Life insurance

User Forum Topic
Submitted by moneymaker on November 15, 2012 - 5:56am

Thinking about getting life insurance outside of work. Anybody had good/bad experiences with life insurance? The company I'm considering is westernsouthernlife, never heard of them before, but I guess they are big and have been around for over 100 years.Thought I'd go with the free 1x salary from work and then supplement it with approximately 3x salary. That way if I get some terminal illness that prevents me from working i would still have insurance for the family.The way the numbers work out I will actually have more insurance for less than I'm currently paying, but after inflation I'm sure that wouldn't be true down the road, as the 20 year term policy outside of work would be fixed as opposed to the work one which goes up with salary.

Submitted by flu on November 15, 2012 - 7:26am.

I went with metlife. They are more expensive, but were AAA+...No complaint...yet...Because, well I'm not dead...yet :)... So I guess you really won't know :)

I have some advice from you. '

*If you are young and healthy, I would consider getting a $1million-$2million term life, outside of an employer... The policy won't be that expensive for you now...And if you wait until you think you need more, it won't be an option for you (or will be very very expensive). It will give your family piece of mind. $1million-2million will not go very far if it has to replace your income for 20+years.

*I would do this sooner versus later. Sooner = cheaper. You don't know what health issue will be lurking a few years from now. I learned that the hard way. When I was 30, I thought about getting term life...At the time I figured getting 1/2 million was sufficient because I was cheap...I figure I could bump up the policy later, since what could go wrong with my health? 3 years later everything did go wrong...And if I wanted to get another policy, good luck.... So again, don't skimp on life insurance when it's cheap. Besides, if you hit the lotto jackpot, or you end up working of the next Google, or you IPO your company, you can always terminate the policy early.

*You can skip the supplemental life offered by your employer. Although the employer's supplemental is probably cheaper, it's most likely not portable with the same cost if you no longer work there (IE you get laid off). If you get laid off say 5-10 years from now, and you wanted to carryover your supplemental insurance, your cost to do that will be much higher...A reason why you might want to do the supplemental insurance with your employer is if you have no choice and your health sucks...Because the policy from your employer up to 3x typically doesn't require health exam, does not discriminate against health issues...

*For most people, it's probably suffice to just get term life...maybe 20 years (that should be when your kids are more or less self-sufficient and when most of your large debt is already paid off..hopefully)...
There are other products that insurance co's love to try to sell you: "whole life" and "variable annuity" which mixes life policy with an investment vehicle. They are very complicated, and are heavily fee ridden... Generally, most common people would be better off having term life and having investments seperate and not tied to insurance...Where these insurance+investment instruments would make more sense is if you are very wealthy and need additional tax shelters, because some of these mixed products have very special estate tax considerations... You probably don't need to worry about it unless you have significant assets and those+insurance policy payout exceeds estate tax exemptions significantly...Which brings me to the next suggestion...

*If you are already thinking by life insurance, you should probably also think about a living trust as well. The last thing you want your family to have to go through is probate...Get one setup...Don't do it yourself unless you know what you're doing. Pay the $1000-2000 to an estate lawyer...Also, depending on what they end up doing with the estate tax exemption next year, you might need to setup an A-B (bypass trust)....If estate tax rules expire, they revert to a $1million exemption. For a married couple, you can setup an A-B bypass trust that will double the exemption (IF you manage your accounts a certain way)...So that will be $2million exemption. That's probably the easiest thing to do...More complicated tax shelters can be setup, but talk to an estate planner/estate attorney for that...

*Your spouse should also have a equal life insurance policy. If she passes away, you'll need to hire people to take care of your kids and/or you'll need to work less, so it will hit your income. And it won't cost you that much more... Generally, life insurance for women is cheaper then men, health being equal, policy being equal.... I don't know why, but that's just how it is.

Submitted by teaboy on November 15, 2012 - 7:35am.

MM, I just got $1M life insurance for similar reasons to what flu wrote. Costs were:
$1,000,000- 15 year term-$300.00 Annual
$1,000,000- 20 year term-$440.00 Annual
$1,000,000- 25 year term-$730.00 Annual
$1,000,000- 30 year term-$790.00 Annual

I wasted quite a bit of time getting individual quotes before I found quickquote.com which gave instant online quotes from multiple providers.

tb

Submitted by dumbrenter on November 15, 2012 - 8:20am.

I have had very good experience with AAA and highly recommend their office off of Del Mar Heights.
I was looking for 20 year term.
Their super preferred rate (i.e. the healthiest individual rate) is competitive with other insurance companies.

My recommendation would be to go with at least 6x your mean pre-tax income over last 3 years. Obviously the insurance company will try to sell you too much but you have to consider your own personal situation e.g. if you have a working vs non-working spouse, number of children, time it takes for your family to bounce back and be ok without you etc.
Most people confuse life insurance with getting an estate for the family and overpay, but remember, the purpose is not to get your family rich off of your death, just give them some buffer to adjust to the fact that you will not bringing in the bacon for a few years.

Submitted by CDMA ENG on November 15, 2012 - 10:30am.

I started a thread on this some time ago. There was a lot of good advice on this there.

I went with a term that I may convert to whole with Northwest Mutal.

regards,

CE

Submitted by moneymaker on November 15, 2012 - 9:34pm.

Well I get my free physical tomorrow. Hopefully I'll be super duper preferred.

Submitted by Diego Mamani on November 16, 2012 - 5:16pm.

Quote:
Obviously the insurance company will try to sell you too much but you have to consider your own personal situation e.g. if you have a working vs non-working spouse, number of children, time it takes for your family to bounce back and be ok without you etc.
Something to consider too is the level of assets you currently own. You may have enough in savings, investments, home equity, etc., that you may end up needing little or no insurance.

Submitted by flu on November 16, 2012 - 6:06pm.

If $400/year for $1million and it's like $300/year for $500k, what difference does it really make. That's like two tanks of gas. Or 3 times eating out for 2 at an average restaurant... Don't see what the big issue is for someone healthy.

Submitted by dumbrenter on November 16, 2012 - 6:31pm.

Diego Mamani wrote:
Quote:
Obviously the insurance company will try to sell you too much but you have to consider your own personal situation e.g. if you have a working vs non-working spouse, number of children, time it takes for your family to bounce back and be ok without you etc.
Something to consider too is the level of assets you currently own. You may have enough in savings, investments, home equity, etc., that you may end up needing little or no insurance.

Good point. Many people with assets forget to account for that and go with higher payout (and premium).

Submitted by moneymaker on November 16, 2012 - 6:56pm.

Yes I figured out on my own that life insurance is not for the poor or the rich. I fall in between, so if i can get more for less, I'm gonna do it. It will be interesting to see if my employer tries to tax me on the 1x earnings that they give me for free, and if so, at what value?

Submitted by flu on November 16, 2012 - 8:05pm.

moneymaker wrote:
Yes I figured out on my own that life insurance is not for the poor or the rich. I fall in between, so if i can get more for less, I'm gonna do it. It will be interesting to see if my employer tries to tax me on the 1x earnings that they give me for free, and if so, at what value?

??

...I don't think you will be taxed on the life insurance from your employer if they are only giving you 1x...

Submitted by ljinvestor on November 16, 2012 - 11:06pm.

I'm in the business and would say go with the 20yr term. Don't see any reason to pay extra cost of 25 or 30 year when with most carriers you can convert before the end of 20th year at today's health rating if coverage is still needed

Submitted by carlsbadworker on November 16, 2012 - 11:35pm.

I agree with others that you should buy it as soon as possible with good coverage and length. I made a mistake by buying only 10 year term about 5 years ago but my wife has since discovered a risk factor in her health that made her term policy very expensive to renew when it expires 5 years from now. Now she will probably get it only through work in the future.

Submitted by bearishgurl on November 16, 2012 - 11:58pm.

ljinvestor wrote:
I'm in the business and would say go with the 20yr term. Don't see any reason to pay extra cost of 25 or 30 year when with most carriers you can convert before the end of 20th year at today's health rating if coverage is still needed

Agree. I got a 20 yr level term policy several years ago at a good rate. But I was really put thru the paces to qualify for it. I feel grateful to have it, and, by the time it "expires," I'll be a fossil with one foot in the grave and other one "off-balance" so it won't matter anymore :-0

Submitted by AN on November 17, 2012 - 2:00am.

flu wrote:
If $400/year for $1million and it's like $300/year for $500k, what difference does it really make. That's like two tanks of gas. Or 3 times eating out for 2 at an average restaurant... Don't see what the big issue is for someone healthy.

Where can you get $1M policy for $400/year? I'm quite a bit younger than most on here and for my age, a $1M policy is around $800-$1k, a $2M policy is around $1600-1900. I didn't check for the $500k policy, but I assume it's close to 1/2 of the $1M policy, since the $2M policy is about 2x. For the $300 vs $400, I totally agree, but if it's $400 vs $800, it might stretch some people.

Submitted by carlsbadworker on November 17, 2012 - 8:06am.

AN, that's way too high if you are young and healthy. You should shop around. I used selectquote.com and the rate is better than AAA.

Submitted by ljinvestor on November 17, 2012 - 8:26am.

Term4sale.com is another quote engine that shows many carriers. A 35yo runs approx $450 for $1MM of 20yr term at best class...goes up by almost $200 at next health class down

Submitted by flu on November 17, 2012 - 8:57am.

AN, disclaimer is that it was close to 6 year ago. But the difference between 1/2million and 1 was about $100-200 for me at the time. I was cheap...so I settled with the 1/2million.... $1million policies were around $400-500 (depending on company)...

Fast forward 8 years... I'm technically not insurable (or it's prohibitly expensive now)...

Submitted by bearishgurl on November 17, 2012 - 9:51am.

AN wrote:
flu wrote:
If $400/year for $1million and it's like $300/year for $500k, what difference does it really make. That's like two tanks of gas. Or 3 times eating out for 2 at an average restaurant... Don't see what the big issue is for someone healthy.

Where can you get $1M policy for $400/year? I'm quite a bit younger than most on here and for my age, a $1M policy is around $800-$1k, a $2M policy is around $1600-1900. I didn't check for the $500k policy, but I assume it's close to 1/2 of the $1M policy, since the $2M policy is about 2x. For the $300 vs $400, I totally agree, but if it's $400 vs $800, it might stretch some people.

I'm paying $564 annually for $250K coverage but I was old when I qualified and even older now (but well preserved, lol).

Submitted by AN on November 18, 2012 - 3:22pm.

flu wrote:
AN, disclaimer is that it was close to 6 year ago. But the difference between 1/2million and 1 was about $100-200 for me at the time. I was cheap...so I settled with the 1/2million.... $1million policies were around $400-500 (depending on company)...

Fast forward 8 years... I'm technically not insurable (or it's prohibitly expensive now)...


Lucky you. There's no way you can get $1m for $400-500 now. You can't even get $1M policy for $400-500 3-4 years ago. There must have been a big price increase 5-6 years ago, right after you got it.

Submitted by teaboy on November 18, 2012 - 10:42pm.

AN wrote:
There's no way you can get $1m for $400-500 now. You can't even get $1M policy for $400-500 3-4 years ago. There must have been a big price increase 5-6 years ago, right after you got it.

Um, did anyone read my post above, on the 15th?

It went something like this...

teaboy wrote:
MM, I just got $1M life insurance for similar reasons to what flu wrote. Costs were:
$1,000,000- 15 year term-$300.00 Annual
$1,000,000- 20 year term-$440.00 Annual
$1,000,000- 25 year term-$730.00 Annual
$1,000,000- 30 year term-$790.00 Annual
I wasted quite a bit of time getting individual quotes before I found quickquote.com which gave instant online quotes from multiple providers.

Btw. I'm 34 & reasonably healthy.
tb

Submitted by AN on November 18, 2012 - 10:55pm.

teaboy wrote:
AN wrote:
There's no way you can get $1m for $400-500 now. You can't even get $1M policy for $400-500 3-4 years ago. There must have been a big price increase 5-6 years ago, right after you got it.

Um, did anyone read my post above, on the 15th?

It went something like this...

teaboy wrote:
MM, I just got $1M life insurance for similar reasons to what flu wrote. Costs were:
$1,000,000- 15 year term-$300.00 Annual
$1,000,000- 20 year term-$440.00 Annual
$1,000,000- 25 year term-$730.00 Annual
$1,000,000- 30 year term-$790.00 Annual
I wasted quite a bit of time getting individual quotes before I found quickquote.com which gave instant online quotes from multiple providers.

Btw. I'm 34 & reasonably healthy.
tb


I was talking about a 30 years term. My bad in assuming flu's talking about 30 years term.

Submitted by flu on November 19, 2012 - 12:08am.

AN wrote:
teaboy wrote:
AN wrote:
There's no way you can get $1m for $400-500 now. You can't even get $1M policy for $400-500 3-4 years ago. There must have been a big price increase 5-6 years ago, right after you got it.

Um, did anyone read my post above, on the 15th?

It went something like this...

teaboy wrote:
MM, I just got $1M life insurance for similar reasons to what flu wrote. Costs were:
$1,000,000- 15 year term-$300.00 Annual
$1,000,000- 20 year term-$440.00 Annual
$1,000,000- 25 year term-$730.00 Annual
$1,000,000- 30 year term-$790.00 Annual
I wasted quite a bit of time getting individual quotes before I found quickquote.com which gave instant online quotes from multiple providers.

Btw. I'm 34 & reasonably healthy.
tb


I was talking about a 30 years term. My bad in assuming flu's talking about 30 years term.

No. I was talking about a 20 year term...That puts me at 50ish.

I felt for me, that was sufficient because my goal was house paid off, 10+ rentals replacing my current w2 income, kid undergrad college paid off via 529 or something similar...

AN, I think I also wrote "20 year term" on my post... Must be that old age finally catching up to you :)

Submitted by AN on November 19, 2012 - 12:19am.

flu wrote:
No. I was talking about a 20 year term...That puts me at 50ish.

I felt for me, that was sufficient because my goal was house paid off, 10+ rentals replacing my current w2 income, kid undergrad college paid off via 529 or something similar...

AN, I think I also wrote "20 year term" on my post... Must be that old age finally catching up to you :)


I reread your post just to make sure it's not my old age... and yes, I'm not old yet. You didn't mention 20 years, at least not in the post where you mentioned the price difference. I understand where you're coming from and that sounds like a safe and sound estimate. I was assuming 30 years because that's what I have.

Submitted by flu on November 19, 2012 - 9:29am.

AN wrote:
flu wrote:
No. I was talking about a 20 year term...That puts me at 50ish.

I felt for me, that was sufficient because my goal was house paid off, 10+ rentals replacing my current w2 income, kid undergrad college paid off via 529 or something similar...

AN, I think I also wrote "20 year term" on my post... Must be that old age finally catching up to you :)


I reread your post just to make sure it's not my old age... and yes, I'm not old yet. You didn't mention 20 years, at least not in the post where you mentioned the price difference. I understand where you're coming from and that sounds like a safe and sound estimate. I was assuming 30 years because that's what I have.

I'm just ribbing you AN... I know it was just an oversight....heh heh...
Policies are kinda interesting... The difference between 15 and 20 year term when you're thirties isn't that much...But between 20-25 is a jump and between 25-30 not so much difference... At least that's what I experienced.. I guess it makes sense statistically.. Seems like the magic threshold is around 55years+.....

Also, the slightest change in health makes a huge difference. (Women insurance tend to be less than men, because I guess statistically women live longer lives than men...)...So it's probably a good idea to get insurance sooner versus later.

For me, to supplement my own insurance, I do participate in the supplemental offered by my company for 3x salary...That's the threshold before needing a health exam to qualify...That said, it's not ideal, because the policy isn't portable..But, that's the best option for me right now.

Can't really get rich off of insurance. It's more peace of mind.

Submitted by CardiffBaseball on November 22, 2012 - 11:28am.

We are roughly 14-15 years into a term life product that was 88/month for 500k on both of us.

I honestly didn't think to shop around. Now that she is getting treated for breast cancer we are kind of screwed. She gets a little through work and I get a little for her from work, but I think we'll have to wait until this 20 year expires (assuming she's going to make it) before anyone will insure us. Apparently many are now insuring Stage 2 survivors but you have to wait a couple of years.

Submitted by CA renter on November 23, 2012 - 1:11am.

Sorry to hear about your wife, Cardiff. Hope she is doing as well as possible with the treatments, and that she gets better soon. I know it's a scary time right now, but the odds of her surviving this are very, very high. Wishing your and your family the very best, Cardiff.

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