I want to TALK about LIFE INSURANCE.

[Exile]

Many people buy life insurance in order not to leave their spouses in a lurch in case insured dies first. But if the spouse is able to take care of herself (and it's usually the husband buying the insurance), life insurance is a waste of money. IMHO it would be better to spend the money on health insurance instead.

[jc3900]

Well, I am pretty young so what are the terms and costs for term life insurance. If you guys can give me some figures I can run it through an investment calculator to see how much it really is worth.

[LuckyJB]

Originally Posted by Exile

Many people buy life insurance in order not to leave their spouses in a lurch in case insured dies first. But if the spouse is able to take care of herself (and it's usually the husband buying the insurance), life insurance is a waste of money. IMHO it would be better to spend the money on health insurance instead.

Do you have life insurance? Do you know how much it is? Health n Life are two different needs....things are different these days and just seems everyone has the same old answer....there is so much more to life insurance....most people dont even know how it works....

[LuckyJB]

Originally Posted by jc3900

Well, I am pretty young so what are the terms and costs for term life insurance. If you guys can give me some figures I can run it through an investment calculator to see how much it really is worth.

Many factors play into what you want. You have to get an examination first to see if you qualify and get rated. Why would you think its not worth it, even if your young?

[tripods68]

Originally Posted by disneysteve

Why would it make sense to buy it before you actually need it? You'd be wasting the premium payment every month during that time. If nobody is dependent on your income, you don't need insurance. Nobody will suffer financially if you were to die.

You can't just assume "waste" without assessing individuals situations. I agree with LuckyJB. What if the person carries all kinds of debts; credit card, personal loans, and mortgages, burial expenses, hospital bills, would having death protection good idea then? We tend to forget, we incur so much debt on our early years and don't consider the unattended consequences, which is the consumers. You also wouldn't want burden your "own" family of your expenses knowing you have the financial resource. Also, your health status changes year-to-year which affects your insurability.

[disneysteve]

Originally Posted by tripods68

What if the person carries all kinds of debts; credit card, personal loans, and mortgages, burial expenses, hospital bills, would having death protection good idea then?

If a single adult dies, what happens to his debts? If John Doe owes money on a credit card in his name only, what happens when he dies? Can the credit card company go after John Doe's parents to pay that bill? I don't believe so but maybe I'm wrong. Same question for personal loans and hospital bills. As for a mortgage, that would be repaid by the proceeds of the sale of the property.

The only argument that makes sense to me is burial expenses, but all that requires is a minimal policy of about $10,000. And that's only if the family doesn't have any savings to cover an expense like that on their own.

I agree that there is no one-size-fits-all answer. It depends on the situation. I just think selling insurance as an investment product isn't such a great idea. I also think a lot of people are convinced into buying insurance out of fear rather than out of logic and solid financial planning.

[disneysteve]

Originally Posted by LuckyJB

Have enough life insurance to provide approx. 10 times your annual family income.

This is a good rule of thumb and a good starting point for calculating how much you need, but it is just a starting point. From there, you need to determine what the actual needs would be upon your death. When I first took out my policy, we had recently bought our house, had a newborn baby and I had 6-figure student loans and not much in savings. My insurance needs were high. Now, my loans are gone, our mortgage balance is smaller, our daughter is almost 13, we have no other debts and our personal savings have grown considerably so my insurance needs are smaller. My first policy was actually for 15 times income. Now, it is for less than 10 times income. A few more years and I'll probably be able to drop it again.

[sweeps]

If a single person dies with lots of debt, then the creditors have to eat the cost. Having a small (term!) life insurance policy to cover funeral costs usually isn't a bad idea.

Universal/whole life insurance is a bad move at least 95% of the time. The policies are expensive, their underlying investments underperform, they permanently lock you into a particular insurance company, they are very difficult to compare among insurance companies, and they are notoriously expensive to get out of when you realize you've been ripped off.

[disneysteve]

Originally Posted by sweeps

If a single person dies with lots of debt, then the creditors have to eat the cost.

That's what I thought. So the suggestion that a young, single, childless person needs insurance because of debts he owes doesn't make any sense.

[simpleyme]

when you die what you own covers what you owe your parents and children are not left with your debt so the only reason to have life insurance to cover your debts alone is if you have a spouse and that spouse would not have enough to cover those debts

there are reasons to have life insurance but a single person does not leave debt to others, this is something I believe that life insurance salesmen tell us to make us buy insurance so we do not force our parents into poverty when they are forced to cover our bills

My uncle died with no money and no children that were still talking to him and not only did they not come after his mother the family pulled together and we cremated him and bought a fancy urn for grandma to put him in ,the entire cost was 800 dollars

[Dave Rowtree]

Pretty much the whole concept of insurance is a little mystifying - you basically put your trust in multinationals who will make a profit denying your claim. After basic trust issues, I can understand the reasons for protecting huge investments such as house and home, but when it gets down to personal items we have to wonder where all the money is going and if you'll be better off in spending the money on preventions, such as a stable investment - what would happen if all the money you spent on life insurance was spent on investments instead? You're riding the odds but on average, you'll be better off unless you're the one of the million in which a disaster happens to - so I suppose insurance is all related to the amount of risk you are prepared to take. As you get older, you get less risk adverse (as seen by the old drivers who drive 30 mph everywhere - haven't' they got less to lose?)

[Joan.of.the.Arch]

We bought term insurance to cover the time up until our child became an adult. If one of us (husband or self) were to die, we would need money to make up for the loss of the other's contribution while we had a child to support and care for. Once our child was grown, either of us would be able to stand on our own two feet, continue paying the mortgage, etc. So now --after years of reducing the insurance amount as child approached adulthood-- we have zero life insurance. Our money goes to savings and investments instead. I will admit that if my husband were to die now, I could not afford to support my son in school to the extent that we are now doing. But that would be okay. He would not have to drop out, though he might choose to take out a loan. And that is okay, too.

We don't need life insurance for bills, mortgage, funeral expenses, and all that. We are covered through our own savings, investments, and current responsible living already.

[HNorton]

There is only one thing guaranteed after birth and that's death. And no one knows when it will happen. There are also a lot of different ways to accumulate wealth. Is permanent protection the best way to go? That's up to the person buying it. Saying it's a bad move 95% of the time is maybe a little ignorant, especially when you cant know everyone's personal financial situations. The rants about insurance companies and their fees are true to an extent, but EVERY investment has a cost, it just depends on what you are willing to pay. There are people that when faced with information will choose the easier option of the two, not because its the best but just because its the easiest. Can you judge their decisions? No because its THEIR decision.

[tripods68]

Originally Posted by sweeps

If a single person dies with lots of debt, then the creditors have to eat the cost. Having a small (term!) life insurance policy to cover funeral costs usually isn't a bad idea..

This is my point exactly. It is the creditors left hanging the "bag". Then they pass this cost to "consumers" in the form of higher cost (higher rates, fees, etc ). That's not chump change. Even young adult has some financial responsibility (of course not all) to secure "all" debts be repaid no matter how little amount it might be. The amount of coverage is not as important but the financial aspects that isn't covered by savings must be insured. For example, if you owed 30K student loans, $30K car note, no savings, you need at least $60K of death protection + burial cost. This is a more strong compelling arguments to have this protection. It protects the family and consumers. But for someone with no job and debt, I would agree insurance wouldn't make sense.

In many ways, Employers already offers group life insurance protections to many of its employees at very little cost and don't even realize they have it.

[feh]

My wife and I bought term (20 years, I think) insurance a few years ago, even though we have no debt at all. The reason for the insurance would be to cover living expenses until our son is able to support himself (after college). This way, the surviving parent wouldn't have to worry about being a bread-winner and single parent at the same time.

Once the policy expires, we won't be buying any more.

[LuckyJB]

Originally Posted by disneysteve

This is a good rule of thumb and a good starting point for calculating how much you need, but it is just a starting point. From there, you need to determine what the actual needs would be upon your death. When I first took out my policy, we had recently bought our house, had a newborn baby and I had 6-figure student loans and not much in savings. My insurance needs were high. Now, my loans are gone, our mortgage balance is smaller, our daughter is almost 13, we have no other debts and our personal savings have grown considerably so my insurance needs are smaller. My first policy was actually for 15 times income. Now, it is for less than 10 times income. A few more years and I'll probably be able to drop it again.

Great you got that all on the right track for your family. I figure the more I can leave my family behind the better they can be well off even if that means more extra money for them to use on other living expenses or so on.

[LuckyJB]

Originally Posted by disneysteve

That's what I thought. So the suggestion that a young, single, childless person needs insurance because of debts he owes doesn't make any sense.

Still makes sense to me b/c of the WHAT IF QUESTION? what if they eventually dont qualify b/c of medical reasons...age ..etc/.....might as well pay cheap even if its a small term...lock yourself in on that small premium

[LuckyJB]

Originally Posted by simpleyme

when you die what you own covers what you owe your parents and children are not left with your debt so the only reason to have life insurance to cover your debts alone is if you have a spouse and that spouse would not have enough to cover those debts

there are reasons to have life insurance but a single person does not leave debt to others, this is something I believe that life insurance salesmen tell us to make us buy insurance so we do not force our parents into poverty when they are forced to cover our bills

My uncle died with no money and no children that were still talking to him and not only did they not come after his mother the family pulled together and we cremated him and bought a fancy urn for grandma to put him in ,the entire cost was 800 dollars

Yes. ok.....you see I completely understand how most of us agree what Life insurance is for.....BUt im just seeing more to it then most do...its not a common concept to use it for other things than just BILLS>like I said before and most of you seem to disagree or think its wierd. It could be a smart way to use the Death benefit for other reasons than just BILLS, but its definitaley not the ONLY way to do it. Remember it depends on a persons specific situation. Ex. My situation is nothing...no dependents...no bills....but I have bros/sis/mother/father/nephews...and to me whatever money i can leave behind for them ...makes me happy...even if im paying 40 bucks a month for it.

[LuckyJB]

Originally Posted by tripods68

In many ways, Employers already offers group life insurance protections to many of its employees at very little cost and don't even realize they have it.

YES!....I actaully got more insurance through my job with no cost. And most poeple have it and dont even know how it works...or how much protection they need.

[disneysteve]

Originally Posted by LuckyJB

My situation is nothing...no dependents...no bills....but I have bros/sis/mother/father/nephews...and to me whatever money i can leave behind for them ...makes me happy...even if im paying 40 bucks a month for it.

That's where we fundamentally disagree. Unless I was currently supporting all of those people, I wouldn't feel the need to give them money when I die? I have insurance to cover those who I do support - my wife and my daughter and that's it.