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 Posted: Fri Dec 05, 2008 10:46 am Post subject: life insurance investment |
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Hi,
Can I really think of life insurance as a commendable investment option? How do I judge whether its right for me to think of it that way?
brown_brooke
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brown_brooke
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| Posted: Fri Dec 05, 2008 10:54 am Post subject: |
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IMO no, life insurance is not an investment other than the assurance or investment in the life style of the beneficary left behind, there are other regular posters that are much better versed in this that will be along shortly to help with more information, i'm sure.
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Lori
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| Posted: Fri Dec 05, 2008 11:04 am Post subject: |
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You can only decide about an insurance policy once you'd find the right reason to opt for it. Life insurance is always a good form of income protection. It is aimed to offset the earnings of the policy holder (for the beneficiaries). It would surely be of great help if his children are not earning anything. People might differ, but counting upon the 4.5% inflation I don't see insurance investment on the kids as a productive option. It won't get a good return as compared to the dollar value today. Plasticmind
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Plasticmind
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| Posted: Fri Dec 05, 2008 12:25 pm Post subject: insurance |
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| I'll tell ya...I've been looking around for Life Insurance for my son. Something that builds 'cash value'. If 'you' don't know alot about Life Insurance, it's difficult to know what to ask for ( Term, Whole, the 'need', etc.). But.....I'm still researching alot of places. |
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sdchargersfan
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| Posted: Sat Dec 06, 2008 12:48 am Post subject: |
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Not to throw a bunch of rain into this sunshine party,  but it's actually ILLEGAL under IRS rules to call a life insurance policy an investment. That one, at some point in time, will get you in trouble.
It's NOT an investment anyway! It's to protect income, assets, and a bunch of other stuff if you die. If you look at the Internal Revenue Code (IRC), there is a 500' high, 50' thick brick wall that separates life insurance and investment taxation. Life insurance enjoys many beneficial tax treatments as the IRS DOES NOT CONSIDER IT AN INVESTMENT!
If you're looking for specifics, just ask! I'm in the mood to be explanatory!
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InsTeacher
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| Posted: Sat Dec 06, 2008 9:32 am Post subject: |
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Some people enjoy looking at life policies as a medium of investment, but I'd echo what the other posters have said…..life insurance isn't an option for investment. Except some indexed plans a life policy can't generate enough return to be looked upon as an investment alternative.
Also, I agree with Plasticmind, life policy purchased on a child is another lousy investment option. The life policy can't ever generate sufficient return on the money like the conventional methods of investment, this is because, the administrative charges are higher with the life plans which reduce the fund available for investment. Apart from this the insurer is required to set-aside an amount from the premium paid towards death benefit further reducing the money available for investing. |
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jeorge
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| Posted: Sat Dec 06, 2008 3:06 pm Post subject: insurance |
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| WOW!! JEORGE....why is buying a Life Insurance policy, for a child, so bad? I thought it would cover Funeral Expenses, building 'cash value', etc. (God Forbid..) Or......or is their ANOTHER policy that is more 'appropriate' ( lack of a better word..) for this reason? |
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sdchargersfan
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| Posted: Sun Dec 07, 2008 1:33 am Post subject: |
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buying life ins isn't bad...i have them on my kids and grandkids..buying life ins. as an investment, i think is what he's getting at as bad...the policys (as an example) for my grandbabies, cost us like 350.00 TOTAL and are good till they are either 24 or 27 i can't remember, at which time they can convert them or they are done, they are small 15 or 20k policys...my whole theory on policys for kids (as i've said many times) is the financial burden on top of the horrific emotional burden...that's one thing I don't want to worry about putting 10k or better on a charge card to bury one of them...and as i pay it off reminding me even more (like you'd ever get over it, but you know what I mean)..in the case of the policys I bought, 350 for 24 or more years of 'life insurance' with a death benefit only is just fine with me.
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Lori
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| Posted: Sun Dec 07, 2008 5:00 am Post subject: insurance |
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| So, basically, a Life Insurance policy, for a child, should be a very 'simple' policy..nothing added to it or anything 'fancy. Make sense to me. |
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sdchargersfan
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| Posted: Sun Dec 07, 2008 11:34 am Post subject: |
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I don't know about that sd, that certainly seems to be the opinion of some posters in this thread...and mine..but whether it's ALWAYS true i'm not sure.
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Lori
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| Posted: Sun Dec 07, 2008 1:51 pm Post subject: insurance |
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| 'Keep it simple.'...kind of thing, I think. I've looked at several insurance companies for Life Insurance.......sometimes, the 'suggest' to add this or that. Sometimes they just want to 'upgrade'...ya know? A Death Benefit...that's really all I'm looking for ( for my son). |
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sdchargersfan
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| Posted: Sun Dec 07, 2008 10:36 pm Post subject: |
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me too that's all i wanted as well...
just something to take care of the final
arrangements (God forbid).
.
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Lori
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| Posted: Sun Dec 07, 2008 11:13 pm Post subject: insurance |
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| I know what you mean about "God Forbid"..........however, you just never know. |
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sdchargersfan
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| Posted: Mon Dec 08, 2008 4:28 am Post subject: |
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There's another thing that you have to consider when insuring a child. Many of you have mentioned coverage in the event your child should die. While the premise is sound, the likelihood of your child dying in early life is slim. Frankly, that's not the primary reason you should consider buying coverage on a kid.
The main reason you buy life insurance on you kid is to protect their insurability. Typically, you're never healthier that when you're a child, and the premiums are never cheaper than when you're young when talking about life insurance. So, the reality is that while the kid is healthy now, buy the coverage and lock in their insurability so that if their health changes down the road, it won't be a factor. An insurer is not allowed to cancel or rerate a policy once issued and past the contestability period except for nonpayment of premiums.
For all three of my kids, we have purchased what are known as "jumping juvenile" contracts. They start off with a face amount of $50,000 on each kid, and when they turn 21, the face amount "jumps" to $250,000 without evidence of insurability and there's no premium change. That's a quarter milion dollars of coverage that cannot be taken away, and the premium is based on the kids' age at purchase. That'll be a hell of a deal when they're 40 years old with kids. And they have a cash value component, which adds to their value. Again, not at all an investment, just a fund from which they can withdraw from or borrow against if they have to.
Thanks to the powers that be that all the kids are healthy, and I hope I'll never see those policies used. They were bought for my kids and their families, not me and their mom.
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InsTeacher
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| Posted: Mon Dec 08, 2008 5:06 am Post subject: |
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| Quote: | | WOW!! JEORGE....why is buying a Life Insurance policy, for a child, so bad? I thought it would cover Funeral Expenses, building 'cash value', etc. (God Forbid..) |
Hey SD, there is nothing wrong in purchasing life policy on a child, but its more often a sentimental decision than an informed financial decision. I don't support purchasing life plan on a kid purely on the basis of principal. I don't think that the parents want to be benefited out of their child's death rather they'd take care to secure that the child doesn't become destitute upon their death. |
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jeorge
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