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  1. #1
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    Default Shopping around for life insurance

    I am starting to shop around for a life insurance policy, anything specific to keep in mind/look out for? Are certain companies typically better or more popular than others?

    Will likely talk to an advisor as well if anyone has any recommendations for one.

    Any advice/input is appreciated.

    Thanks

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    I have a whole life policy with statefarm (now desjardins) since 2005. There are a lot of options so definitely talk to a specialist. For example mine is a $500k policy at $330/month. Some say it's a waste but it's insurance so whatever works for You. My cash value if I wanted to cancel would be about $50k right now.

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    Quote Originally Posted by max_boost View Post
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    I have a whole life policy with statefarm (now desjardins) since 2005. There are a lot of options so definitely talk to a specialist. For example mine is a $500k policy at $330/month. Some say it's a waste but it's insurance so whatever works for You. My cash value if I wanted to cancel would be about $50k right now.
    Man that is pricey, I have a $500k policy as well and mine is only $35/mth.

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    Whole life LOL

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    Last edited by Sugarphreak; 08-18-2019 at 12:21 AM.

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    Quote Originally Posted by max_boost View Post
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    I have a whole life policy with statefarm (now desjardins) since 2005. There are a lot of options so definitely talk to a specialist. For example mine is a $500k policy at $330/month. Some say it's a waste but it's insurance so whatever works for You. My cash value if I wanted to cancel would be about $50k right now.
    Sick. I have a whole life policy with guaranteed insurance addon yearly of 50k. But my cost is roughly $10/m per 10k of coverage. Parents bought me the policy 28 years ago, passed it on to me at 18. Broker told me they don't even offer anything remotely as good as these old whole life policies any more.

    OP: term life is great for temporary insurance. Not so much for long term planning.
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    lol another form of forced savings? Haha 330/month over the years definitely add up but it's serviceable so you don't concern yourself with it. Plus it was an agent/buddy who sold me on it so you just believe it's a good idea at the time. Was in a serious relationship, just bought a house etc. Etc.

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    I'm sure I put this in another thread previously but it's my opinion that whole life policies aren't really suitable for most people in terms of covering them for unexpected death scenarios.
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    I'm glad this is such a safe space full of support and encouragement.

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    Anyone thinking of signing up for life insurance in the near future might want to consider doing so before January 1st 2018.Policies are going to get more expensive in 2018 almost entirely due to the DNA health testing kits.

    The industry is making a broad stroke assumption that there will be an increased demand from a majority of what they would consider as those that are high risk for health issues that were uncovered by the DNA results that wouldn't as easily have been known based on a regular insurance medical exam. While the law/ruling is that insurers cannot ask if a person has taken a DNA test nor request the results from a private test, they are pricing the market to reflect the potential increase in demand for policies arising from those that take the kit results seriously and seek a policy when they hadn't necessarily felt they need for one prior.

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    My recommendation is definitely for term insurance and get it as young as possible and for more than you need as it will be costly to increase later. Although keep in mind what coverage you may have from work.

    And don't waste money on a term longer than you need. I didn't renew my insurance last time as my kids were now 9 and 11 and we had no loans or mortgages. And I have ~$500K of coverage at work and my wife has ~$300K which is more than enough if something happened.

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    Quote Originally Posted by 89coupe View Post
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    Man that is pricey, I have a $500k policy as well and mine is only $35/mth.
    That sounds like term not whole life.

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    this is a good comparison tool for term insurance:

    https://www.term4sale.ca/

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    Term or Whole is usually the decision.

    Figure out what liability you are covering for (mortgage? spouse? spouse and kids?)

    Term:
    It's just like car insurance, it's throw away money but it's cheap. $1M policy will usually be in the $100/mth range for someone in the 20s/30s that is healthy. But premium will increase as you age.

    Whole:
    It's expensive. Usually buys you 1/10th of the coverage for the same price as Term. But the premium is usually fixed as you age and there is a redeem value to you want to stop. But the redeem value will always be less than what you put in in the 1st 20 years of the policy. And your policy is valid even if you stop paying once the commitment is made. Like Max said, it's almost like forced saving, except you will never see a dime, it's your dependents that get to benefit from it.


    The problem with Whole life is that you may be under insured later in life. I started a $100K policy in the 90s and back then you can buy a house for that. 20 years and $20K later, $100K is barely a down payment for the same house.

    The problem with Term is that if you have liability late in life, ie having kids in your 30s and 40s, paying premium well into your 60s will be very expensive. But you can also drop it as your liability lessens (house paid off, won lottery etc).


    To me, if you have asset that will cover your liability, you don't need insurance. It's basically for people with young kids and mortgage payments that in case one parent passed, whoever left behind is sitting on a pile of cash to draw on until kids are grown and start generating income.

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    Quote Originally Posted by Xtrema View Post
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    Term or Whole is usually the decision.

    Figure out what liability you are covering for (mortgage? spouse? spouse and kids?)

    Term:
    It's just like car insurance, it's throw away money but it's cheap. $1M policy will usually be in the $100/mth range for someone in the 20s/30s that is healthy. But premium will increase as you age.

    Whole:
    It's expensive. Usually buys you 1/10th of the coverage for the same price as Term. But the premium is usually fixed as you age and there is a redeem value to you want to stop. But the redeem value will always be less than what you put in in the 1st 20 years of the policy. And your policy is valid even if you stop paying once the commitment is made. Like Max said, it's almost like forced saving, except you will never see a dime, it's your dependents that get to benefit from it.


    The problem with Whole life is that you may be under insured later in life. I started a $100K policy in the 90s and back then you can buy a house for that. 20 years and $20K later, $100K is barely a down payment for the same house.

    The problem with Term is that if you have liability late in life, ie having kids in your 30s and 40s, paying premium well into your 60s will be very expensive. But you can also drop it as your liability lessens (house paid off, won lottery etc).


    To me, if you have asset that will cover your liability, you don't need insurance. It's basically for people with young kids and mortgage payments that in case one parent passed, whoever left behind is sitting on a pile of cash to draw on until kids are grown and start generating income.
    After 12.5 years of paying into my policy, I'm close to break even should I cancel. Total payments made =49,500 but my cash value is around $47K (checked my paperwork) so $2500 for 12.5 years of insurance coverage is reasonable if you don't count the time value. With that said, in a few years my cash value will be higher than the payments and it'll keep growing. In this case, say at age 65, my total payments will be about $166k but should I cancel and take the money, all the dividends etc. added up the cash out should be $300k. Now is that $300k subject to tax? Or I stop making the $330/month payment and they just subtract it from my cash value.

    Anyway, I have considered canceling it several times but the agent always talks me into keeping it.

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    The people who sell whole life policies usually make sick ongoing commissions of that tells you anything.
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    Quote Originally Posted by max_boost View Post
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    Anyway, I have considered canceling it several times but the agent always talks me into keeping it.
    That's their job. You basically have to be on your knees and beg before they let you withdraw. That's why I don't consider it as saving because I will never see it again.
    Last edited by Xtrema; 09-08-2017 at 03:31 PM.

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    Last edited by Sugarphreak; 08-18-2019 at 12:22 AM.

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    Quote Originally Posted by Xtrema View Post
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    That's their job. You basically have to be on your knees and beg before they let you withdraw. That's why I don't consider it as saving because I will never see it again.
    I don't understand why you keep saying you won't see it again lol the option is there to cash out on what you put in if you keep the policy long enough (12+years)

    Quote Originally Posted by Sugarphreak View Post
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    Tough to say, personally I think it is good to have some life insurance so you don't burden your family with a mortgage, also it pretty much needs to be part of your financial planning if you have kids. Once you get outside of those two reasons, it isn't that crucial.

    I think for you it is a numbers game at this point, just sit down with an excel spreadsheet and work out values to see when the optimal time for withdraw will be. Then work out things like inflation, potential for compound interest in a cash account (EQ Bank is 2.3% right now), and capital gains on all ends (I think capital gains when you cash out).

    Only 1500 in insurance cost over your cash value is pretty good though. Over that same period of time my costs will be more than double that for less coverage. Not sure if you have to pay taxes on that cash though if you take it out though (depending on how they structured it), and when you factor in lost interest and inflation you are probably down a few thousand more. I will say that it doesn't seem like that bad of a product, and you might come out ahead if the value exceeds your pay in by enough... then it is like you got free life insurance!
    Yup. It's marth!

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    As a licensed INDEPENDENT broker in Alberta & BC, I can tell you that I have replaced well over a DOZEN whole life policies with better/cheaper policies with substantially larger long term savings & investments.

    If ANYONE has any questions, message me, id love to help!


    As for the withdrawing the money from the policy, its considered income and you would be taxed accordingly.
    Last edited by GOnSHO; 09-08-2017 at 04:32 PM.

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    The first question I would ask anyone thinking about life insurance is why do you need life insurance?

    If you're single, or DINK, why do you think you need life insurance? Known illness = You'll likely be denied. Assume you'll die early = semi legit if you want to play the odds and view it as a lottery for your spouse. Thinking about having kids and want protection against possible future policy denying issues so want to lock in while you know you can get it? semi legit. Want it so that you can pass a big lump sum of money on to someone else? illogical.

    If you have kids life insurance imo pretty much is the first type of insurance you should get, then house, then car. If you have insurance on your house in case it burns down so you aren't homeless than you better have insurance on yourself in case you die so your family doesn't live in poverty forever (unless you already have other means of their support). But why would you need life insurance after your kids grow up and move out? Why would you need life insurance after you retire?




    As far as I'm concerned life insurance should only be bought when young if you plan to have kids and are figuring you will be denied in the future due to health. It should only be carried as long as your kids rely on your income for support. You should dump it the moment your income is not necessary for another's survival.

    The logic behind this is because insurance companies pay out something like $100 for every $125 they take in. That means statistically you're going to pay $125 to get $100 from them, which IMO is retarded if that money isn't necessary to replace your income that someone else is currently surviving off of. You'd be better off pocketing that money in your mattress or investing it in a low risk mutual fund.

    I never liked whole life either; always sounded like a very high MER low yield mutual fund to me. As far as I'm concerned you'd be better off going term 20 or < and investing the difference yourself.

    Dont even get me started on life insurance on pets or on children. wtf...

    Thats my biased opinion anyway based off my life and my 20 year old finance education. I'm sure there are some legit reasons I never thought of, but i'm also sure they are likely not the norm.

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