Life Insurance

[anarchy]

My dad's best friend is my insurance broker and he's been great to deal with so far. He recently recommended that I get life insurance while I'm young as premiums go up significantly with age and as your health deteriorates.

He's recommended I sign up for 400k term insurance and 100k whole life. From what he explained, term insurance is cheap but it's like rent, it's basically gone if you never use it. Whole life on the other hand, pays dividends and eventually will pay for itself, but costs a lot more, which is why he set me up with a hybrid of both.

My premiums for this works out to be almost $200 a month. I know it's subjective so I won't ask whether this is the best way to spend/invest my money, but I guess I'm wondering if any of you have any thoughts on whether it's a good idea or not on getting life insurance when you're young.

Btw, I am 27, with no dependents. I'm single and own a townhouse.

[max_boost]

I have a $500K whole life policy through Statefarm. I got it when I was 23. Premiums are $300/month.

Absolutely everyone should have life insurance. Your coverage depends on how much you can afford.

[sneek]

This is just my opinion and you really shouldn't take it for anything more than that. I don't have my LLQP, I have just done some homework.

IMO whole life isn't worth getting at the 100K level, to be honest I am curious why the agent even bothered... If you are looking for life insurance you could consider getting some term insurance over a longer period of time. I believe terms like 20 years are guaranteed renewable.

Secondly, technically whole life doesn't cost more than term based from an actuarial standpoint, with the fisher theory applied, you might be better off investing your premiums on your own. Although the performance of Whole life polices does fluctuate with the interest rate.

Before I jump to conclusions though, what are your needs/why are you purchasing life insurance in the first place.

[anarchy]

Max - this is with Statefarm too. How is it only $300/mo for you for 500k whole life when mine's only 100k whole life (with 400k term) already $200? I'm assuming it's because you did it at age 23.

Sneek - I don't recall how long my term insurance is for as it's been a couple months since we last talked about it (I'm seeing him again on the weekend), but I believe it was 20 years.

From what I recall from our conversation, whole life premiums were much higher than term, but whole life was an investment and would pay dividends, eventually paying for itself. Term on the other hand, as it was explained to me, would be money that I would never see again if I never use my policy.

As for why I need or am purchasing it, I'm doing it because my insurance agent recommended I do so at my age before my premiums get too high. Like I said in my op, I don't have a family or anything like that, it would mainly be covering my house for my parents.

As for what I can afford, I can definitely afford the $200 a month. I just wasn't sure if that was a high amount and whether it's necessary when I don't have a family and dependents right now, and whether I'd be better served investing that money elsewhere.

[Tik-Tok]

We have term insurance, just started last year. 2 of us, $400g each, for $100/month. No it doesn't "pay out unless you use it", but then, neither does car insurance, or house insurance, does it?

Doesn't hurt to have life insurance no matter what your age, and as your agent said, it definitely is cheaper to get while your young. Our rates are set at $100/month for the next 20 years, so after the term is up, the mortgage is paid anyways, so we can get much lower insurance.

edit: After all, I don't need to give my wife any incentive to off me, lol.

[max_boost]

Originally posted by anarchy
Max - this is with Statefarm too. How is it only $300/mo for you for 500k whole life when mine's only 100k whole life (with 400k term) already $200? I'm assuming it's because you did it at age 23.


I got it back in 2004 and it's actually $330/month.

[JordanAndrew]

Sorry to hi-jack but was also looking into this as well.

Have you spoken to any other company regarding this like Sunlife?

[ExtraSlow]

Be cautious taking life insurance advice from a life insurance salesman. If you want a real eye opener, see if he'll tell you his commissions, both up front and ongoing, for each type of policy.

Personally, I don't like whole life. I like to keep my insurance and investments separate.

[Iceman_19]

Originally posted by anarchy


From what I recall from our conversation, whole life premiums were much higher than term, but whole life was an investment and would pay dividends, eventually paying for itself. Term on the other hand, as it was explained to me, would be money that I would never see again if I never use my policy.



This actually made me laugh. You are NEVER going to see a penny you pay into life insurance, ESPECIALLY if you have to use the policy! Lol!

[Pacman]

Originally posted by ExtraSlow

Personally, I don't like whole life. I like to keep my insurance and investments separate.

Exactly....buy term and invest the difference on your own.

[gkAeris]

hope this isn't a silly questions, but doesn't you work cover your life insurance i know its no where near what you get if you pay for life insurance i think its like ~$80k or something?

so this life insurance is additional?

[lint]

Originally posted by ExtraSlow
Be cautious taking life insurance advice from a life insurance salesman. If you want a real eye opener, see if he'll tell you his commissions, both up front and ongoing, for each type of policy.

Personally, I don't like whole life. I like to keep my insurance and investments separate.


Originally posted by Pacman
Exactly....buy term and invest the difference on your own.

+2


Originally posted by gkAeris
hope this isn't a silly questions, but doesn't you work cover your life insurance i know its no where near what you get if you pay for life insurance i think its like ~$80k or something?

so this life insurance is additional?

What happens if you lose your job? Change jobs? Depending on where you are at in your career, you may need to re-qualify, or have developed health problems that may sky rocket premiums with a new insurer. Work insurance is a nice to have, set yourself up with your own policy. It's especially important once you have dependents.

[Tik-Tok]

Originally posted by gkAeris
hope this isn't a silly questions, but doesn't you work cover your life insurance i know its no where near what you get if you pay for life insurance i think its like ~$80k or something?

so this life insurance is additional?

Yes it's additional, assuming you have life insurance at work. All the work ones I've seen are one years pay. That isn't going to help my wife a whole lot if I die. With $400g (plus my work one), that's enough to pay off ALL our debt (mortgage especially), enough to cover funeral costs, and enough to help supplement her income for a few years at least.

Even if you aren't married, you'll still have your mortgage debt after you die, so it's good to not leave your family with that debt as well.

[Sugarphreak]

...

[max_boost]

I got my whole life policy when I was 23. At that time I was looking to move out, get a house and was in a serious relationship. The idea was to cover the mortgage and have some left over.

The premiums to the whole life is much more than term or universal life. I didn't like the idea of term or Universal life so I went with whole life.

This is what I was told, after 15-20 years, my policy would be paid off but that would depend on market conditions. There's a cash value to my policy should I decide to cancel it. The cash value would earn 4.5%/year in interest.

330(premium)X12(months)X17(years)=$67,320.

It is at the end of year 17, if I were to cancel my policy, that's my cash value. So that's break even point unless you take into account time value of money. If you were to invest 330 monthly over 17 years, you would end up with more. Or you can look at it as the end of your term insurance BUT you get your money back haha Make sense?

Now if I have to pay 330/month for 40 years, then I'm gonna be pissed. I'm hoping for no more than 20 years actually. My cash value at the end of 40 years is $250K. If I have no beneficiaries, I might just cash it out lol

Now is the cash value withdrawal because of policy cancellation taxable? My dad canceled his policy and took a $7k payout and didn't pay any tax.

At the end of the day, just buy what works for you.

[Xtrema]

I started my whole life insurance when I was 23. $100k (price of a small townhouse back in the days). 20 years, $9xx a year. I should not have to pay into it anymore after 20 years as the dividends pays for itself. And withdraw rate is about 60-70% of what I put in if I terminate early.

This was bought because the my parents was helping a friend out on commissions and thought it's a pretty good investment/safety net because I drove like a retard (like most Civic owners) when I was young.

This many years later, with all the buy out, transfers between insurance companies, I start to think term life is a lot less hassle.

$100k is dick all today. Probably even less 10 years later. And worst yet if I don't die til 80s or 90s. It is supposed to adjust along with inflation but after what all the insurance company pulled in the last decade, I don't trust them any more.

Also life insurance is something you need in case you don't have any or enough money left to your family to cover expenses and stuff. Once you have enough saving and no debt, screw insurance. Go invest to get a bigger return.

Now the nice feature of whole life is that you can use it as a loan collateral. You ideally, you can access funds before you die. But there are rules and fees on that. So if you are financially sound, you probably don't need to go there.

IMO, there is no winning scenario* with insurance. It's just something you pay to have peace of mind.



* I know someone who had a failed/failing business that he took out a huge policy, and off himself. Don't know the detail but somehow wife and family got the pay out and was able to pay off a big house and have a sizable saving to leach on.

[Tik-Tok]

Our term policy also has a "terminal illness" thing, so we can take out 50g's before death to spend how we please (even for radical treatments). We also get paid out for suicide, which I thought was weird (after 2 years from coverage start.