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Life Insurance

M

manlymatt83

Lifer
I'm 26 years old, and my insurance broker has recommended I take out an insurance policy. He recommended term convertible to whole or just whole. I'm an independent contractor, so I'm sure this wouldn't be a bad idea - the rates grow significantly as I get older.

Any thoughts on here from people who know what they are talking about?
 
Don't listen to him if he describes the policy as an investment.

The only reason to buy insurance is if you have people depending on you for their support, e.g. wife and kids.

I haven't done the cost/benefit analysis of your two options:
a) get a policy now to "lock in a better rate" but pay for it for years before you need it
b) invest that money into a real investment, then (maybe) pay higher rates later when you finally do need a policy
 
DaveSimmons said:
Don't listen to him if he describes the policy as an investment.

The only reason to buy insurance is if you have people depending on you for their support, e.g. wife and kids.

I haven't done the cost/benefit analysis of your two options:
a) get a policy now to "lock in a better rate" but pay for it for years before you need it
b) invest that money into a real investment, then (maybe) pay higher rates later when you finally do need a policy
Click to expand...

And why is that? This is often the only way that wealthier people can transfer tax free assets to their family and avoid estate taxes. It also allows for people to withdraw earnings tax free...income and capital gains tax free. I think you're just espousing garbage without knowing what you're talking about.

Anyway, if by broker you mean your home/car salesman, then you really need to reach out and find a life insurance salesman. Whole life policies are typically much more expensive than UL or VUL policies and therefore leave people under-insured.
 
buy term and invest the difference yourself
and you don't need term life insurance unless you are married or have kids or some other dependent
 
Are you married? Do you have kids? No? Then pass for now.

Find an actuary, friend or consultant and look at the probability of someone like yourself dying, now and in the future.

Run a little risk/reward scenario with the probabilities.
 
FoBoT said:
buy term and invest the difference yourself
and you don't need term life insurance unless you are married or have kids or some other dependent
Click to expand...
This
If no one depends on you, just buy enough to bury yourself and get us all a new video card.
 
even if you don't have a wife and kids now, it might make sense to go ahead and buy a policy while you're young and healthy and can get better rates

and you never can tell, something might come up that will make you uninsurable in the future

getting a cheap term policy now might be the way to go
 
tynopik said:
even if you don't have a wife and kids now, it might make sense to go ahead and buy a policy while you're young and healthy and can get better rates

and you never can tell, something might come up that will make you uninsurable in the future

getting a cheap term policy now might be the way to go
Click to expand...

Well, a 20 year term would end when I'm 46. And a 30 year term would end when I'm 56.

I agree a whole life policy might not be the best right now, especially since i have better investments I can make (like debt).

Maybe I should get a 20 year term policy (which I can convert to a whole life policy at any time), so as it gets close to expiration, I can convert it to whole life no matter what my health is.
 
The only people who would ever say that a whole life policy is better for you are the people who make the larger commission off whole life policies. The purpose of life insurance: pay for final costs. Plus, if you have a family, to make sure they're comfortable without your income. Once you hit 65 or 70 years old, you shouldn't need life insurance, period.

Look at how life insurance policies are marketed for senior citizens: the purpose is if they don't have enough in savings to pay for funeral costs, the insurance policy is to cover those final expenses.

Term. When you have dependents, a larger policy. When your dependents have graduated from college, you can reduce the policy. By the time you're of retirement age, you shouldn't need a policy. Invest the savings.
 
DrPizza said:
The only people who would ever say that a whole life policy is better for you are the people who make the larger commission off whole life policies. The purpose of life insurance: pay for final costs. Plus, if you have a family, to make sure they're comfortable without your income. Once you hit 65 or 70 years old, you shouldn't need life insurance, period.

Look at how life insurance policies are marketed for senior citizens: the purpose is if they don't have enough in savings to pay for funeral costs, the insurance policy is to cover those final expenses.

Term. When you have dependents, a larger policy. When your dependents have graduated from college, you can reduce the policy. By the time you're of retirement age, you shouldn't need a policy. Invest the savings.
Click to expand...

So right now I'm 26. Should I get a 30 year term policy to cover me until 56? Then, when I'm 35, get a smaller term policy to overlap with this one to cover me until I'm 65 (and in between 56 + 65)?
 
Do you have a wife or kids that dependent upon you?

If not, why not just start an investment program with premiums you don't spend as rainy day or emergency fund? Do you or will you have retirement funds they can draw upon to live on if you unfortunately die before you have accumulated a good nest egg for your family?

I always thought life insurance was for young people with dependents till they got till say age 50 and had saved enough money to provide for dependents if they died at that point.
 
DrPizza said:
The only people who would ever say that a whole life policy is better for you are the people who make the larger commission off whole life policies. The purpose of life insurance: pay for final costs. Plus, if you have a family, to make sure they're comfortable without your income. Once you hit 65 or 70 years old, you shouldn't need life insurance, period.

Look at how life insurance policies are marketed for senior citizens: the purpose is if they don't have enough in savings to pay for funeral costs, the insurance policy is to cover those final expenses.

Term. When you have dependents, a larger policy. When your dependents have graduated from college, you can reduce the policy. By the time you're of retirement age, you shouldn't need a policy. Invest the savings.
Click to expand...

I underwrite life insurance applications and this is the best advice in this thread.

I personally have a small whole life insurance policy that my parents bought me as a kid (which will cover a very nice burial and pays for itself with the annual dividend) and enough term insurance to cover my salary for 10 years. If that plus SSA benefits for my daughter isn't enough to keep my wife happy then that's her fault.
 
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