Universal life policies - needed, or get rid if?

[glock35ipsc]

Before reaming me too bad, keep in mind this was all done before I/we had a clue what I was doing. We were financial juveniles.

When my wife and I had our first child 8 years ago, we wanted to start a college fund (529) for him. We contacted a friend of my brothers who sold insurance, IRA's, etc. When he left, we had no 529, but we had life insurance on all of us! Now granted, we needed the life insurance, but I think we don't need exactly what we were sold on.

Here is what we have:

Me:
- $400k 20 year Term Life
- $100k 15 year Universal Life

Wife:
- $400k 20 year Term Life

Son:
- $30k 20 year Universal Life

Daughter:
- $30k 30 year Universal Life

Now that I am a little older and a little wiser, I realize that we let an insurance salesman in our house and bought his fluff hook, line and sinker. I have since divested everything we had with his (Roth IRA's, 529's, etc.) except for the life insurance. Mainly because I didn't know jack about that, and still don't for the most part.

I have been told lately that I don't need the U/L policy on myself, and that I certainly don't need them on the kids.

Also, I did some checking on term rates today and it seems that I can get it cheaper elsewhere. Like about half of what I am paying now.

Should I dump the U/L policies, AND start looking for new term policies that are cheaper?

[Daylily]

How old are you now? How many years are remaining on the 20-year term policies? Will your children be grown and out of the house prior to the 20-year term policy expiring? I think those questions will help answer what to do with the policies on you and spouse.

As for the kids. Drop those policies.

I'm a little confused when you say '30 year universal life'. A universal policy is a permanent policy.

[maat55]

Dump what you have and shop around for a good 20 year term rate. Carry a smaller one on your wife unless she is an equal breadwinner. Some people takeout small ones for burial on children but I don't recommend it.

[sweeps]

Drop it like it's hot.

[glock35ipsc]

How old are you now? How many years are remaining on the 20-year term policies? Will your children be grown and out of the house prior to the 20-year term policy expiring? I think those questions will help answer what to do with the policies on you and spouse.

As for the kids. Drop those policies.

I'm a little confused when you say '30 year universal life'. A universal policy is a permanent policy.

I am now 38 (next month), my wife will be 33 in August. Looking at the policies again, we got my son's U/L on 4/2002, my U/L and Term on 4/2002, and my daughters U/L on 6/2003.

My son will probably be out of the house in 10-12 years, and the daughter 13-15 years.

I say 20 and 30 years on those, and I am a little confused too. In a 3-ring binder he put together for us, in the Life Insurance section he wrote on a spreadsheet U/L, so I took that as Universal Life.

I was wrong on the years too. In the policy, actually a copy of the application, it is stated as "Life Time Protector, Level, 20 Years" on my son's, "Life Time Protector, Level, 30 Years" on my daughter's, and "Life Time Protector, Increasing, 15 Years" on mine. I'm guessing the "Life Time Protector" is a term that company uses?

The company is Life Investors Insurance.

Dump what you have and shop around for a good 20 year term rate. Carry a smaller one on your wife unless she is an equal breadwinner. Some people takeout small ones for burial on children but I don't recommend it.

Are you saying dump the 20 year term with this company too, or just the other ones?

The wife makes about $15k more than I do.

That is the EXACT reason he sold us on the kid's policies! Of course, being new parents, and not knowing squat about anything then, we thought than that we should have it.

Thanks for the suggestions!!

[glock35ipsc]

OK, I found this:

Flexible Premium Adjustable Life Insurance Policy

[maat55]

I am now 38 (next month), my wife will be 33 in August. Looking at the policies again, we got my son's U/L on 4/2002, my U/L and Term on 4/2002, and my daughters U/L on 6/2003.

My son will probably be out of the house in 10-12 years, and the daughter 13-15 years.

I say 20 and 30 years on those, and I am a little confused too. In a 3-ring binder he put together for us, in the Life Insurance section he wrote on a spreadsheet U/L, so I took that as Universal Life.

I was wrong on the years too. In the policy, actually a copy of the application, it is stated as "Life Time Protector, Level, 20 Years" on my son's, "Life Time Protector, Level, 30 Years" on my daughter's, and "Life Time Protector, Increasing, 15 Years" on mine. I'm guessing the "Life Time Protector" is a term that company uses?

The company is Life Investors Insurance.



Are you saying dump the 20 year term with this company too, or just the other ones?

The wife makes about $15k more than I do.

That is the EXACT reason he sold us on the kid's policies! Of course, being new parents, and not knowing squat about anything then, we thought than that we should have it.

Thanks for the suggestions!!

You should have 8 to 10 times your annual income. Since you and your wife are close in salary, I would get equal 20 year policy's. Now, before you turn forty would be a good time to convert to a new 20 year period. Say your combined salaries are 100,000 you should both get 400k to 500k on each.

[cptacek]

where are you looking to get quotes? I am in the same boat for my DH...my company policy is great, but he is self employed. He has $100,000 on him ($50,000 whole life and $50,000 term life) and I bet they sold him a line of crap too. I tried to change it, but I was getting sucked in too so I canceled everything we had agreed on...damn salesmen anyway. I haven't looked at anything else since.

[maat55]

where are you looking to get quotes? I am in the same boat for my DH...my company policy is great, but he is self employed. He has $100,000 on him ($50,000 whole life and $50,000 term life) and I bet they sold him a line of crap too. I tried to change it, but I was getting sucked in too so I canceled everything we had agreed on...damn salesmen anyway. I haven't looked at anything else since.

We have our policy with Midland National Life Insurance Co. You might try a quote from them.

1-800-923-3223

I also noticed there is a term ins on the right side bar Term Life Insurance | SelectQuote

[momof1in150]

I disagree about taking a smaller policy out on your wife. While my DH makes more then I do it would cost him quite a bit to cover what childcare expenses if something was to happen to me. We have a child with Autism so we need to consider what help he would need if something happened to me - special education advocate, potential lawyer for special education, specialized childcare, housekeeper, etc. They are expenses we don't incur now because I cover them with what I do at home.

[noppenbd]

We went through Selectquote.com and had a great experience. You will get several different quotes so you can compare side by side. I would get 15-25 year term policies for 10 times your income each. Base the length of term on a few things: when you expect your children to be self-sufficient, and when your major debts (mortgage) would normally be paid off. At that point the need for insurance is greatly decreased. Also make sure you buy from a company that is rated A+ or better (an insurance policy is only as good as the company who writes it).

[disneysteve]

A few comments...

1. Dump the insurance on the kids. There is no reason to carry life insurance on children unless they are somehow responsible for supporting the household - modeling, acting, etc.

2. Dump the universal life unless there is a steep surrender charge.

3. Get quotes to replace the term coverage. Term rates have dropped significantly in recent years. Even the same company that issued your current policy is probably charging less today for the same coverage.

4. VERY IMPORTANT!! DO NOT CANCEL YOUR EXISTING POLICIES UNTIL YOU HAVE THE NEW POLICIES IN YOUR HAND AND IN EFFECT!! You don't want to cancel what you've got and have one of you die before you get new coverage.

As a note to everyone, if you have term coverage and you've had it for more than 5 years, go out and get new quotes. You may find you can get lower rates today even though you are 5 years older. I'm in the process of doing that myself and will definitely be saving money by switching.

[disneysteve]

One more thing. Regarding the amount of coverage you need. 10 times income is a good starting point for your calculations, but you need to work from there. Figure in your debt - mortgage, student loans, credit cards, cars, etc. Figure in what new expenses your surviving spounse might have if you were to die: child care, lawn care, etc. Figure in needs for the kids: college funds, weddings, etc. And factor in existing assets and savings. As we've gotten older and our debt has decreased and our personal portfolio has grown, I've decreased my life insurance coverage a couple of times. Your need for insurance diminishes as you get older typically.

[aida2003]

Flexible Premium Adjustable Life Insurance Policy

I don't know about this one. Are all your family's UL insurance policies called by this name? Sounds like your yearly premiums vary each each. What's the yearly premium for each of them?

I agree that you didn't need to get an insurance for your kids. And probably for you both, either. As a disclosure: We got an ULI policy for $100K on my DH from AIG. But we bought it with our free will, so when/if we regret our decision, it's our fault.

Before dropping the policies you should check out their 'fine print'. I mean what surrender charges you'd have if you canceled all UL policies right now or/and any other fees. Even if they're very large, I'd probably swallow as a sunk cost and drop kids' policies. As regards to your and your DW's policies, if they charges seem large, but the surrender period ends in a few years, maybe I'd keep them. Only maybe depending on $$ you pay early, whether you really can afford it and if the charges would be large.

As far as your Term-Life insurances go and whether to cancel them or not, you should do some research and get new quotes based on your current age. Check out [url=http://www.insure.com]. If you don't want to get calls from insurance agents right now, put some fake name/phone #, so you see some quotes on the screen. I'd not stop your current policies until you've got new ones in place (you'd have to pass a medical examination first).
And make sure to check a co. financial health on A.M. Best Company. You want to see their rating above B+. A's are always better.

[aida2003]

One more thing. Regarding the amount of coverage you need. 10 times income is a good starting point for your calculations, but you need to work from there. Figure in your debt - mortgage, student loans, credit cards, cars, etc. Figure in what new expenses your surviving spounse might have if you were to die: child care, lawn care, etc. Figure in needs for the kids: college funds, weddings, etc. And factor in existing assets and savings. As we've gotten older and our debt has decreased and our personal portfolio has grown, I've decreased my life insurance coverage a couple of times. Your need for insurance diminishes as you get older typically.

I'm not sure I agree that everybody MUST get 10x income + all other stuff on top of that. To me it sounds like a person should protect to a reasonable amount, but not give a lavish life after he/she is gone, unless the spouse doesn't work and won't be able to work.
It sounds that OP's kids are beyond daycare days, so the amount drops. I'd include college, but not weddings .