Life Insurance

[Swass]

Sorry, Swass, but it is you that is wrong.

You are wasting your money on life insurance for a child, unless they provide income or they are predisposed to some type of illness. Here’s what people smarter than me say:

http://www.kiplinger.com/columns/ask/archive/2003/q0212.htm

http://money.cnn.com/2005/04/05/pf/expert/ask_expert/index.htm

http://money.cnn.com/1999/06/04/smbusiness/mosbacher_col/

http://www.chicagotribune.com/business/yourmoney/sns-yourmoney-0925spending,1,1460654.story?coll=chi-news-col&ctrack=1&cset=true

http://articles.moneycentral.msn.com/Insurance/AvoidRipoffs/10kindsOfInsuranceYouProbablyDontNeed.aspx

http://www.bankrate.com/fox/news/insurance/kids-life1.asp

http://www.marketwatch.com/News/Story/Story.aspx?dist=newsfinder&siteid=google&guid=%7B66026DC6-80CC-47D3-9FD0-F938274F13D7%7D&keyword=

Re-read my post above yours Chad

 

[AZ Typed]

TOGA: Why would you use an insurance product for retirement? Or, vice versa, why would you use a retirement product for insurance? It makes no sense. It's like using a 757 to make 30 minute hops - totally the wrong equipment for the job, unless you're filthy rich. EIL is no different. Like a 757 used for long-haul, EIL is a great retirement tool, when used appropriately, which it rarely ever is. Most of the time it seems that people selling Equity Indexed products are doing so because they were too lazy to get a securities license.

Swass: Many people in the business have no clue either. It's too bad that many people in the business simply have an insurance license and are suddenly experts. It's also too bad that 95% of insurance salespeople are out soley for the commission.

The idea of insurning a child to hedge against the risk of uninsurability is smart, only after other higher priority issues are addressed. Of course, this is situationally dependent. The majority of professional opinions out there would recommend this approach. The majority of sales people who don't eat if they don't make a sale, would try to sell a life insurance policy on a child. Perhaps a child rider would make more sense, but even that is usally a rip-off cost wise.

AZT

 

[festus89]

What's the problem with whole life ???

nothing, other than its a rip-off

 

[TOGA]

AZ Typed -

I'll grant you that EIUL is not for everybody. It's not sexy or aggressive, and it requires self-discipline. There are no other investment vehicles that provide so many advantages. Freeing up your home equity to purchase an EIUL instead of buying any other insurance product or depositing in any other investment with your after-tax dollars affords you the jump-start advantage of a "deposit" (single-pay premium) that comes to you income tax-free. That's because you're buying the policy with loan proceeds, not income. This also increases your mortgage interest tax deduction. Then, the money grows tax free, is withdrawn tax free, and transfers to heirs tax free. The growth is indexed to the S&P 500, which has averaged 7.3% annual growth over its 73 year history. Meanwhile, fees are extremely low . . . usually 0.5 - 1.0 % of the annual growth. Finally, the heirs get the death benefit (also tax free). All the while, you've freed up your home equity as an emergency fund, instead of leaving it trapped in your home.

 

[Swass]

A person is infinitely more likely to become disabled than pass away. If you are in a business situation (sole prorietorship, partnership, small corp., etc) you should look into disability insurance. That's a whole 'nother beast that makes life insurance look like simple arithmatic compared to quantum theory......... but that's another thread. If there's any interest.....

 

[Swass]

Sorry for the typo's. Kinda late

 

[Swass]

Swass: Many people in the business have no clue either. It's too bad that many people in the business simply have an insurance license and are suddenly experts. It's also too bad that 95% of insurance salespeople are out soley for the commission.AZT

The problem with most captive agents, i.e. State Farm, American Family, Shelter etc., is that they are given x number of sales they have to produce each month to make their bosses happy with only a minimum amount of knowledge in the area of life insurance (or any number of products in this realm). They make sweeping judgements with no real clue as to what they are doing or the ramifications of their actions, a simple beneficiary change can hold up monies for the insured's intended audience if not submitted correctly. If I want car insurance or homeowners, they are great and serve their purpose in this fashion. If I am interested in alternative types of insurance or have special needs then I will refer to professionals who are in a higher tax bracket (due to knowledge and skill) that specialize in said products. People who step outside their knowledge base in insurance are the people who give insurance in general a bad rap. Same as used car swindlers.

 

[400A]

400A, you could be wasting money, too.

If I’m single and die without life insurance, the hospital where I spent my last days can bill me all they want, I’m not paying (and neither are any of my relatives unless they were dumb enough to co-sign a line of credit or loan). If the estate I leave behind is so miniscule that they can’t get the funds together to throw a funeral, maybe relatives and friends will do so. If not, I’m sure they’ll do something with me.


Check this out:


http://moneycentral.msn.com/quickref/quickref.asp?Cat=10&SelCat=2&RefType=0&QAMode=2&Topic=6&Sub=0


As a single person, do I really need life insurance to pay funeral expenses and take care of my debts?
If you’re single, you may find that life insurance solves a number of issues. However, the sales pitch that you need insurance to pay for your funeral costs and retire your debts if you die prematurely is not among them. Your parents, siblings, or friends will probably pitch in to pay for your funeral if necessary. And unless you co-signed a loan with parents, partners, or friends, no one else is responsible for your debts. Your assets will be sold to pay your creditors. If your debts outweigh your assets, your creditors will take the loss.

Not me, I have a wife and 3 kids. I will keep my insurance.

I still would not do that even if I were single. Someone would still have to clean up my estate, and there may be things in it I would want family members to have.

In my opinion, the let the doctors & hospitals eat it plan is one of the reasons health care is so expensive.

 

[AZ Typed]

http://www.insurancenewsnet.com/article.asp?n=1&id=68485

Food For Thought. Enjoy -

AZT

 

[h25b]

What's the problem with whole life ???

nothing, other than its a rip-off

So you don't have anything to really add to the discussion.. Thanks...

 

[-9Capt]

What's the problem with whole life ???

Do not buy whole life! Know that term is cheaper and a better deal. Whole life is insurance with a slight savings/investing mix. These slick salespeople get their big paydays when you sign up for whole life. Your first years premium and 3-4% thereafter goes to commissions. Therefore, you won't see much in growth for 15 - 20 years. You would do 10X better with any good mutual fund. Don't let them fool you with claims that your investments are tax free. Its not - per the IRS its tax deferred, not tax free. And due to the extremely high commissions you won't ever see much growth. Just look up on the internet and see how many people amassed great wealth with whole life - you will find the answer is zero! What a rip off! Upon calling numerous experts, the only reason to have whole life is if you are 60-65 or above, or if you are extremely wealthy and want to use it to pay your estate taxes when you die. That is it from the worlds leading experts! Suzie Orman will tell you the same - stay away from whole life!

 

[PiratePilot]

Thank you for the replys!

 

[StaySeated]

The statement above regarding whole life commissions is not accurate. Your first years premium is not solely a commission (everyone and their brother would get an insurance license if that was the case) and the annual trailers are not any where near 3 or 4%. If you compare most life insurance products today (and a lot of annuities from respectable companies) to a mutual fund with class A shares you will find the commission structure to be very similiar. Some annuities pay more up front but there are no trailing commisions. The renewal commissions on life insurance are no where near the 12b-1 fees and expense ratios found in mutual funds. With regard to the tax free withdrawals, you can take policy loans tax free. The loans reduce the face amount of the policy and provide an income tax free. If you keep your 401k/IRA until age 70 1/2 and begin to take RMD, you will repay all of the deferred taxes in about 4 years. Every distribution after that will be gravy in Uncle Sams pocket. I do not think life insurance is the panacea to all investment problems, but it definitely has its place and todays life insurance products (like Indexed Universal Life) definitely have their merits.

 

[mavericks]

Find your local Primerica agent and he will explain everything about insurance to you. Why you should buy term and not whole life, universal, or variable. if you buy term and invest the difference in premium you are saving from not buying one of the other products you will be far better off. Every life insurance agent has term in his briefcase, but will not show it to you unless you ask him. The commision is very small on term.

 

[AZ Typed]

StaySeated,

Well Said.


Mavericks,

Primerica agents have zero training in anything but selling term, and the term they sell is overpriced to pay their multilevel payout structure. In addition, Primerica agents are trained to sell you class A share mutual funds on the investment side, which in many cases is a complete rip off to the client, but a 5% sales charge in Primerica's pocket. I've run into so many people who were ripped off by a Primerica agent's sales pitches. Their philosophy is smart (buy term and invest the diff.) for middle America, but their products and methods stink, period.

AZT

 

[Swass]

Agreed, run form Primerica sales people. What a joke.

 

[AZ Typed]

TOGA - pulling money out of a home to fund a EIL is plain stupid - sorry. That seminar you paid money to attend was plain incorrect and put on by a bunch of financial fools - no offense.

AZT

 

[SonnyD]

AZT,

Why's that?

 

[Bandit60]

28 year old / male / single/ non-smoker / good health / pilot seeks advice on life insurance. I just got off the phone with Prudential agent in Phoenix and I felt the agent was incopentent and was just trying to make a quick insurance sale. Any advice on picking a policy, what I should be aware of before I signing up, ext.... Thank You.

Does your employer have any type of life insurance for you?
If they do then great. That should be enough to cover the burial.
Since your a single guy why do you want life insurance? Do you have any dependents that need your support to survive? If you dont then I cannot see any good reason to have life insurance at your age. Take the money you would be spending on life insurance and invest it in retirement or invest it for your future. You will get a much better return on your money if you stay away from life insurance.

Just my two cents.

 

[Swass]

Sound advice so far, except, only a fool expects to get a great return on life insurance. That's not what it is for, it's to protect assets.