Life insurance questions-need to get a policy?

I started a new job and have no insurance. My husband picked me up on his health plan and I have life coverage with his comp also but would like a seperate plan that I can establish now (before getting older, facing higher premiums). How do I pick a plan. Any comp in particular better to deal with?

There are two types of life insurance you should know about. The first one is called cash value life insurance, otherwise known as whole life, universal life, or variable life. This is type of plan that builds tax-deferred savings, which is called cash value. You are protected for your entire life. In most policies, when you die, your beneficiary will only get the death benefit and the insurance company will keep your cash value. If you want your beneficiary to also get the cash value, you have to pay more premiums to include that feature. Because of the cash value feature, this type of life insurance is said to be very expensive.

The second type is called term insurance. This type doesn't build cash value, so term insurance is known as "pure" insurance, just like car insurance and health insurance. You can afford lots of coverage for low amount of premiums. There are many level term policies ranging from 5 year to 35 year (in 5 year intervals). For most people, a 30 year term is the best option for them. If people want to build tax-deferred savings, they are better off opening a Roth IRA and invest money into various mutual funds.

Take a look at this hypothetical example between whole life and term insurance: Lets say this person is 30 years old and is rated non-preferred.

Whole life:
Coverage: $100,000
Premiums: $1000/yr until age 98
Cash value: First 2 years, $0. By age 60, $40,000.

30 year Term:
Coverage: $100,000
Premiums: $250/year for 30 years
Cash value: N/A
Investing the difference...
Invest $750 or $62.50/month @ 0%: By age 60, have $23,250.00
At 5%: By age 60, you will have: $55,675.86
At 12%: You will have $249,400.28 in 30 years.

Taking a look at the difference, would makes more sense to you? Whole life or term insurance? You probably asking how can I get 12%? Simple, you can earn 12% from mutual funds. I have putting away $100/month into 3 different mutual funds and the rate of return on my portfolio has been around 12.22% in the past 3 years.

Ok, what if you only invest $100/month? Would you still buy cash value life insurance?
@ 0%: You will have $36,000 in 30 years.
@ 5%: You will have $83,573 in 30 years.
@12%: You will have $352,991 in 30 years.

How much would it cost if I renew my term in 30 years, keeping coverage the same?
At age 60, most insurance companies can only offer term up to 20 years.
So, for 20 year term for $100,000 coverage: $1500/year.
Yes, this would seem more expensive than to buy whole life 30 years ago, but you need to look a the cost.

Comparing term and whole life:
With term insurance, you are paying a total of $7500 in premiums from age 30 to age 60.
With whole life, you are paying a total of $30,000 from age 30 to age 60.
Then you renew it to a 20 year term, you are paying $30,000 from age 60 to age 80.
With whole life, you are paying an ADDITIONAL $20,000 from age 60 to age 80.

So total cost from age 30 to age 80:
Term insurance: $7500 + $30,000 = $37,500.
Whole life: $30,000 + $20,000 = $50,000.

At age 80, do you think really need life insurance still? What finanical obligations do you have at age 80? I doubt you will have any kids to take care of. I almost certain that your mortgage is paid off. As for credit cards, you should be able to pay the balance off each month if you started investing at age 30. Do you see why term insurance makes more sense than whole life or any other kinds of cash value?

Rating services show how financially stable companies the companies are. The top companies are Met Life, New York Life, Prudential, and John Hancock. By the way, I seem to always see messages on this board regarding buying term over cash value life insurance just because the commissions for the insurance agent is higher. Are these people not allowed to get a paycheck? If you truly want a policy that will last you the rest of your life and is paid up after a certain number of years and the premiums won't change then get whole life. Term will last you until age 80 or 90 depending on what state you live in and the premiums go up after a certain time. Whole life is the only truly permanent life insurance policy. Lock in the premiums when you're younger because if you decide to convert term insurance to permanent when you're 60 or 70 it may not be affordable.

choose the right company

go to www.quotesmith.com
its an agency that will obtain quotes from a number of companies.

look for low cost term with premiums fixed for the period you desire. Dont let an agent talk you into whole life or universal life or variable life -- big commissions for them, big expenses for you! I worked for Prudential for 13 years.

Banner Life as noted above is one of the companies. I actually have a banner life policy i bought on Quotesmith.

good luck

If you're in Virginia (I'm guessing from your user name), I can help you.

There are several different types of life insurance and there's no one best fit for everyone. You need to think about what you're trying to accomplish with the coverage. For instance, are you trying to replace your income, making sure that your final expenses are covered, taking of your children's educational or caregiver needs, or some combination thereof?

Term insurance is typically what people talk about because it's always the cheapest option. However, at the end of whatever term you've picked (typically 10-30 years), you're without coverage. And that can be a big problem when planning for final expenses, or future education needs of your children.

Most term policies will give you an opportunity to convert some or all of the face amount to a whole life policy; however, that's the most expensive way to do it because, even if you don't have to provide evidence of insurability at that point (meaning you wouldn't have to take a medical exam), you'd be paying based on your age in the year of the conversion.

If you decide to go with term, I usually recommend at least a small whole life policy in combination so that you don't get into one of those situations later on.

There's another option called a universal policy. I describe it as "term on steroids", because it really doesn't build cash value like whole life (at least, not after the first couple of years), but it provides protection for the rest of your life. (They have an extension clause on them that typically takes them to age 120 or more.) This means that you'd never have to worry about the term running out. They're a good deal less expensive than whole life and a little bit more expensive, on average, than term. However, there are some great benefits aside from the price also. For instance, because it's a universal policy, you have some flexibility on the payments. I typically set these up for my clients so that they will only have to pay on them through age 65. That way they always have the protection, but they don't have to continue paying for it after they're retired and likely have a reduced income.

Incidentally, I also wanted to mention that your situation is not uncommon and your husband may want to consider getting a policy for himself as well. Yes, he's covered at work now. But what happens if the company is sold and no longer offers coverage, or when he retires and there are still final expenses to consider?

At any rate, it's food for thought. Feel free to email me if you have questions!

Choose a company that gives you great rates based on you not smoking or having significant health problems and that offers you flexibility.

And one that allows you to increase the face amount whenever you need to, as opposed to having to purchase a new policy at an older age.

Look for inexpensive term life insurance. You can get a large amount of covereage for very little money. It's called "term" because you have the right to purchase life insurance for a "term" of 10, 15, 20 or 30 years.

Look for the 20 or 30 year plans. You are not obligated to keep it for all 20 or 30 years, but you'll have the right to keep it for that long if you so choose.

Look online at the rates of Banner Life. Very tough to beat.

Good luck to you! :)

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