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life insurance
- Thread starter Ylen13
- Start date
MercenaryForHire
Lifer
One million dollars? Holy sh|t.
- M4H
- M4H
Sealy
Platinum Member
I'm not sure where you're from, but here in Canada, there is more than one kind.
You should have a financial planner, advisor, broker, or whatever, come and sit down with your parents and figure out what would be best for them.
Getting life insurance at an older age can be expensive, but often worth it. But there are also other options.
It's not so cut and dry...they should talk to an agent about it.
You should have a financial planner, advisor, broker, or whatever, come and sit down with your parents and figure out what would be best for them.
Getting life insurance at an older age can be expensive, but often worth it. But there are also other options.
It's not so cut and dry...they should talk to an agent about it.
Sealy
Platinum Member
hmm not sure how it works in the states.
My fiance is a financial advisor for Freedom 55 financial and they own a whole bunch of different life insurance companies.
If you're parents are self employed, they might also want to look into getting some critical illness, and/or disability insurance. That way if either of them gets hurt or gets cancer, and is unable to do the job, they will always have money coming in.
If you don't mind my asking, how old are you? Cause it might be worth your while to look into getting some insurance as well. The younger you are the cheaper it is, and if you get a whole life policy, your premiums never go up. My parents got me one when I was 17 and it costs 7 dollars a month.
I'm paying $300 a year for $100k worth of life insurance that I signed up for when I was 21. Rates have definately gone up since 9-11. Your parents might want to look at insuring each other for $500k rather and then getting $500k of term insurance. Realistaclly, unless they are awful with finances, they probably won't need the big $'s once all the kids are gone from home.
flamingelephant
Golden Member
Term is good if you only need insurance for awhile. 10, 15, 20 years......... (but, companies make the most money off these plans cause they don't usually pay them out)
Whole life and Universal life are insurance tied to a market investment (or something similar). They run the duration of your whole life, but if you die early on in the insurance you typically dont get the whole amount. It is also a tax shelter, one of the best if you make over 150k a year. You put a majority of your earnings into the universal life policy, where it grows tax free, and you borrow against the value of the policy, and pay no interest if you set it up right, so you earn all your money tax free, and when you die, the policy pays off your loan and the excess goes to whoever you want it to go to, but, unless you make more than 150k, its almost impossible to make it worth while.
Most people are best with term, because its insurance in case something happens to you to support your familiy. 10,15,20 years down the road your situation will have changed and you might need more, less or no insurance.
Whole life and Universal life are insurance tied to a market investment (or something similar). They run the duration of your whole life, but if you die early on in the insurance you typically dont get the whole amount. It is also a tax shelter, one of the best if you make over 150k a year. You put a majority of your earnings into the universal life policy, where it grows tax free, and you borrow against the value of the policy, and pay no interest if you set it up right, so you earn all your money tax free, and when you die, the policy pays off your loan and the excess goes to whoever you want it to go to, but, unless you make more than 150k, its almost impossible to make it worth while.
Most people are best with term, because its insurance in case something happens to you to support your familiy. 10,15,20 years down the road your situation will have changed and you might need more, less or no insurance.
Term is good if you know how long you want coverage. You can buy a policy based on just about any amount of time. The policy can either be level (payout doesn't change), or decreasing (where it's expected you have less debt as time does on and want to pay less for insurance).
Whole Life does not expire, and has a cash account. The cash account gets low interest, similar to yield on a basic bond. It is designed to maintain a certain standard of living, but is not considered an aggressive investment.
There are several hybrid policies that combine whole insurance, flexible premiums, and investment grade cash accounts. The most flexible is the VUL (Variable Universal Life) where you combine insurance coverage and investment into mutal fund like cash accounts. The money can be borrowed upon typically after 2 years without a penalty (unlike a 401k or IRA in many cases), and you can surrender the policy after 15 years without a penalty. VUL is considered a good tool for estate planning because the proceeds are tax free and kept out of the probate courts. If you get a hybrid policy, make sure you understand all charges. Depending on how it's written, the fees can kill your return. Typically in a hybrid policy you have two options, one which pays out face value plus cash account upon death, but has higher premiums. The other option is payout exactly face value upon death, where increasing cash account values are expected to drop insurance costs as time goes on. Eventually your cash account could equal or exceed face value, where you would no longer have any premiums.
I used to be a broker, it's been awhile but there is a rough sketch for ya. I would do a ton of research on the web before buying anything. And check out the company you do business with at www.bbb.org.
Whole Life does not expire, and has a cash account. The cash account gets low interest, similar to yield on a basic bond. It is designed to maintain a certain standard of living, but is not considered an aggressive investment.
There are several hybrid policies that combine whole insurance, flexible premiums, and investment grade cash accounts. The most flexible is the VUL (Variable Universal Life) where you combine insurance coverage and investment into mutal fund like cash accounts. The money can be borrowed upon typically after 2 years without a penalty (unlike a 401k or IRA in many cases), and you can surrender the policy after 15 years without a penalty. VUL is considered a good tool for estate planning because the proceeds are tax free and kept out of the probate courts. If you get a hybrid policy, make sure you understand all charges. Depending on how it's written, the fees can kill your return. Typically in a hybrid policy you have two options, one which pays out face value plus cash account upon death, but has higher premiums. The other option is payout exactly face value upon death, where increasing cash account values are expected to drop insurance costs as time goes on. Eventually your cash account could equal or exceed face value, where you would no longer have any premiums.
I used to be a broker, it's been awhile but there is a rough sketch for ya. I would do a ton of research on the web before buying anything. And check out the company you do business with at www.bbb.org.
MercenaryForHire
Lifer
I have a feeling I'm needed here.
Non-CC PayPal only. 😀
- M4H
Non-CC PayPal only. 😀
- M4H
Your bank probably offers some pretty good insurance options. However, the people working at the bank are normally not good investment advisors. If you want expertise, go with one of the big investment houses like Prudential or Northwestern Mutal Life. I had a policy with NWML when I was growing up, it was a whole, and I was happy with them. My current VUL policy is with Western Reserve Life, and I have been extremely happy with them.
Here's some basic info:
- Term life: "Pure insurance" only. You pay a very minimal amount per year for 1-30 years to cover against death only. Good for high dollar amount coverage for little money. Decreasing term is good if you have a mortgage you are paying off and you want it paid in full when you die. (just one example)
- Whole Life: See wyvrn's explanation. In this case, dividends / interest are accumulated and added to the cash value of the policy , from which you can borrow from later if needed to pay off debts or whatever you want.
- Variable Life: See wyvrn's explanation, again. These are tied to the money market and can fluctuate depending on the performance of the economy.
- Universal Life: Here, the premiums you pay are "unbundled" and the interest/dividends applied for future premium payments. HEnce, you CAN accumulate cash value but at a lower rate. The main advantage is that this is the cheapest way of getting a GUARANTEED death benefit for life.
- Disability: Think of it as insurance for your income. If you are partially or totally disabled this policy can help replace part of the income lost from your inability to work.
- Long Term Care: This pays for any care you might need outside of the scope of normal health care, such as hospice and nursing home care. A very good thing to have if you are getting up in age.
If anyone has other questions I'll be more than happy to field them.
- Term life: "Pure insurance" only. You pay a very minimal amount per year for 1-30 years to cover against death only. Good for high dollar amount coverage for little money. Decreasing term is good if you have a mortgage you are paying off and you want it paid in full when you die. (just one example)
- Whole Life: See wyvrn's explanation. In this case, dividends / interest are accumulated and added to the cash value of the policy , from which you can borrow from later if needed to pay off debts or whatever you want.
- Variable Life: See wyvrn's explanation, again. These are tied to the money market and can fluctuate depending on the performance of the economy.
- Universal Life: Here, the premiums you pay are "unbundled" and the interest/dividends applied for future premium payments. HEnce, you CAN accumulate cash value but at a lower rate. The main advantage is that this is the cheapest way of getting a GUARANTEED death benefit for life.
- Disability: Think of it as insurance for your income. If you are partially or totally disabled this policy can help replace part of the income lost from your inability to work.
- Long Term Care: This pays for any care you might need outside of the scope of normal health care, such as hospice and nursing home care. A very good thing to have if you are getting up in age.
If anyone has other questions I'll be more than happy to field them.
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