"whole" life insurance

[Manny]

Gotta be some insurance peeps on here. What sayeth you? Yay? Nay?

[Wishbone]

If you can afford it, its great. Makes good money for you after about 10 years.

To bad its kind of pricey, I got rid of my 1/2 mill policy to by my first bike

[richw]

I wish I had kept mine

It isn't the best investment but its fairly painless and
by the time you retire you will have a pretty big wad.

It works well with human nature

[Jaynnus]

You're better off with a standard life policy and an IRA or 401(k) contribution. Typically the investment returns are higher.

[Manny]

You're better off with a standard life policy and an IRA or 401(k) contribution. Typically the investment returns are higher.

yes, thats what ive been doing, and I've got a term plan in place now. The illustration makes it look good, but not for like 30 years. I think Im going to hold off for now....one idea the person had was to buy a plan for each of my kids now, so when they are in thier 30's it is peaking. Also, very cheap monthlies for babies, and the rate is fixed....

[Cheese]

Like Jayn said, get a Term Life policy to cover the unexpected and an IRA or 401K for retirement. Kids don't need life insurance but you can start investment accounts for minors as soon as they have a social security number.

BTW, bumping up Term Life insurance to cover a mortgage is cheaper than Mortgage Insurance.

[Degsy]

Like Jayn said, get a Term Life policy to cover the unexpected and an IRA or 401K for retirement. Kids don't need life insurance but you can start investment accounts for minors as soon as they have a social security number.

I agree in part, but disagree on the "kids don't need life insurance" part.

Once you have life insurance, you cannot be denied a renewal. That said, term life is a great way to invest for your child's future. Get a million dollar term life policy on a baby for cheap money and in 20 years help to pay for their start in adult life.

Worst case scenario. Your child is diagnosed terminal at 5 years old. Cash in the the insurance early for a reduced deal (they will do that in some cases) and spend the final months/years of your child's life at Disneyworld, the beach, ballgames etc etc. use any more to set up a scholarship in your child's memory or donate to a good cause. I know it's a morbid view, but it is a possibility and the whole idea of life insurance is that it is a bet you don't want to win.

Derek

[Jaynnus]

At the very least, add a rider for your child onto your term policy. God forbid something should happen, money should be the least of your worries for the final expenses. Usually riders are limited to small amounts 10-25k each child but the add on premium is less than a dollar a month and some insurance companies it is the same add on premium for one kid as it is for 3 or 4. Seems morbid yes, but irresponsible if you don't.

[Cheese]

I agree in part, but disagree on the "kids don't need life insurance" part.

Once you have life insurance, you cannot be denied a renewal. That said, term life is a great way to invest for your child's future. Get a million dollar term life policy on a baby for cheap money and in 20 years help to pay for their start in adult life.

Worst case scenario. Your child is diagnosed terminal at 5 years old. Cash in the the insurance early for a reduced deal (they will do that in some cases) and spend the final months/years of your child's life at Disneyworld, the beach, ballgames etc etc. use any more to set up a scholarship in your child's memory or donate to a good cause. I know it's a morbid view, but it is a possibility and the whole idea of life insurance is that it is a bet you don't want to win.

Derek

This sounds more like "Whole Life" than "Term Life". Typically with Term life there is no "cashing in" unless you die. If you don't die before age 65, the Term Life provider keeps everything.

[Jaynnus]

This sounds more like "Whole Life" than "Term Life". Typically with Term life there is no "cashing in" unless you die. If you don't die before age 65, the Term Life provider keeps everything.

You are right....typically. However you can get term life that has a terminal illness clause. AFLAC has it.

[ScottyGixxer]

This is waaaaaaay too vague, and there's A LOT of mis-information being slung around....

You need to define PRECISELY what your goals are before selecting the appropriate life insurance product.

...and making bold statements like you're better off in a 401K is language that should NOT be used. Most 401K's are "wrappers" for investments within, which can TANK, and are by no means guaranteed, it ALL depends upon the investments within.

Again, you have to define your goals. There are a TON of insurance products out there, there are four general categories:

Variable contract: insurance benefit with investments you select within, be very aware of the cost of insurance charges. I believe this product is best for relatively savvy investors, it has the POTENTIAL to build cash value, but there are no guarantees unless you have a "fixed" account option not subject to market risk.

Universal contracts: There are a few flavors of these, in some, you pay one premium/premium stream and coverage is guaranteed for life, in others, you can choose to pay what you want. Most of these contracts have a minimum guaranteed interest crediting rate they will pay, however, you must be aware of the difference between guaranteed charges and "current" charges

Whole life: although these have a ton of options, they generally pay dividends which you can use in the future to pay for your policy, OR get more insurance. The problem with this type of insurance, is there are too many "moving parts", mere mortals cannot accurately compare if they're doing "well" or not, only qualified professionals can. This tends to be the most expensive type of insurance, Agents love selling this type of product, it rakes in the most $, has the most bells and whistles, and again, is the most confusing to the average Joe.

Term insurance: pretty self explanatory, pay x for x years, and you'll get $X. HOWEVER, be AWARE: NOT every term contract allows you to "convert" in later years, and many have STRICT rules on conversions. This is the cheapest form of insurance, hence, the least options. Generally, there is no cash build up.


3 very IMPORTANT things to keep in mind:

1. your health. If you're in shitty health now (if you smoke, overweight, take a lot of meds), you will probably want something other than TERM. For if you're in crappy health, you get to the end of that term period, you'll have aged at least several years, and to get the same coverage you could have gotten when you were younger is going to cost you a HELL of a lot more. This is the dark side of term, lots of cheap coverage up front, NOW, wait until you're older to get permanent (non-term) coverage, and you'll get JUICED. Particularly if your health gets worse, it gets bad enough, and many companies won't even touch you, and flat out deny you coverage.

2. Very few insurance contracts remain competitive over time. You're wise to look for better every 5 to 10 years.

3. Does your Agent represent only one company, or many? If he only represents one, chances are, that company is only competitive in only one of the 4 types of insurance I posted.


My cred: I'm a financial analyst who's specialty happens to be building super large insurance syndications (bundled multiples of the 4 types) for super wealthy folks around the globe, currently, I sit around and assess suitability for a major insurer, making sure their big "sales" are ethically sound when contracts are being exchanged for other contracts. Few in New England know more about this shit than I...

Good thing I popped in on a nostalgic whim eh???

[Honclfibr]

Salesmen exist to sell you something that is more likely to benefit someone else than you. Otherwise, how would they make their commision?

[ScottyGixxer]

Salesmen exist to sell you something that is more likely to benefit someone else than you. Otherwise, how would they make their commision?

Insurance is one of those things were as an individual, you can actually benefit more, group risk... group risk....

[Honclfibr]

Insurance is a necessary evil. Just remember, the house *always* wins.

[ScottyGixxer]

Insurance is a necessary evil. Just remember, the house *always* wins.

Whenever someone dies, the person who gets the check certainly won't call it evil...

As the saying goes, the most welcome guest at any funeral is the insurance man... lol

[ScottyGixxer]

As I was thinking about it here are some GENERAL questions to give you an idea of what product type is appropriate:

How long do you want the insurance for, and for what purpose?

How healthy do you think you are?

Are you the type of person who wants to have some sort of insurance your entire life such that someone gets some sort of death benefit at some time?
If so, do you care about the potential of cash value build up, or do you just want flat out protection? (non-term)

Is your need/want relatively short term? Do you only want to protect your family/mortgage for a certain amount of years, don't really care beyond that, and want the cheapest possible coverage out there? (term)

Do you have some money to "play around with", want some sort of potential lifetime coverage, and are interested in cash value build up while being exposed to market risk? (variable)

Of course, rarely is anything black and white, and you may want a bit of everything, but questions as such need to be asked to get you into the right product.

[CMG241]

I have a SBLI term life 1mil policy - anyone ever check to see how they feel about track days and or racing? Need to be declared??

[ScottyGixxer]

I have a SBLI term life 1mil policy - anyone ever check to see how they feel about track days and or racing? Need to be declared??

Usually, yes, you need to declare it somehow, and this is usually done by a thing called the "avocation questionnaire".

To put it bluntly, unless explicity covered by your policy, if you bite the big one as a result of a track day/race (and this means even if you die like 3 months later or something), you can bet $1,000,000 they're going to try to get out of paying the claim on the grounds you didn't disclose you participated in such activities.

[PinHead]

So who would be the better insurance company to deal with. I am in need of a new life insurance policy and there seem to be so many different ones out there.
Any help would be great.

[CMG241]

Good point, Thanks

[ScottyGixxer]

So who would be the better insurance company to deal with. I am in need of a new life insurance policy and there seem to be so many different ones out there.
Any help would be great.

It depends on a lot of things, some are better than others for particular product types, HOWEVER, that being said, you usually can't go wrong with the bigger, more well known insurers. They each have a huge arrary of products, and in general, they need to stay competitive to keep their shareholder's happy. To name a few, in no particular order: John Hancock, AIG/American General, ING, MetLife, Prudential. These companies are stable (check the S&P/Moody's/AM Best ratings if you like), huge, and are very likely to be around 50-100 years from now. These guys are pretty much sure-fire, have a wide array of products to fit every need, and have been in the business forever, unlike a lot of bank insurance products that will likely have merged and changed ownership 10 times in the next 20 years. That's not to say you won't find a better deal out there somewhere, it really all depends on what I've written above, but with these guys, it's kind of like
buying a new Honda Civic, you know what you're getting for a fair price.

[NEWTREADS]

Term insurance is like auto insurance. You pay premiums until the term is over. Like auto insurance because you have to crash to benefit and if you don稚 the money for that yearç—´ premium is just spent. 10yr. 20yr. etc. The only way to benefit is to die in the specified term that the policy is in force thatç—´ why itç—´ so cheap. There is return of premium options out there too. Problem with the term is when it runs out and you need more insurance you much older and it costs a fortune. If you wait till itç—´ out you have to prove insurability again too. So if you came down with cancer or MS or something youæ±*e screwed. I saw one comment on child policies. Yes, good idea, lock in a cheap 40 something dollar rate and have a variable investment to run along side of your retirement plan. You can set those up to have an increasing death benefit too. The real bonus is you can borrow money from the policy for college, home purchase, or retirement. For college it is available, but not considered by the financial aid office. I have issued a few that have buried many of the retirement plans I've come across out there. The house does usually win. Thatç—´ how companies stay in business. If they always lost they wouldn't be able to pay all of their claims. All insurance is pretty much based on the mortality tables ideally the company will do a bit better than breaking even. Thatç—´ why the premiums are so low when you are young. You will be paying them longer. It doesn稚 always have to be a necessary evil variable life policies can be tweaked to do allot for you as a living benefit. I have been doing investing for a while now along with insurance. Yes I do earn a commission when I write policies. The company pays me not the client. I have to earn a living too. Itç—´ just providing a service, like having a mechanic or a landscaper. PM me or call John at 413-789-8422 if anyone has questions or would like more info. Oh yeah consultation is free for you guys. Mention NESR.