Life insurance

[Zimmermanbicycle]

Anyone here know about life insurance?
as a new father involved in cycling and motorcycling I feel like I should have it,just not sure what it is exactly.
Any V opinions greatly appreciated
-Eric

[funcrusher]

A lot of options...depends on how much coverage you need and what kind of structure you want

I would say go for a term policy to start. You can always add later. My guess is you're in good health cuz you frequent this forum? Also you're relatively young cuz you just had a kid?

Term for a young healthy male is pretty cheap. I would also consider disability as it is probably more likely that you'll be somehow incapacitated than die. You should try to get both life and term through your employee cuz rates are a little better.

You also need insurance for your wife. It is a difficult conversation but you should have it. Think childcare costs in the case you your wife's premature death.

In terms of amount think about how much your current burn rate is. Divide it by 5% or so. You can buy tax free munis that yield about 5%.

I can bore you to tears with this stuff. Also consider using a broker.

[WadePatton]

term only ever. it's hugely affordable and is how every life policy has for the "base".

then some peeple try to sell you "investment" (everything other than term) policies. these policies cost four times (guess) as much because they need extra money for the investing side (the part that promises a return), money to pay commissions, and money for fees, whatever, etc.

whatever "cash value" "accrues" from this wondermind investment fund--guess what? IS NOT PAID in addition to the face value of the policy, but they get to keep that part. your beneficiary gets the face value (same as term-which is what _pays_ that benefit under any design).

according to my financial adviser, dave ramsey, one can realize a better return on his investments if he buys term, and then INVESTS the difference (directly) between term price and "whole/universal/whateverpackage they're pushing now" life insurance directly, thus not paying commissions and fees into an indirect--always too conservative (lowest returns) thereby effectively investing three times as much at a better rate, etc. and so on (whilst having the same or better $ death benefit).

hope that's concise enough and not too flippant but that's the truth as i unnerstand it.

[1centaur]

The standard advice is good advice: term life is pure insurance, whereas whole life is part insurance and part investment product, and most say you can invest better on your own. The Net has squeezed out a lot of distribution costs in term life; if you can can get a good price from a well-rated company, you're most of the way there. Level term for 20 years so you can build up a nest egg of your own (in theory). Education, living expenses and burial expenses that the survivors have to cover are the usual items to consider. A broker (even on-line) can help steer you to better rates for people with "risk factors" like high cholesterol, for example. There are big differences in price for the same insurance just because some people don't do their own comparison shopping.

[mosovich]

Agree with Wade.. Only buy term.. I'm an FA and I will only sell term.. The only good thing about the other stuff is for the salesman that sells it to you.. The commissions are super high and it'll take you forever to get any kinda cash value.. Term is by far the best way to go.. Anyone that tries to sell you the other stuff, run don't walk out of their office..

[dhoff]

Agree with Wade.. Only buy term.. I'm an FA and I will only sell term.. The only good thing about the other stuff is for the salesman that sells it to you.. The commissions are super high and it'll take you forever to get any kinda cash value.. Term is by far the best way to go.. Anyone that tries to sell you the other stuff, run don't walk out of their office..

Sounds to simple too be true and that's because it is. There are many good reasons to buy permanent insurance. It all has to do with how long you need it. Whole life bought at age 30 is a bargin by the time you are 50.

I do have real expertise in this area and great resources. If you want to discuss, just send a pm. I DO NOT SELL THIS.

[Zimmermanbicycle]

Sounds to simple too be true and that's because it is. There are many good reasons to buy permanent insurance. It all has to do with how long you need it. Whole life bought at age 30 is a bargin by the time you are 50.

I do have real expertise in this area and great resources. If you want to discuss, just send a pm. I DO NOT SELL THIS.

I will PM you,I'm nearly 50,took my time on the fatherhood thing,so at this point whole life is probably not the way to go.
Thank you all for your input!
-Eric

[the bottle ride]

Agree with Wade.. Only buy term.. I'm an FA and I will only sell term.. The only good thing about the other stuff is for the salesman that sells it to you.. The commissions are super high and it'll take you forever to get any kinda cash value.. Term is by far the best way to go.. Anyone that tries to sell you the other stuff, run don't walk out of their office..

I have no skin in the game- can not sell anybody anything.
I tend to agree with this- I worked in a chop shop/cold call place that specialized in Varialble Universal life to get my feet wet in the business years and years ago- and then years later I worked for an asset management firm that did loads of work for the insurance business and at best it was mal-practice to the highest accord the way whole life/VUL was marketed- some scary stuff is out there for the unsuspecting customer.

Term is the best solution for most people. VUL or whole life type insurance makes sense in certain caes where funding is not an issue- meaning you have no problem over-funding for the life of the insurance. Makes sense for businesses and some individuals.

Buy term- and use the difference in your premiums to buy regular old diversified mutual funds.

[monadnocky]

If you're a veteran or the child of one, look into USAA (nowadays they might not even require this; I'm not sure). They are unbelievably helpful and pleasant to deal with. Very simple products (term policies) for relatively little money, and they're a really reputable organization.

[echelon_john]

SBLI is also a good source of reputable, relatively low-cost term insurance.

[swt]

+1 We have USAA and are happy with the value and the experience was indeed painless and pleasant.

If you're a veteran or the child of one, look into USAA (nowadays they might not even require this; I'm not sure). They are unbelievably helpful and pleasant to deal with. Very simple products (term policies) for relatively little money, and they're a really reputable organization.

[Gummee]

Agree with Wade.. Only buy term.. I'm an FA and I will only sell term.. The only good thing about the other stuff is for the salesman that sells it to you.. The commissions are super high and it'll take you forever to get any kinda cash value.. Term is by far the best way to go.. Anyone that tries to sell you the other stuff, run don't walk out of their office..

In a perfect world, I agree with this. The whole Primerica 'buy term and invest the difference' thing works IF YOU INVEST THE DIFFERENCE. Times being what they are, what's the first thing to stop if/when something bad happens to the economic engine of the family?

Permanent insurance is kind of like a Swiss Army knife. No, the blades on the Swiss Army knife don't work as well as the individual tools, but they're all there when you need em.

So... it all depends on the situation you find yourself in. If you only need insurance for X years, buy term and hope you die somewhere in there. If you don't quite know when you're gonna die and want to hedge bets, LOTS of term and a little permanent insurance may be a better bet. Most permanent insurance will go out to age 120 or so these days. If that's not close to a guarantee that you'll die with insurance in place, I don't know what is! (as long as premiums are paid...)

More term downsides: Term ends. Hence the name. You get to the end of the term and you're alive? Guess what? All that $$ is gone. If you stop paying term premiums, there's no separate account to pay the premiums so the policy lapses. ...and the biggest downside: term ends. Get to the end of your X years and you decide you still need life insurance, you get to pay out the nose for it 'cause chances are you're older and probably not in the same health category.

Variable policies are just that. Variable. They invest in mutual fund subaccounts that mimic their regular mutual fund counterparts. Things go up, so does your account. Things go badly you may get a nice note from your insurance carrier saying 'we need more $$...' I've seen it happen.

Whole life is probably the most expensive option but its a viable option if you start early enough. Wait and you're trying to make up time and the premiums are higher for what you're getting. IIRC WL policies endow at age 100, so more time = lower premiums to get to where the actuaries say you're supposed to be.

Then there's fixed and indexed Universal Life. Less $$ than WL and VULs but you still get cash accumulation, etc.

I could go on and on and on...

In short: everybody's situation is different. Someone that pushes exclusively one form of insurance exclusively is something to be wary of. Optimally you want someone that listens to your goals for said insurance, digs a little into your financial situation, and makes a recommendation specifically FOR YOU. Actually, agents are required to assess suitability. Whether they do or not is another story.

M

[rwsaunders]

Search for a term product that rewards you for a healthy lifestyle (confirmed via a physical), as your premiums should be more competitive.

[sbornia]

Just went through this process myself. Sent you a PM .

[TTX1]

Has anyone looked at Health IQ? They advertise discounts for cyclists who ride X miles per week...

[Chad]

Has anyone looked at Health IQ? They advertise discounts for cyclists who ride X miles per week...

Interesting, so the actuaries must have determined the benefit of the fitness outweighs the risk. I like that.

[Maxspeedwell]

Used to sell about twenty five years ago.

Here's just one more secret they don't want out...it's all term.
Some term just has a savings plan attached to it (whole life,
Universal life). Despite promises, you won't know the true rate
of return, and you eventually become "self-insured". Example:
At 25 years you have a $100,000 policy and then suddenly die.
If the (ahem) savings portion is 50%, your beneficiary will get
the $50,000 from savings, and $50,000 from the death benefit.
No, you won't get your savings and the $100,000. Just ask your
agent, and let him/her know you will be following-up with a call
to verify the answer with the state insurance commissioner.

Here's something even better:
You can borrow against your savings in the policy, and the interest
rate is very low! What a deal! Imagine, if I went down to the bank
and borrowed against my saving, I wouldn't be charged interest. Sadly,
it a real scam.

Used to be a publication called, "Wolf's Compendium". It showed the actual
rate / 1,000 that insurers charged. That let out too much information and
now Wolf's is almost impossible for the average guy to access.

Just buy term and forget about lining your agent's pocket with gold.

[sailor]

I need to buy a life insurance policy since I have a new son. I am looking for a good source of advice on how long of term to go with. A 25 year term is 50% more expensive than a 20 year term and a 30 year is almost double the 20 (yearly prices). I am thinking if I go with a 20, i could renew with a lower policy when it expires (house will be mostly paid off, kid should be out of the house and hopefully at least halfway through college). Does this make good financial sense? Who should I talk to that won't just sell me crap I don't need?

[Hoonjr]

http://sbli.com is where I bought my 20 year term policy after my sister in law died at age 41. Spooked me and my wife so got enough coverage to pay off the mortgage in case either of us died. I pay $192.00 a year and my wife pays slightly less for $300,000.00 coverage for each of us. Good luck it's good peace of mind.

[znfdl]

I will PM you,I'm nearly 50,took my time on the fatherhood thing,so at this point whole life is probably not the way to go.
Thank you all for your input!
-Eric

I have life insurance through my employer, but also have a term policy.

The term policy is in place until my youngest child turns 25, then the term expires.