Who has life insurance?

[CThunder-blue]

I'm about to sign up for some. I had a guy come out yesterday to sell me some. Here's the breakdown of what they're offering:

$100k accidental death
$20,919 whole life, which will have a cash value of just under 10k at 65
$200k 4 year term

total for me is $70.35/month

Is that reasonable? I had signed all the paperwork and such, but was informed that using 2 different colored inks voided the contracts so he wants to come out today to have us (my wife purchased as well) re-sign.

forgot to add, I'm a 34 non-smoker, non-drinker married guy.

[onetruevibe]

Originally Posted by CThunder-blue

I'm about to sign up for some. I had a guy come out yesterday to sell me some. Here's the breakdown of what they're offering:

$100k accidental death
$20,919 whole life, which will have a cash value of just under 10k at 65
$200k 4 year term

total for me is $70.35/month

Is that reasonable? I had signed all the paperwork and such, but was informed that using 2 different colored inks voided the contracts so he wants to come out today to have us (my wife purchased as well) re-sign.

forgot to add, I'm a 34 non-smoker, non-drinker married guy.

I do...for my wife and I. I pay $42/month. I'm not sure what that gets me...but I can check the policy online this afternoon and let you know, though

[Alex]

Healthy? Mid 30's? Consider Term instead of whole life. The investment potential within these plans are often much worse than you could do in any number of other types of investments. Term life is much simpler to compartmentalize, and understand what you are getting for what you are paying for. The payout of $200K seems quite low for $840/year.

For 10 year or 15 year term insurance, that same $840/year would be more like a $1.3M - $1.5M policy for a guy, and $2.0M - $2.5M for a woman. If you don't need that much coverage, you could pay much less at a lower payout amount.

[Powerlogix]

Originally Posted by Alex

Healthy? Mid 30's? Consider Term instead of whole life. The investment potential within these plans are often much worse than you could do in any number of other types of investments. Term life is much simpler to compartmentalize, and understand what you are getting for what you are paying for. The payout of $200K seems quite low for $840/year.

For 10 year or 15 year term insurance, that same $840/year would be more like a $1.3M - $1.5M policy for a guy, and $2.0M - $2.5M for a woman. If you don't need that much coverage, you could pay much less at a lower payout amount.

Alex nailed it perfectly. A term life insurance plan might work better considering your age and health.

[RatherUneek]

I just ran a quote (I sell insurance for State Farm). I will tell you that i work in Texas and every state has their own rates but I wouldn't expect them to be too much different.

300K 10yr term- $35.40/month (we don't offer accidental. ask him the price to add that amount to the term.)

25K Whole life- $36.65/month (gaurantted cash value of $10,751 at age 65)


Total- $72.05 Not too far off from what you were quoted. Make sure it is a well known company is the biggest thing. These small no name companies go out of business all the time. Call a local State Farm, Allstate, MetLife agent. Life insurance is important just make sure that you are not buying too much. Some will say buy term invest the rest which isn't a horrible idea but the fact is that most people don't invest the difference. I would say the amounts you were recommended dont seem out of the ordinary. Good Luck.


I just read the rest of Alex's post. A 10 year term for $70/month would be $718,326 death benefit. Just in case you were considering going that route. Like I said before speak with a few local agent's and compare.

[Nemesis]

I was just going to sign up for one too with State Farm but those are some unattractive numbers/benefits.

I will have to look into what my work is offering.

[CThunder-blue]

Originally Posted by Alex

Healthy? Mid 30's? Consider Term instead of whole life. The investment potential within these plans are often much worse than you could do in any number of other types of investments. Term life is much simpler to compartmentalize, and understand what you are getting for what you are paying for. The payout of $200K seems quite low for $840/year.

For 10 year or 15 year term insurance, that same $840/year would be more like a $1.3M - $1.5M policy for a guy, and $2.0M - $2.5M for a woman. If you don't need that much coverage, you could pay much less at a lower payout amount.

I think the thing with the term life is that the premiums would go up after the term is over right? Right now, I have a $360k policy thru my company for Group Universal Life Insurance and I pay $25/month for that. I know that will cover the cost of my house and at least give my wife no worries on making the mortgage.

Originally Posted by RatherUneek

I just ran a quote (I sell insurance for State Farm). I will tell you that i work in Texas and every state has their own rates but I wouldn't expect them to be too much different.

300K 10yr term- $35.40/month (we don't offer accidental. ask him the price to add that amount to the term.)

25K Whole life- $36.65/month (gaurantted cash value of $10,751 at age 65)


Total- $72.05 Not too far off from what you were quoted. Make sure it is a well known company is the biggest thing. These small no name companies go out of business all the time. Call a local State Farm, Allstate, MetLife agent. Life insurance is important just make sure that you are not buying too much. Some will say buy term invest the rest which isn't a horrible idea but the fact is that most people don't invest the difference. I would say the amounts you were recommended dont seem out of the ordinary. Good Luck.


I just read the rest of Alex's post. A 10 year term for $70/month would be $718,326 death benefit. Just in case you were considering going that route. Like I said before speak with a few local agent's and compare.

The company is AIL and from what I understand, they're a fairly large group. I did a quote with the online state farm website and it gave me the same numbers you are, if not a bit higher.

That cost of $70.35 includes all those policies, so I would get the whole life, term life, and accidental for $70.35/month. I'm beginning to agree with you guys on the whole life tho. That policy would cost me $31/month alone. Where do you guys see the million dollar policies?

The cost breakdown would be:

$8- accidental 100k
$28.xx- 4 year term 200k
$31.xx- whole life 20,919

[Apex]

I have 20-year coverage. over 1M payout and I pay 111 every quarter.

[CThunder-blue]

Originally Posted by Apex

I have 20-year coverage. over 1M payout and I pay 111 every quarter.

what company is this with and can you give any more details? why only 20 years?

[Apex]

Term life. You pay less because it isn't long term coverage..and the chances of something happening between now and when I'm 45 are pretty slim from an insurance perspective.

I go through ING.

There is a website, kinda like progressive, where they show you a lot of different coverages and rates. Look it up on google, forgot the website addy.

[Nemesis]

Originally Posted by CThunder-blue

what company is this with and can you give any more details? why only 20 years?

+1

Edit - nvrmnd. I C ur post above. You got ninja posting reflexes. LOL

[RatherUneek]

You have to look at the net cost of insurance with the whole life though. It is more but the premiums never increase and with the cash surrender value at age 65 you are getting over 85% of your money back if you choose to surrender the policy. So what did you really pay for the coverage? With term you get nothing back. But if you have no long term needs then you may want to stick with term. Everyone's situation is different. There is also a product called Return of Premium Term that if you live through the entire term you get every penny you paid in back. It is almost double the regular term rates though.

[CThunder-blue]

Originally Posted by Apex

Term life. You pay less because it isn't long term coverage..and the chances of something happening between now and when I'm 45 are pretty slim from an insurance perspective.

I go through ING.

There is a website, kinda like progressive, where they show you a lot of different coverages and rates. Look it up on google, forgot the website addy.

Thanks. A 30 year term for me would put me 1 year away from retirement age. It looks like ING has the best Return of Premium rate as well. That would be pretty cool to get all my money back if I don't die. haha.

[Alex]

Originally Posted by RatherUneek

You have to look at the net cost of insurance with the whole life though. It is more but the premiums never increase and with the cash surrender value at age 65 you are getting over 85% of your money back if you choose to surrender the policy.

If the difference were a little bit more, there would be a clear advantage to locking in the same premium. That's the decision between an ARM and a fixed-rate for mortgages, for example.

But comparing Whole Life and Term isn't directly analogous. Whole life starts off at a very high premium (multiples of Term) and stays at that same high premium for life. Only late in life does it ever start to come back closer, and at that point the life insurance needs of most individuals are often less pressing.

I think the website that people are thinking of is www.selectquote.com, but I'm sure there are others.

[CThunder-blue]

I used this: http://www.freelifetermquote.com/ but that selectquote one looks good too.

[Alex]

Originally Posted by Nemesis

I will have to look into what my work is offering.

One thing to keep in mind is what you plan to do if you ever leave your current employer. If the primary life insurance is with them on a corporate plan, what happens when you are no longer an employee? In some plans, there is a grace period of a month, and then the policy ends. In some, the policy can continue as is, but the premiums go way up.

It was enough of a worry when I changed jobs a few years ago (didn't want to have no life insurance coverage for any period of time, no matter how short), that it caused quite a bit of stress. Right at that point, we decided it's much easier to maintain policies that have nothing to do with one's employment. Nothing wrong with getting any free insurance that is offered, and maybe paying a little for some more if it's a screaming deal. But when we shopped around, we found that for any significant amount of coverage, the rates with both of our employers at the time weren't any cheaper than getting similar coverage on the open market anyway.

[kkim]

term life. calculate coverage for as much as your debt load, so if you die during the term period, your debts are covered.

shop around... policies for term vary greatly from company to company.

[Animal78]

Geez I am glad I don't have to worry much about this stuff. My wife serves in the Coast Guard and all of our benefits are done thru them or USAA. I can't remember what my coverage is ATM but i am sure it's more than what's needed. We are so insured I can't imagine needing more. I love the fact that we are on with the USAA company being military we get all sorts of breaks on things. Of course being married with a kid and having good credit ratings owning homes etc. all helps big time.

[gfloyd2002]

Originally Posted by CThunder-blue

I'm about to sign up for some. I had a guy come out yesterday to sell me some. Here's the breakdown of what they're offering:

$100k accidental death
$20,919 whole life, which will have a cash value of just under 10k at 65
$200k 4 year term

total for me is $70.35/month

Is that reasonable? I had signed all the paperwork and such, but was informed that using 2 different colored inks voided the contracts so he wants to come out today to have us (my wife purchased as well) re-sign.

forgot to add, I'm a 34 non-smoker, non-drinker married guy.

For a vast majority of people, anything other than pure term life is a bad idea. The whole life policy (or variations) is a mix of insurance and investment that is usually intended to hide fees and costs that make it a (generally) inferior choice to buying insurance and investing seperately.

With whole life you pay for the investment portion, and those investment portions are expensive -- policies come with high fees and commissions, which sometimes lop off as much as three percentage points from the annual return. One of the best ways to invest is in no-load mutual funds that give you essentially better performance through low fees. Whole life policies are not that. There are also often up front commissions on these policies of like 100% of your first premium. You get killed with fees, commissions, etc. and whole life policies simply don't compete well with simply choosing to buy term life and invest your money independently for the investment portion. Of course, all of these fees and costs are hidden by mixing the costs and premiums together into one monthly premium that is very hard to break down.

In cases like yours, the minimal value whole life aspect of the policy is probably just there to hike up the costs for you. I think you'll find by checking the cost of term life in the comparison sites listed below that your premiums will go down fairly significantly. If you then calculate the value of a seperate investment with the difference - your net returns will be more than the value of the investment portion of the insurance policy. Here is a real world example borrowed from Smart Money:

*35 year-old nonsmoking male has a choice between a $250,000 Met Life universal policy with a $3,000 annual premium and a same amount of renewable term coverage with a 20-year fixed premium of $350.
*At the end of one year, the universal policy, assuming it paid 5.7% per year, tax-deferred, would have a cash value of exactly zero (cash value is the amount you would get back if you canceled the policy).
*But say he had instead invested $2,650 (the difference between $3,000 and $350) in a no-load mutual fund that averaged a total return of 10% annually. At the end of the first year, he'd have $2,841, accounting for taxes on the earnings at a 28% rate.
*At the end of 10 years, he would have accumulated more than $46,000 in after-tax savings in the mutual fund. Over the same period, the cash value of the policy would have climbed only to $31,819.

Almost always when you run the numbers this way, term life is the better choice. "Almost always" because you can use whole life policies in an trust to pay estate taxes out of policy proceeds after you die. If you are really wealthy, the tax savings can exceed the generally crappy investment returns. So, if whole life isn't something being recommended by your tax attorney as part of an estate plan, probably not for you. When you confront the insurance sales people with this and ask for a breakdown of costs for the whole life policy, they will inevitably revert to the benefits of "forced savings" and challenge whether you would really put the money away and invest it instead. Take that for what you will - I take it as an insult to my intelligence.

[SteveL]

“$20,919 whole life, which will have a cash value of just under 10k at 65”

This part is dependent on interest rates and will not normally be guaranteed, not only that by the time you get to 65 $10,000 may not be worth very much.

Steve

[Sailariel]

I know that this has nothing to do with Life insurance. I have Term Insurance through the military. Currently I am uninsurable because of cancer and my age--so I have what I have.

It never ceases to amaze me that a "Motorcycle Forum-Ninja specific" covers the range of topics exhibited here.

The people on this forum REALLY care and are willing to help others on this forum without reservation.

This forum is the Crown Jewel, and Alex--you have accumulated some great Karma with this endeavour. One of these days when I visit my daughter in San Jose, I will make it a point to call you and thank you in person. I'll even let you try out the NT-700.

[CThunder-blue]

Alex, if you do come out this way to the bay area, we should do a small meet for dinner!

[Sailariel]

That's for sure. I'll bet we could probably find a good Vietnameese restaurant.

[Alex]

Sounds like fun, drinks are on Tri!

[rwheelz]

We have a policy on my wife through Genworth. $800k 10 yr term insurance is $258 per year, this is on a 32yo in perfect health. I do not currently have a policy myself, being 33yo and still invincible and all . We are heading in a few weeks from now to get $1mill policies on both of us, since we are planning to try and have a child soon. A year ago, they estimated these policies were around $300-350/yr each.

Our investment guy recommended we consider whole life insurance as part of our long term investment strategy. We plan to revisit this within a few years, but will have a lot of thinking to do in terms of weighing the options. We will also have a lot of learning to do before making such a decision, since this stuff is new to us.

FWIW, an older family friend once told me that the best strategy is to buy 30 year term life by age 35, assuming you are healthy enough to get into the best category. Then, plan at some point to switch over to whole life when it makes the most sense, in terms of the whole life being a more conservative portion of your asset allocation.

[Bleak21]

Subbed

I know this will be helpful to me in five to ten years!

[CThunder-blue]

Originally Posted by Alex

Sounds like fun, drinks are on Tri!

I can do that. Water for everyone! There are tons of great asian restaurants around here. Dim Sum is awesome after church . I know of several good vietnamese restaurants and thai places as well.

I've made up my mind on the insurance thing and will stick to my company's group plan for now. My wife will get enough to pay off any debt I have as well as pay off the mortgage in case I kick the bucket today.

I may consider getting the 30 year term ROP insurance later this year tho. Maybe when I start tracking the bike? LOL

[peachdiddy]

I have 70k whole-life, 6 month disabilty (covers both my incomes), and accident insurance, and I pay about $54 twice a month. My accident pays out $25k if I die in accident. Long story short, if I fall off my ninja (fart propelled, I'm sure), I'm clean for 6 months if injured, and my wife would get $95k if it kills me.

[CThunder-blue]

Originally Posted by peachdiddy

I have 70k whole-life, 6 month disabilty (covers both my incomes), and accident insurance, and I pay about $54 twice a month. My accident pays out $25k if I die in accident. Long story short, if I fall off my ninja (fart propelled, I'm sure), I'm clean for 6 months if injured, and my wife would get $95k if it kills me.

That seems really expensive. You pay $108/month and are getting under 100k death benefit. Do you have pre-existing conditions?

[peachdiddy]

I gotta call them and tell them I don't smoke anymore.

[DeniseM]

You should consider getting a term life plan. There doesn’t seem to be much advantage in buying a whole life policy at this point in time. At your age and with your health condition and lifestyle, you should be able to qualify for the best rates for a term life plan and it will likely cost you a lot less than the policy you’re considering currently.

And if you go with level term life insurance, your premiums will remain stable through the duration of the policy!

Denise