Who out there knows alot about this, because I know zilcho…
I’m a healthy, 38 y/o with a wife and two small children. I have basically no life-insurance (other than the measley amount my job offers).
What do I want/need?
What do you have?
I am about 8 years your junior and carry a $1m policy from State Farm - this would go to pay off any and all of my bills as well as cover the costs of burning my ass. I am not sure why I got that as I dont have a family at all but at the time did live with my ex and she was the benifactor.
What is neat, is that I can actually use my insurance as an investment and take loans and or dividends from the account (I guess that would be 1099 income though - I think, but I am no accountant). I would suggest you call a big company like State Farm or whom ever has your home owners policy. I cant recall if it is good or bad - but one (“Term Life”) I think was like a gamble that you may die, and the other was in investment just in case you did…but like I said, I am no accountant.
I just bought some last week. There are some good insurance guys on the board that I am sure will pipe in here. I am seriusly considering getting something like critical care coverage. I am always worried about what could happen if I get paralyzed on the bike or get some sort of long term illness. I would hate for my fiancee/wife to have to quit her job just to look after me and what not. I think for someone with kids, you would want to get enough coverage that if you die or are incapacitated/can’t work, your mortgage will get paid off and your family will be taken care of (enough money for college/living etc).
Just my 2 cents from what I have learned so far.
Meeting with an Allstate agent tonight. I’d like to go in knowing at least something. Try to impress my wife - of course she won’t fall for it!!
The one where the money you pay is more like an investment account - that’s what I’m after…will explore…
Buy term policies, not whole life. Term is cheaper, and when you get older you can reduce it after your house gets paid off, kids get through college, etc. Don’t buy more than you need though–if your wife finds out you’re worth more dead than alive, then you may have to watch your back for the rest of your life. ;^)
I have a 20 year term life policy for $500k. Costs me about $18/month through Allstate. Life insurance as an investment is simply a story insurance salesmen tell in order to sell more life insurance. If you’re after a real investment, there are far better vehicles than a life insurance policy.
Hmmmmmm…very interesting. My wife also told me earlier that she’s prepared a meal for after our meeting with the insurance guy.
So what you ask?
Well, this is about the third meal she’s cooked in our 8 years of marriage. I’ll be sure to have her take the first bite, just in case! 
I have the $1 million deal as well along with an arrangement for the disbursement of retirement and investment accounts.
The funny thing is, an ex-girlfriend is named and the beneficiary. I told her a while ago, “If anything ever happens to me, you’ll get a pleasant surprise.”
Understood about the investment thing…we have that taken care of elsewhere anyway.
I guess what I’m looking for is a plan that does offer some flexible options with regard to funds access (at a price of course).
I think in the end a basic term policy is where we’ll be leaning towards…
Thanks all!!
Not an expert but I think you bring up a VERY good point.
The way I see it is this. Life insurance is fairly easy. If you’re the soul bread winner you have to get enough to cover the cost and projected cost for the entire family.
If you’re not then you’d only have to cover your part of the loss, even less, IMO, because if your gone you don’t have to pay for you anymore.
I think alot of people over look disability. The way I figure it, you’re more likely to be disabled than killed. If you’re disabled you loose some or all of your ability to get income but retain all or most of the expenses. In some cases you have more, medical in particular, expenses.
Just a thought.
~Matt
TnT, replacement of income would be covered by long term disability income policy. make sure if you purchase one that it is an ‘own occupation’ type policy.
The rule of thumb for need is 7-10 x your annual income. With two young children, if you are the sole earner, you’ll be more towards the 10x amount. To purchase a permant policy at 10x your income can be cost prohibitive. There is a lot more to the different types of plans, so I’d recommend talking to someone with credentials such as CLU, ChFC, CFP. You need to have someone take a complete look at your financial position and make a qualified recommendation. No on plan is right for everyone. Let me know if you have specific questions…you can PM me too.
I’m no expert but but hereis what I remember. There are 2 basic kinds:
Term = X amount of insurance for X years at a fixed cost per year. It has no value if your don’t croak during the term.
Whole Life = Insurance plus part of the premium is invested and you have a little nest egg at some point if you don’t die.
Both have lots of options and extras which are quite confusing but just focus on what you need and what they are actully trying to sell you. Try to get the two to match.
Term is really cheap for someone your age. They’ll try to sell you whole life since the commission is higher. I got term since I could get more insurance that way.
Get a policy on your wife too. When she wasn’t working I had enough on my wife so I could at least pay off my mortgage which would allow me more options workwise and make it easier to raise the kids. Now that she is back to work, I’m going to get some more so we can replace part of her earnings.
Be sure to give some consideration for life and disability on your spouse as well. Doesn’t matter if she works outside the home or not. This is an area many seem to overlook.
I agree with several other replies on buying term insurance over a whole/universal life policy. Look at a 20 year “level” term policy. These policies lock in the rates for 20 years, and after 20 years you may find that you no longer need life insurance (i.e. kids are out of college, house is paid for, etc.)
Hope this helps.
O.k…so am I understanding correctly then, that most people in, let’s say, their fifties and sixties, no longer have life insurance because their term policies have run out?
I would imagine that obtaining life insurance at that point in ones life is pretty costly…so you just go with out? Hoping that mortgage is paid off, kids through college, etc??
Please don’t lump all insurance sales people into the group that will sell you something just because the commission is higher. Granted, there are lots like that, but not all of them…which is why it is important to work with someone who has credentials (not a guarantee, but it helps).
thanks, Andy
I suggest that you talk with somebody who is not in the business of selling you insurance.
Talk with somebody who is educated about how much insurance is needed but is not a salesman. A fee-only Certified Financial Planner would be a good start. Check out http://www.napfa.org/index.html.
In addition, I would recommend using a no-load insurance company such as http://lowload.ameritas.com/
Why pay 80% of the first 5-8 years of premium to an insurance salesman when you could have the cash value building in your policy starting today.
Keep in mind also that when you buy insurance it might affect your estate planning depending on the size, owner and insured of the insurance policy. Depending on your net worth and individual situation comprehensive estate planning may be necessary before you purchase a policy.
Insurance planning is not something to be taken lightly. If somebody uses a rule of thumb or income model I’d run out the door. Everybody’s situation is different.
Actually, I suspect that “most” people in their 50s and 60s do have life insurance. However, if you no longer have children living at home, do you still need the same $1MM life insurance policy that you did when you had two kids at home under the age of five? I would say that you don’t, but everyone views this differently.
A healthy 58 year old today can easily purchase life insurance. I do not know the premium costs, so cannot speculate on how costly a policy becomes at that age.
If you invest the difference b/t a term policy and a whole life one of equal value, you should do better than if you bought the whole life policy. (Historically speaking - past performance is no gaurantee of future performance etc.)
Or so I’ve been told and investing the diffence is easier said than done.
The idea is that at a more advanced point in your life, you have built an “estate” and therefore, your heirs no longer need the insurance payout if you die–they simply liquidate the estate. Obviously, given the savings and spending habits of many people these days, the assumption that one will have an estate at that age is possibly flawed. Also, I know many people who are now in their 60’s with grown children and grandchildren dependent on them for support. So–some level of insurance may be necessary for some people at that point in their lives, but I hope my insurance needs are minimal, at best, by then.