Life Insurance--do you have it? Should I have it? Cost?

[Anonymous]

Actually, it's fairly smart. Life insurance is a bad deal, with a low expected rate of return on your investment. If you can save on your own, you can do better - at the end of say 30 years, you'd have a lot more money in the pot, and you or your kids could use it without you having to die first. But the problem is, most people don't save, so they need life insurance or 401(k)s or whatever to make them save.

Life insurance is not an investment - it's insurance. If you're using it for investment purposes, you're misusing it - of course you won't get the same "rate of return" on your money after factoring in the cost of insurance. And on a term policy, there is NO rate of return. but if you focus on how much money you'll have after the policy expier, you're assuming you won't die prematurely. It's likely you won't, but if the consequences of your untimely demise woudl be catastrophic to your family, you need to hedge even those small odds.

The purpose of life insurance is income replacement, plain and simple. In OPs case (and the PP who posted that she's rather have the $30,000 in premiums), is she dies her family would lose 2/3 of their income. The purpose of the life insurance is to replace that income, so her husband and kids won't lose their house, etc. Unless they absolutely wouldn't need the income, life insurance is necessary. If you just want to assume you won't die early, that's fine, and you'll likely be right. But if you're not?

[Anonymous]

Anonymous wrote:Well I guess I am self-centered too because we are foregoing it. Family of 4, dual incomes. Oh well.

Golf claps for you. What happens to your kids if you and DH are killed in a car accident?

[Anonymous]

Anonymous wrote:Well I guess I am self-centered too because we are foregoing it. Family of 4, dual incomes. Oh well.

Your budget is so tight you can't spend a thousand dollars a year for that security? Wow. We each have over a million. I don't want my spouse to worry about hiring help with the kids, making the mortgage payment or paying for the kids' college if I die.

[Anonymous]

My DH is very sick and while he has the minimum of LI at work (1x salary) he can't get more and can't buy any outside of that. I'm terrified of what will happen (likely in the next few years) and I have only $122k from his policy and around the same from his 401(k). And that is it. And yes it is better than nothing but still wish I could find more security for myself and my child. Of course I'm saving like mad right now.

BUY IT IF YOU CAN.

[Anonymous]

I too am shocked by those who consider life insurance an investment. It's not. Consider the concept of health insurance. I pay a certain amount a year for it, but I'm delighted if it turns out to have been a waste because we had no major illnesses or injuries. If investment is your mentality, why have health insurance -- after all, you might not get sick this year?

My husband and I do not make a lot -- making life insurance all the more important, in many respects. It makes it so that if either one of us dies, the other could pay off the mortgage, if so desired, and take some time off work to adapt. We forego a lot of things, buy by gosh, each year when the life insurance bills arrive, I pay them and send them off ASAP.

OP, you're not irresponsible or selfish for not having it -- but do get it. The likely best product will be a term policy, maybe 15-30 years, depending on the age of your children. This protects them for that many years, after that they would not get any money if you died -- but assuming they are independent adults by that time, that should be okay.

Good luck.

[Anonymous]

Life insurance is a bad deal, with a low expected rate of return on your investment.
quote]

Everyone thinks insurance is a bad deal... until they need it!

[Anonymous]

Anonymous wrote:

Anonymous wrote:Well I guess I am self-centered too because we are foregoing it. Family of 4, dual incomes. Oh well.

Don't forget irresponsible.

'Idiotic' also comes to mine. Much better to use that $ on expensive strollers and cars.

[Anonymous]

Seriously--you can get a decent 'term' policy for just a few hundred bucks/per year fixed rate. Cut out just one a couple of Starbucks per week.

People seriously don't realize they could lose their house, the kids would have no $ for college...if your spouse is gone more $ on childcare while you need to work to earn the bucks. I really can't believe intelligent ppl in this area do not carry any life insurance.

[Anonymous]

Anonymous wrote:Seriously--you can get a decent 'term' policy for just a few hundred bucks/per year fixed rate. Cut out just one a couple of Starbucks per week.

People seriously don't realize they could lose their house, the kids would have no $ for college...if your spouse is gone more $ on childcare while you need to work to earn the bucks. I really can't believe intelligent ppl in this area do not carry any life insurance.

If you really, truly don't need to replace the income, then fine - don't get any. But be conservative when makign that estimate. Otherwise, there's no excuse.

[Anonymous]

DH and I both work, and each have life insurance policies - his is about $500K and mine about $800K.

I wish he had more, but he has MS and is in his fifties, and doesn't qualify for more.

Given that, we have been very conscientious about creating security so that if one of us dies the other is ok. We have about $200K saved towards college; $1.2 towards retirement; and the remaining mortgage on our house (worth about $800K) is $120K.

If one of us were to die, the other could easily pay off the mortgage with the life insurance proceeds, and send the kids to college without having to save more.

[Anonymous]

OP, if you are a Fed, you still may not be able to get fed life insurance. There is no annual enrollment & open seasons are very rare. New hires can enroll but current employees would have to wait for the next open season and it could be years. But if you can enroll, the basic coverage is a good deal but the others are not as good as what you can purchase on your own, so I would forego the optional add-on coverages.

With your age & if you are in good health, you should be able to get it for a reasonable cost.

We have a $1M policy on me, plus my fed coverage is about $100K - this is not so much to cover my lost income (DH wouldn't need to replace my income) as it is to cover the cost of all the childcare he would need. DH has almost $3M from his own policies & his employer's coverage combined. We each have $200-300K in our retirement accounts and DH has close to $100K equity contribution account in his firm that would be paid out to me. The insurance we have on DH is enough to pay the mortgage off & fund the kids' college. Without the mortgage or need to save for college, I could support myself & our 4 kids on my salary.

I am 40. Got my $1M policy a few years ago & it is $585/yr.
DH is 39. He has a $1M policy that is about $1K/yr and another $700K policy that's $650/yr.

[Anonymous]

We bought a 20-year term for each of us, supplemental to what we have at work. I work with a woman whose sister lost her house when the sister's husband died unexpectedly and young. They had forgotten to mail in the last life insurance premium. So sad.

[Anonymous]

Anonymous wrote:I read somewhere recently that insurance companies don't always pay out the sum that they are supposed to right away and sometimes they even make money by putting the LI money into an account that accrues interest or even an investment. I think this concerned mainly military families and SGLI, but I wonder if 'regular' LI companies work like that as well. Peope actually had to wait for a long time to get to their money. If this is the case, then what is the point of LI? Is it really beneficial?

This is a fairly unscrupulous practice that insurance companies use to keep the money in their accounts while the family mourns/makes arrangements. The beneficiary always has the option of receiving a lump-sum payment. The "checking account" is the default option but anyone who is "in the know" would realize they need to take it out of the insurance company's account. The insurance companies are benefiting from those who are not "in the know".

[Anonymous]

My parents got me a life insurance policy when I graduated high school. I think it's a $1 million term policy with Penn Mutual, and I have my own as well, which I haven't glanced at in (eek like a year) and it's also a $1 million term policy. Very insured, my family absolutely 100% depends on me.

[Anonymous]

Anonymous wrote:OP, we don't have it either. Well, we each have one year's salary as an employment benefit. But it wouldn't be enough if someone died.

I'm afraid to even research it, because my husband has a history of mental illness. I'm sure any insurer would seize on that as a reason to give us astronomical rates, or turn him down altogether.

You might be able to apply as the primary and have DH secondary on the policy. When we did that and I was secondary on DH's policy, they only checked my labs (blood panel) and blood pressure. I don't think I had to give them any medical history--they only took DH's.