much term insurance/death benefit. I agree with not mixing investments and insurance, unless your advisor is truly a trusted person.

there are a great number of variables for each of us that must be considered before buying life insurance. Having a special needs child for example is a huge long term responsibility.

so....
calculate what you really need to cover your basic, stay in your home, expenses until your kids reach age 23 or so. The younger your kids the more coverage you need because the money has to last longer. Comparison quote among A+ rated companies only; their rating has nothing to do with the price of their insurance. If you are a military family, USAA is a great place to start looking.
 
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   / Life Insurance?? #27  
some thoughts from a guy who spent his professional career mostly in insurance and financial planning:

Buying term insurance to cover a specific time period is incredibly important for most families that are not blessed with a huge trust account.

...shop around, but then buy the policy, don't procrastinate. ...

Most folk want their families to be able to stay in their current homes if a spouse dies, either one. What is super important is understanding the surviving spouse's ability to earn a decent living on their own. If your wife is a doc or engineer, or even a hair dresser, the work is out there. But so many spouses do not have marketable skills, often from choice (home schooling kids for example) and have been out of the work place so long that leaving the surviving spouse with the equivalent of one or two years of income is no bargain.

...

Here's a simple little rule. One child or a spouse with serious physical problems, $500K. Two kids, $1M. Sound crazy? It's not... One million bucks will allow an approximate $50K withdrawal for a long time, and that will keep most of us out of the poorhouse. You are trying to recreate an income stream that has stopped, not hit it big with a huge payday. Take your current income, multiply by 20, and if you want to make sure your kids get to go to college, or your wife doesn't have to marry that loathsome neighbor out of despair to feed your kids, then you need AT LEAST that much term insurance/death benefit. I agree with not mixing investments and insurance, unless your advisor is truly a trusted person.

...

Good Gracious Man, that was most excellent advice, on the Internet AND FREE! :thumbsup::laughing::laughing::laughing:

Also one should not forget SS survivor benefits.

We have life insurance on both of us but I have been wanting to reevaluate the policies and very likely up the amounts. I keep putting mail from one of the current policies with the bills but I keep procrastinating on spending the time to look at the insurance coverage. :rolleyes:

If one has a problem with an insurance company, call up the state insurance commission about the problem. I have told coworkers to do this and it is amazing how fast the insurance company solves the problem once the insurance commission gets in the picture. Unfortunately, we have a great deal of contact with our insurance companies, but fortunately, we have very few problems with the different companies. We have talked to the insurance commission to get help with interpreting policies and state law and the employees at the commission have been VERY helpful over the years.

Later,
Dan
 
   / Life Insurance?? #28  
Like most threads, it doesn't take long to wonder off the path. Don't think anyone has answered the OP question about suggesting a good company. AM Best is an insurance rating company that has been around for a LONG time. Suggest you check them and their ratings to find, evaluate, the various Ins Co's out. Did see one poster mention looking for an A rated Co and that rating was most likely from AM Best.

Have to agree with those that said not to mix insurance and investments together. Co I worked for provided insurance for their employees. By the time I retired we had been debt free for a decade or two. We're in our 70's and are in decent financial shape so we don't see any need to have life insurance.
 
   / Life Insurance?? #29  
We are fortunate......we have zero debt.....we have money in the bank......we retired early. Life insurance is not necessary for us. If I die tomorrow.....the family is fine and the green plastic trash bag with my ashes will be buried in the back yard next to our dogs. The bag is paid for! :thumbsup:
 
   / Life Insurance?? #31  
term insurance is the most appropriate type for most people. Families who have significant assets should consult an estate attorney regarding the most advantageous way to fund possible estate taxes. Permanent life insurance can be an important part of a risk management strategy. Insurance is not investing.
 
   / Life Insurance?? #32  


Nahh, Jerry....something tells me you made the right choices, at least most of the time and worked your butt off...Now I will buy that...:thumbsup:

Thanks Bob......we have worked hard for what we got and have never asked anyone including parents or the government to pay our way. I'm betting you have similar standards. We are fortunate.....good friends, family and dogs. Appreciate your comments.:drink:
 
   / Life Insurance?? #33  
I have about $500K of term and $100 of whole life. I think it is a necessary evil, if something happens to me my wife would be in financial straits without the insurance. That would be unacceptable. Hate paying the premiums, but consider it necessary. I hope I outlive the term coverage and I won't look back an regret all those premiums I paid at all.
 
   / Life Insurance?? #35  
I have 500k 20 year term life through tiaa-cref. $300 per year fixed. I am 35.

I don't know that much about life insurance policies. I have had a few priced for me. I think I would read the fine print very carefully on a policy that guarantees me $500,000 upon death or paying $6,000 over a twenty year time span. I would say every person in America should be so fortunate as to have a life insurance policy like the one you have.
 
   / Life Insurance?? #37  
I don't know that much about life insurance policies. I have had a few priced for me. I think I would read the fine print very carefully on a policy that guarantees me $500,000 upon death or paying $6,000 over a twenty year time span. I would say every person in America should be so fortunate as to have a life insurance policy like the one you have.

this sounds super cheap but it's the going rate for a healthy non smoker in that age bracket. Why? Because only about three percent, from memory, of all term policies ever pay out. They run out before the person dies and the premiums not used for a death payment are used to lower the cost of the product for everyone buying it. Term insurance is incredibly competitive, there really are good deals out there.

Also, remember that almost all the money paid as premiums into life insurance are regulated and required to be invested in super secure investments.
Personally I would try to choose a mutual insurer instead of a stock insurer. In the first, the policy owner is an actual owner in the company and all profits accrue to the policyholders, albeit in a very long time frame. Stock insurers first look to profit and are usually good dividend paying investments, but the key is the profit/dividend goes to third party investors, not the people being insured. Mutual companies are becoming fewer but the concept is an excellent one.

If you have not had a physical/lab work in several years, get a physical done before you apply for insurance. Really. Otherwise the underwriting will pick up stuff you don't know about, and all insurers assume the worst and worry about info intentionally withheld. A good broker armed with accurate health info is your best bet. Otherwise, you'll apply for insurance at one company, get upcharged or declined due to health issues you aren't aware of, but likely should be..., and once you've been rated or declined by an insurance company, all insurers share that data base. There is no where to hide.
Much better to go in with a known condition submitted to a carrier that the broker knows isn't scared of that particular condition, and get the best rate going in.

Different insurers have different "appetites" for risk, often simply because they specialize or understand that condition well from experience.
But go in blindly to the wrong insurance company, get turned down, and now even the company that might have accepted you the first time now won't.
I saw this happen time and time again. The agent/broker should ask a million health questions up front, and if there is a real concern, can send in a
"preliminary" submission, which if declined or objected to won't go in the big database in the sky as a decline. That black mark is really hard to deal with, and often is obtained through the total ignorance or laziness of the broker applying for insurance for you. Find an experienced broker who has access to many markets, not just one, and you will have the best chance of getting the best value. Brokers can plug in your basic data and get quotes back from fifteen companies in a matter of seconds.

If I were in my thirties or forties, I'd buy as much thirty year term as I could or that makes sense for my need. The last ten years of a thirty year policy are relatively very, very inexpensive vs taking out a new policy at your older age. And yeah, the kids may just be getting out of college then, but it's amazing how other needs show up too.

I'm going to finish this ramble by mentioning something I learned early on. It was called "finding the love". Yes, you have to do your calculations and determine financial need, but if someone has an attitude towards life insurance, perhaps from a prior bad experience, unless they are motivated by love to protect their families, the insurance doesn't get purchased. We buy this insurance not for us but because we love our families and want to protect them when we can't be there to do it. I mean to upset no one by saying this, but guys, this is what makes this discretionary insurance world go round.

almost all the life insurance I sold (always asked for, never solicited) was term insurance, and with a big company that paid a twenty percent commission the first year, and not double or triple that. Why? the premiums were usually the lowest. I had already vetted the insurer quality, now it was my job and responsibility to get the least expensive insurance in to effect so that more money was left over for college funds and general living expenses. Of course I came at this from a financial planning standpoint, not a "eat what you kill" sales approach.

I wish I could be as succinct as Bird. Sorry for the length of this. Unfortunately I used to teach this stuff in a classroom so I tend to get up on that podium too often. And frankly, I find a discussion of grease types much more interesting...:D
 
   / Life Insurance?? #38  
True. On the monetary side of things.

I view it as an investment in my families future, and my current peace of mind.

I don't think the point is to not buy insurance, the point is to buy it smart. Products that provide insurance and also act as an "investment" end up putting money into the pockets of insurance companies that could go into the pockets of your loved ones. Daugen has provided some great inside information on how to buy it smart. The other half is to invest smart so that you can support yourself through retirement and hopefully leave a legacy.
 
   / Life Insurance?? #39  
So a person without dependants would be wasting premium dollars buying life insurance?
 
   / Life Insurance?? #40  
So a person without dependants would be wasting premium dollars buying life insurance?

A single person without financial debt cosigned by another, (i.e. did your parents assume $50K in debt putting you through law school, or buying your first house, whatever) likely no reason to buy. A married spouse that both have self supporting incomes (one income, either one, could keep the survivor in their current home and lifestyle), well, likely not either. Unless you think you might get married and have kids later, and your family all died of cancer, or something hereditary, I can't think of many uses for life insurance other than to "create an estate". Always wanted to give $100K to your church? Or do some other good financial work? Most life insurance companies take a dim view of folks buying lots of insurance where there isn't a need. Be really sure on your need or lack of it, and if not there, put the money in your IRA.

there are many exceptions to all of this; life is too complicated and people get into financial entanglements/commitments that sometimes can only be handled by life insurance, like a business buy sell agreement or a family farm life partnership. It's always worth talking to an advisor; the first meeting is free and if a "needs analysis" can't show some legitimate need, buy yourself a nice lunch and keep your money elsewhere.

I have a kind of silly perverse enjoyment giving general advice like this, because in my last career I earned my CFP, which is not easy to get, and if I had said more than my name without twenty three pages of disclaimers, I would be lined up and shot. I was constantly getting gently reprimanded by my boss not to be so specific and certainly not to put too much in print. My response was always "but it's true, plain and simple". True is ok but only when accompanied by enough disclaimers nothing seems to be believable. When I retired, I turned my CFP designation back in, because having it carried huge potential liability. As my accountant brother told me, having that designation made me a "Most Trusted Advisor" and that comes with a huge bullseye on one's back. Now I'm a happy retired guy that is just trying to give generic helpful advice. As they say,
just my two cents now. Your results may vary...

btw, try to pay annually if you can. Unless you have automatic monthly premium withdrawals, the fees for paying other than annually are usually a poor deal.

hope this helps a few folk. I think I need to shut up here and let others give their experiences.
 

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