I have never had Life Insurance, nor has my wife. We are in

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PostPosted: Fri Feb 08, 2008 7:02 pm   Post subject: I have never had Life Insurance, nor has my wife. We are in   

I have never had Life Insurance, nor has my wife. We are in our middle 50's. What type of insurance would be best.

Cwpnd
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PostPosted: Fri Feb 08, 2008 8:02 pm   Post subject: I have never had Life Insurance  

Welcome Cwpnd!



The process of buying life insurance includes at least four variables:

(1) Need

(2) Budget

(3) Age

(4) Health Condition



I only know that you are in your middle 50's.



I would find a professional insurance agent in your area and sit down and look at your life insurance "Need":

(These are questions to discuss - no need to answer them here.)



Do you have a mortgage?

Do you have a lot of debt?

How long do you want to keep your life insurance? May sound like a dumb question, but at your age, if you want the life insurance policy in force the day you die, I would suggest a form of permanent life insurance.



What exactly do you want to accomplish with your life insurance program?

Pay Mortgage?

Pay Debt?

Pay Final Expenses?

Leave spouse a regular income?

Money for grandkids' education?



Buying life insurance is not as simple as just going online and buying a $100,000 policy. You need an agent you can trust to help you.



If you have any further questions, just post.



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InsuranceMaze
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PostPosted: Fri Feb 08, 2008 11:16 pm   Post subject:   

There are probably a lot of scammers out there just waiting to take your money, so maze is right, you must find some one you can trust with this planning, find a reputable company or ask around and see what your friends have. The may seem kind of freaky, but it would not hurt to ask the local funeral parlor, they deal with the results. They may have heard a lot of whose good and whose bad. Just a thought.

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PostPosted: Sat Feb 09, 2008 5:22 am   Post subject:   

Welcome to the community Cwpnd. We are happy to have you with us. Though Insurance Maze has left very little to add Evil or Very Mad I'm just trying to put my two penny forward....a Term life policy may score over a whole life plan for an individual at mid 50. It'll be cheap also as compared to that of a whole life plan. Reminding you that anyway the premium rate will be much high for you as it depends upon the age of the insured.





Another point, have you considered buying a long term care insurance? It seems to be an ideal plan for the graying people. It'll take care of your health care costs, nursing home care, day-care expenses and the other supports that you may need as you grow old. You may wish to pay a thought over it as well. Very Happy

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PostPosted: Sat Feb 09, 2008 5:22 am   Post subject:   

Thanks cwpnd, That is good sound advice that I also can use . I will remember that when I get to get insurance also.

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PostPosted: Sat Feb 09, 2008 3:49 pm   Post subject:   

Before choosing a life insurance plan you may want to consider what your goal is for the life insurance.



Do you want to provide money to support your spouse in case you pass away? Do you want to provide for your children, and any granchildren?



Also, decide how long you need life insurance, how much life insurance you need, and how much you can afford to pay for the life insurance.



You also want to compare rates and plans from several insurance companies because each company has different rates and underwriting guidelines.



Also, consider the A.M. Best financial strength rating of the life insurance company you choose. An insurer rated "A" Excellent or better by A.M. Best should be a financially sound, secure carrier.



You can also look into the insurer's status with your Department of Insurance in your state to find out if they have any complaints.



I hope that helps. You may want to consider term life insurance, it may be more affordable compared to whole life, depending on how long you want coverage.



Best of luck to you and your family.



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PostPosted: Sat Feb 09, 2008 4:50 pm   Post subject:   

Term life insurance is fantastic if you have documented evidence that you are going to die in 10, 20, or 30 years.



Let's suppose a person in his/her 50's buys a $100,000 20-year term life insurance policy for a premium of $45.00 per month (I just made that up).



Let's jump ahead 20-years (he/she didn't die) - now comes the Big Decision! The first term period of our life insurance has expired, so in order to keep this life insurance, we have some options:



(1) Renew the policy at a premium of $750.00 per month

(2) Let the policy lapse and have no life insurance

(3) Purchase a new life insurance policy - Remember now 70-ish

(4) Convert the term policy (if convertible) - Remember now age 70-ish



We forgot about the quadruple by-pass surgery at age 65, which makes the "purchase of a new life insurance policy" out of the question (most likely).



We don't just want the policy to lapse because we needed the life insurance when we bought it and we still need it.



According to the provisions of the term life insurance policy, it was only convertible in the first 10 years. Didn't read that part and no one told us.



So, we're down to one option -

Renew the term policy at a premium of $750.00 per month.



If someone had just shown us a permanent form of life insurance while we were in our 50's, we could have bought $100,000 of life insurance that would be good for the rest of our lives for - $125.00 per month.



Don't misunderstand me, term life insurance is an excellent way to guarantee liquidation of a "term" debt like:

Mortgage

Auto Finance

Credit Card Debt

Short Term Loan



But if you expect a term life insurance policy to be in force the day you die, you could be disappointed.



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PostPosted: Sat Feb 09, 2008 8:22 pm   Post subject:   

Insurance Maze, I completely agree with you.



I have read that approximately 97% of all term policies do not pay out the death claim for any one of the following reasons:



1. The policy expires with the insured alive.

2. The policy is cancelled.

3. The policy lapses.

4. The policy is converted to permanent life insurance.

5. The policy is lost.

6. The beneficiaries were unaware there was a life insurance policy in place.



Term life insurance is just that, life insurance for a specific term. Nothing more, nothing less.



I absolutely agree with your analysis about the options available if you outlive your policy term.



These are very important points to be considered before someone chooses any term life insurance policy.



One point though, I have a term policy and a permanent policy because I know the value of both, and what they do for me and my family.



However, many individuals that take the time to protect their loved ones with life insurance, may also have a separate investment set aside to pay for their final expenses, instead of using a permanent life insurance policy. Although a permanent life insurance policy can certainly provide for more than just your final expenses.



Thanks again for your addition to this ongoing thread. It is always best to consider all perspectives when it comes to life insurance.

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PostPosted: Sat Feb 09, 2008 8:44 pm   Post subject:   

If the term policy expires and you are still living do you get the premiums back or nothing at all. What if I paid for a term policy for 30 years and I am 50.Chances are I would not out live the policy right?

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PostPosted: Sat Feb 09, 2008 11:49 pm   Post subject:   

First, if the term policy expires and you are still alive, you would not get the premiums back, unless you purchased Return of Premium term life insurance. The return of premium policy usually costs 20%-40% more than a regular level term life insurance policy.



However, if you outlive the return of premium term life policy you will get your premiums back, except for any expenses stated in the policy that the insurer keeps.



If you are 50 and have a 30 year term life policy, you may or may not outlive the policy. The average life expectancy for a male is approximately 77+ years. And, with better health care, better nutrition and prescriptions drugs, people are living longer.



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PostPosted: Sun Feb 10, 2008 1:41 am   Post subject:   

While it is true that well over 90% of term policies are never used, in a near-perfect scenario, the combination of term, Roth IRAs and matching 401K will lead one to some very green pastures.



Throw in a 529 (but you must be careful with them) and you have all bases covered.



But it is not a perfect world and many (or shall I say most???) do not "invest the difference." Thus, when the term policy expires, there's not enough cash to preserve retirement.



So, in some cases, Whole Life is the best option.



For what it is worth, I do not have ANY permanent coverage, although being in this business, I was diligent enough to invest. Of course...the last 4-6 weeks has not been a happy time in the equities market.

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PostPosted: Sun Feb 10, 2008 2:01 am   Post subject:   

There may be better health care and prescription drugs but they are all not within my grasp as I cannot afford these things so I look to be lucky to live past a term policy. Also it sounds like a horrific percentage of term life policies to not be used.Sounds like a great waste and great gain for insurance industry.

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PostPosted: Sun Feb 10, 2008 2:56 pm   Post subject:   

hummingbird it seems that you may have misunderstood the point I was trying to get across:



Quote:
Sounds like a great waste and great gain for insurance industry.




Let's look at a family of five - Mom, Dad, 4 year-old, 5 year-old, and 7 year-old. In order to provide the maximum life isurance protection, Dad feels that he needs $250,000 in life insurance.



Dad feels that all the kids will be out on their own in about 14 years (youngest child will be 1Cool.



The premium for a permanent $250,000 life insurance policy just will not fit into the family budget, however he can pay the premium for a $250,000 term policy.



So, he buys a $250,000 20-year term policy, which will help take care of his family if he should die while the kids are still at home.



So, if Dad dies in 10 years, who has gained the most, Dad's family or the insurance company?



As far as "buy term" and "invest the difference" - no one in my 20+ years in the insurance industry has shown me a way that a person can accumulate $100,000 in cash in 20 years. The last time I checked, the compounded interest rate would have to be something like 25%.



So, term life insurance in the right situation is an excellent buy, but the style of life insurance depends on individual desires and circumstances.



PS - I don't know where the smiley faces are coming from, I didn't put them there.


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PostPosted: Sun Feb 10, 2008 3:47 pm   Post subject:   

Actually...$149 per month invested for 20 years at 9% will accumulate to $100,000. A Roth would be a great vehicle for this.



11% ROR will reduce the required monthly payment to $115. If you are earning 7%...the monthly payment will increase to $195.



So it's not as tough as you might think. Naturally, a mutual fund will create some taxes for you. And the beauty of this is...if you stop or skip payments...you don't run the risk of losing everything.

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PostPosted: Mon Feb 11, 2008 1:48 pm   Post subject:   

Sorry, I was having a brain freeze on the last post and didn't make myself clear.



When I made the statement:

Quote:
As far as "buy term" and "invest the difference" - no one in my 20+ years in the insurance industry has shown me a way that a person can accumulate $100,000 in cash in 20 years.




I was talking about the difference in premium of term life insurance and permanent. It my example with the person in his 50's, the term premium was $45.00 per month and the permanent life insurance was $125.00 - a difference of $80.00 per month.



Where can a person invest $80.00 per month and accumulate $100,000 cash in 20 years was actually the question.



According to MSN Money here's what it would take:



Starting with $80 and depositing $80 monthly over 20 years (at a rate of return 21%, compounded monthly and taxed at your marginal rate of 28%), you will save $107,768.

Initial balance: $80

Total deposits: $19,200

Total interest earned: $122,900

Total taxes paid: $34,412

Total Saved: $107,768



Where can a person get a guaranteed return of 21%?


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