What do we know about Life Insurance?

Discussion in 'The Watercooler' started by Scent of Cedar *, Jun 4, 2016.

  1. Scent of Cedar *

    Scent of Cedar * Well-Known Member

    I am checking into life insurance after reading one of the threads here.

    What do we know about Life Insurance?

    Thank you.

    Cedar
     
  2. Tanya M

    Tanya M Living with an attitude of gratitude Staff Member

    It can be tricky. When husband and I first got married (he's 10 yrs older than me) I wanted to get life insurance on him. We got a variable life policy through John Hancock. We were told that it would grow in value and that after so many years it would have earned enough that we would no longer have to pay the premiums and could also be used as part of our retirement fund. We paid our quarterly premiums for the last 20 plus years.
    A couple of months ago my employer brought in a lady from Edward Jones to do some lunchtime sessions with topics ranging from 401K's to life insurance, retirement, debt, etc...... I attended one and like the lady so hubby and I set up a time to meet with her to go over everything to make sure we are on track. We were very surprised to find that the life ins. policy we had would soon start to lose value. She explained that at the time the policy was written the stock market was doing well but as we know the last decade has been a roller coaster ride with the stock market and this policy was driven by that. She explained that there would come a day that the policy would "lapse" and in order to maintain the same dollar amount of coverage our premiums would most likely double.

    There are so many different options for life insurance. I suggest that you get with a financial planner like Edward Jones as they can help you see not only what you can afford but also what the best option is for you.

    We ended up cashing in the policy we had and put it into a new policy. The new policy offers a guaranteed benefit and also offers a living benefit in that if hubby needs long term care I will be able to access the money to help pay for it.

    For myself, I have a term life policy which is very affordable.

    Good luck!!
     
    • Informative Informative x 1
    • List
  3. GoingNorth

    GoingNorth Crazy Cat Lady

    I have a small ins policy that is just enough to cover cremation + a few thousand dollars to clear up any final expenses.

    I have no children to leave an estate to. The closest thing i have to an estate is very high-quality furniture which I most likely will leave to my niece if she wants it.

    My late husband had no life insurance o ther than a tiny policy I was able to get on him through my job. He had a 250K policy through the Army, but when they privatised that in 94, he was dropped like a hot potato.
     
    • Informative Informative x 1
    • List
  4. Ironbutterfly

    Ironbutterfly Active Member

    I have a group life insurance policy via work, payout if I die while working is 4 x my salary. But once I retire it gets drastically reduced. Hubby also had group insurance when he was working. He is retired now. Anyways, Husband and I took out what is referred to as "burial insurance". Its a whole life policy, yes more expensive, but with our age, late 50's, and me having diabetes, it's what we can afford. We took out enough for cremation and funeral services on each of us and little bit left to cover any bills. We didn't want our kids to have to pay for anything. We have lot of money socked away in 401k's, so we should be ok.
     
    • Informative Informative x 1
    • List
  5. KTMom91

    KTMom91 Well-Known Member

    Hubby and I both have life insurance through his company, and he has another policy that we got when we first got married. I'm too big a health risk for insurance companies.
     
  6. Scent of Cedar *

    Scent of Cedar * Well-Known Member

    On the other thread, the decision was to begin a joint bank account for the child or children in question. That way, the child owns the account, too. When we are gone, the child gets access to the account. Nothing to do with a Will or probate.

    So I am thinking about that. My specific question has to do with what happens if we outlive the insurance we buy. Is that money just gone? When I try to research these questions online, I am inundated with insurance company ads. Every one telling me why they are best and suggesting I need to talk to an agent.

    I think I will begin with the company who carries our house and auto insurance.

    That will give me something to compare to in the real world.

    Thank you everyone for your comments and insights.

    We are in our sixties, too. Premiums will be very high for us. The problem with beginning a joint banking account is just going ahead and doing it. But for both kids and all grands, that would be eight accounts.

    So we are back to the insurance question.

    I am still exploring how to do this.

    Thanks, thanks, thanks, everybody.

    Cedar
     
  7. KTMom91

    KTMom91 Well-Known Member

    Have you considered some sort of a trust for the kids/grandkids instead of a bank account? Miss KT's father's parents started a trust for her, I don't know when, but it paid for her college. A great blessing for me and Hubby, to be sure. I don't know all the details, since Grandma has stopped speaking to me, but it's something to think about.
     
    • Informative Informative x 1
    • List
  8. Tanya M

    Tanya M Living with an attitude of gratitude Staff Member

    Any insurance policy has a beneficiary and you can add a second beneficiary. The life insurance we have on myself and my husband, we are each others beneficiaries. If we both go at the same time, it goes to our trust. We put our entire estate into a trust and our grandchildren are the beneficiaries of the trust. The lawyer that did our wills also did the trust.

    A trust is a good idea if you are leaving a house and other monies because it avoids probate. The ownership of what's in the trust immediately transfers to the beneficiaries.

    Again, a financial planner is a good person to talk to as they can really help you to break things down.
     
    • Like Like x 1
    • Winner Winner x 1
    • List
  9. Copabanana

    Copabanana Well-Known Member

    If it is term insurance. Yes. The money is gone, when the term expires. You can renew the insurance, with a new term, but the cost would be based upon your new, older age.

    Of course, that is because the closer one is to what the actuarial tables indicate is the normative age to die, for sex, health factors, etc. the more likely is the need for a pay out.

    Recently somebody through my bank tried to sell me an annuity, with a guaranteed floor in value. The value could increase but it could not fall below a certain amount. I am really hesitant to buy a product such as this, because I feel it is kind of like Las Vegas, the deck is stacked against the consumer.

    Since most of us are between 50 and late 60's, there is still time (hopefully) for growth of capital, if this money is no longer needed as an emergency fund or for living expenses.

    I was researching today companies that are structured along the line of the conglomerate/holding company run by Warren Buffet. The genius of this stock is that the core holdings are insurance companies. Familiar names like General Re and Geico come to mind. Buffett was attracted to these investments because insurance companies from the investment perspective are actually giant stock and bond portfolios. And then he has these other companies, in varied industries that he buys as good investments, often under market.

    You see, the insurance companies invest the premiums they collect, and the annuity money we invest, to anticipate the payouts they have to inevitably make. So, if we are over time paying for a 20 year term insurance policy, say, $20,000, they use our money over time to make much, much more.

    So when you buy company like this, (I do not want to mention specific names) you are buying their core investments--huge insurance companies with huge stock and bond portfolios. The conservative nature and diversification of these companies makes them (hypothetically) far less volatile than any given stock (or even bond).

    I am wondering if that does not make most sense for Seeking, and for me, for instance, instead of paying an insurance premium, where really the upside would be limited--and in the case of term insurance--not really meeting the need, if it ended before time of death.

    The growth in some of these stocks has been impressive. I checked just one. If bought in 1990 it would have delivered a 30x increase in principal. In 15 years.

    That is what I am thinking of doing. I have already identified a handful of stocks that have insurance companies (or similar type companies) as their core assets--but need to check them out further. I think I will begin to do a strategy like dollar cost averaging, (actually there are more powerful ways to do it, but I forget right now), putting aside even a hundred dollars a month, to do something like this--spread among several different stocks.

    I wonder of RB would let us have a stock club on water cooler.
     
    • Informative Informative x 1
    • List
    Last edited: Jun 6, 2016
  10. InsaneCdn

    InsaneCdn Well-Known Member

    The difference between insurance and an investment is that the insurance - like a joint bank account - doesn't go through the will. An investment DOES go through the will - and therefore is subject to various forms of taxation before payout to heirs.
     
    • Informative Informative x 1
    • List
  11. Copabanana

    Copabanana Well-Known Member

    But what if the investment was held in a joint account? Why would it of necessity go into a will, if it was held jointly? Because there would be a survivor.

    Do we know for sure, that this cannot be done?

    The joint bank account idea has been used by the women in my family as long as we have been in this country. (It's called hiding money from husbands and leaving it directly to the child. Except this is making me sad because my mother said she would do this for me, to level out an inequity, and my sister got her to change her mind. All of this is so painful on some level.)
     
  12. InsaneCdn

    InsaneCdn Well-Known Member

    If you are looking at anything more complex than a simple bank account... you should be using a financial advisor who has specific training and experience in wills and in taxation. The laws get REALLY complex with investments and inheritance. I've heard it's at least as bad in the US as it is in Canada.
     
    • Informative Informative x 1
    • List
  13. Copabanana

    Copabanana Well-Known Member

    Joint Tenants With Right of Survivorship (JTWROS)

    Insane. I think this is what I am talking about. A stock account can be held like this. And upon death of one joint tenant, ownership passes to the second. With my limited knowledge of these things, it would not be an asset that would be subject to a will--because full ownership would pass to the other owner.
     
    • Informative Informative x 1
    • List
    Last edited: Jun 5, 2016
  14. Copabanana

    Copabanana Well-Known Member

    Like an attorney. My mother's attorney (now mine) has attorneys in his office who are CPA's. The practice specializes in business, tax and estate law.

    Of course I do not know what I am doing. And needless to say, cannot advise one other person!!
     
  15. GoingNorth

    GoingNorth Crazy Cat Lady

    My mother is a retired CPA. She took the continuing education classes etc., to keep her certifications (tax and banking) active up until about 8 years ago. When she first retired, she did taxes and such for small businesses to bring in a bit of extra money.

    She told me that the laws, etc in the US have changed so radically, that if she wanted to activate her certifications again, she would have to go back to school for approx a year to bring her skills up to date.

    I last worked in 2007. For me to get back into IT, I would have to start from scratch, though would be able to test out of the a few of the entry level classes, and would do better than a raw newbie because of my knowledge of how the "guts" work.
     
    • Informative Informative x 1
    • List
Loading...