life insurance

[zahc]

Now that I have kids, the basic life insurance I get through my employer is no longer sufficient. I'm 29. I need to quickly buy some life insurance, maybe a 30 year or something. How do I shop? What are the differences between providers? Do I need to look out for certain terms or gotchas? If there is a problem with a claim I won't be alive to argue about it.

[Brad Johnson]

Whole life or term? Whole life is 'spensive, but the policy has a guaranteed end-of -term value. Term is cheap, but it's payout on death only.

My suggestion is to go hybrid. Get term life for the family financial safety net, but put the amount you'd be paying for whole life into a variety of medium growth mutual funds.  There's a historic probability the end-of-life value will be significantly more than the same dollars paid on a whole life policy.

Also'  check with your employers insurer for discounted term life rates. I get a $400k term policy through the university for a whopping $16 a month.

Brad

[Monkeyleg]

Before I had to give up my photo studio, I had $500,000 in whole life policies with Northwestern Mutual Life. I know that whole life policies aren't a great investment, but it was another form of forced savings. NML doesn't guarantee a return, but they usually do at least 8% per year.

At the time I cashed in the policies, they would have given me $1600 a month at age 65. That number would have grown over the years.

[zahc]

I'm looking for term.  I have enough forced savings already.

The main thing is what company to choose and how I know what I'm getting.  Are term life insurance policies standardized or regulated?  Unless I have a lawyer look over my policy,  how can I be sure they won't refuse to pay out because they don't cover my cause of death?

[charby]

I'm looking for term.  I have enough forced savings already.

The main thing is what company to choose and how I know what I'm getting.  Are term life insurance policies standardized or regulated?  Unless I have a lawyer look over my policy,  how can I be sure they won't refuse to pay out because they don't cover my cause of death?

In my experience most term life insurance polices are written pretty short and you can see what or what they don't pay out for.

Does your employer have supplemental life insurance you can buy?

[KD5NRH]

Also'  check with your employers insurer for discounted term life rates. I get a $400k term policy through the university for a whopping $16 a month.

At one point, I had a $1M supplemental death and dismemberment policy, plus an extra $1M if it happened in a car wreck, plus another $1M if it was on business.  My employer's plan had it at $18/mo.  Full payout for permanent loss of use of two "essential parts," which included arms, legs, 80% effective sight in either eye, and 80% effective hearing in both ears.  Of course, (in any case where I survived) it was on top of the health insurance, worker's comp, disability, etc.  They didn't pay us much, but the benefits were great.

It was depressing when I realized that the most beneficial thing I could do with my life at the time would be to go deaf and lose my left arm in a wreck on company time.  

[Brad Johnson]

Are term life insurance policies standardized or regulated?

Most states have their own insurance regs.  I would expect term policies from any of the recognizable name companies will be sufficient, and similar.  The only gotcha I can think of is to make sure it's a full meal deal offering and not some kind of stated-coverage-only AD&D limited policy.

Brad

[zahc]

If I buy a 20 year term policy on the open market, then I will get a guaranteed rate for 20 years. On the other hand if I lose my job then I have the amplified impact of losing my income and insurance at the same time, plus having to pay a higher rate on the open market due to being older. I have heard that insurance costs more when you get older. Right now it looks like a 500k 20 - year policy will cost me about 45/mo. I will have to compare that with what my employer offers.

[charby]

If I buy a 20 year term policy on the open market, then I will get a guaranteed rate for 20 years. On the other hand if I lose my job then I have the amplified impact of losing my income and insurance at the same time, plus having to pay a higher rate on the open market due to being older. I have heard that insurance costs more when you get older. Right now it looks like a 500k 20 - year policy will cost me about 45/mo. I will have to compare that with what my employer offers.

Do you do banking via a credit union? If so check with them.

[Tallpine]

It's all just one big crap shoot, anyway 

[cordex]

Right now it looks like a 500k 20 - year policy will cost me about 45/mo. I will have to compare that with what my employer offers.

I'm just a little older than you and I got more insurance for less money with SBLI.  Got it quoted out through Zander who checked with several different providers.

[Brad Johnson]

Do you do banking via a credit union? If so check with them.

This. Some "regular" banks are even offering it as an accountholder perk now.

Also check for group discout rates through your credit card providers, and from member-organizations like NRA, AAA, etc..

Brad

[cordex]

Also check for group discout rates through your credit card providers, and from member-organizations like NRA, AAA, etc..

When I was looking a year or so ago, the "group discount" rates offered through AAA and the NRA specifically were much higher cost than he has already been quoted.  He might check, but I doubt it will be worth it.

[Chester32141]

Adds a little to the cost but Premium Waiver in the event of disability should be added to the policy .... 

[vaskidmark]

I might have missed it, but I do not recall anybody discussing catastrophic coverage and long-term disability.

Stopping being the one bringing in the groceries is bad, but paying for long-term care is usually even worse as it often involves the rest of the family losing all the assets that usually remain on the breadwinner's death.

Find an agent and discuss your situation.  Get a second opinion if you want to.  Then look for a broker to see if they can suggest equivalent alternatives to what the agent is selling.

stay safe.

[grampster]

I was an insurance agent for 37 years.  If you want some advice, PM me.

[Scout26]

Whole life or term? Whole life is 'spensive, but the policy has a guaranteed end-of -term value. Term is cheap, but it's payout on death only.

My suggestion is to go hybrid. Get term life for the family financial safety net, but put the amount you'd be paying for whole life into a variety of medium growth mutual funds.  There's a historic probability the end-of-life value will be significantly more than the same dollars paid on a whole life policy.

Also'  check with your employers insurer for discounted term life rates. I get a $400k term policy through the university for a whopping $16 a month.

Brad

Utter *expletive deleted* bullshit.


Buy Whole Life.  Buy as much and then a little more then you can afford.  The cash builds up, you can take it out if you need it, the policy never expires and if you pick a good company, at some point the cash in the policy generates enough to pay the premium and continue to grow.  Tax free.

Only buy term if you are willing to die during that term.

And buy the disability rider.  


I currently have $600K on my sorry carcass. On which I'm paying precisely $0 in premiums.  Had I had term, it would have expired about 3 years ago and I would have $0.  Get a diagnosis of Multiple Myloma and insurance companies won't touch you.   Sometimes it's fun to fill out the "GUARANTEED ISSUANCE !!!  YOU CAN"T BE TURNED DOWN !!!"   Just to get the rejection letter or even better the chipper young life insurance sale person from a call center just like on TV !!    Can't learn disappointment soon enough, I say.

I might have missed it, but I do not recall anybody discussing catastrophic coverage and long-term disability.

Stopping being the one bringing in the groceries is bad, but paying for long-term care is usually even worse as it often involves the rest of the family losing all the assets that usually remain on the breadwinner's death.

THIS.

SO.
MUCH.
THIS.


Get with Grampster.  He can 'splain this better than I.

[Hawkmoon]

Buying term life insurance is a lot like paying rent on an apartment instead of buying a house and building equity.

[vaskidmark]

Buying term life insurance is a lot like paying rent on an apartment instead of buying a house and building equity.

Some folks only need coverage for the term - for example until the kids graduate, until the kids/ex reach the age the divorce decree says you no longer have to cover them, or the like.  There are advantages and disadvantages to either type of coverage.

The discussion might be better served by exploring the amount of coverage needed - do you base it on today's economy or on the projected rate of inflation* to meet down-the-road expenses in down-the-road costs?

stay safe.

* - and  how do you factor in the possibility (probability, in some folks' mind) that the dollar will be re-valued?

[brimic]

Buy Whole Life.  Buy as much and then a little more then you can afford.  The cash builds up, you can take it out if you need it, the policy never expires and if you pick a good company, at some point the cash in the policy generates enough to pay the premium and continue to grow.  Tax free.

I wish I would have gotten that advice myself about 10 years ago.
My term policy will be good enough to cover me until the kids are out of high school at least.

[Jamisjockey]

Get more than you think you need.  I've had a few young friends taken before their time, and their families have suffered not having enough to get on track afterwards.

[Monkeyleg]

Buy Whole Life.  Buy as much and then a little more then you can afford.  The cash builds up, you can take it out if you need it, the policy never expires and if you pick a good company, at some point the cash in the policy generates enough to pay the premium and continue to grow.  Tax free.

Only buy term if you are willing to die during that term.

And buy the disability rider.

This is something I should have mentioned earlier. When I had to close my studio, I was able to cash in my whole life policies and get $35,000 from them. I'd only been paying in for 5-7 years on them. That helped pay off creditors.

I switched to term life insurance, but have kept a disability income policy, although it doesn't kick in for 90 days after the onset of the disability, and only pays for two years.

[Brad Johnson]

Get more than you think you need.  I've had a few young friends taken before their time, and their families have suffered not having enough to get on track afterwards.

Ditto times elebenty.  No matter which type of policy you decide works best for your situation, get enough coverage to pay off all your familial debts, cover anticipated needs (kid's college, etc) and leave several years' worth of living expenses in the bank.  How many years is your choice, but the more the better. The total will be more, probably much more, than you might expect.

Brad

[Pb]

All of the money you are overpaying for whole life you could be investing on your own and not have to pay them their huge cut of the money.  It is overpriced.

I've got term life through the NRA endorsed insurance folks.  I bought a 15 year policy that would pay about $450,000 if I die.  The price is less than $200 a year.  I'm happy with it, I couldn't get a local insurance guy to give me rates anywhere near that low.

[Northwoods]

Haven't more than skimmed responses, but with all due respect to Scout, I'm with Brad on this.  With rare exceptions (and Scout may well be one) it's better to buy a large term policy and save the difference in premium into a good mutual fund(s). 

Check out Zander as a source for quotes.  Had really good luck with them more than once.

Get disability insurnce too.  If possible get "own occupation" to age 65 coverage, with a 90-180 day elimination period, depending on your emergency fund size and premium tolerance.