Life Insurance?

[lrjohnson]

Sweepsplayer: Your student loan must be paid before your parents will get the money. (They're just not responsible for the student loan if your assets can't cover it.)

Defcon: this is incorrect. The life insurance benefit passes to the benificiary and creditors have no claim to it.

This makes a really big difference on what OP does. Can one of you post a definitive link?

I do not have debt or dependants so I do not have life insurance except for the automatic little work policy at 5K-no cost to me; and a little policy from my credit union-2K, no cost to me (but they send me letters all the time explaining how I can bump up the coverage at a low cost.)

OP, you may want to check if you have any automatic coverage like I do.

This does remind me that I want a small funeral and I'd better put my plans on paper. If my loved ones pay less it will be more respectful to my memory, not less, and if it's on paper a funeral home can't bully them while they are grieving.

[sweeps]

Defcon is correct. I did some searching, and the laws vary from state to state, but in general life insurance proceeds to non-dependent beneficiaries are exempt from creditors' claims. This assumes of course that the beneficiary has been specifically named on the policy and the policy wasn't obtained fraudulently or with the intent to defraud creditors. But regardless, check your state laws first.

(Remind me never to get involved in life insurance questions. )

[lrjohnson]

Sweeps:

I did some searching

It's one of the things we respect about you, Sweeps. You rarely shoot off the hip, and your foremost interest is correct answers. Thanks for checking.

[sweeps]

Thanks lr. The funny thing is if you google "life insurance" single "no dependents", practically every site (including the Illinois Dept of Insurance) suggests that single people with no dependents buy life insurance for funeral expenses, medical bills, and debts including credit cards or student loans. That appears to be really bad advice. If life insurance proceeds go directly to your named beneficiaries (such as non-dependent parents) without any claim from creditors, then why bother? Just get enough life insurance for a relative to bury you and be done with it.

[poundwise]

Originally Posted by defcon

for someone young and healthy a 50k and 15 k policy would be similar in price as it is the policy fee that would make a large part of the 1st 35-80 per year. Plus there are nopt many 15 k term policies so whoel life si your only choice at that face amount.

You may be right comparing 50K to 15K. That is, if one was going to go with 15K he/she may just as well go with 50K. However, if one wanted a simpler policy, just for burial expense, you can get a lower-priced alternative with coverage around 5K.

Thanks for the good point.

I must say, all things considered, I would not recommend life insurance to someone single, healthy, and in their 20s.

[CRFSaver]

Check through your work to make sure you are not covered already. Every job I have had I have been covered from 1X to 1 1/2X my annual salary. In fact I pay taxes on the premium value over 50 or 60k. If you are already just name your family as beneficiary. You might check on whether you stipulate in your will that the proceeds would be used to cover funeral costs etc.

[katwoman]

Originally Posted by poundwise

I must say, all things considered, I would not recommend life insurance to someone single, healthy, and in their 20s.

I know EVERYONE says that BUT......I also know that a friend of mine who is healthy as a horse, but unfortunately, as BIG as a horse, was turned down for a life insurance policy. My brother, who is a business owner, and his partners all got 2M life insurance policies (the business would be the bene) and he was upset at the premium he was quoted due to his high triglycerides. 7k/yr while the female partner came in at 3k/yr.

He was also upset since he let another life ins policy lapse and the thought of replacing it now would mean that he'd have to cough up more in the way of premiums.

My point is this: get the policy while you ARE young AND healthy. Sometimes the "smart thing to do" can actually cost you more in the end.

[defcon]

Originally Posted by poundwise

You may be right comparing 50K to 15K. That is, if one was going to go with 15K he/she may just as well go with 50K. However, if one wanted a simpler policy, just for burial expense, you can get a lower-priced alternative with coverage around 5K.

Thanks for the good point.

I must say, all things considered, I would not recommend life insurance to someone single, healthy, and in their 20s.

Figure that anywhere from 35-80 or approx 3-7/mo is going to the company as a polcy fee and that at the age of under 30 cost/ 000 will be about .5 for a term and probably more like 2.5 or 3. Example for male age 25 in good health

5k whole life 62/yr
50 k 20 yr term 133/yr
250k 20 yr term 200/yr

This assume preferred but not best health. Term prices are lower with good health. But most companies do not do fully underwritten policies below 100k term so that is 1 reason why the value is higher face amounts. Companies will not spend money to underwrite 120/yr policies. Sp in this ex we get approx 5000% more coverage for 300% more premium and the terms here are convertible so if you do get married and your health changes then you can convert without additional ohysical requirements. It is up to the person whether the 200/yr opportunity cost plays for them in their long term planning and/or risk management.

[defcon]

Originally Posted by CRFSaver

Check through your work to make sure you are not covered already. Every job I have had I have been covered from 1X to 1 1/2X my annual salary. In fact I pay taxes on the premium value over 50 or 60k. If you are already just name your family as beneficiary. You might check on whether you stipulate in your will that the proceeds would be used to cover funeral costs etc.

If you are young and healthy you can get less expensive individual coverage that you take from job to job (no cobra for life benefits) and if your employer is paying for the benefits it is no longer a tax free benefit. Remember as a 28 yr old healthy individual your group consists of the 52 yr old diabetic chain smoker and you suffer for it. You can usually save on individual into early 40's for males and late 40's for females.

[defcon]

Originally Posted by katwoman

I know EVERYONE says that BUT......I also know that a friend of mine who is healthy as a horse, but unfortunately, as BIG as a horse, was turned down for a life insurance policy. My brother, who is a business owner, and his partners all got 2M life insurance policies (the business would be the bene) and he was upset at the premium he was quoted due to his high triglycerides. 7k/yr while the female partner came in at 3k/yr.

He was also upset since he let another life ins policy lapse and the thought of replacing it now would mean that he'd have to cough up more in the way of premiums.

My point is this: get the policy while you ARE young AND healthy. Sometimes the "smart thing to do" can actually cost you more in the end.

I would assuem the policies were part of a buy sell agreement and if it was entity buy sell it is a tax write off anyways.

Also if he let the old policy lapse while the new one was in underwriting the agent did him a diservice but not advising against and possibily has liability if he instructed to cancel the other policy before approval on the new policy. That is Insurance 101 but not something you see the lesser agents in the biz do.

[katwoman]

Originally Posted by defcon

I would assuem the policies were part of a buy sell agreement and if it was entity buy sell it is a tax write off anyways.

Also if he let the old policy lapse while the new one was in underwriting the agent did him a diservice but not advising against and possibily has liability if he instructed to cancel the other policy before approval on the new policy. That is Insurance 101 but not something you see the lesser agents in the biz do.

Yes, it is a tax write off.

No offense, but I can always tell who the business owners are vs. non-business owners. Non-business owners always bring up tax write offs while prudent business owners ALWAYS look at the bottom line and hate the term "tax write off". Let's face it, employee insurance premiums are a tax write off but how many employers these days are picking up the tab? Bad business debt is a tax write off but how many businesses are happy that customers don't pay? Trust me when I say his partners are not happy that they have to shell out more in premiums for him than for themselves.

As for the lapsed policy, this was one he bought on his own and decided he didn't need it. In hindsight, of course, he wishes he kept it up.

[Young81k]

If you buy a permanent life insurance policy when you still relatively young, your premium is likely to be quite low. You will definitely benefit from the low premium as you get older (closer to the final day). Although you have to pay premium for longer period of time, the low premium may turn out to be cheaper in the long run.

Also premium life insurance allows you to withdraw or borrow money against your life insurance policy for quick access to cash.

[webcontacts00]

Do not buy insurance policy as investment vehicle. We have done enough research and calculation to prove that it is waste of money. Term life is fine if you have any dependents.