Life Insurance

[gsganzer]

That is certainly an option, but many people do not have the discipline to invest that difference in premium. Also whole life is for your WHOLE life. If you outlive your term insurance, and will wind up with nothing when it expires. No money, and no way to buy any more insurance, because now you are old and sick. This is why he needs to find an agent he trusts to explain and show illustrations of how the money goes in and grows. Sure you can put your difference of premium between the two products in the stock market if that is what you want to do. Different strokes for different folks. I agree there is no free lunch, and I do like to eat.

I tend to agree with travelover, if a person has some financial discipline. I don't want to confuse investments with insurance and prefer to keep them separate. Term life is the same as buying auto insurance, you buy it for an intended purpose and a specific term and it's significantly cheaper than whole life. The idea behind term is that it's intended to protect you during the period of your life that your family would be at financial risk if you croaked. By the time you hit 65, your home should be paid for, kids through college and spouse ready to start tapping the IRA and 401K's.

However, if someone had the spare cash and wanted to buy whole life, a great way to do it is to take your cash and buy CD's in different terms. Then use the proceeds from the maturing CD's to pay the whole life premiums. In the long run, you'd buy the whole life policy for significantly cheaper.

 

[Beltzington]

The wife and I have term insurance. We started 3 or 4 years ago (I am 48 now) and have fix rates until 65 or 67--which is pretty typical.

We based our amount on total debt load plus costs for our daughter if one of us had to go it alone. Both my wife and I work, so the idea was to be able to pay all debt, have 2 years of the deceased spouses salary and then have money for the kid's expenses and college (if that is what she wants).

I can't say what is right for you, but my one piece of advice is if you are going to do it, do it soon. Life insurance will only get more expensive as you get older--no matter how excellent your health.

I would be interested in who you are insured with. I getting ready to retire and most of the term providers increase every 5 years over 50. Huge increases, of .50/1000 to over $6/1000 at 65. I'm going to cover my pension income until I am 65 and hope SS death benefits will still be around to cover my wife's expenses at 65. 401k should provide beer money should we both live longer.

 

[jerrybob]

The point of term insurance is just that, you buy it while you need the protection it offers, and hopefully you'll build up your nest egg over your working career to the point where you'll be self insured by the time you retire.

https://www.daveramsey.com/blog/the-truth-about-life-insurance/

Exactly what we did........unfortunately......many folks don't have the discipline to save when young......too easy to make excuses why they can't. They drive nice cars......have every electronic gizmo out there but not much in their savings accounts. Oh well......

 

[sodamo]

As pointed out, it is individual.
Turn 70 this year, wife a bit younger.
Had a pretty good insurance plan about 30 years ago. Especially given my income at the time, my demise looked attractive in a financial sense LOL
But looking at things a few years ago, it just didn't make sense anymore. All the term provisions had expired, but monthly premium was still the same for what appeared to be little benefit. Cashed out of the whole life, used the dollars to open an investment account for granddaughter and that monthly premium goes into that account. We'll never see the money, but should come in handy for her when she is old enough to appreciate it.
Plan is to be totally debt free in four more years, meaning mortgage paid off.
Even in worst case scenario, all our current liabilities could be paid by off via 1/3 of our non real estate investments in just a matter of weeks.
If we both expire suddenly, we have an annuity that will pay until 2022 and will cover the liabilities and our heirs in good shape with assets.
Unless SS craps out, we have several monthly checks payable until we each die. Wife will get 55% of my pension.
Have a rental that potentially replaces the rest or wife could move into the rental and get a larger income from our house.
Far from wealthy, but we can live comfortably. When one of us exits, the other is covered without having to make a major adjustment, when both gone, the heirs can party.
I feel better with our self insurance program than I did with the promise from a policy.

David Sent from my iPad Air using TractorByNet

 

[Bigkrank]

Make sure you AND your wife have life insurance. I bought many years ago and have switched about two times. Yea unfortunately I had to use it so I know.

 

[kenmac]

Well, I've got 50K on me and the wife has 50K on her.. This is mostly to take care of final expenses... When 1 of us passes , the 1 left have plenty enough in savings ,and investments to make it just fine

 

[k0ua]

This will probably draw some fire, but you should buy life insurance on your children also. These little juvenile policies only pay around 20,000 to 25,000 but typically cost $5 per month or less. Many can be kept and added to when the child becomes 21 without needing proof of insurance. So when the kid develops juvenile diabetes, or some other dread disease they can have a life insurance policy as an adult even though they are sick.

 

[dmccarty]

...
Additionally, think about disability insurance. Sometimes getting hurt badly is worse financially than dying.

Yep, this is a biggy.

I have a policy at work that will provide half of my income if I am disabled. I pay extra so I would get 2/3's of my income...

We surely cannot live on 1/2 or 2/3s of my income but I figured we would be ok with the company and Social Security disability insurance since one would pay 2/3s of my income and the other would pay about 1/2.

I was wrong. :confused3::shocked:

A friend of mine got ALS, which eventually killed him, and that is when I found out about the limitation in our company's disability insurance policy. The policy makes sure that we will get 2/3s of my salary AFTER Social Security pays. In other words, if Social Security pays for half of my income, the company policy pays the difference to get me to 2/3s, or about 17% give or take.

I think we can live on that 2/3s but I would rather have more to live on as a buffer...

Having said that, at least we HAVE disability insurance and I have long payed for the extra coverage. My friend did NOT have the extra coverage.

Get disability if you can afford it, but read the wee, small, itty, bitty, tiny, small print.

Later,
Dan

 

[EddieWalker]

Thank you for the advice. I've been doing a little google searching online, but haven't really seen anything yet. I'll probably start talking to some insurance people in town. I don't know any, I have all my insurance online through Geico.

What is disability insurance? Does it work for people that are self employed? I always figured that is what my credit card was for. Use it when I'm sick and not able to work, then pay it off when I'm back to work.

 

[KennyG]

I kept my insurance policy from work when I left and a good thing I did. When I got sick I found out I could no longer get another policy as no one would cover me. So I am glad I stayed with this one through the years. So you might want to keep that in mind cause you never know whats around the bend.

Interesting comment. Was this an early retirement and then you went into another career? My thought on life insurance was always that it was intended to replace income that would be lost in the event of an early death. I often hear of (and see advertised) term life insurance for retired people. I can't understand that. If you are retired, the income issue doesn't seem to be there. If you are so poor you can't handle "final expenses" let welfare handle it. Odds are against you on life insurance, otherwise the insurance companies would be bankrupt.

I've always had more than enough life insurance through work and when I retire, I won't have any life insurance.

 

[gsganzer]

Thank you for the advice. I've been doing a little google searching online, but haven't really seen anything yet. I'll probably start talking to some insurance people in town. I don't know any, I have all my insurance online through Geico.

What is disability insurance? Does it work for people that are self employed? I always figured that is what my credit card was for. Use it when I'm sick and not able to work, then pay it off when I'm back to work.

Eddie,
I think disability insurance refers to long term disability. If you got hurt to a degree that you couldn't return to work and/or debilitated and unable to return to your previous level of work. I'm going to start looking into this for myself. In a sense, being permanently disabled is almost a bigger burden on the survivors then being killed outright.

 

[k0ua]

Disability insurance is income replacement when you can no longer work. There is a full range of options on this type of coverage. Again you need to contact a local agent you trust to go thru all of the variables. This is often coverage until you can get on SS disability.

 

[Looking4new]

Yep, this is a biggy.
The policy makes sure that we will get 2/3s of my salary AFTER Social Security pays. In other words, if Social Security pays for half of my income, the company policy pays the difference to get me to 2/3s, or about 17% give or take.

Get disability if you can afford it, but read the wee, small, itty, bitty, tiny, small print.
Dan

And take it to your Philadelphia lawyer and get him/her to interpret it for you.
I'm not trying to be a smart *** here, but only a lawyer can interpret insurance policies with all their to wits and to wherefores.

 

[kenmac]

The point of term insurance is just that, you buy it while you need the protection it offers, and hopefully you'll build up your nest egg over your working career to the point where you'll be self insured by the time you retire.

https://www.daveramsey.com/blog/the-truth-about-life-insurance/

That's the correct answer.. That's why I don't care to buy anymore than I have now.. If I out live my term.. My wife will be ok, and vise versa ..

Like koua said,, a lot of people wouldn't take those term savings ,and invest it.
Just like those same people get a large sum of $$ back from the IRS each yr, because they can't save any other way....

I have asked some I know, why do you let the IRS keep your $$ all year then, give it back to you with no interest ?? Answer,, If I put it n the bank, I'll just go get it out & spend it... Just can't fix stupid !!

 

[dmccarty]

...

What is disability insurance? Does it work for people that are self employed? I always figured that is what my credit card was for. Use it when I'm sick and not able to work, then pay it off when I'm back to work.

I am talking about long term disability insurance but we really should be discussing both long and short term disability. My company pays for short term disability, I can't remember if it is 6 or 12 months, after which I would go on long term disability. Short term disability will pay my full salary for the given time period then I would go on long term disability. The base coverage for long term disability is 50% but I pay a bit more, it is not much, to get to 2/3s of my salary.

When I was younger and a contractor I looked at paying for long term disability. This was quite a long time ago, and I can't remember all of the details, but I do remember this much, it was expensive. :laughing::laughing::laughing: Now, I only contacted one company and did not compare prices/policies. I did not follow through mostly because they wanted me to meet a nurse to give blood and such. I did not have the time, which is really not a good excuse, but I was young, healthy and had no dependents. The policy was expensive but after a year or so, if I i did not have a claim, they paid me quite a bit of money back and the policy cost went down drastically.

Later,
Dan

 

[dmccarty]

And take it to your Philadelphia lawyer and get him/her to interpret it for you.
I'm not trying to be a smart *** here, but only a lawyer can interpret insurance policies with all their to wits and to wherefores.

Well, I am going to be the dumb *** here and say I did not need a lawyer since the policy was pretty clear. The problem was I assumed and did not read which makes me a dumb ***. :banghead: This a company benefit and how the policy is described led me and others to think it would pay 1/2 or 2/3 of my pay. They do not mention the Social Security link until you read the policy which is kinda strange since it would only take a sentence or two to explain. Its not like the company is trying to put a fast one over you since they have have nothing to gain or loose with this in any way. My guess is that the person writing this up does not know either....

But my friend found out the hard way when he was diagnosed with ALS. :shocked:

Later,
Dan

 

[Travelover]

Re long term disability insurance, there are several flavors. One pays if you cannot continue in your current profession, others only pay if you cannot work at all in any job. I know that it costs money, but it would suck to try to live on Social Security disability payments.

 

[kenmac]

it would suck to try to live on Social Security disability payments.

I know some that try.... $730.00 per mo.. They can't live on that ,so they steal from others and sale it for scrap..

 

[k0ua]

There are many type of disability insurance. Long term, Short term, Accident only, and Business Overhead expense. There is a lot to know.

 

[murphy1244]

I know some that try.... $730.00 per mo.. They can't live on that ,so they steal from others and sale it for scrap..

They are not all that low.