My husband and I are both 23 years old and we just purchased a home. We have been under pressure from our Insurance Agent and our Mortgage broker to obtain Life Insurance in case something happens to one of us.
We would like to have coverage in case something happens. I know the importance of Life Insurance, as my mom was killed in a car accident when she was only 38. So, we want to be protected, and we want our house to be safe.
We are pretty much clueless when it comes to Insurance policies. I ALREADY LOOKED UP THE INFO ON WIKIPEDIA, SO PLEASE DON’T GIVE ME MORE OF THAT. I want opinions on what the best kind of Life Insurance is for us.
Term (but if it is a 30 year term, does that mean when we are for example 54 and something happens after the 30 years, we aren’t covered???) or Permanant (whole life, and others). We didn’t like the decreasing term policy our agent showed us. We have gotten 2 quotes for Term Life.
Help us make an informed decision!!! Please!
Dan, I don’t have your email address!!!
Best reply by Daniel J:
Get a whole life/Universal Life policy. You’ll pay more money, but you’ll get that money back. If you get a 30 year term, at age 54 life insurance will be about 400% higher than what you’ll pay now. If you need help, e-mail me. Dan
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What type of Life Insurance is best for my husband and I? (We just purchased a home, we are both 23 years old)
Term life is most economical but after a 30 year term and a 30 year mortgage your home is paid off. By then you won’t need the life insurance for making the mortgage payments. If you are smart now, you will put money into a 401K plan (tax free) so that after 30 years you will have enough that you won’t need that term insurance to continue because your 401K will transfer to each other. Look into revolkable trusts, joint tenantcy, survivorship, and all of that with an estate lawyer. For any matters relating to finance, written in plain English, check out the books by Suze Orman at your library. I assure you, you will be enlightened on the whole insurance nightmare. Whole life is extremely expensive. You are much better off planning your own life and death. Insurance is VERY important but don’t rely on your agent to do the math for you. They are pretty much on commission to overinsure rather than protect you. Check out what Suze Orman has to say in her books … and Saturday night TV show on CNBC (cable).
If I were you, I’d go back to the bank I worked with on my loan, or your current bank for checking and savings, ask to talk to a financial adviser at the bank.
Explain your concerns, and listen to his opinions.
Second, ask 3 or 4 uncles and aunts who they have used for insurance, who they really trust, go talk to that person, and ask them to explain the differences and advantages to both kinds of insurance.
Third, if either of you work for a larger company, see if the HR department has anyone who consults with employees about financial concerns and visit with them.
Finally, now that you have a lot of information, weigh the options, and make decisions.
Personally I’d recommend a combination. Have a Whole Life policy of a more minimal amount say $50,000 to $100,000, then have a term life insurance policy for a higher amount. The term life is to cover your risk while you establish your financial security.
Enjoy the new house, and may it be filled with love, and the pitter patter of little feet.
Personally it depends upon the type of persons you are. and if you are likely to keep the insurance. You can buy partipating life insurance in which dividends are paid back into yuor policy making it more valuable, but it’s high and the supreme court ruled in the 50s that particpation insurance was nothing more than returning a portion of over charged premiuums to you.
Personally I think if you are 23 and are finance able to spend two a monthon insurance I would buy term for 30 years even cheaper reducing term and invest t he balance in cd deposits and leave it alone. Henry Ford said compound interest is the strongest thing on earth andhe was right,.
Here is some examples; If you are 23 in good health, none smoker, not over weight than you could buy form prudential about 500,000 for 30 years level term for about 34 dollars a month.for a male. less for a female. thiswill vary company to company. but the point is if you can spend 200 a month (200 as an example) and bank the balance in savings and leave it you would come out miles ahead over whole life.
If you spent 70 a month on the actual insurance plan and the balance on savings you would have invested $25,200 dollars in the insurance plan and 46,800 in the savings account not counting all of the interest built up.
This time and time again will beat the odds on just buying insurance. with something like thios your family is covered for both of you. it’s all according how much you need and want.
!50,000 at about 40 a month for both of you with a company like prudential or american general is not a bad deal if you bank the like amount in savings. you always buy insurance because you need it for protection.,to offset the cost a like amount or partial of the amount you pay for coverage invested in savings will remove the cost in the future. the interest on your savings covers it.
or that is my story and I am sticking to it>:)
This is a tough question, but this is Yahoo! Answers, so I’m here to help.
First, bankrate.com is a well-known, excellent website that has a calculator for this (see below).
If your insurance agent is “pressuring” you, I surmise that he/she is not acting in your best interest, but rather, his/hers. Purchasing life insurance, while prudent, is something that should be done with an advisor whom you trust completely and feel zero pressure.
For more information, please visit your state’s insurance department website. They provide objective information that will assist you in your purchase. Attached is a sample for the state I live in, Texas. Good luck, my young friends!
Term life!!! You can each get a half million of term life for under $500 a year, it’s MUCH cheaper than paying $3k – $4k for whole life. Save the difference every year, and in 20 years when the term expires, if you don’t want to renew it, you should have plenty of funds on your own.
Personally, I own a 30-year term insurance with $500,000 coverage and only pay about $48/month for it. I’m 24 right now and bought it when I was 23. So when I become 53, I hoping that most or all my financial obligations are paid off and that I have accumulated lots of money in my Roth IRA. If I still need life insurance at age 53, I can decrease my coverage amount to my family needs. At age 53, I shouldn’t be thinking about life insurance. I should be thinking about whether I have enough saved toward retirement? I don’t want to back to work when I retire. That’s why I buy term and invest the difference.
When you buy term, you are also suppose to have extra money left over to save toward retirement. When you buy whole life, you don’t have any extra money because whole life is very expensive. In whole life policies, rate of return on savings is very low and if you want to use it, you have to BORROW it. Do you like to borrow your own money and pay it back?
That’s why I choose term insurance. Why should insurance have a savings plan attached to it and that when you die, your family only has access to the face amount and not the savings? So, if you want your family to have the best of both worlds, buy term and invest away each month.
Go for a long term whole life policy with only death benefit. Long term is possible as you both are young. IT will also benefit you as your premium will be relatively low.
Work out how much you are able to apy on insurance every year and ger a policy which will give you the maximum coverage for that amount.
Do not consider any insurance agents offers for an investment linked scheme. These will have higher premiums and lower coverage and the returns will be similar if you go for any other direct investment.
I’m sorry to hear about your mother. I do understand your sincere interest in getting the right type of life insurance protection.
Given your age and your needs I would suggest level term life insurance for a 30 year term. In addition, you may want to request the endorsement for conversion privileges added to your policy. This will allow you to convert a certain amount of coverage to whole life insurance by a certain date in the future. That way, you have lifetime coverage, no matter what happens to your health in the future.
By combining the benefits of whole life and level term life insurance you get the maximum amount of protection at an affordable rate, and lifetime protection guaranteed.
This is exactly what I did for my family. That way I got the maximim amount of life insurance protection and made sure I had some whole life coverage that will not end after 20 or 30 years. I chose a small amount of whole life to cover final expenses and build some cash value. I would imagine when you are 54 years old and the 30 year term insurance expires you will have enough money saved to pay your final expenses and any outstanding debt.
Here is a complete explanation of the question you have about whole life and term insurance:
Term life insurance is designed to help people buy life insurance protection they need when they can’t afford to purchase all permanent insurance, or when they only need life insurance protection for a specific period of time. Term insurance provides you with a guaranteed death benefit, but no cash value.
The life insurance premiums will increase at pre-determined intervals such as 1 year, 5 years, 10 years or 20 years. This depends on the type of term life policy you select. A term life policy is often the choice when your life insurance protection needs are higher for a period of time, then drop down to lower levels in later years, such as when your family is growing.
Term insurance can also be an effective way to provide supplemental coverage in addition to permanent insurance during years you need higher levels of protection, such as when your family and other financial responsibilities are beyond your current income.
In these situations, term coverage allows you to purchase important death benefit protection without going beyond your budget. Also, if the coverage is convertible (the coverage can be “converted” to a comparable permanent life insurance policy, without the need to provide evidence of insurability), you can get the coverage you need today — with the ability to purchase permanent insurance coverage in the future.
The Real Cost of Term Life Insurance
However, term insurance has its disadvantages. It isn’t right under all circumstances. Among its drawbacks, be sure to note the following:
You do have to “die to be paid.” As unpleasant as that sounds, it’s true. Term life insurance provides a death benefit only, for a specific period of time. So, if you outlive your policy period, there is no payout to your beneficiaries. When the term coverage expires, your protection ends, too. And, if you stop paying your life insurance premiums, the coverage ends. Period.
Here’s an example for you – Let’s say you own a $250,000 term life insurance policy. You’ve kept the coverage in force for twenty years, and the policy expires at midnight on June 30. If you die at 11:59 p.m. on June 30, your beneficiary receives the full $250,000 in death benefit proceeds. However, if you die at 12:01 a.m. on July 1, your beneficiary receives nothing under the term insurance policy, since the policy has expired.
Purchasing term insurance is often compared to renting an apartment. When you rent, you get the full and immediate use of the apartment and all that goes with it, but only for as long as you continue paying your rent. As soon as your lease expires, you must leave your apartment. Even if you rented the apartment for 10 years, you have no “equity” or cash value that belongs to you.
There is the Very Real Risk of becoming uninsurable when the term insurance coverage expires. While many term policies are convertible to permanent insurance coverage, others may not be. And, even if the term policy is convertible, there are time limits. If the policy is allowed to expire, you may be required to re-apply for life insurance coverage, and prove insurability by taking a medical exam. If you are found to be uninsurable at that time, you will be without life insurance coverage.
Since premiums increase at each renewal, the long-term cost of term can be very costly. Many people buy term insurance coverage when they are in their 20s or 30s because it appears more affordable when compared to a cash value or permanent life insurance policy with the same death benefit amount. By the time they’re in their 40s or 50s, the coverage seems a little more expensive, as the rate goes up. In their 50s, the cost may be comparable to the cost of permanent coverage. Finally, in their 60s, if not sooner, they may decide to drop the policy — not because they no longer need the protection, but because they usually can’t afford it. However, the person who paid more for a permanent life insurance policy in their 20s may still be paying the same premium. That’s why the term policy’s conversion privilege is so important. This valuable feature is usually available in the first few years of the policy, and allows you to convert to permanent insurance without submitting evidence of insurability. Converting to a permanent policy lets you “lock in” a fixed premium, and your life insurance coverage can never be canceled, provided you pay your life insurance premiums.
The Value of Permanent Life Insurance
Cash value or Permanent life insurance is often the best long term solution for many people. The reasons:
Permanent life insurance provides you with lifetime insurance protection, provided you pay your premiums. Usually, once you’ve been approved for coverage, your policy cannot be canceled by the insurer. Regardless of your health, the insurance will remain in force.
Despite higher initial premiums, permanent life insurance can be less expensive than term life insurance in the long run. Many permanent life insurance policies are eligible for dividends, which are not guaranteed, if and when they are declared by the insurance company. Many companies offer the option to apply current and accumulated dividend values towards payment of all or part of your life insurance premiums. If dividend values are sufficient, out-of-pocket premium payments may be reduced after several years, yet coverage continues for your entire life. So, while life insurance premiums must be paid under both, the permanent and term life insurance plans, long-term out-of-pocket cost of permanent insurance may be lower compared to the total cost for a term life insurance policy.
Permanent insurance can eliminate the potential problem of future insurability. Cash value life insurance policies do not expire after a certain period of time. And, some policies contain guaranteed purchase options, which allow you to buy additional life insurance coverage at specified times, regardless of your health.
Cash Value Life Insurance builds cash value within the policy. This amount, part of which is guaranteed under many policies, can be used in the future for any purpose you wish. If you choose, you can borrow cash value for a down payment on a home, to help pay for your children’s college education, or to provide income for your retirement. (Note: Borrowing cash value from your permanent life insurance policy requires the payment of loan interest and will affect your total policy values.) Also, if you decide to stop paying premiums and surrender or cancel your permanent insurance policy, the guaranteed policy values are yours.
Recommendation
When purchasing life insurance coverage — renewing or converting a term policy — look at more than just the premium. Consider the financial rating of the insurance company. Consider your long term goals and needs for protection. A professional insurance agent can discuss your life insurance goals, analyze your insurance needs and review the pros and cons of the various life insurance policy options available.
I hope that helps! Take care and make sure to take your time in reviewing your options before choosing a life insurance policy.
If you want to compare the five best life insurance quotes online Go to: – http://www.insureme.com/landing.aspx?Refby=613403&Type=life
term would probably be your best bet right now. you are both young and if in good health, the premiums will be cheap. most term policies offer a conversion option to where up to a certain date you can convert your term into a permanent (universal or whole life) plan that will accumulate value. the value can then be borrowed against to pay for your any expenses you may come across.