Life Insurance

[sodamo]

Nor that high!

David Sent from my iPad Air using TractorByNet

 

[sodamo]

So, some comments re disability insurance from experience.

Wife was in a major car accident in 98, 5 months in hospital. Achieved what her surgeon termed, maximum medical improvement, totally disabled.

Fortunately, she was working for a decent major corporation and just months before the accident had reconfigured her benefit package. While a super person, she wasn't high on the food chain, just a legal secretary, nothing special in package.

Lessons learned:
Short term disability was great, basically like getting her normal check and benefits for 6 months, but on the last day, it was like flipping a switch to off.
Long term disability immediately pickup from short term. If you haven't read the fine print, not to worry, they are not bashful to inform you.
If long term was a company paid benefit it is taxable income, if employee paid maybe not. She had opted for company paid only, therefore fully taxable.
As noted, the 50% included a SS offset. Due to fact my wife was a federal employee most of her career, she qualified for medicare, but not enough quarters for SS disability, so no offset.
Some months later we receive the SS benefit notice that comes around your birthday and lo and behold those months on short term disability gave my wife her required quarters.
So, armed with this new info we engaged in that battle. Took about a year and a half as I recall and eligibility after winning appeal was back dated to some made up date, not date of disability. As advised we dutifully notified the long term carrier, providing details and copies of the SS correspondence.
About 2 years after that we receive notice of suspension of LT benefits for failure to report receiving SS disability. Naturally, I can and do provide copies of the faxes sent previously. LT suspended payments until they have recovered the amount they determine to have been over payment. Eventually, a check based on 50% minus the SS disability resumes. Those paper checks come in the mail every month, they will not do a direct deposit. Those checks will cease when she turns 65 or they no longer believe she is disabled. At one time there was a hint at a lump sum buy out but it didn't materialize, wife turns 63 this year.

__utmc

 

[npalen]

Not sure why, but I bought a State Farm Whole Life plan at age 19. Been paying $21.40/month for the last 51 years and it provides $20,000 life insurance with double indemnity and now an additional $20,000 paid up dividend insurance. It's current cash value is about $60,000. Was that a good investment? Have to consider that the premium back then was worth a lot more than now. I borrowed and repaid at 6% for some of the kids college expenses over the years. That was fairly good interest rate during some of that time.
Was always covered by adequate company life insurance during my working years.

 

[MossRoad]

If You invested
$21.40
at an interest rate of
6.6%
With additional payments of
$21.40 every month
In 51 years,
your money would have grown to
$106,766.77

Based on this calculator....
Savings Interest Calculator - CNNMoney

And assuming 6.6% average rate of return of the S&P500 between 1963 and 2015 figured from this calculator...
S&P 500 Annual Return Calculator

 

[KennyG]

Without fail, term life insurance plus index fund investment will considerably outperform whole life insurance.

On the other hand, term life insurance plus nothing (because of lack of discipline in savings) will underperform whole life insurance.

Your fate is in your own hands.

 

[k0ua]

Without fail, term life insurance plus index fund investment will considerably outperform whole life insurance.

On the other hand, term life insurance plus nothing (because of lack of discipline in savings) will underperform whole life insurance.

Your fate is in your own hands.

Well stated.

 

[mjarrels]

Eddie, as a former Marine, can you still get VGLI life insurance? When I retired from the Navy, I took VGLI life insurance with a much better rate than I could get else where.

mark

 

[NY_Yankees_Fan]

Give these folks a try

Best Term Life Insurance Quotes & Rates | SelectQuote

We got a great rate for a term policy rate fixed for 10 years, all AAA rated companies.

Contact a financial advisor to do the calculations for you if you are not sure how much you need. The last person I would go to is a life insurance salesman, he has his interest in mind not yours. That financial advisor should be one you pay for, not one that is free if you want an unbiased view of your concerns.

 

[npalen]

If You invested
$21.40
at an interest rate of
6.6%
With additional payments of
$21.40 every month
In 51 years,
your money would have grown to
$106,766.77

Based on this calculator....
Savings Interest Calculator - CNNMoney

And assuming 6.6% average rate of return of the S&P500 between 1963 and 2015 figured from this calculator...
S&P 500 Annual Return Calculator

So when I die my wife (or estate) gets $100,000 (40K + 60K) and if I'm killed by someone who thinks I post too much here on TBN she gets $120,000 (40K + 20K + 60K). Doesn't sound like a bad investment to have coverage and load privilege all these years. Probably could have beat it by investing that $21.40 each month in stocks and reinvesting dividends though. But then I wouldn't have had the coverage.

 

[Pixguy]

Not sure why, but I bought a State Farm Whole Life plan at age 19. Been paying $21.40/month for the last 51 years and it provides $20,000 life insurance with double indemnity and now an additional $20,000 paid up dividend insurance. It's current cash value is about $60,000. Was that a good investment? Have to consider that the premium back then was worth a lot more than now. I borrowed and repaid at 6% for some of the kids college expenses over the years. That was fairly good interest rate during some of that time. Was always covered by adequate company life insurance during my working years.

With respect, the insurance co. took your money and said you had a cash value of 60k but if you want it you have to "borrow" your own money? What am I missing?

 

[npalen]

It's THEIR money until you kick the bucket.

 

[Deere Dude]

Had a $5000 whole life policy at 18 yo and kept it until around 30 and cashed it in for close to what I paid. Then I went on a cheaper 25k term ins. policy as suggested by friends and supposedly invested the savings.

Then a year or two later the insurance man came out to see if everything was adequate and maybe to tweak the policy. Before to long he said I needed a 50k policy for various reasons. I told him I am not trying to make my wife's new boyfriend rich, which he didn't see the humor in that. He pressed the issue and I told him I didn't want the $50k policy and now that I think of it, I don't want that $25K policy either. He took his stack of papers in his hand and threw them up to the ceiling and said, "You are going backwards."

I canceled it and figured as long as I had enough to bury myself and enough for the wife for a year or so that's all I need. I don't regret cancelling it. Of course later I stuck money in the stock market, then it really went backwards, but at least I wasn't keeping an agent in new cars.

 

[k0ua]

It's THEIR money until you kick the bucket.

That isn't true.. You can surrender the policy for the cash value.

 

[k0ua]

Had a $5000 whole life policy at 18 yo and kept it until around 30 and cashed it in for close to what I paid. Then I went on a cheaper 25k term ins. policy as suggested by friends and supposedly invested the savings.

Then a year or two later the insurance man came out to see if everything was adequate and maybe to tweak the policy. Before to long he said I needed a 50k policy for various reasons. I told him I am not trying to make my wife's new boyfriend rich, which he didn't see the humor in that. He pressed the issue and I told him I didn't want the $50k policy and now that I think of it, I don't want that $25K policy either. He took his stack of papers in his hand and threw them up to the ceiling and said, "You are going backwards."

I canceled it and figured as long as I had enough to bury myself and enough for the wife for a year or so that's all I need. I don't regret cancelling it. Of course later I stuck money in the stock market, then it really went backwards, but at least I wasn't keeping an agent in new cars.

So you cut off your nose to spite your face? And then you invested in the stock market and really went backwards? Okey Dokey. You sure showed him about them new cars huh?:laughing:

 

[sodamo]

That isn't true.. You can surrender the policy for the cash value.

My understanding, and I could be wrong. If you surrender the policy you lose the insurance benefit. If you borrow against it, you payback time time interest. If you don't payback, the insurance benefit at death is reduced by the amount borrowed and any interest owed.

While great for the beneficiaries, not so good for the insured.

<CGImageProvider 0x1568b170>

 

[k0ua]

My understanding, and I could be wrong. If you surrender the policy you lose the insurance benefit. If you borrow against it, you payback time time interest. If you don't payback, the insurance benefit at death is reduced by the amount borrowed and any interest owed.

While great for the beneficiaries, not so good for the insured.

<CGImageProvider 0x1568b170>

Of course.. the word surrender means to "give up" So when you surrender the policy you no longer have the coverage. Of course there are many types of polices. As an example the "return of premium" This is typically a term policy but instead of having nothing at the end of the term, no coverage AND no cash value, with return of premium, you have the coverage for the 10, 20 or 30 years whatever the term is that you took out and at the end of that term the insurance company returns all of the premium you payed in for all those years.

 

[k0ua]

Here is another unique policy, this is a simple policy with a face value of $60,000. When you reach 65 years of age, the insurance company pays you $20,000 cash and gives you a "paid up" whole life policy of $20,000 for the rest of your life. The idea of this is that you have the coverage you might need during your productive years, you gets some cash at age 65, and have a 20,000 final expenses policy that you are done paying for as it is "paid up"

 

[Pixguy]

That isn't true.. You can surrender the policy for the cash value.

So the company charges additional fees to force you to save but if you want the "savings" you lose the death benefit?

 

[k0ua]

So the company charges additional fees to force you to save but if you want the "savings" you lose the death benefit?

Yes. Why would the insurance company be interested in insuring you for all of those years for no profit? They will always make a profit, not on each insured, but in the long run with a pool of insured. and have money to pay their agents and office personnel. The way to beat them at their own game is to die. Then you have showed them! But they got that dieing thing pretty well figured out.

 

[kenmac]

Some of my HVAC / Plumbing business is with those home appliance insurance companies.. Like life insurance,, they will lose on some, but in the end ,, they ain't gonna lose,,they know the odds ...
As I said earlier, my wife & I have a small term life policy... I think it will probably expire out B-4 I die.. If it does,,, I'll be ok, because I invested & made more with the $$ I saved over whole life..