LIfe insurance or no life insurance.

[Ella'sDaddy]

Dear Prime,

The more I look into this issues, the more opinions I get. Can some of you shred some light on this..

I recently was blessed with my second daughter. I want them to be well taken care of if something should happen to me...

Should I or should I not get a life insurance.. and why?

Thank you in advance..
Dat

 

[Jimbo]

Well, I guess it depends on how much money you have. If you have a million dollars tucked away then I would propose you might not need life insurance.

If something happened to your children's parents (you) then how would your children survive and prosper? How would their education be paid for?

 

[NsXMas]

The rule of thumb is 10x your annual income for insurance. And absolutely you should have it, unless you're a multi-millionaire or billionaire!!!

 

[Miner]

Once you have kids Life Insurance is a very good thing, unless as the previous posters comment, you have enough money to provide for your wife and them in the event of your demise.

Think about how your wife and kids would financially survive if you suddenly left the picutre. If you are the primary breadwinner, that income goes away but the expenses remain. I'm talking mortgage, power, petrol, food etc.

My wife is licensed in CA for ING and a couple other insurance companies. PM me if you want her to contact you. She isn't actively working as an agent but can hook you up.

Our first baby is on the way and I'll be increasing my life insurance as I'll now need to make sure 2 people are taken care of in the event of my demise.

Miner

 

[kookoo4nsx]

If you work for a big company just call HR and see what they offer. If you are an independant contractor, I hope you are healthy otherwise rates can be very high.

If you have alot of debt, a wife that doesn't work or need to save for college, go ahead and get it. I would recommend buying from 2 different companies and get at least 10 year term.

 

[shawn110975]

well life insurance is a must. I want my son to have everything he deserves if something should happen to me.

heres a story you should think about

my buddy's dad was in the airforce and smoked all his life, he found out he had lung cancer and was going to pass on to a better place, so him having insurance/life policy thru the airforce he went out and put 4 brand new cars in his name for all of his kids since the cars would be paid off if he died thru his life insurance policy, they just needed to pay the car payment on time intill he passed, the tragic day came and went the insuance people seeing he had 4 car loans out added to the ammount they had to pay out.
they didnt like this at all, they took my buddies siblings to court and lost. court said it was in the policy to pay off the cars including the life insurance policy. they made out like bandits,

so if i knew I was gonna die, I would do the same thing.

 

[guanacoracing]

The guideline used to be 10X income but that's outdated. See attached for what my agency now uses although it is not "written in stone" since you have to consider a lot of variables.

 

[NsXMas]

Here is a sobering example of why you absolutely need life insurance, and what could happen if you don't. And work provided life insurance is not adequate, because you can be laid off / fired at any time, just like this story.

 

[davidf]

I thought life insurance was so your wifes new husband could buy a new 4x4 and bass boat!

 

[BATMANs]

A good number of folks that I've met who owns exotics like F cars and L cars are doing it by borrowing against their life insurance plan.

So they use life insurance as a form of tax shelter and then borrow against it.

Very Republican behavior.

:biggrin:

 

[NsXMas]

The guideline used to be 10X income but that's outdated. See attached for what my agency now uses although it is not "written in stone" since you have to consider a lot of variables.

Whoa, the 25-30x income replacement is overly excessive... but good for insurance sales! :biggrin:

I thought life insurance was so your wifes new husband could buy a new 4x4 and bass boat!

LOL

 

[Matt Knight]

Hi Dat,

I see this as an issue of personal responsibility. Life insurance can have many funtions (see BATMANs post), I see it as a means to replace lost income or eliminate debt. Run the scenario of you being taken out of the picture; what would your family need to maintain the lifestyle that you want them to have? If you need coverage it likely that your wife will also need coverage. I had the misfortune of losing my wife 4 years ago; I had more than double the coverage she did (it was inconceivable to me that she would go first).

Any finacial plan you have should consider life insurance as a means to complete your plan if you are not here to do it.

Someday I hope to be in a finacial postion that puts me beyond the need for life insurance; until that day I will keep my policies.

Best regards,

Matt

 

[guanacoracing]

Whoa, the 25-30x income replacement is overly excessive... but good for insurance sales!



LOL

But think about it: right out of college let's say you're making $30K, 30X gives you $900,000 of coverage. If you do nothing about it during your lifetime, if may or may not be enough. The upside of starting young and buying permanent insurance is you can build a cash value that you can then use to buy the F and L exotics as indicated by BATMANs. :biggrin:

As you are older, the multiplier declines since the assumption is your income will be higher.

 

[BATMANs]

........The upside of starting young and buying permanent insurance is you can build a cash value that you can then use to buy the F and L exotics as indicated by BATMANs. :biggrin:.........

...... Life insurance can have many funtions (see BATMANs post)..........

 

[pgilliam1]

I sold insurance for several years. My advice is to have enough to take care of your family in case you die (either in savings or savings plus insurance). Buy the cheapest, longest term, TERM LIFE policy from a reputable company. Stay away from insurance based savings policies of all types. They are designed to make insurance companies money, not help you.

 

[H-carWizKid]

I have 1 daughter, and 1 wife. I have a combination of whole life insurance combined with a term life policy that would provide my beneficiaries with the equivalent of my income into perpetuity if properly invested and managed.

My wife is a cancer survivor (which I am very grateful of), but unfortunately that means she is difficult, if not impossible to insure. Other than a 50k whole life policy she had before our marriage (and her cancer), and the term policy on my spouse I was able to get though my work, my daughter and I would be high and dry if my wife passed on.

I say this to get to my point- if you are going to insure, do it NOW before any health issues that might affect your liability to insurers arise.

P

 

[BATMANs]

I'm curious, what do you guys think is a good $$$$ amount to retire on?

For me and my forecasted retired lifestyle and material needs I'm thinking $6 million net and liquid.

 

[pgilliam1]

I'm curious, what do you guys think is a good $$$$ amount to retire on?

For me and my forecasted retired lifestyle and material needs I'm thinking $6 million net and liquid.

Can't you stay on topic - LOL? That's a whole different subject with a different answer from everyone depending on lifestyle - sheesh! :tongue:

 

[druby]

Find a good agent and get them to help you figure out what to get. I used to sell life before a specialized in benefits, my daughter does it now but we are in Georgia so really can't help you personally. There is no real firm multiple of income to use. You basically figure out how you want your family to live after you are gone, take away what you have in savings and your spouses ability to earn an income and the rest you need to insure. You definitely want to buy from one company for ease of claim and because when you get term insurance the more you buy in one policy the cheaper it is due to "breakpoints". I also don't agree with not buying some permanent coverage of you can afford it. I have $1 million in whole life and $3 million in term. I will get rid of the term after my son finally graduates from college and our commercial and home loans are paid off (son about 5 years and loans about 10 years). The last $1 million is what I call my "till death do us part" insurance there for my wife to have some liquid money after I die since most of our assets are tied up in commercial real estate, my business or stocks none of which I want her to have to sell in a hurry if I die. I am also a huge advocate for trusts so that your money goes where you want it and not to your wifes future husbands (take you pick - bass boat, NSX, big house, his kids etc). I am always willing to give advice for free and I am not licensed in Ca so I won't be trying to sell you anything.

 

[davidf]

If one remarries, you should certainly have a policy for the wife but by all means, have something also for you biological child/children as well, and have a very very trustworthy person to oversee it. "Not" their stepmother. I've personally seen death and inheritance money tear families apart. Money changes people.

 

[eddiensx]

If you want some unbiased info give me a PM. I am a CFP and a CHFC as well a Registered Investment Advisor.

I am not allowed to give advice on a blog like this because of the SEC and other Regulatory Bodies.

Don't worry about me charging a fee, I will discuss this with you as much as you want free of charge.

 

[Ric]

I have a question: if you're single and the only asset you have is some cash in the banks (less than 1million), do you need to buy any life insurance and/or set up any trusts or anything like that? If shiet happens, I want my stuffs go to my brother/sister.
Thanks.

 

[Ella'sDaddy]

Thank you Prime for all the helpful insight. I agree, having my wife and two daughters taken care of is number one priority in my life. The problem is that when I look into life insurance, there are so many type of policy. Some will allow you to draw money out of it, some will grow your money, and the basic terms. I guess some recommend full life while others only recommend term life... which policy is the smartest one...

Thank you once again..
Dat

 

[ncdogdoc]

Thank you Prime for all the helpful insight. I agree, having my wife and two daughters taken care of is number one priority in my life. The problem is that when I look into life insurance, there are so many type of policy. Some will allow you to draw money out of it, some will grow your money, and the basic terms. I guess some recommend full life while others only recommend term life... which policy is the smartest one...

Thank you once again..
Dat

Follow pgilliam's advise.....TERM. Nothing else. Use the rest of the money with a good financial planner to worry about college, retirement, etc.

And don't forget disability. Much more likely to happen than death. IMHO

 

[docjohn]

as someone else stated buy the cheapest term policy from a respected established provider.The other types of insurance are vehicles for the vendor to make money,there are much better ways to invest.