Do I need life insurance?

[Anonymous]

You can use insurance for other things aside from passing away. many people use cash value to provide an additional tax deferred bucket, and given the current tax environment, most successful people are looking for additional places to put dollars. Also agree that Disability Coverage is essential, because if you're too sick to work, how would you build up enough assets to retire anyway? Insurance is risk management 101, and the reason a number of people run into catastrophic fianancial situations is because they are under-insured.

[Anonymous]

can you explain how disability insurance works?

[Anonymous]

16:22 is correct if you may have a child. Get disability first if anyone is going dependent on you. That was the advice we got when we first married. By the time we applied we had aged-out or there was something in the medical records that someone didn't like so we have no disability insurance. Fortunately I was a little more on the ball with long term care and life insurance (we are older than most the posters here). Otherwise, you have no need. Are you working full time? Disability used to come in benefits packages. Grab it if you can get it and hold on to it.

[Anonymous]

So is disability insurance different than just, disability? Like if you're unable to work due to mental or physical impairment, can't you apply for 'disability'?
I know it's not that simple- I just want to know what the difference between 'disability' and 'disability insurance is'.

I work FT but my benefits package doesn't include disability insurance. However, I'd be screwed if I couldn't work (I don't have a lot of money or assets, and no one to rely on). Does DI cover physical injuries as well as medical conditions (cancer, needed surgeries, etc)?

[Anonymous]

Anonymous wrote:

Anonymous wrote:Honestly, if you're a SAH parent with a spouse who makes good money, I don't even see the need for it then, except that it provides a cushion for that spouse to take time to collect their life/take time off work to be there for a child.

I repeat - no need.

My wife is a SAHM and I make $90k. We have $1 million in term life insurance for each of us. If she died, I'd would probably stay home until the money ran out.

And if you didn't, you'd have to pay for childcare. I agree, it makes sense for a SAH spouse to have at least enough to cover the cost of childcare, plus whatever you would expect that spouse to make if s/he went back to work when the kids were older to contribute to things like activities and college.

[Anonymous]

Anonymous wrote:You can use insurance for other things aside from passing away. many people use cash value to provide an additional tax deferred bucket, and given the current tax environment, most successful people are looking for additional places to put dollars. Also agree that Disability Coverage is essential, because if you're too sick to work, how would you build up enough assets to retire anyway? Insurance is risk management 101, and the reason a number of people run into catastrophic fianancial situations is because they are under-insured.

You're referring to Whole Life Insurance, rather than Term Life (for cash value). For the VAST majority of people, Whole Life is a bad investment, and money can be better and more cheaply invested elsewhere. You end up paying a ton in what are essentially management fees (for the investment) without hardly any control about how the money is invested. I used to work with the insurance industry, and folks on the inside would joke about what a bad deal it was.

[Anonymous]

Anonymous wrote:

Anonymous wrote:You can use insurance for other things aside from passing away. many people use cash value to provide an additional tax deferred bucket, and given the current tax environment, most successful people are looking for additional places to put dollars. Also agree that Disability Coverage is essential, because if you're too sick to work, how would you build up enough assets to retire anyway? Insurance is risk management 101, and the reason a number of people run into catastrophic fianancial situations is because they are under-insured.

You're referring to Whole Life Insurance, rather than Term Life (for cash value). For the VAST majority of people, Whole Life is a bad investment, and money can be better and more cheaply invested elsewhere. You end up paying a ton in what are essentially management fees (for the investment) without hardly any control about how the money is invested. I used to work with the insurance industry, and folks on the inside would joke about what a bad deal it was.

Sorry to revive a year old post but I had to reply to this one. I disagree that whole life policies (especially when used for cash value) are a bad investment for a VAST majority of people. I too work in the insurance industry (not an agent so simmer down) and also have many years experience in the field of financial planning (not as a planner), so I have seen how both standard investments work and how life insurance products work - both are good and both have their proper place in a solid investment portfolio along with real estate, IRAs, 401ks, long term care insurance etc- the latter not being an actual "investment".

This is a highly regarded type of product amongst those in the industry. If properly designed and funded, you will end up with a really nice - tax free - income stream in retirement. yes there are fees and yes they are high but that's because the fees are front loaded and consolidated, meaning you generally only pay the fees for the first 10 years that you are funding the policy and not for the life of the policy. Once your 10 years have passed (or 11 years), the fees drop dramatically - usually 1/10 of what the fees were for the first 10 years. And guess what, EVERY investment vehicle from your 401K to your Roth to your managed money accounts have fees - even the "no load" fund companies like Fidelity and Vanguard. Also, if you don't want to use the cash that is sitting in your policy you still have a great death benefit.

Another point I'd like to make regarding fees in these policies - mortgages are pretty much designed the same way. When you buy a $400K property, for the first 10 years it feels like you are making very little headway toward paying down your principal. of the $1900 you pay for that mortgage, the vast majority of it goes towards interest (aka, fees paid to the bank the loaned you the money to buy the house) and very little towards principal. after about 10 years, it literally flip flops where most of the money goes toward paying principal. Roth IRAs are also similar to cash value life insurance in that you put the money in after taxes and it grows tax free so when you start using it at 59 1/2, you don't pay taxes on it!

anyhow, just wanted to add my two cents and correct some inaccuracies from PPs post. flame away.....

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Honestly, if you're a SAH parent with a spouse who makes good money, I don't even see the need for it then, except that it provides a cushion for that spouse to take time to collect their life/take time off work to be there for a child.

I repeat - no need.

My wife is a SAHM and I make $90k. We have $1 million in term life insurance for each of us. If she died, I'd would probably stay home until the money ran out.

And if you didn't, you'd have to pay for childcare. I agree, it makes sense for a SAH spouse to have at least enough to cover the cost of childcare, plus whatever you would expect that spouse to make if s/he went back to work when the kids were older to contribute to things like activities and college.

Completely agree. If a SAH mom dies, the husband will 1) possibly want to take time off to be with the children or 2) will need to pay for child care, and any other support services that might be needed for the children. Term life insurance provides a nice safety cushion, and is not all that expensive.

[Anonymous]

Nope, as long as you have enough that someone can pay to bury you, you're good.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Honestly, if you're a SAH parent with a spouse who makes good money, I don't even see the need for it then, except that it provides a cushion for that spouse to take time to collect their life/take time off work to be there for a child.

I repeat - no need.

My wife is a SAHM and I make $90k. We have $1 million in term life insurance for each of us. If she died, I'd would probably stay home until the money ran out.

And if you didn't, you'd have to pay for childcare. I agree, it makes sense for a SAH spouse to have at least enough to cover the cost of childcare, plus whatever you would expect that spouse to make if s/he went back to work when the kids were older to contribute to things like activities and college.

Completely agree. If a SAH mom dies, the husband will 1) possibly want to take time off to be with the children or 2) will need to pay for child care, and any other support services that might be needed for the children. Term life insurance provides a nice safety cushion, and is not all that expensive.

My husband and I both work, have about 1 million of term life each. We have little in the way of family other than each other and our kid, thus would need the money for childcare and other such expenses if something happened to one of us. We wouldn't want the other to not only suffer a loss and have to suddenly raise a child alone but also be forced to immediately lower our standard of living due to financial necessity.