I want to TALK about LIFE INSURANCE.

[disneysteve]

Since this is a site specifically to help people with finances, it makes no sense to recommend to do something that is stupid to do.

Good point. It would be like me recommending that you all increase your tax withholding so you get a huge refund every April. Sure, it is something some people do on purpose as forced savings, but it is a lousy idea.

[disneysteve]

If you knew you were going to be married in the short few years, buying death protection while young might be a good choice.

Why would it make sense to buy it before you actually need it? You'd be wasting the premium payment every month during that time. If nobody is dependent on your income, you don't need insurance. Nobody will suffer financially if you were to die.

[LuckyJB]

question...when you say young people pay $7-24 dollars a month for insurance vs older people who pay up to $80 a month...do the rates change as a person grows older? Do people in their twenties pay $20 and when they hit 31 yrs they get a new bill for $40? or do you suggest youngstersget in early because they will be paying the same low monthly bill their whole lives?

The cost of insurance always rises.

The reason I put the amounts for young is b/c those amounts are in subject of many factors such as your medical condition, age etc...I pay less cause i rated healthy and im young, yes....and as you get older it is more expensive..or maybe you have a medical condition.....or so...but the cost of insurance always rises...

You must ask yourself how much life insurance protection is enough? Have enough life insurance to provide approx. 10 times your annual family income.

[LuckyJB]

Which is of course, a poor way to handle your finances. Since this is a site specifically to help people with finances, it makes no sense to recommend to do something that is stupid to do. I restate - insurance is for insurance, not to make money. If you try to make money with it, you are either doing insurance fraud or making poor money decisions.

Thats why im under general discussion. Its not stupied it is smart....and theres nothing wrong with diversifying. I agree with insurance being insurance....and if you can make money off it why not....its a person choice. its not fraud or a poor decision. Let it be...

[LuckyJB]

Why would it make sense to buy it before you actually need it? You'd be wasting the premium payment every month during that time. If nobody is dependent on your income, you don't need insurance. Nobody will suffer financially if you were to die.

Eventually you will need it and like I said earlier....what if you cant qualify because a medical condition ...and its a smaller premium while your young. "Nobody will suffer financially if you were to die?" thats just bad advice..... How do you know? take into account final expenses (funeral expenses, medical expenses, etc), possible debts( mortg, loans at death, consumer debt)....taxes....I see so many young kids die and there family cant even afford to bury them....they have car washes...even though i dont have dependents or anything I still have it...atleast I know my family can bury me, they can use the money and have a little less stress...they can use it for future expenses.....

[Exile]

Many people buy life insurance in order not to leave their spouses in a lurch in case insured dies first. But if the spouse is able to take care of herself (and it's usually the husband buying the insurance), life insurance is a waste of money. IMHO it would be better to spend the money on health insurance instead.

[jc3900]

Well, I am pretty young so what are the terms and costs for term life insurance. If you guys can give me some figures I can run it through an investment calculator to see how much it really is worth.

[LuckyJB]

Many people buy life insurance in order not to leave their spouses in a lurch in case insured dies first. But if the spouse is able to take care of herself (and it's usually the husband buying the insurance), life insurance is a waste of money. IMHO it would be better to spend the money on health insurance instead.

Do you have life insurance? Do you know how much it is? Health n Life are two different needs....things are different these days and just seems everyone has the same old answer....there is so much more to life insurance....most people dont even know how it works....

[LuckyJB]

Well, I am pretty young so what are the terms and costs for term life insurance. If you guys can give me some figures I can run it through an investment calculator to see how much it really is worth.

Many factors play into what you want. You have to get an examination first to see if you qualify and get rated. Why would you think its not worth it, even if your young?

[tripods68]

Why would it make sense to buy it before you actually need it? You'd be wasting the premium payment every month during that time. If nobody is dependent on your income, you don't need insurance. Nobody will suffer financially if you were to die.

You can't just assume "waste" without assessing individuals situations. I agree with LuckyJB. What if the person carries all kinds of debts; credit card, personal loans, and mortgages, burial expenses, hospital bills, would having death protection good idea then? We tend to forget, we incur so much debt on our early years and don't consider the unattended consequences, which is the consumers. You also wouldn't want burden your "own" family of your expenses knowing you have the financial resource. Also, your health status changes year-to-year which affects your insurability.

[disneysteve]

What if the person carries all kinds of debts; credit card, personal loans, and mortgages, burial expenses, hospital bills, would having death protection good idea then?

If a single adult dies, what happens to his debts? If John Doe owes money on a credit card in his name only, what happens when he dies? Can the credit card company go after John Doe's parents to pay that bill? I don't believe so but maybe I'm wrong. Same question for personal loans and hospital bills. As for a mortgage, that would be repaid by the proceeds of the sale of the property.

The only argument that makes sense to me is burial expenses, but all that requires is a minimal policy of about $10,000. And that's only if the family doesn't have any savings to cover an expense like that on their own.

I agree that there is no one-size-fits-all answer. It depends on the situation. I just think selling insurance as an investment product isn't such a great idea. I also think a lot of people are convinced into buying insurance out of fear rather than out of logic and solid financial planning.

[disneysteve]

Have enough life insurance to provide approx. 10 times your annual family income.

This is a good rule of thumb and a good starting point for calculating how much you need, but it is just a starting point. From there, you need to determine what the actual needs would be upon your death. When I first took out my policy, we had recently bought our house, had a newborn baby and I had 6-figure student loans and not much in savings. My insurance needs were high. Now, my loans are gone, our mortgage balance is smaller, our daughter is almost 13, we have no other debts and our personal savings have grown considerably so my insurance needs are smaller. My first policy was actually for 15 times income. Now, it is for less than 10 times income. A few more years and I'll probably be able to drop it again.

[sweeps]

If a single person dies with lots of debt, then the creditors have to eat the cost. Having a small (term!) life insurance policy to cover funeral costs usually isn't a bad idea.

Universal/whole life insurance is a bad move at least 95% of the time. The policies are expensive, their underlying investments underperform, they permanently lock you into a particular insurance company, they are very difficult to compare among insurance companies, and they are notoriously expensive to get out of when you realize you've been ripped off.

[disneysteve]

If a single person dies with lots of debt, then the creditors have to eat the cost.

That's what I thought. So the suggestion that a young, single, childless person needs insurance because of debts he owes doesn't make any sense.

[simpleyme]

when you die what you own covers what you owe your parents and children are not left with your debt so the only reason to have life insurance to cover your debts alone is if you have a spouse and that spouse would not have enough to cover those debts

there are reasons to have life insurance but a single person does not leave debt to others, this is something I believe that life insurance salesmen tell us to make us buy insurance so we do not force our parents into poverty when they are forced to cover our bills

My uncle died with no money and no children that were still talking to him and not only did they not come after his mother the family pulled together and we cremated him and bought a fancy urn for grandma to put him in ,the entire cost was 800 dollars