Life Insurance

[Tacori E-ring]

We are getting to the point in our lives that I think we should consider getting life insurance. What are the important questions to ask? What should I make sure the policy has? Any suggestions on companies?

 

[Regular Guy]

a) Term insurance is broadly believe to be the way to go...not mixing together insurance with investing.
b) I think you should then look for commoddity-ish pricing...not paying for an agent''s help
c) Getting an assessment of how much to get...paying for, and getting enough, and not too much, will be helpful.
d) not sure how many good options exist, but USAA is what I have, and I believe they''re very well regarded. Most or many of their products are only available to service men & women, but this...they''ll sell to everybody. And...their process, if by phone, will begin with a pretty thoroughgoing interview and assessment of needs. One understands, at the end of their process, you''ll get an eval that''s designed to be on the nose, and with pricing that is fair, and not salesman enhanced.

 

[asscherisme]

I agree with Ira. Term is the way to go. I would never mix life insurance and investments.

 

[Skippy123]

Well, I use to work for John Hancock. Term is probably good. I wouldn''t recommend variable. People no longer sell whole life or I would recommend that. I would buy it online. I wouldn''t go with an agent; they get big commisions.

Here is a great article that covers everything I would say about life insurance. I am so glad I found this, here you go: http://www.smartmoney.com/insurance/life/index.cfm?story=whichtype0205

Try to get the longest term. If you only get 10 year and then go to apply for more, you will be 10 yrs older and it will cost you more monthly.
I hope this article answers your questions.

 

[Tacori E-ring]

Thanks for all the advice!

 

[strmrdr]

term convertible to whole life without proof of insurability is the best bet for most people.
"convertible to whole life without proof of insurability " is the key term or you might not be able to get another policy later!!

 

[AGSHF]

Hello Tacori Ering,

I read on the boards that you are expecting. Congratulations!

If you are in the market for life insurance because you now have a dependant (!), you might consider buying the life insurance even before your baby arrives. We did, as soon as we were safely on our way to having our first child.

Here are a few thoughts:

First, you should considr how much of a safety net you want to provide the surviving spouse and your child. Do you want to have enough to provide for your child through college? If so, it could be quite a large amount.

Will the surviving spouse work? If so, then the amount needed is less, of course.

Do you want the insurance to pay off the mortgage, if you have one.

Deciding on the amount is typically the first step. That way, you and your DH will have an opportunity to discuss some significant issues and make decisions.

Because you are young, term insurance is the cheapest type to buy. You can buy a large amount of coverage for an affordable annual premium. Term insurance is just like homeowners and auto insurance--you are insured when the insurance is in effect and there is no "investment" feature. You should consider looking into 10 or 20-year fixed term insurance. If the insured is young, a non-smoker and in good health, the annual premiums will be pretty reasonable and, because of the nature of the insurance policy, stay constant for 20 years--until your baby is 19-20 years old. I consider it money well spent. For example (just a very general estimate), a $1,000,000 policy might cost approximately $1,000 per year. You can get additional policies if you have more children or to insure for more.

I also figured that when our child is 19-20 years old, we will "self-insure" because we will have other financial resources to pay for her education and, more important, she will be an adult and more capable of caring for herself should the worst happen.

If you choose to go with term insurance, look for good ratings of the insurance company from A.M. Best. I forget what the best ratings are but they denote the financial health of the company--something like A+. Do a bit of research.

If you want to buy insurance that has a savings or investment feature, make sure that the cost of the savings or investment feature isn''t so high that you end up buying less insurance than what you need. In other words, you might need $500,000 of insurance coverage, but with this type of policy, the premium payments may be more than you can afford at this time. Also, look for surrender charges, annual costs, etc. + the commission the salesperson may be earning from you buying the policy.

Don''t forget to take into account insurance that either you or your DH has through your employer. At the outset, you may need only to supplement that. Later, when your income grows, adjust coverage accordingly.

Check out www.smartmoney.com. It has a pretty good section on insurance and will get you started.

Hope this helped!

 

[fire&ice]

Yes, you are young. Lock in for at least 20 years - if not more. Shop around. Many insurer''s will give you the best rate with submitting a physical. We pay about 750/year for a 1mil. policy. We locked in about 10 years ago.

It''s necessary evil.

 

[Regular Guy]

Two things further, or also...

What Skippy & F&I note are important, I agree. Go long. After getting our initial insurance with the advent of our little ones, I found when going back later to USAA, they could no longer offer me (based I think the specifics of regulations in my MD locale) a 20 year lock...but rather, only something like 5 year locks, with rates tbd at the beginning of each 5 year period. So, check for what you can do on this.

Also, I just did a google search on life insurance no commission, and see that Google sees now what I used to know...2 insurers are still probably good, with respect to this. Both USAA, and also, Americas. See here. But, check me...hopefully there would not be great variability in pricing broadly.

 

[fire&ice]

Our intitial policy was with First Colony Life Insurance. They were bought by Geneworth (?) Financial. We purchased our policy through a friend that does all types of insurance.

Contrary to all financial experts, we do have a universal life as well. It suits us because when hubby''s life insurance runs out, we still have a 100k policy that will be paid for.

Look into a policy that offers double indenmity. Life insurance is especially necessary if you have children. At this point in our life, we are probably over insured.

 

[Regular Guy]

Date: 5/2/2007 12:03:07 PM
Author: fire&ice

Look into a policy that offers double indenmity.

Go figure!

 

[Tacori E-ring]

Thanks so much for all this advice! We are both self-employed so any benefits we need to buy out of pocket. My FIL really got me thinking about life insurance. He said if one of our lives would take a financial hit if one of us dies we need it. Makes sense to me. I am not really concerned with getting it as an investment but more as a safety net (hopefully we will both live long, healthy lives but life cannot always be planned). I will read those articles. We also need to figure out how much we actually need. I would like to buy something before fall (self imposed deadline).

AGSHF, Thank you so much! We are very excited and looking forward to meeting our baby.