Thinking about getting Life Insurance

[steppinthrax]

I'm roughly 30. My wife and I were talking seriouslly about this, we've recently had a freind we know die from pancreatic cancer. She had a 1M policy that pretty much took care of everything. I'm planning to purchase coverage for myself so in the event something happends to me, our mortgages will be paid off.

Instead of just doing a raw goodle search and calling the first company I knew I wanted to get the opinion of others who have insurance.

1. I want to get at least 1M, That would be more then enough for our two mortgages and enough money from taking care of other issues.

2. Would it be better off to get whole life or term life.

3. I was told to use multiple insurance companies since if i use one big company they are harder to pay out.

4. What are some good companies, is a cheaper payment v.s. a more expensive payment any different?

 

[MontyAC]

Stick with term life insurance.

http://en.wikipedia.org/wiki/Term_life_insurance

 

[Mxylplyx]

Whole life insurance is a ripoff, so avoid it. No sense in trying to mix a life insurance product with an investment vehicle. Get a 20 year term, and then in 10 years consider getting another 20 year term in addition to the first to carry you through to your near retirement age, after which you ideally would not need to insure your life due to savings/retirement. There are many good companies out there. Northwest mutual is a long standing one I have heard good things about.

 

[child of wonder]

I'm about to turn 34 and am looking at a 30 year term life insurance plan. That will last until I'm retired and by then the insurance won't be needed to replace my income if I kick the bucket.

 

[Vdubchaos]

Get longest term insurance you can get

And get it while you are healthy!!!

Stay away from Whole life (no need to have insurance company invest your money for you) and by all means RUN AWAY from anyone that wants to sell you Universal insurance.

 

[steppinthrax]

Thanks,

What companies are the cheapest/best value.

Or does it really matter. I imagine there are regulations regarding life insurnace. So the price dosen't really matter.

 

[drquest]

You are generally better off with term life and investing the difference into some other investment vehicle than going with a variable whole life product. Term will always be cheaper, but just as it states, it's for a term that is agreed upon when you sign up.

If you have the means, and feel you'll be around for a number of years, a variable whole life product is nice because you can keep it as long as you want, as long as you pay for it and the price will stay the same. Term life will be pretty cheap at 30, but 40-50 etc... it starts getting pricier and your health and age later will determine how much coverage will cost.

 

[mshan]

I would view term life insurance as a bridge during early years of your life (e. g. I think life insurance rates really start to go up when you get to about 50 years of age) when you and your family have not been able to build up other assets (investments, alot of equity in your house, etc) to fall back on if something tragic and unexpected were to occur.

Regarding actually selecting an insurer, I would guess you really need to dig a bit deeper and see how financially sound they are and whether they are prudent in their risks they take with investments (taking your premiums, investing them, and trying to make more money than they ultimately have to pay out, when all of their insured are lumped together).

And obviously, if any particular offer seems to good to be true, it probably is...

 

[Zenmervolt]

Whole Life insurance is really only for estate planning of very wealthy individuals who want to use the policy payout to transfer money into a trust with minimal tax consequences. It's extremely useful in those situations, but it's not the right choice for the average middle-class individual.

As others have noted, term life insurance is a much better deal for a younger person like yourself who is using life insurance as a hedge against catastrophe. The rule of thumb that I go by is 650k per infant child; more if you want to be able to cover other liabilities like paying off your house and less if the children are older. The idea being that you want to leave enough money to fund the costs of raising the child as well as that child's potential college education.

ZV

 

[bignateyk]

My wife made me get life insurance when I started traveling to war zones. I just got 20 year term life with enough to pay off the house.

 

[sixone]

I'm roughly 30. My wife and I were talking seriouslly about this, we've recently had a freind we know die from pancreatic cancer. She had a 1M policy that pretty much took care of everything. I'm planning to purchase coverage for myself so in the event something happends to me, our mortgages will be paid off.

Instead of just doing a raw goodle search and calling the first company I knew I wanted to get the opinion of others who have insurance.

1. I want to get at least 1M, That would be more then enough for our two mortgages and enough money from taking care of other issues.

2. Would it be better off to get whole life or term life.

3. I was told to use multiple insurance companies since if i use one big company they are harder to pay out.

4. What are some good companies, is a cheaper payment v.s. a more expensive payment any different?

Do you have life insurance through your employer? If so, you can deduct that from your goal of 1M.

Get term life. If you apply for one large policy with one company, they may have more requirements; if you go for smaller policies with multiple companies, you'll end up having a a paramedical exam, blood test, and urine test for each one. Up to you which way you want to go.

Don't call any of those companies that claim they'll get you a bunch of quotes to choose from. They'll show you the policies that make THEM the most money, not the ones that save YOU the most money.

Your best bet is to look up some local life insurance agents, and compare what they can offer you.

 

[BoomerD]

PM me your wife's email address or phone number. She and I need to talk...

 

[kranky]

Go with 30-year term life, get quotes from a local independent agent who will survey a number of insurers to get the best deal. For a sanity check, also get quotes from a couple big-name insurers that the independent agent did not check with (because those big companies sell through their own agents). Make sure whoever you sign up with is a highly-rated company by A.M. Best (financial strength).

You do not need whole life, universal life, variable life or any other type. With a 30-year term policy, it will end when you're 60 and by then you should have enough assets that you don't need it any more. People tend to think life insurance is to be a big payoff for your survivors whenever you happen to die, but you should only pay for it up until your survivors don't need it any longer because you have enough assets.

You can choose "annual renewable term" (ART) which starts with a cheap payment and goes up as you get older, or "level term" which keeps the payment the same for the length of the term policy (and of course will be more expensive than annual renewable term at the start). Go with level term because there are no worries about future costs.

Also, a term policy makes comparing costs very easy. It's apples-to-apples. Just make sure the company has a high rating.

Life insurance shouldn't be based on mortgage balance. People choose an insurance amount by factoring in what is owed but that should be a minor issue. It wouldn't even make sense to hurry up and pay off the mortgage if you die. Why tie all that money up in a house when it might be better used elsewhere? Just keep making the payments, using the insurance money. Who knows, they might not even want to stay in the same house.

Your company may give you insurance but do not reduce your own insurance level based on that. You want insurance that is yours as long as you pay the premiums, not based on an employer.

I think you'd actually save money by having one single policy, that is a question for the independent insurance agent.

 

[steppinthrax]

Go with 30-year term life, get quotes from a local independent agent who will survey a number of insurers to get the best deal. For a sanity check, also get quotes from a couple big-name insurers that the independent agent did not check with (because those big companies sell through their own agents). Make sure whoever you sign up with is a highly-rated company by A.M. Best (financial strength).

You do not need whole life, universal life, variable life or any other type. With a 30-year term policy, it will end when you're 60 and by then you should have enough assets that you don't need it any more. People tend to think life insurance is to be a big payoff for your survivors whenever you happen to die, but you should only pay for it up until your survivors don't need it any longer because you have enough assets.

You can choose "annual renewable term" (ART) which starts with a cheap payment and goes up as you get older, or "level term" which keeps the payment the same for the length of the term policy (and of course will be more expensive than annual renewable term at the start). Go with level term because there are no worries about future costs.

Also, a term policy makes comparing costs very easy. It's apples-to-apples. Just make sure the company has a high rating.

Life insurance shouldn't be based on mortgage balance. People choose an insurance amount by factoring in what is owed but that should be a minor issue. It wouldn't even make sense to hurry up and pay off the mortgage if you die. Why tie all that money up in a house when it might be better used elsewhere? Just keep making the payments, using the insurance money. Who knows, they might not even want to stay in the same house.

Your company may give you insurance but do not reduce your own insurance level based on that. You want insurance that is yours as long as you pay the premiums, not based on an employer.

I think you'd actually save money by having one single policy, that is a question for the independent insurance agent.

Thanks for the information,

What do you mean by a local independent agent?

 

[SphinxnihpS]

I'm roughly 30. My wife and I were talking seriouslly about this, we've recently had a freind we know die from pancreatic cancer. She had a 1M policy that pretty much took care of everything. I'm planning to purchase coverage for myself so in the event something happends to me, our mortgages will be paid off.

Instead of just doing a raw goodle search and calling the first company I knew I wanted to get the opinion of others who have insurance.

1. I want to get at least 1M, That would be more then enough for our two mortgages and enough money from taking care of other issues.

2. Would it be better off to get whole life or term life.

3. I was told to use multiple insurance companies since if i use one big company they are harder to pay out.

4. What are some good companies, is a cheaper payment v.s. a more expensive payment any different?

Without knowing your complete financial picture and goals, anyone that gave you advice is wrong.

If you want actual comprehensive life insurance advice, contact a fee-only life insurance planner with NO STAKE in what you buy. This is the only way you will get objective advice. If you want recommendations on who exactly these people are, PM me. There are only 4 in the country.

 

[kranky]

Thanks for the information,

What do you mean by a local independent agent?

An agent that is not tied to a single insurer and can get quotes from multiple insurers to help find the policy that best fits you.

http://www.iiaba.net/agentlocator/findagent.aspx

 

[Elbryn]

An agent that is not tied to a single insurer and can get quotes from multiple insurers to help find the policy that best fits you.

http://www.iiaba.net/agentlocator/findagent.aspx

heres a tool that i used when we bought term life for ourselves.
http://www.term4sale.com/

plug in your numbers, the credit rating of insurance company you want and it'll spit out numbers. at least it did the last time i used it. i used those numbers as a comparison point for when i talked to our insurance agent. the price we got back was not the lowest in the list but not terribly far off and from a company (genworth) that we've heard of before so we made it happen.

 

[TwiceOver]

Not really much to add. Term and get at least 10x your salary. I wouldn't focus on "Pay this or that off". You want your survivors to be able to live the same way they currently are (or better) for 10 years. Now what they actually do with that money, yeah who knows.

 

[CPA]

Term. I timed ours to coincide with the raising of our kids. Essentially two 20-year $750K plans. By the time they expire, my kids will be out of the house and we should be out of debt, including most of the mortgage. Haven't decided whether I'll re-up or just keep what we get through work.

 

[jaedaliu]

Without knowing your complete financial picture and goals, anyone that gave you advice is wrong.

If you want actual comprehensive life insurance advice, contact a fee-only life insurance planner with NO STAKE in what you buy. This is the only way you will get objective advice. If you want recommendations on who exactly these people are, PM me. There are only 4 in the country.

so you pay the person a fee to advise you on what plan to buy, then you go find someone selling that plan and buy through the salesperson?

Crazy that there are only 4 people offering this niche service in the entire country.

 

[JoetheLion]

I don't know where you're from, but If wikipedia didn't help, look through the list of life insurance types and when you choose the kind you'll (don't go with whole life insurance, it's really not worth it) run some instant quotes to see how would you fare with it. It's good to look through a list of insurance companies/brokers to compare the prices as well as pros and cons. When you're almost settled on the insurance company, it's not a bad thing to look up some opinions of former or longterm "customers".

 

[JPerk]

There's some good advice in here but also a couple things that are off. I would agree that a term product most likely meets your needs best. If you already max out all 401k and tax advantaged IRA options, you could consider whole life as an additional savings vehicle. You may not get the same return on your own but you can get a guaranteed return, even in down years in the market.

I would recommend one single policy because the cost will be lower than several small policies. $1M isn't going to be difficult for the beneficiary to collect on. If you did spread it out, all the companies could use the same para med exam but you would have a higher cost.

Use term4sale.com to get an idea what a 20 and 30 year policy should cost. It could cost more if you don't qualify for the best health category. Finding a local agent to talk with that offers the same products as that website shouldn't be hard. Just call several in the area and ask if they sell those products. Most are going to offer the best price for you so they can get a client rather than what makes them the most money.

Lastly, the term product may come on a Universal Life policy. This is becoming more common. Someone mentioned they got a genworth term policy, those are only written on UL policy forms now. The reason is to add flexibility at the end of the term. You will have a low rate for the set 20 or 30 year term but will have the option to pay more to keep it going if needed. It is very expensive after initial term so that only gets used in worst case scenarios. Just don't be alarmed if the term product says universal life.

 

[boomerang]

Be sure to price a policy out on your wife. Generally speaking, it costs less to insure a female than a male. Lock in a long term policy on both of you now while you're healthy and the premiums will be low.

 

[kranky]

There's some good advice in here but also a couple things that are off. I would agree that a term product most likely meets your needs best. If you already max out all 401k and tax advantaged IRA options, you could consider whole life as an additional savings vehicle. You may not get the same return on your own but you can get a guaranteed return, even in down years in the market.

Can't agree with that. Costs of whole life are too high and taxable investments without high commissions are still preferable over whole life. It's a product that has a use for a very small number of people, almost certainly not including the OP.

Lastly, the term product may come on a Universal Life policy. This is becoming more common. Someone mentioned they got a genworth term policy, those are only written on UL policy forms now. The reason is to add flexibility at the end of the term. You will have a low rate for the set 20 or 30 year term but will have the option to pay more to keep it going if needed. It is very expensive after initial term so that only gets used in worst case scenarios. Just don't be alarmed if the term product says universal life.

My old agent tried to stick me with a UL policy when I requested term. I simply said I cannot understand the 40 pages of fine print and I will pass. Level term, I understand. I pay $x for 30 years, and if I die you give the beneficiary $Y. After 30 years, it's over.

Any other policy type, they claim to be simple but when you see the actual policy you can tell there's a lot more in the details than what they are telling you. And the policy document defines how it works, not what the agent claims.

I will never buy an insurance policy of any type that I cannot understand completely. Maybe that means I am missing out on some super-sophisticated complex structure that might be perfect for me, but I doubt it. I know my old agent wanted desperately to get me into the UL policy but if they can't define the policy in a handful of pages, clear enough for me to comprehend, then it's probably not in my best interest to trust an agent's 5 minute summary of what it took a herd of lawyers 40 pages to write down.

 

[SphinxnihpS]

so you pay the person a fee to advise you on what plan to buy, then you go find someone selling that plan and buy through the salesperson?

Crazy that there are only 4 people offering this niche service in the entire country.

1.

Yes, and yes, and you have the consultant involved in the sales process to make sure there is no bait-and-switch.

2.

There may be 1 or 2 I have not heard of, and some have come and gone throughout the years, mainly because they we unqualified, but generally there have only been 4 for the past 10+ years.

Here's a nice article about the practice.

http://www.bankrate.com/finance/insurance/need-fee-only-insurance-consultant.aspx

Please not that even though the article is focussed on complex cases/permanent life insurance, that doesn't mean these types of folks can't help everyone. People do take them their Joe the Plumber, middle-class, term is the best solution situations and benefit greatly from the experience.

I'm not arguing against term/invest the rest here. I'm arguing against one-size fits all advice in the utter lack of situational awareness. Some of the people here should be ashamed of themselves for giving advice based on assumptions. This thread isn't about buying a video card or a couch. The OP posted so little of his situation and goals, that one simply can't say what's best for him.