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Message
Life Insurance: Where to start?
Posted on 1/30/15 at 8:55 am
Posted on 1/30/15 at 8:55 am
I know the very basics about life insurance, but this is probably the topic in the personal finance world with which I am least familiar. However, I am fairly certain that I am not interested in whole/universal life based on my limited knowledge of the products and an understanding of my personal situation.
But my question is, where do I start by assessing how much I really need and when to buy? I know some people who are in the industry, but there is no one that I really trust to give me a good reference of a professional to meet. The few times I have been approached briefly by friends of friends, I feel like I'm at a used car lot or something. I hate feeling like someone is trying to sell me something. Is there anyone that is really looking out for my best interest?
I know there are a few insurance professionals who post, so I'll leave some personal info in case they have any specific comments/thoughts...
I just got married in the past month (hence why I am getting serious about this topic now), and we are both in our mid/late 20's with no children. We still rent and have very minimal student loan debt that could be paid off any day. No car loans, etc. We have normal CC activity that is paid in full each month. Most likely, we plan to buy a house and start a family within in the next 5 years or so. My income is currently the significant majority of our household income, and that will likely continue to be the case. We have no plans to transition to a single income family in the future unless there is a major unforeseen circumstance to drive that decision. Neither of us are smokers or have chronic illnesses of any kind. She is fit, but I am definitely overweight. We both have relatively small employer paid life insurance benefits (~1.5X salary for me and ~.5X salary for her).
But my question is, where do I start by assessing how much I really need and when to buy? I know some people who are in the industry, but there is no one that I really trust to give me a good reference of a professional to meet. The few times I have been approached briefly by friends of friends, I feel like I'm at a used car lot or something. I hate feeling like someone is trying to sell me something. Is there anyone that is really looking out for my best interest?
I know there are a few insurance professionals who post, so I'll leave some personal info in case they have any specific comments/thoughts...
I just got married in the past month (hence why I am getting serious about this topic now), and we are both in our mid/late 20's with no children. We still rent and have very minimal student loan debt that could be paid off any day. No car loans, etc. We have normal CC activity that is paid in full each month. Most likely, we plan to buy a house and start a family within in the next 5 years or so. My income is currently the significant majority of our household income, and that will likely continue to be the case. We have no plans to transition to a single income family in the future unless there is a major unforeseen circumstance to drive that decision. Neither of us are smokers or have chronic illnesses of any kind. She is fit, but I am definitely overweight. We both have relatively small employer paid life insurance benefits (~1.5X salary for me and ~.5X salary for her).
9
Posted on 1/30/15 at 9:18 am to kennypowers816
quote:
I am definitely overweight
If you are unhealthy, you will pay higher premiums. If you are a couple of pounds high, no worry, but if you are a lot high, you might not get the best rates.
There are some "rules" out there that some people like to follow, such as 10 times annual income. In reality, it will change. You might not need a lot now, you will need more when the kids are around, and you might need less when the kids move out and you have saved more money.
A good life insurance professional can get more detailed than that, and can run an analysis that more specifically recommends what is a good amount of coverage.
If you are just looking for cheap, easy stuff, see if your auto insurance carrier also offers life insurance, you may be able to get discounts as well.
Posted on 1/30/15 at 9:51 am to LSUFanHouston
Think seriously about how much your spouse "needs". Right now, you have no mortgage obligation and she isn't responsible for your student loans.....so your employer provided policy is prob sufficient to pay for funeral expenses and give her a couple months cushion. Ask her about this: you need to talk about this together.
Check with your employer: often, supplemental policies are very cheap as an add on to the coverage you already have.
As I've posted before on this board, you ABSOLUTELY should purchase disability/income interruption insurance BEFORE you spend money on life insurance. A stroke or heart attack can render you unable to work yet you will be potentially able to live for decades more. Being dead is cheap...being alive and unable to work is expensive.
Check with your employer: often, supplemental policies are very cheap as an add on to the coverage you already have.
As I've posted before on this board, you ABSOLUTELY should purchase disability/income interruption insurance BEFORE you spend money on life insurance. A stroke or heart attack can render you unable to work yet you will be potentially able to live for decades more. Being dead is cheap...being alive and unable to work is expensive.
This post was edited on 1/30/15 at 9:52 am
Posted on 1/30/15 at 10:09 am to kennypowers816
You don't 'need' life insurance. Your chances of you dying any time soon are minuscule. Your widow would remarry and carry on just fine in the exceptionally remote possibility you keel over before your time.
chances of dying at a particular age
25 .001342
30 .001408
40 .002084
50 .005156
(I know these numbers a cumulative, but still relevant to the question)
10x income is completely absurd for someone your age and created to generate commissions with zero basis in how people actually deal with premature death of breadwinner. If you're 50 or 60 and haven't properly saved, then something like that MAY make sense, but even then, your widow won't need 10 years income as she will remarry anyway.
A much better way is to plan for LIFE. Spend the time and money finding safe and prudent ways to plan for paying for kids, college, and retirement if you DON'T die, since there is a 99% chance you're going to live and have to deal with those things. Planning for the .5% outcome just doesn't make sense any more than buying lottery tickets.
There are times when life insurance is a good idea, but if you save now, that time will never come. Once life insurance becomes needed later in life, you should have paid off all of your debts and have enough savings for your widow to carry on without you. If I can do it, anyone can.
chances of dying at a particular age
25 .001342
30 .001408
40 .002084
50 .005156
(I know these numbers a cumulative, but still relevant to the question)
10x income is completely absurd for someone your age and created to generate commissions with zero basis in how people actually deal with premature death of breadwinner. If you're 50 or 60 and haven't properly saved, then something like that MAY make sense, but even then, your widow won't need 10 years income as she will remarry anyway.
A much better way is to plan for LIFE. Spend the time and money finding safe and prudent ways to plan for paying for kids, college, and retirement if you DON'T die, since there is a 99% chance you're going to live and have to deal with those things. Planning for the .5% outcome just doesn't make sense any more than buying lottery tickets.
There are times when life insurance is a good idea, but if you save now, that time will never come. Once life insurance becomes needed later in life, you should have paid off all of your debts and have enough savings for your widow to carry on without you. If I can do it, anyone can.
Posted on 1/30/15 at 10:15 am to kennypowers816
buy as much a term life as you can thru your employer... if ain't enough buy some more term
avoid whole life like the plague.
avoid whole life like the plague.
Posted on 1/30/15 at 2:12 pm to kennypowers816
I purchased a 30 yr term policy through MetLife. It will expire when i am in my early 60's and by that time my financial burden to anyone left behind should be very little to none. At least that is my thinking. I ended up with a $750k policy fwiw.
Posted on 1/30/15 at 2:23 pm to Clint Torres
email me, djw70726@yahoo.com
I have a business partner who is an expert in life insurance. He is independent so he is able to offer much better policies than standard term policies from new york or anywhere else. He also has policies with living benefits that can be very beneficial in case of injury or sickness.
I have a business partner who is an expert in life insurance. He is independent so he is able to offer much better policies than standard term policies from new york or anywhere else. He also has policies with living benefits that can be very beneficial in case of injury or sickness.
Posted on 1/30/15 at 2:28 pm to kennypowers816
If you died today, your wife would probably be better off then had she never married you. Once you have kids, then you have to consider your wife will have to raise them for the next 20 years and that is when you should have maximum life insurance. As you get older your savings will (should) increase and your dependents will get closer to being independent. Get the life insurance you reasonably need, not way more. Life insurance is a necessary protection, but it comes with a cost that cuts into the money you could apply to other things like retirement.
1. Married without kids in your 20's, you need very little life insurance. Your wife should not be dependent on you at this point.
2. Once you have kids, you will need enough for your wife to get your kids into and maybe through college. You also don't want her to have to work at wal-mart after your kids are out of the house.
3. Once you are older, you need enough insurance to supplement your saving to allow your wife to retire. Hopefully you will have enough savings and not need any by the time you are 60.
1. Married without kids in your 20's, you need very little life insurance. Your wife should not be dependent on you at this point.
2. Once you have kids, you will need enough for your wife to get your kids into and maybe through college. You also don't want her to have to work at wal-mart after your kids are out of the house.
3. Once you are older, you need enough insurance to supplement your saving to allow your wife to retire. Hopefully you will have enough savings and not need any by the time you are 60.
This post was edited on 1/30/15 at 2:30 pm
Posted on 1/30/15 at 2:29 pm to kennypowers816
I'd suggest a 30 year Fully underwritten policy from an A or A+ Rated Insurance Carrier for whatever amount of monthly premium you can comfortably afford. Ask an Independent agent to shop how much coverage you can get for a fixed dollar amount, say $50 a month combined. I would also do separate policies instead of a policy where she is a rider on yours in most cases.
If you are VERY overweight they will "rate you up" and give you a "higher table rating" which translated means higher risk/more expensive. Just give an agent this info and he can figure something out. I have a simplified carrier (no exams-higher risk- more expensive premiums) that has a CRAZY high build chart, and that is where I put my chubbiest people. I tell people to get that, and then drop it a year down the road after they have dropped the weight in favor of a more affordable policy.
I wrote a policy in 2012 for a 35 year old guy who died three weeks later. I wrote a policy in 2013 for a 25 year old guy who died 11 months later. It happens.
If you are VERY overweight they will "rate you up" and give you a "higher table rating" which translated means higher risk/more expensive. Just give an agent this info and he can figure something out. I have a simplified carrier (no exams-higher risk- more expensive premiums) that has a CRAZY high build chart, and that is where I put my chubbiest people. I tell people to get that, and then drop it a year down the road after they have dropped the weight in favor of a more affordable policy.
I wrote a policy in 2012 for a 35 year old guy who died three weeks later. I wrote a policy in 2013 for a 25 year old guy who died 11 months later. It happens.
Posted on 1/30/15 at 2:29 pm to kennypowers816
Have been pleased with the term life quotes thru accuquote. but you need disability first
Posted on 1/30/15 at 3:34 pm to kennypowers816
I've always looked as life insurance as "death" insurance.
Term policies are geared to this thinking.
The amount depends on your particular circumstances. You should carry enough to help your family cope with the loss of your income. I have 2 kids, 15 and 18, and a wife with 2 masters degree who works. I carry about 4 to five times my income in term policies. Some people I know carry much more. My wife is smart and not helpless so do not have a multimillion dollar life insurance policy. I'm a doctor and many of my colleagues carry much larger policies. Basically, their family is set for life financially if they die which seems a little much to me, but to each his/her own.
Term policies are geared to this thinking.
The amount depends on your particular circumstances. You should carry enough to help your family cope with the loss of your income. I have 2 kids, 15 and 18, and a wife with 2 masters degree who works. I carry about 4 to five times my income in term policies. Some people I know carry much more. My wife is smart and not helpless so do not have a multimillion dollar life insurance policy. I'm a doctor and many of my colleagues carry much larger policies. Basically, their family is set for life financially if they die which seems a little much to me, but to each his/her own.
Posted on 1/30/15 at 6:53 pm to Lsupimp
I have a simplified carrier (no exams-higher risk- more expensive premiums) that has a CRAZY high build chart
Which carrier?
Which carrier?
Posted on 1/30/15 at 7:09 pm to kennypowers816
always max out employer sponsered benefits but do not count it as part of your insurance plan. You have no control of that coverage.
What's your height and weight?
Underwriters also look at prescriptions, medical records, family history, alcohol /drug/psychiatric treatment, hazardous work/hobbies, travel destinations...etc.
You're needs will change alot over the next few years so you may consider buying enough term to cover the upcoming life changes. If youre in decent health and in your 20's, the difference in premium between $1million and 500k will be minimal.
Cover debts, funeral costs, emergency fund, possible child care/education savings and replace as much income as you want or can afford.
What's your height and weight?
Underwriters also look at prescriptions, medical records, family history, alcohol /drug/psychiatric treatment, hazardous work/hobbies, travel destinations...etc.
You're needs will change alot over the next few years so you may consider buying enough term to cover the upcoming life changes. If youre in decent health and in your 20's, the difference in premium between $1million and 500k will be minimal.
Cover debts, funeral costs, emergency fund, possible child care/education savings and replace as much income as you want or can afford.
Posted on 2/3/15 at 11:02 am to wasteland
Simply put if you have a great group benefits deathly max out your coverage there. After that you can analyze how much you need on a simple form of formula of getting 10 times your annual income of life insurance to protect if you would pass away. You also seriously need to consider some type of disability income protection in case you had some kind of sickness, illness, cancer, accident, depression, etc. bottom line!
I am an independent agent so let me know if there is interesting with more info/questions. Good move on your part!
I am an independent agent so let me know if there is interesting with more info/questions. Good move on your part!
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