Life Insurance

[SB]

I didn't want to hijack the thread below about a Financial Planner, but that discussion made me post this thread about life insurance. I never have been a believer in it, and I've had two different financial planners try to tell me that I needed it. When it is needed? When you have more debt than assets?

When I told these financial planners my life insurance was self financed, they both gave me inquisitive looks and asked what I meant. I told them - my assets were greater than my debt, wanted my kids to be taken care of until adulthood (and they will be because of assets if needed), my wife can take care of herself by continuing to work. I figure life insurance is the insurance company betting I won't need it and if I was to pay the premium I'm betting that I will need which means I think I'm going to die.

If I was carrying a significant amount of debt I might could understand the need for term life insurance. I've known of guys in business together that named their partner(s) as beneficiaries to policies that they all took out for themselves/partners/owners of the business. I could see the potential in this situation if the company is carrying a lot of debt or to be used to buy the deceased partners ownership/interest out after his passing.

So, when is life insurance a good deal?

[the doctor]

My assets are greater than debt as well, but fact is i still have debt. With two kids under 8 and a mortgage I keep enough life insurance to make sure house gets paid and a trust established for their college. Dont count retirement dollars in assets either. Your spouse will still need to reitre at some point.

Not a big fan of it but do keep enough to cover those things above.

the doc

[backwoods]

Glad someone posted this. I was curious as well. Thanks.

[REBEL DUCK]

I sell it and believe in it. There is a lot of ways it can be used the simplest is term to cover debt, mortgage kids etc. The whole life is a asset just like land to me you get it paid for and it's guaranteed to be passed to my son. As my father did for me. The cash value is there if I ever need it in case of emergency I doubt I ever get in it but it's there.


If you ever do decide to look at it find someone you trust because there are tons of companies and policies out there. I advise folks to stay away from universal life and variable. Either buy term or whole nothing is wrong with either as long as you understand it. The whole life is a good place to dump money If you have it sitting around not drawing much interest and you don't need the money. It will grow at a guaranteed rate and pass on tax free.

[Long Cut]

To each his own on if they want it or not but here's how we use it.
My wife is a stay at home mom so she does not produce much income therefore in order to keep her from having to scramble and go back to teaching school I carry 12 times my income, here's why. The only debt we have is our mortgage so 2 times my income will bury me and pay off the mortgage easily. The other 10 times my income is to be invested, the money earned will even in a down market let my family go on living the same life until my wife decides to go back to work or whatever. I carry a 20 year term policy that my carrier just allowed me 10 years into the term to increase the amount and reset the term to 20 years for minimal premium increase because I lost a lot of weight. We carry 100,000 term on my wife basically for burial and what it would cost me to hire someone to keep kids and clean etc(replace some of what she does) for about 2 years.

I figure it's going to cost me about 20,000 over the course of the term and I know I don't get any tangible asset in return but I travel a lot as a sales rep so who knows what could happen to me these days. Hopefully there will be a day when I can self insure with cash type assets but I'm not anywhere near that yet.

[trey]

You get term life because it's cheap.

500,000 for a 30yr is a whopping $20/month, pending health and Tobacco use.. Why would you not get it??? Term life is available to protect your assets, pay off debts, replace income from an unexpected death, eliminate mortgage and help fund college education.. It's very affordable and it's the greatest gift you can leave your children and your spouse.. Also, some of your assets you have may not be readily available to your loved ones until the estate is closed.. Those bills don't stop coming..

There's 2 types of Life insurance,

Temporary - which also means term, it's like renting a house, figure out how much you need today and rent the policy to replace what your family would lose if you died today.. You make 75,000/year and owe 250,000 on a mortgage.. You need at least 1 million in coverage if you don't have any assets.. You don't rent a house for 30years, you only rent it for as long as you need it.. You need the most life insurance from 25-50 because your greatest asset is your ability to earn an income, through out these years you'll be building a family, collecting debt and planning retirement, and college education, after 50 your house is paid down, children are grown and you can covert your term policy whenever you need too.. If you raise face amount, you gotta go back through underwriting... if you lower face amount you keep same rating class.. After your kids are grown and you've paid your house down, you won't need near the amount of life insurance as you did when you started your family.. Lower your face amount and convert it again.. You should change your life policy several times throughout your life.. Every time you have a life changing event, you should have your agent review your policy!

Permanent - this can be whole life, Universal life, etc.. Every case is different and depends on what the clients goals are! The difference is this life insurance policy will be there when you are 90 and have a heart attack.. Final expenses get paid quickly and smoothly..


I personally think it's a great idea to have both of these in some form or fashion.. You will die, but you don't know when, so protect your family and let your spouse and children know that it doesn't matter when I go, everyone will be taken care of.. If you love your family then you owe them at least that much!

[cwink]

I use term life insurance and I have about 2 million in separate policies through work and private insurance.. I think I pay about 70 a month.. I want enough life insurance to pay off my debt including mortgage, and what is left should be enough that my wife can invest the money and the interest should just about replace my paycheck.

[ScottyLee]

here's my 2 cents.

not sure exactly what kind of assets you are describing, but to liquidate assets, it involves time and additional taxes and maybe even additional penalties (again depends on what kind of assets). Can your wife and family maintain their current lifestyle without your income? If something happens to you tragically, and there are large sums of debt incurred before you die, can these be paid off and final expenses be handled without causing a lifestyle change? If you have children, is education expenses something you plan to take care of, or is it already fully funded? Business partnerships have been mentioned. Life insurance could also be used to cover estate taxes.

I get why you feel like you do, most men feel the same way. The real question is, if your gone tomorrow, is you wife okay with the financial situation? if the answer to that question is no, then you need life insurance.

[rjohnson]

In our business partnership we have a policy on each other and agreement that the policy will be the buyout for the other spouse. So if I get killed somehow the policy amount will go to my wife and he will get full ownership at that point and vice versa. Personally I carry enough to pay off my mortgage x4 so she and junior will be ok. Term is basically just covering you until close to retirement. At that time you should be close to having your house paid off, plenty of retirement money, and a lower cost of living so the passing of one will not be a burden on the spouse. My wife has an equal amount of life insurance as well. It doesn't cost much per month so why not.

[7ducks]

[JDgator]

Can I have a second term life policy if the first is no longer enough?

[trey]

[huntersmky]

It's a necessity for anyone with Children unless you are a millionaire already! My father died when I was 7 and he had enough life insurance to get my sister and I both through college as well as take care of my mother for the rest of her life. He also sold life insurance too, so he knew what he was doing when he made the purchase. I have $1.4m on me, $250K on wife, and a whole life 20 yr full pay for $150k on my oldest son (will have a $36k cash value when he's 26 so he can borrow for a down payment on house instead of calling me), and i'm about to purchase another policy in the same amt and terms for my youngest son.

Don't leave your family in financial burden. We spend $5k+ on leases and land payments to duck and deer hunt so what's $2k a year for life insurance for your entire family? You are selfish if you don't think about their futures. Nothing is worse than a death in the family followed by financial stress. Call your local agents today and get a quote for free.

[Deltaquack]