Does anyone having life Insurance through USAA?

Posted: Fri Dec 04, 2009 11:52 am Post Subject: life insurance

Thanks, everyone, for your responses. I DO have debts (slowly, but, surely, getting them paid off) and I DO have a son. I have a Life Insurance policy on myself, of course. However.....I'm looking for one for my son. I really don't know anything about UL....I just 'put it out there' so I could see what other people think, their opionions, etc. Something that is affordable, practical and 'stable'.

Posted: Fri Dec 04, 2009 12:43 pm Post Subject:

Whole life will probably be around the same price for your son as a no-lapse UL and build much more cash value and/or death benefit over his life. The price difference for whole life vs. UL on a child is usually minimal compared to the difference for an adult.

Posted: Sat Dec 05, 2009 12:49 am Post Subject:

I'm not a fan of UL for younger ages.

If you are going to buy a policy for your son, make sure that the premiums are easy for you to afford. I like WL for children. The main reason for buying insurance on a child is that it guarantees that they can get coverage as an adult. For instance, I have many of my clients buy policies for $62,500 on their kids. The reason for this is that the child will be able to buy $1,000,000 of coverage as an adult with no medical questions.

(This particular policy includes a rider that allows the child to purchase 2x the face amount of the policy up to $125,000 8 different times. $62,500 x 2 x 8 =$1,000,000)

Posted: Sat Dec 05, 2009 02:36 pm Post Subject: life insurance

As I said, I want something that is affordable to me and something that will 'stay with him' (lack of a better word). Cash Value?..yep, want that, too. Whole Life?..I'll look into it. Thanks.

Posted: Sun Dec 06, 2009 12:51 am Post Subject:

To really do this right, it will cost right around $55/month. If that premium isn't easy to afford, this isn't a great idea.

This will buy a $62,500 WL policy and will give him the ability to purchase $1,000,000 more of coverage in the future with no medical questions. Additionally, the premiums will be paid for him if he ever suffers a total disability.

Posted: Sun Dec 06, 2009 08:27 am Post Subject: life insurance

Thanks, SKID. yes...that premium WOULD be affordable for me. And...does this pay Cash Value, as well?

Posted: Sun Dec 06, 2009 09:11 am Post Subject:

Yes, there would be a cash surrender value. The quote comes from one of the giant mutual insurance companies.

Things should be pretty similar between Guardian, Mass Mutual, Nortwestern Mutual and New York Life.

Posted: Thu Dec 10, 2009 11:54 pm Post Subject: life insurance

Thanks for the advice, ya'll!! I'm starting a Whole Life policy, for my son, for about $33.00 per month. THIS I sure can afford!! The policy is for $50,000. I'm doing through a Military site.

Posted: Fri Dec 11, 2009 06:56 pm Post Subject:

SD . . .

As "fjalru" put it, "I'm not a fan of UL" for kids either. The main reason being that UL premiums are always based on an illustration that shows straightline interest crediting, when the likelihood of that is remote.

Since the 1980s, UL interest crediting rates have steadily fallen and are now well below 6% (under 5% at a few companies). If the interest crediting rate remains level or continues to decline, there will likely still come a point in the policy that the premiums + interest on the cash accumulation are not enough to cover the actual monthly expenses of the contract, and the insurer simply begins using the cash accumulation to cover the shortfall each month, creating a negative impact.

Unless you start paying higher premiums, the negative spiral accelerates until there is no remaining cash value, and the policy lapses (absent a "no lapse guarantee"). Even with the no lapse guarantee, all your son has is a permanent term policy, and if just one payment is missed, he doesn't even have that, without dumping massive amounts of money into the policy. Not what you were expecting 15-45 years ago when your son was 15-16 years of age.

A whole life policy, by design, can never do that. Not until someone stops making premium payments would they start taking from the cash value to keep the policy going, and until every last cent was gone.

As others have said, at this age, there is essentially no difference between WL and UL premiums, so the better use of one's money, despite the agent dialogue that all but promises millions of dollars in cash value for your child in retirement, would probably be directed to the whole life policy -- because even if he never increased his coverage as skldfwm suggests, his premium outlay would never increase ($660/year x 105 years = $69,330 for a $62,500 policy (the excess is the cost of the "guaranteed purchase option" your son chose not to take advantage of)).

Doing the simple math, the $50,000 policy for $33/month is about $41,000 over 105 years (to age 121). Very typical of a whole life policy, and a reasonable decision on your part.

Way to go Mom! The cash value will not make him wealthy. Teach him instead to work and save in his Roth IRA and other retirement accounts, and he'll be able to take good care of you in your old age.

Posted: Sun Dec 13, 2009 03:34 pm Post Subject: life insurance

Thankyou for your compliment, MAX!! You're such a 'Dear thing'..LOL The Rep, on the phone, was very helpful. NOT trying to sell me something I didn't need or couldn't afford. I don't want to make my son wealthy..i want to make him responsible. I'm not wealthy, by ANY means..however....my life is very 'rich' in so many ways. Oh..MAX..forgot to ask the Insurance Rep, so..I'll ask you..LOL In the WL Policy, does it include a Death Benefit or do I need to 'add' it on? I should have asked the Rep, but I didn't!! (Sniff, Sniff)