Should I elect for the highest amount of coverage offered by the company, since I have a child?

They allow for some crazy number like X10 your annual pay, but you have to have a physical first.

The cost is not prohibitive. I'm sure it might get that way in the future, but for right now it sounds really good.

Any thing I should look out for? The policy is held by a reputable life insurance firm.

10/11/2007 6:34:51 PM

ibtl

10/11/2007 6:39:06 PM

bam delete.

i searched and didn't find anything earlier.

10/11/2007 6:45:45 PM

What $$$ do you need to replace for your family if you die?

The place where I work gives 1X annual pay as life insurance as a regular benefit but they will give quotes if you want additional insurance on top of that. The price quote I got through my employer wasn't so hot so I picked up an additional 3X my salary from NC Farm Bureau.

This will be enough to pay off the house and let my wife finish school. After that she should be able to handle whatever bills come her way.

I love my wife but I am not setting her up to eat bon bons and watch soaps all day after I'm gone (and she agrees).

-- Dave

10/11/2007 7:11:05 PM

The purpose of a your life insurance policy is to replace lost income, so you should get an amount that would have them covered for the next 5-10 years (plus maybe cover college for the kids).

For instance, from my employer I elected for 3X salary (that was most you could take before being required to have a physical). I also have an additional policy w/ Amica. I have no children, so I am confident that is enough.

In the case of your children, if you insure them you should just get enough cover funeral/burial expenses. This is because: a) you don't have to make up for their lost income, and b) you don't need be in a situation where you benefit from their death.

Same goes for your spouse (unless she is a wage earner and you need to replace income).

10/11/2007 7:55:13 PM

term or whole policy?
i just converted my 10-year term into a whole universal life policy.

10/11/2007 8:37:04 PM

term life at the moment, maybe converting to whole later.

10/12/2007 12:12:57 AM

^^ that probably was a bad move

10/12/2007 12:25:35 AM

my term is scheduled to change in a couple of years, and it wasn't much more more for the whole.
i didn't do it 'as an investment,' per say, but the return numbers looked good, so i don't feel too bad about it.

10/12/2007 7:48:58 AM

Term is the way to go. Don't look at life insurance as an investent (which is what whole life insurance essentially is), the returns are horrid.

The idea is that you have term while you amass your wealth via other investments. Once your investments have matured, you drop all life insurance policies and become self-insured. If you invest properly, your nest egg should mature right about the age at which life insurance rates begin to get expensive.

10/12/2007 9:12:21 AM

How does life insurance work in the US? I have seen ads where they say you pay around $50-100 a month, and you get a half million to a million policy.

I am outside the US, and all the companies I looked at here were offering something that looks like mine:

$100,000 policy
$3,441/year ($287/month) x 30 years

IOW, I will be paying just over $100,000 in 30 years. If I live through that, I get the sum insured back, plus any profits (projected to be a total of $200,000 at that time).

There are other clauses as well, such as for loss of limb(s), eye(s), disability, etc.

How come in the US, you can get a $100,000 policy by paying like $15-20 a month? How long do you pay for?



^ But what's the harm in getting your money back? What you said sounds weird to me.

10/12/2007 7:09:55 PM

the short answer is that there is an opportunity cost associated with having that money tied up in a whole life policy which yields a low return.

term insurance is kinda like renting life insurance...it's very cheap, but it accumulates no value over time. when you stop paying, that's the end of it. However, it is very cheap (prob $25/month for a $250,000 policy). You are better off taking the difference in cost between term and whole insurance and investing it elsewhere, like stocks (or more specifically index funds, for most people).

also, if you are doing what you should financially, you won't need life insurance forever. You need very little of it when you are young (just enough to pay for funeral expenses, etc). As you start a family, you have a child (and maybe to some extent a wife) dependant on your income--this is what life insurance is intended to, well, insure. As you get older and accumulate more and more wealth (and your kids get older and closer to being self-sufficient, and eventually become so), you need less and less life insurance. At that point you just drop all life insurance, because your accumulated wealth will be sufficient to provide for all burial expenses and to support your dependants.

10/12/2007 11:09:41 PM

^^ You have a Foreseter's Policy? Or maybe Old Mutual?

Yeah, you can get policies like that here, but they are a bit more expensive to get return of premium. Worth the money though. You can get them "simplified issue" which means no medical exam or you can get a policy with a medical exam if you are healthy and save a few bucks every month.

The problem with insurance at work is that the day you quit, you lose your coverage. Its not a bad idea to carry coverage outside of work so that it goes with you if you leave your job. Either get something permanent (Whole life or UL with a secondary guarantee) or at least get something that will last you until you plan to retire (ex. a 30yr term policy).

10/13/2007 1:05:51 AM

most people will be better suited by term

the only catch is that it becomes big boy rules at that point...you need to invest the money you're saving by using term.

10/13/2007 2:39:43 AM

?topic=475382

Quote :

"bam delete. i searched and didn't find anything earlier."

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10/13/2007 1:18:12 PM

Im getting a term plan to add to my benefits at work ...

Let me know if you are looking, I have a friend who sells good plans through mass mutual. They offer term, UL, and Whole and there are many flexible ways to plan out the payments. He sat down with us this week, and was very honest about what we really need/dont need for out situation.

10/13/2007 1:58:08 PM