Life insurance

[moneymaker]

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.

[Coronita]

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.

[teaboy]

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

[dumbrenter]

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.

[CDMA ENG]

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

[moneymaker]

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

[Diego Mamani]

[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.[/quote]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.

[Coronita]

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.

[dumbrenter]

[quote=Diego Mamani][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.[/quote]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.[/quote]

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

[moneymaker]

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?

[Coronita]

[quote=moneymaker]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?[/quote]

??

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

[ljinvestor]

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

[carlsbadworker]

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.

[bearishgurl]

[quote=ljinvestor]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[/quote]

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

[an]

[quote=flu]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.[/quote]
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.

[Author]

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