need advice on buying life insurance

[rigz]

I am 38. Wife is 36. We have a 1 year old. I know to avoid whole life so I am looking for term.

here are the questions I have so far (sorry there are so many but I feel lost as I start the process):

1) where do I even start to look? the only place Ive really heard of is zander (from listening to dave ramsey) but when I fill out the information, it gives me quotes from around 20 different companies, of which most Ive never heard of (and it looks like its dave's own company so hes clearly biased). Can I sign up with any of them? Are they all basically the same? Any recommendations on who to go with or who to avoid?

2) (sort of connected to the first question) should my wife and I go with the same company? or is that more of a convenience thing?

3) should we get 20 year or 30 year term life?

4) and for how much? whats the rule to determine the amount of insurance to buy?

5) How do I know which health category to choose? for example, on zander it lists "Preferred Plus, Preferred, Standard Plus and Standard". Are they going to ask for a medical record for my wife and I?

6) Is life insurance, in the unfortunate case we need to use it, taxable? Makes a difference when deciding how much to get I would assume.

any help is much appreciated

[disneysteve]

Zander is fine. AccuQuote.com is also good. That's who I used (though the quotes I got were pretty much the same as the ones I got from Zander).

Pick the best rate. It doesn't matter if you both use the same company or not. Shop based on price.

Whether you go with 20 or 30 year depends on when you anticipate no longer needing insurance. In 20 years, your 1-year-old will be 21 but additional kids may still be minors so you might lean toward 30 years, at least for the primary income earner.

Rule of thumb is 8-10 times income. Tweak that based on your personal situation and what you actually want the insurance proceeds to cover if one of you were to die.

Choose the best health category and let the company figure it out. They will have you fill out a questionnaire, do a physical exam, and get medical records from your physicians.

[Jluke]

Good planning! I did this 2 years ago when my son was born.

I belong to the American Chemical Society so I went through them; they connected me with New York Life. I got a 20-year term at age 36. I went with 250k; it is a low amount, but I also have the 401k, life insurance through work, and savings for them to survive on.

So, if you belong to a professional membership you might be able to find other choices. I imagine your auto/home insurance company would also offer term life. The company you work for may also be connected to a term insurance company that you can get on your own.

For your question on health category, they will assign that based on your medical records/exam. If you fall in Preferred Plus, you will get the lowest rate; Standard will be the highest rate.

[disneysteve]

If you get coverage through work, find out if you can keep the policy at the same rate if you leave the job.

It's fine to check work and through clubs and organizations (AAA, AARP, etc.) but still go through Zander or AccuQuote to make sure you're getting the best rate out there.

[natasha.cornelius]

Planning Ahead with Life Insurance

Good for you for planning ahead. Term life insurance is one of those products we hope to never have to use, but know it's vital to have especially if you have a family.

1) Try Quotacy.com they have an easy-to-use quoting tool and you don't need to give any contact information until you're ready to apply. You can see estimated policy costs instantly.

2) You and your wife don't need to go with the same insurance company. Go with whichever ones give you the best premium pricing. If you have different health situations or family history, different carriers will rate you differently anyway.

3) The term length is dependent upon what you want to plan for. If you have a 30-year mortgage, for example, having a 30-year term plan might be ideal. 20-year will make sure your son is financially protected until he hits adulthood.

4) Usually people recommend 10x your income, but Quotacy.com has a good Needs Analysis Tool you can play around with when you run a quote. That will help determine how much you may need.

5) The insurance company determines which health class you'll be in dependent upon your age, health, lifestyle, and a couple other factors. Preferred Plus offers lower premiums payments than Standard, for example.

6) Term life insurance is not taxable if the death benefits are payable to a named beneficiary (a real person).

Best wishes to you and your family!

[rigz]

wow, thanks to everyone for the replies and information.

so just to be sure, all the companies are legit? I will be ok going with any of them? in the event that I have to use it, the last thing I want is me or my wife to have to go through a hassle dealing with a poor insurance company. that is a huge fear of mine for her.

[natasha.cornelius]

A-rated Carriers

Go with a life insurance agency that works with A-rated carriers. For example, with Quotacy (the online term life insurance marketplace I mentioned previously) works with only A-, A, or A+ rated life insurance companies. Most of them are household names such as MetLife (famous Snoopy mascot), Prudential, and John Hancock.

[LivingAlmostLarge]

Did online as well and get 25 years. I think we got that when we had our first. Mostly because we knew we were having at least 2-3 kids. So it'll last till around 18 and we may cancel it earlier. How much to get? Only you know. But I will say it is huge peace of mind to have so much cheap.

[rigz]

thanks again to everyone for all the help

I do have a follow up question...

when they look at my medical records to figure out which health "category" I should be placed in (I assume to figure out my risk of death), will I be able to renegotiate at a later time for a lower rate, if I am able to change my medical stats (lower my cholesterol, blood pressure, etc)?

or do people simply cancel their current policy and start up a new life insurance policy with the healthier numbers? or does this just never happen?

[Drake3287]

Years ago when our kids were born I bought Term Life Insurance through Met Life, I wanted a company that would be around years later so my wife wouldn't have to worry about dealing with some unknown company. For myself, I purchased enough insurance to pay off our house plus a little extra and for my wife I just bought $100,000.

For us, at that younger age my wife would have still worked making a salary and realistically would have gotten remarried at some point. We didn't need a million dollar policy like some others, just the protection of having the home paid off.

25 years later now and I'm financially secure and our house is almost paid off. I hope to cancel our policy in the near future before the next rate increase. The term insurance did what it was suppose to, luckily we didn't need it.

As for insurance agents, sorry but I don't like or trust them although I'm sure there are some good ones out there. Everyone I've ever spoke to including Met Life wanted to sell me everything but the kitchen sink. Even today with a pension guaranteeing me 100% of my salary including spousal continuance along with a huge savings account and kids out of college, they still tell me I need more insurance. Don't fall for everything they tell you. Do your own home work and talk to friends and family about what they did. Everyones situation is different.

[Eagle]

We have 13 times our income for me. Nearly 7 times our income for my wife. Both are term life insurance policies.

[disneysteve]

Do your own home work and talk to friends and family about what they did.

Definitely do your homework. I would not, however, talk to friends and family. The vast majority of people are clueless when it comes to financial matters. What everyone else did is most likely not what you want to do.

Get the online quote. Pick the cheapest one. Avoid a live agent at all costs. Avoid anything other than term coverage like the plague.

[MickeyMickey1975]

thanks again to everyone for all the help

I do have a follow up question...

when they look at my medical records to figure out which health "category" I should be placed in (I assume to figure out my risk of death), will I be able to renegotiate at a later time for a lower rate, if I am able to change my medical stats (lower my cholesterol, blood pressure, etc)?

or do people simply cancel their current policy and start up a new life insurance policy with the healthier numbers? or does this just never happen?

A nurse will come to your home or work and do a mini physical. Height, weight, bp, temperature, blood, ursine, etc. that is how they rate you. You would have to cancel and get a new policy to go to a healthier category. I have done this.