Life Insurance?
livinlife asked:
My husband, 32 and I, 30 are looking into life insurance. Can anyone tell me which company or websites I can use to get information. There are so many out there… wouldnt know where to start. Who do you personally use? Is there a medical exam involved? What type of premiums are you paying? Is it fixed or does it go up every few years? We live in Florida also. Any help would be appriciated.
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My husband, 32 and I, 30 are looking into life insurance. Can anyone tell me which company or websites I can use to get information. There are so many out there… wouldnt know where to start. Who do you personally use? Is there a medical exam involved? What type of premiums are you paying? Is it fixed or does it go up every few years? We live in Florida also. Any help would be appriciated.
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Category: Insurance | Tags: Life Insurance, Premiums 7 comments »
June 26th, 2009 at 5:22 pm
Look for term insurance not whole life – a much better value for your money – you want death protection not investment out of insurance – invest in investment programs (401 – Roth IRA ETC) not life insurance – only purchase term insurance to cover the loss of an income to protect your family
June 29th, 2009 at 8:39 am
I would check around in a few different places. A little friendly competition will give you a better result. Expect to give your actual dates of birth, general health questions, and family history to get quotes. As you mentioned, there are a number of different options out there. If you know how you would generally like your life coverage to behave, I can find something to match.
June 30th, 2009 at 11:47 am
There are two types of Insurance; Permanent and Term.
Permanent Polcies remain at the same monthly cost for the rest of your life.
Term policies remain fixed for a set number of years. After the set number of years the policy either terminates or can be rewriten for the same length of time, but you’ll now be evaluated at your new age, not the age you are now.
Permanent Policies are similiar to buying a home. The policy builds Cash value and could potential increase your death benefit. You can take a loan out against your own cash value or should you cancel the policy at a later time, you will get the cash value paid out to you at that time.
Term policies are like renting. After the set term (5, 10, 20, 30 years) each party walks away. You don’t get any money back, but you’ll have paid less over the course of the 10 years.
If you were to get a 20 yr term policy now, at age 50 your policy would end (unless you had already died). You could then get another policy, but they’d rate you as a 50 year old, not a 30 year old. and at each of these 20 year renewals, you’ll have to go through medical screening again.
If you were to get Permanent Policy now, you’ll have a higher premium now, but at age 50 you’ll still be paying the same amount as you are now. At age 70 you’ll still be paying the same amount as you are now. At age 90? Same amount.
To figure out how much coverage you’ll need, here’s a handy tool: L.I.F.E.
L: Liabilities: mortgage, car note, student loans, credit cards
I: Income replacement: 5 to 10 times your annual income (though in your case, each of you have another 30-35 years working life in you, you might want more)
F: Final Expenses: Typically $10-25 k
E: Education: Education for your spouse, should they need to change careers to maintain their standard of living after you pass and/or college tuition for any childre you may leave behind.
So, with a $200k mortgage, $25k car loan, and $15k Student Loan, your L is $240k.
If you’re making $50k annually, you’ll need $500k for I.
Let’s call F at $15k
E? Well, 2 kids at $20k per year for 4 years each translate to $160k.
This mean you’ll need $915,000 worth of Life Insurance.
I have my Life with State Farm. It’s also giving me a discount on my car insurance.
July 3rd, 2009 at 2:35 pm
Check the related link below for additional info regarding whole life policies.
Insurance, when it started, was meant to be for a period of time- TERM. After a while companies changed to wanting to make as much as possible while paying out as little as possible. They created whole life and all its variations. People say term is like renting.
NOPE!!! It is about understanding that the money in a whole life policy is not yours but the companies. There are five funny rules about whole life: 1) In first 2 years there is NO cash value. 2) When it does start to accrue, you get only 1-4%. 3) You can borrow, but you pay the Company a fee of 6-8% to take your money out. 4) They can and will make you wait to get your money. 5) Your beneficiaries will get one or the other. Meaning, they will receive face amount or cash value- their choice; almost always it is face amount. What about cash value? The company keeps it!! Unless you pay more in premiums for your people to receive it.
Life insurance is not the appropriate term I like using. It is more appropriately income protection insurance. If anybody relies on you for a paycheck you are OBLIGATED to get and have income protection insurance.
Buy term and invest the difference. Term is for a period of time. That time period is to be used to accumulate enough money to become self insured. Once you are self insured, you no longer need any or as much insurance as you did. This is called the theory of decreasing responsibility. When young, you need as much as possible because you have kids, debt mortgage, education and you have little in the way of available assets. But, later you had better have saved money for retirement. Now you need little to none because retirement has been taken care of, kids are grown- out of house, education taken care of, debt and mortgage is paid for.
For those of us your age, term is the only way to go. All the others are smoke and mirrors. Sometimes the agent doesn’t even know about thgeir policies and how they work.If they do and don’t tell you- Shame on them!!! By using term, you get max coverage for as little as possible. Make sure it is level term- premiums do not go up, make sure that the entire family is covered on one policy- multiple policies mean multiple policy fees, and increased commission, make sure that children are covered under one payment- both present kids and future ones, and make sure that the agent completes a comprehensive financial analysis for your family.
I hope this has helped.
July 4th, 2009 at 5:00 pm
Yes, there’s a medical exam. You can get one with a fixed premium – fix it for 20 years or so. Your BEST bet is to buy from a local agent, starting with the guy that does your house and car insurance.
Set the goal of the life insurance first, then find the product that meets that goal best. MOST of the time, but not ALL the time, term insurance is the best product to meet most people’s goals at the cheapest rate.
I have 20 year term, renewable convertible, through Jacksonville National. That might not be the best company for YOU, though. An independent agent can get you quotes for a variety of products, with 6 – 10 different insurance companies, AND can help you compare and contrast the coverages.
July 7th, 2009 at 2:03 am
At this point I would suggest that you both take term life insurance. It is much cheaper than other forms of life insurance. For a small amount of money you can buy a great deal of insurance. I would suggest 30 year term which means that you will have that insurance for thirty years. The insurance rate at the beginning will be higher but in the long run you will be paying less.
Most life insurance agents will suggest some form of permeant life insurance. Their sales technique is to convince you that it is better since you will be getting money back at the end of the policy, will be able to borrow from it and have tax advantages. Most consumer advices believe that you are better off taking the difference in the premiums between term and permanent insurance and investing it. Instance agents receive very little commission on term insurance but almost the first years premium on permanent life. Do not be hoodwinked. They are living on your money. Most permanent insurance policies are front loaded which means that you have very little growth of your money in the first ten years or so of the policy. If you cancel as many people do, you have almost nothing to show for a large investment. Many people do cancel.
As far as where to look is concerned place 30 year term insurance into Google and also twenty year term insurance. Look for sites that deal wish a number of different companies. Read the terms of the policy carefully and ask for them in writing. Do not make any hasty decisions.
Good luck.
July 10th, 2009 at 5:41 am
I’ve been helping people with their financial planning for many years now and the only type of life insurance I sold to all of them is term insurance. Term insurance is the only type of life insurance that doesn’t build savings. Base on your age, I recommend a 35 year term insurance.
Since term insurance doesn’t build savings, it lets you decide where you want to save your money. I recommend my clients to invest their money. I educate them about how money works, the Rule of 72 and the power of compound interest. After that, they realize that saving money in bank accounts are not going to get them to financial independence quick enough. So I open IRA accounts for them, variable annuities for few of them, emergency funds, and so on. If you invested $333/month at a 10% rate of return for the next 30 years, you will have about $760,000 for retirement. If your husband does the same, he too will have $760,000. Together, both of you will have $1,520,000 to live on. In 30-35 years, do both of you think you will still need life insurance? What financial obligations will you have when you are in your 60s?
I also provide debt solutions to clients to help them pay off their debt faster and do other things like budget worksheet and financial needs analysis. The company I work at is Primerica Financial Services and they serve over 6 million clients.