Opinions requested on life insurance

[Coronita]

[quote=HLS]Hi Ray,, interesting strategy but I think that laddering life insurance is pretty risky in itself as you may not qualify for a policy 10 years down the road at all so it also depends on if you want to gamble with coverage, and it’s more expensive to buy the older you get.
Premiums are likely to rise in the future as well.
20 years of coverage starting today may not cost much more than 10 years of coverage starting in 10 years.

Perhaps it also depends on whether you plan on winning or losing the bet with the life insurance company.

If you win, the return on a policy is far better than money in a retirement account. If you lose the insurance company gets to keep your money but you are still around to talk about how much you wasted.

The only reason term policies lapse is because people stop paying the premiums.

Is the goal to allow the survivor to live a similar lifestyle or force them to scale down as suggested above ?[/quote]

Alternatively, you can buy more than one policy, each being smaller amounts, versus 1 large policy. Total upfront premium costs for all policies would be more than a single larger policy, BUT then you can cancel one of your policies as your financial position changes. So for instance rather than buy 1 $1million, buy two $500k, and cancel one if you have built up $500k in reserves. Also insures yourself against an insurer if they go belly up (although unlikely)

[HLS]

$1 Million 20 year term. Preferred MALE in CA
starting at
age 25 $425 a year
age 30 $438 a year
age 35 $450 a year
age 40 $645 a year

At age 25 committing to paying $8,500 over 20 years
for $1 million in coverage doesn’t sound crazy.
The odds are you will waste the money but provide security to your family “just in case”

If one had to choose, I’d say that protecting your family is more important than HBO or alcohol or other frivolous expenses.
There might even be a way to have your employer pay your premium with pre-tax dollars. Less than $40 a month.

$100K policy is $110 a year.
$500K policy is $250 a year.
Lower coverage seems like a poor choice unless that’s all you can really afford.

[HLS]

$1 Million 20 year term. Preferred MALE in CA
starting at
age 25 $425 a year
age 30 $438 a year
age 35 $450 a year
age 40 $645 a year

At age 25 committing to paying $8,500 over 20 years
for $1 million in coverage doesn’t sound crazy.
The odds are you will waste the money but provide security to your family “just in case”

If one had to choose, I’d say that protecting your family is more important than HBO or alcohol or other frivolous expenses.
There might even be a way to have your employer pay your premium with pre-tax dollars. Less than $40 a month.

$100K policy is $110 a year.
$500K policy is $250 a year.
Lower coverage seems like a poor choice unless that’s all you can really afford.

[HLS]

$1 Million 20 year term. Preferred MALE in CA
starting at
age 25 $425 a year
age 30 $438 a year
age 35 $450 a year
age 40 $645 a year

At age 25 committing to paying $8,500 over 20 years
for $1 million in coverage doesn’t sound crazy.
The odds are you will waste the money but provide security to your family “just in case”

If one had to choose, I’d say that protecting your family is more important than HBO or alcohol or other frivolous expenses.
There might even be a way to have your employer pay your premium with pre-tax dollars. Less than $40 a month.

$100K policy is $110 a year.
$500K policy is $250 a year.
Lower coverage seems like a poor choice unless that’s all you can really afford.

[HLS]

$1 Million 20 year term. Preferred MALE in CA
starting at
age 25 $425 a year
age 30 $438 a year
age 35 $450 a year
age 40 $645 a year

At age 25 committing to paying $8,500 over 20 years
for $1 million in coverage doesn’t sound crazy.
The odds are you will waste the money but provide security to your family “just in case”

If one had to choose, I’d say that protecting your family is more important than HBO or alcohol or other frivolous expenses.
There might even be a way to have your employer pay your premium with pre-tax dollars. Less than $40 a month.

$100K policy is $110 a year.
$500K policy is $250 a year.
Lower coverage seems like a poor choice unless that’s all you can really afford.

[HLS]

$1 Million 20 year term. Preferred MALE in CA
starting at
age 25 $425 a year
age 30 $438 a year
age 35 $450 a year
age 40 $645 a year

At age 25 committing to paying $8,500 over 20 years
for $1 million in coverage doesn’t sound crazy.
The odds are you will waste the money but provide security to your family “just in case”

If one had to choose, I’d say that protecting your family is more important than HBO or alcohol or other frivolous expenses.
There might even be a way to have your employer pay your premium with pre-tax dollars. Less than $40 a month.

$100K policy is $110 a year.
$500K policy is $250 a year.
Lower coverage seems like a poor choice unless that’s all you can really afford.

[Coronita]

beanmaestro,

A few things to consider, especially when you have a kid

a)You’ll spend a lot of money raising the kid and sending to college. Don’t be surprised if the college tuition reaches $300k by the time your kid goes to college.

b) If something tragic happens to you, chances are your spouse is NOT going to be working full time, but rather mostly spending full time raising a kid, at least for the first couple of years until your kid reaches say junior high.

c) Consider inflation of the U.S. dollar

d) Don’t know how many kids you end up having. Plan for at least 1 more kid, just in case.

Imho, you should at least consider having total life of $1million at this point in your life. You have a $650k obligation + $350k that it will probably cost to see your kid go through college (even that is way underestimated)…Would you really want your wife to deal with moving,relocating,etc at the time of your death which would already be pretty stressful for her?

As your kid gets older, your family builds up financial reserves, you can taper your insurance off.

For me, my insurance consists of the following:

1) 2x salary insurance provided by employer
2) $300k supplement life insurance from employer (with cheap premiums)
3) $500k separate 20 year term life insurance
3) Two additional $100k term life from associations with group rates.

I split this up this way because as my kid get older, and as I have more financial reserves, I’ll cancel some of the policies. By the time my kid is on her own, all the policies are finished.

….
If you work at a large company/institution, I’d consider getting part(but not all) of your insurance as supplemental insurance (say 25-30% ), because usually it’s the cheapest route. The drawback is that if you leave your employer for any reason, you either can’t carry the policy with you OR if you do, your rates are going to be dramatically higher. Also, usually employers for FTE have 2x salary coverage provided by the employer.

b) Definitely get a policy independent of your employer. Term life, 20 year at least $500k. If you are in good health and do not have pre-existing conditions, try to get $1m. I regret not getting a larger policy, because I found out I have a pre-existing condition a few years after I bought my policy. even if I wanted to buy more, it’s either not possible or going to cost a fortune. Big mistake on my part.

c) If you belong to any associations, they usually offer some $100k policies here and there for reasonable rates.

As your kid gets older and you build up your financial assets, you can start cancelling policies bit by bit. For instance, once you pay of your mortgage, get rid of the supplemental insurance from your employer. Once your kids go to school, get rid of the smaller policies. The term life policy you bought should be the last one you get rid of, because all the other plans can change.

Try to avoid complex insurance products unless you really want to understand how they work. Agents love trying to sell you a variable annuity or something like that.

While you’re in the mood of planning for the unexpected, you probably should also look into (if you haven’t already) a living trust, sooner rather than later. Some thing you might also want to consider.

You *might* consider leaving some of your money to your kid explicitly, under the guardianship of your wife (and some alternative backups) versus giving all of it to your wife directly…not so much because you don’t trust your wife…But consider the situation in which your wife gets everything directly, your wife gets remarried to a horrible man, subsequently gets goes through a divorce, and who then proceeeds to comes after her assets. Not only does your wife get the shaft, but so does your kid….Versus if she is just the one who is a guardian of your kid’s fund, it’s not “her assets” for the new hubby to go after…And furthermore, she could withdraw from being the trust guardian, which then the next person you name would have the responsibility. The same could be said for the reverse situation in which your wife passes away, you get remarried, go through a horrible divorce, and that new person decides she wants half of your assets.

[Coronita]

beanmaestro,

A few things to consider, especially when you have a kid

a)You’ll spend a lot of money raising the kid and sending to college. Don’t be surprised if the college tuition reaches $300k by the time your kid goes to college.

b) If something tragic happens to you, chances are your spouse is NOT going to be working full time, but rather mostly spending full time raising a kid, at least for the first couple of years until your kid reaches say junior high.

c) Consider inflation of the U.S. dollar

d) Don’t know how many kids you end up having. Plan for at least 1 more kid, just in case.

Imho, you should at least consider having total life of $1million at this point in your life. You have a $650k obligation + $350k that it will probably cost to see your kid go through college (even that is way underestimated)…Would you really want your wife to deal with moving,relocating,etc at the time of your death which would already be pretty stressful for her?

As your kid gets older, your family builds up financial reserves, you can taper your insurance off.

For me, my insurance consists of the following:

1) 2x salary insurance provided by employer
2) $300k supplement life insurance from employer (with cheap premiums)
3) $500k separate 20 year term life insurance
3) Two additional $100k term life from associations with group rates.

I split this up this way because as my kid get older, and as I have more financial reserves, I’ll cancel some of the policies. By the time my kid is on her own, all the policies are finished.

….
If you work at a large company/institution, I’d consider getting part(but not all) of your insurance as supplemental insurance (say 25-30% ), because usually it’s the cheapest route. The drawback is that if you leave your employer for any reason, you either can’t carry the policy with you OR if you do, your rates are going to be dramatically higher. Also, usually employers for FTE have 2x salary coverage provided by the employer.

b) Definitely get a policy independent of your employer. Term life, 20 year at least $500k. If you are in good health and do not have pre-existing conditions, try to get $1m. I regret not getting a larger policy, because I found out I have a pre-existing condition a few years after I bought my policy. even if I wanted to buy more, it’s either not possible or going to cost a fortune. Big mistake on my part.

c) If you belong to any associations, they usually offer some $100k policies here and there for reasonable rates.

As your kid gets older and you build up your financial assets, you can start cancelling policies bit by bit. For instance, once you pay of your mortgage, get rid of the supplemental insurance from your employer. Once your kids go to school, get rid of the smaller policies. The term life policy you bought should be the last one you get rid of, because all the other plans can change.

Try to avoid complex insurance products unless you really want to understand how they work. Agents love trying to sell you a variable annuity or something like that.

While you’re in the mood of planning for the unexpected, you probably should also look into (if you haven’t already) a living trust, sooner rather than later. Some thing you might also want to consider.

You *might* consider leaving some of your money to your kid explicitly, under the guardianship of your wife (and some alternative backups) versus giving all of it to your wife directly…not so much because you don’t trust your wife…But consider the situation in which your wife gets everything directly, your wife gets remarried to a horrible man, subsequently gets goes through a divorce, and who then proceeeds to comes after her assets. Not only does your wife get the shaft, but so does your kid….Versus if she is just the one who is a guardian of your kid’s fund, it’s not “her assets” for the new hubby to go after…And furthermore, she could withdraw from being the trust guardian, which then the next person you name would have the responsibility. The same could be said for the reverse situation in which your wife passes away, you get remarried, go through a horrible divorce, and that new person decides she wants half of your assets.

[Coronita]

beanmaestro,

A few things to consider, especially when you have a kid

a)You’ll spend a lot of money raising the kid and sending to college. Don’t be surprised if the college tuition reaches $300k by the time your kid goes to college.

b) If something tragic happens to you, chances are your spouse is NOT going to be working full time, but rather mostly spending full time raising a kid, at least for the first couple of years until your kid reaches say junior high.

c) Consider inflation of the U.S. dollar

d) Don’t know how many kids you end up having. Plan for at least 1 more kid, just in case.

Imho, you should at least consider having total life of $1million at this point in your life. You have a $650k obligation + $350k that it will probably cost to see your kid go through college (even that is way underestimated)…Would you really want your wife to deal with moving,relocating,etc at the time of your death which would already be pretty stressful for her?

As your kid gets older, your family builds up financial reserves, you can taper your insurance off.

For me, my insurance consists of the following:

1) 2x salary insurance provided by employer
2) $300k supplement life insurance from employer (with cheap premiums)
3) $500k separate 20 year term life insurance
3) Two additional $100k term life from associations with group rates.

I split this up this way because as my kid get older, and as I have more financial reserves, I’ll cancel some of the policies. By the time my kid is on her own, all the policies are finished.

….
If you work at a large company/institution, I’d consider getting part(but not all) of your insurance as supplemental insurance (say 25-30% ), because usually it’s the cheapest route. The drawback is that if you leave your employer for any reason, you either can’t carry the policy with you OR if you do, your rates are going to be dramatically higher. Also, usually employers for FTE have 2x salary coverage provided by the employer.

b) Definitely get a policy independent of your employer. Term life, 20 year at least $500k. If you are in good health and do not have pre-existing conditions, try to get $1m. I regret not getting a larger policy, because I found out I have a pre-existing condition a few years after I bought my policy. even if I wanted to buy more, it’s either not possible or going to cost a fortune. Big mistake on my part.

c) If you belong to any associations, they usually offer some $100k policies here and there for reasonable rates.

As your kid gets older and you build up your financial assets, you can start cancelling policies bit by bit. For instance, once you pay of your mortgage, get rid of the supplemental insurance from your employer. Once your kids go to school, get rid of the smaller policies. The term life policy you bought should be the last one you get rid of, because all the other plans can change.

Try to avoid complex insurance products unless you really want to understand how they work. Agents love trying to sell you a variable annuity or something like that.

While you’re in the mood of planning for the unexpected, you probably should also look into (if you haven’t already) a living trust, sooner rather than later. Some thing you might also want to consider.

You *might* consider leaving some of your money to your kid explicitly, under the guardianship of your wife (and some alternative backups) versus giving all of it to your wife directly…not so much because you don’t trust your wife…But consider the situation in which your wife gets everything directly, your wife gets remarried to a horrible man, subsequently gets goes through a divorce, and who then proceeeds to comes after her assets. Not only does your wife get the shaft, but so does your kid….Versus if she is just the one who is a guardian of your kid’s fund, it’s not “her assets” for the new hubby to go after…And furthermore, she could withdraw from being the trust guardian, which then the next person you name would have the responsibility. The same could be said for the reverse situation in which your wife passes away, you get remarried, go through a horrible divorce, and that new person decides she wants half of your assets.

[Coronita]

beanmaestro,

A few things to consider, especially when you have a kid

a)You’ll spend a lot of money raising the kid and sending to college. Don’t be surprised if the college tuition reaches $300k by the time your kid goes to college.

b) If something tragic happens to you, chances are your spouse is NOT going to be working full time, but rather mostly spending full time raising a kid, at least for the first couple of years until your kid reaches say junior high.

c) Consider inflation of the U.S. dollar

d) Don’t know how many kids you end up having. Plan for at least 1 more kid, just in case.

Imho, you should at least consider having total life of $1million at this point in your life. You have a $650k obligation + $350k that it will probably cost to see your kid go through college (even that is way underestimated)…Would you really want your wife to deal with moving,relocating,etc at the time of your death which would already be pretty stressful for her?

As your kid gets older, your family builds up financial reserves, you can taper your insurance off.

For me, my insurance consists of the following:

1) 2x salary insurance provided by employer
2) $300k supplement life insurance from employer (with cheap premiums)
3) $500k separate 20 year term life insurance
3) Two additional $100k term life from associations with group rates.

I split this up this way because as my kid get older, and as I have more financial reserves, I’ll cancel some of the policies. By the time my kid is on her own, all the policies are finished.

….
If you work at a large company/institution, I’d consider getting part(but not all) of your insurance as supplemental insurance (say 25-30% ), because usually it’s the cheapest route. The drawback is that if you leave your employer for any reason, you either can’t carry the policy with you OR if you do, your rates are going to be dramatically higher. Also, usually employers for FTE have 2x salary coverage provided by the employer.

b) Definitely get a policy independent of your employer. Term life, 20 year at least $500k. If you are in good health and do not have pre-existing conditions, try to get $1m. I regret not getting a larger policy, because I found out I have a pre-existing condition a few years after I bought my policy. even if I wanted to buy more, it’s either not possible or going to cost a fortune. Big mistake on my part.

c) If you belong to any associations, they usually offer some $100k policies here and there for reasonable rates.

As your kid gets older and you build up your financial assets, you can start cancelling policies bit by bit. For instance, once you pay of your mortgage, get rid of the supplemental insurance from your employer. Once your kids go to school, get rid of the smaller policies. The term life policy you bought should be the last one you get rid of, because all the other plans can change.

Try to avoid complex insurance products unless you really want to understand how they work. Agents love trying to sell you a variable annuity or something like that.

While you’re in the mood of planning for the unexpected, you probably should also look into (if you haven’t already) a living trust, sooner rather than later. Some thing you might also want to consider.

You *might* consider leaving some of your money to your kid explicitly, under the guardianship of your wife (and some alternative backups) versus giving all of it to your wife directly…not so much because you don’t trust your wife…But consider the situation in which your wife gets everything directly, your wife gets remarried to a horrible man, subsequently gets goes through a divorce, and who then proceeeds to comes after her assets. Not only does your wife get the shaft, but so does your kid….Versus if she is just the one who is a guardian of your kid’s fund, it’s not “her assets” for the new hubby to go after…And furthermore, she could withdraw from being the trust guardian, which then the next person you name would have the responsibility. The same could be said for the reverse situation in which your wife passes away, you get remarried, go through a horrible divorce, and that new person decides she wants half of your assets.

[Coronita]

beanmaestro,

A few things to consider, especially when you have a kid

a)You’ll spend a lot of money raising the kid and sending to college. Don’t be surprised if the college tuition reaches $300k by the time your kid goes to college.

b) If something tragic happens to you, chances are your spouse is NOT going to be working full time, but rather mostly spending full time raising a kid, at least for the first couple of years until your kid reaches say junior high.

c) Consider inflation of the U.S. dollar

d) Don’t know how many kids you end up having. Plan for at least 1 more kid, just in case.

Imho, you should at least consider having total life of $1million at this point in your life. You have a $650k obligation + $350k that it will probably cost to see your kid go through college (even that is way underestimated)…Would you really want your wife to deal with moving,relocating,etc at the time of your death which would already be pretty stressful for her?

As your kid gets older, your family builds up financial reserves, you can taper your insurance off.

For me, my insurance consists of the following:

1) 2x salary insurance provided by employer
2) $300k supplement life insurance from employer (with cheap premiums)
3) $500k separate 20 year term life insurance
3) Two additional $100k term life from associations with group rates.

I split this up this way because as my kid get older, and as I have more financial reserves, I’ll cancel some of the policies. By the time my kid is on her own, all the policies are finished.

….
If you work at a large company/institution, I’d consider getting part(but not all) of your insurance as supplemental insurance (say 25-30% ), because usually it’s the cheapest route. The drawback is that if you leave your employer for any reason, you either can’t carry the policy with you OR if you do, your rates are going to be dramatically higher. Also, usually employers for FTE have 2x salary coverage provided by the employer.

b) Definitely get a policy independent of your employer. Term life, 20 year at least $500k. If you are in good health and do not have pre-existing conditions, try to get $1m. I regret not getting a larger policy, because I found out I have a pre-existing condition a few years after I bought my policy. even if I wanted to buy more, it’s either not possible or going to cost a fortune. Big mistake on my part.

c) If you belong to any associations, they usually offer some $100k policies here and there for reasonable rates.

As your kid gets older and you build up your financial assets, you can start cancelling policies bit by bit. For instance, once you pay of your mortgage, get rid of the supplemental insurance from your employer. Once your kids go to school, get rid of the smaller policies. The term life policy you bought should be the last one you get rid of, because all the other plans can change.

Try to avoid complex insurance products unless you really want to understand how they work. Agents love trying to sell you a variable annuity or something like that.

While you’re in the mood of planning for the unexpected, you probably should also look into (if you haven’t already) a living trust, sooner rather than later. Some thing you might also want to consider.

You *might* consider leaving some of your money to your kid explicitly, under the guardianship of your wife (and some alternative backups) versus giving all of it to your wife directly…not so much because you don’t trust your wife…But consider the situation in which your wife gets everything directly, your wife gets remarried to a horrible man, subsequently gets goes through a divorce, and who then proceeeds to comes after her assets. Not only does your wife get the shaft, but so does your kid….Versus if she is just the one who is a guardian of your kid’s fund, it’s not “her assets” for the new hubby to go after…And furthermore, she could withdraw from being the trust guardian, which then the next person you name would have the responsibility. The same could be said for the reverse situation in which your wife passes away, you get remarried, go through a horrible divorce, and that new person decides she wants half of your assets.

[Raybyrnes]

HLS
There are other consideration that would need to be considered with any strategy. Family history, life expectancy etc. I think you make a good point about the comparison and cost of coverage which I would have went into but there is only so much I wanted to type.

I may argue that term life insurance costs have actually gone down and as life expectancy going up actuarial tables should adjust to lower costs. This can be debated. Many with term policies who ahve had the policies for over 1 years shoud be checking out costs and rates as they ahve gone down substantially.

I break down the purchasing of life insurance into increments as far too often people address it once and then try and forget about it whereas I0 believe it should be reviewed every 4 or 5 years minimum. You can be both overinsured and underinsured and my method can give you some flexibility to be on target.

I have nothing against other argument for permenant whole life policies. There are some decent strategies that can be used there aswell but if you are looking to send as little as possible on premium I have given someone something to consider.

[Raybyrnes]

HLS
There are other consideration that would need to be considered with any strategy. Family history, life expectancy etc. I think you make a good point about the comparison and cost of coverage which I would have went into but there is only so much I wanted to type.

I may argue that term life insurance costs have actually gone down and as life expectancy going up actuarial tables should adjust to lower costs. This can be debated. Many with term policies who ahve had the policies for over 1 years shoud be checking out costs and rates as they ahve gone down substantially.

I break down the purchasing of life insurance into increments as far too often people address it once and then try and forget about it whereas I0 believe it should be reviewed every 4 or 5 years minimum. You can be both overinsured and underinsured and my method can give you some flexibility to be on target.

I have nothing against other argument for permenant whole life policies. There are some decent strategies that can be used there aswell but if you are looking to send as little as possible on premium I have given someone something to consider.

[Raybyrnes]

HLS
There are other consideration that would need to be considered with any strategy. Family history, life expectancy etc. I think you make a good point about the comparison and cost of coverage which I would have went into but there is only so much I wanted to type.

I may argue that term life insurance costs have actually gone down and as life expectancy going up actuarial tables should adjust to lower costs. This can be debated. Many with term policies who ahve had the policies for over 1 years shoud be checking out costs and rates as they ahve gone down substantially.

I break down the purchasing of life insurance into increments as far too often people address it once and then try and forget about it whereas I0 believe it should be reviewed every 4 or 5 years minimum. You can be both overinsured and underinsured and my method can give you some flexibility to be on target.

I have nothing against other argument for permenant whole life policies. There are some decent strategies that can be used there aswell but if you are looking to send as little as possible on premium I have given someone something to consider.

[Raybyrnes]

HLS
There are other consideration that would need to be considered with any strategy. Family history, life expectancy etc. I think you make a good point about the comparison and cost of coverage which I would have went into but there is only so much I wanted to type.

I may argue that term life insurance costs have actually gone down and as life expectancy going up actuarial tables should adjust to lower costs. This can be debated. Many with term policies who ahve had the policies for over 1 years shoud be checking out costs and rates as they ahve gone down substantially.

I break down the purchasing of life insurance into increments as far too often people address it once and then try and forget about it whereas I0 believe it should be reviewed every 4 or 5 years minimum. You can be both overinsured and underinsured and my method can give you some flexibility to be on target.

I have nothing against other argument for permenant whole life policies. There are some decent strategies that can be used there aswell but if you are looking to send as little as possible on premium I have given someone something to consider.

[Author]

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