awpitt
Main Streeter
There's also and option to do a "conversion" where the cash value pays the premium so it becomes a term policy that pays for itself.
Life Insurance
- Thread starter KDENISE977
- Start date
There's also and option to do a "conversion" where the cash value pays the premium so it becomes a term policy that pays for itself.
KDENISE977
New Member
I am so lost right now...term life insurance so what happens after the 20 year term?
Whole life and cash value? huh??
I just need to know that if my husband croaks(sorry honey), that I don't lose my house because I could NEVER afford the house, car payments, pay for kids college, etc on my salary. :shrug:
Whole life and cash value? huh??
I just need to know that if my husband croaks(sorry honey), that I don't lose my house because I could NEVER afford the house, car payments, pay for kids college, etc on my salary. :shrug:
awpitt
Main Streeter
The policy, and you money, is gone. You have to buy a new term policy based on the rates at that time. The rates go up as you get older so at the end of a 20 year term policy, you are twenty years older. You won't be paying the rate you did twenty year ago.
In the case of my kids and their whole life policies, they won't have that worry. Their premiums were established when they were born and their premiums will remain the same regardless of how old they are.
Its pretty simple. Term life is just life insurance that you pay for on a monthly basis that has a payout value of x dollars..you pick the 'x' that suits your needs and budget.
Whole Life is only really different to the extent that it actually accumulates a 'surrender', or 'cash', value as you pay the premium every month. But..that premium will be initially greater for a given payoff value than it will be for Term insurance and, as has been noted, any cash value of a Whole Life policy accrues very slowly in the first 15 or so years of the policy.
ProfMoneyWise
Member
Read The Total Money Makeover by Dave Ramsey.
The plan is to get out of debt, be prepared for emergencies, fund your retirement, fund the kids college, pay off the house and in 20 years not have the concerns you do now and any Term Life insurance needs are because you want it not because you have to have it.
Former smokers still want a cigarette. Those who have lost weight and keep it off still like chocolate. But I have never met anyone who got out of debt and paid for things with saved money that ever wanted to go back into debt and being a slave to the lender.
Read the book. You can get it at the library for free. Cheapest I have seen it to buy is as an e-book or at Dave Ramsey Homepage - daveramsey.com.
somdforever
Member
2 places you could start:
1. contact the insurance company that your company is using
2. talk to the company that you have auto insurance with
Your insurance through work is more than likely, Term insurance. If so, once you leave the company, the insurance goes away unless you are allowed to convert that insurance to a Whole Life policy with the insurance company. Many will allow it; some don't. That's why I suggest you contact the insurance company that covers you through your work. May even offerr a lower rate. If you and hubby are young, now is the time to buy good life insurance. As you get older, the premiums will be much higher.
The idea is to be self insured after 20-30 years by paying off the house, getting the kids out of school, and having an nice retirement saved by then. If the house is paid off, the kids are on their own, and you've saved wisely over the years (and your spouse is still alive) what do you really need life insurance for. You don't need life insurance for the rest of your life. You just need it to get through a time when you don't have much...
Y-ASK
Now long term care insurance, that's a differnet story and you really don't need to worry about until about 45-50.
ProfMoneyWise
Member
If the odds are played on LTC wait until the age of 60 as they go up at 60+.
A good LTC policy is now covering a lot of pre-nursing home care and Hospice.
If no LTC policy is in place plan on having $400K to cover these services which is what they are. Services. And services need to be paid for.
I don't plan on the Government for my retirement and I sure don't plan on the Government for my care later on.
If I don't have LTC and the Government gets stuck with me then after our money runs out my wife is going to be left with the house, a car and some cash but not much. Not what I want to do to her, or her to me for that matter.
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itsbob
I bowl overhand
You've lost a little in translation..
Today, she may need close to million in insurance.. (probably less but work with me).
20 (or 30) years from now she will NOT need one million dollars in life insurance.. Maybe only half or less.. Buy, or renew (no physical required) your current term at a lower payout. Your payments MAY remain the same.
Bottom line, if she NEEDS a million dollars in coverage most people can't afford that much coverage in whole life.
I believe the Canadian Insurance whatever did some research years back and found 85% of families were underinsured because they were sold on the "cash value" and were using their insurance as an investment not for insurance.
Take the example: You have 50K in whole life, what you think are GREAT return values (dream sheets are based on 10 - 12% returns when the actual return could be as low as 2% or less per year). The insured dies.. You pay for the funeral, you pay off his car note, what do you have left to live on? 10 - 15K?? MAYBE? How long is that going to last? Kids College?
Now your facing the loss of your house because you can't cover the payment without his/her paycheck..
So not only have you lost a loved one, your life is going to be turned upside down financially, AND you've lost your retirement investment.
Whole life, and even universal life is good for ONE person, the insurance salesman.. They will steer you away from term as they get HUGE commissions from both whole and Universal Life, and with the Universal Life they get TWO commissions, one for your insurance, and a commission every month on your "investments". Whole life they get commission regularly for 10 - 20 years, every time your policy renews (on the anniversary date) Better to buy term, and go get your own no load investment tools..
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awpitt
Main Streeter
Didn't loose anything. I've posted, more than once, that Whole Life is not a good buy for adults.
Amen. Buy term, invest or spend the rest, at your discretion. Just don't give it to the insurance companies.....
You will not see it again...
getbent
Thats how them b*tch's R
Oh my. That possibility never even crossed my mind. We (my kids and I) could basically be screwed if, heaven forbid, he passes away in the middle or right after changing jobs. I guess I better see if he has any other options other than a work policy. That's all we have since we assumed we had no other options.
ProfMoneyWise
Member
He needs you to have insurance too. You pass and he is going to need help with those kids.
somdfunguy
not impressed
My goodness what the heck did you all learn in school? This is basic how to survive in the real world stuff. Do your family a favor. Now that you have learned, teach your kids about it.
ProfMoneyWise
Member
I highlighted the part of your response that I believe matters. Somewhere along the way parents stopped teaching this. It is not the schools responsibility in my opinion it is the parents responsibility.
itsbob
I bowl overhand
Not bad but what loss are you insuring by buying life insurance for a 2 year old?
I'd suggest a small exercise of "If I had invested the same money with say a 10% ache return how would that value compare to the cash value, and/or the face value of the insurance?"
Do give a small hint, if you started their IRA the day they were born and it averaged about 12% interest, how much do you, and they have to put away for them to be a millionaire at 65?
About $5 a month..... One cup of Starbucks coffee a month.
Lesser interest rates, and waiting to start the monthly insatllmenta amounts go up exponentially.. drop your average interest to 10, and now you have to put away $15 a month.
getbent
Thats how them b*tch's R
Oh definitely. Going to start looking into that. It just stinks that due to a pre-existing condition, life insur. at work seems to be our only option for the hubby.
