Life Insurance?

[spiritedaway]

It's open enrollment period at my company and I am trying to decide if I should buy life insurance. I never had it and didn't really think about it much before.

It's affordable, I could pay a small amount (under $3?) out of my biweekly paycheck, and I guess it could help if anything ever happens to me. I considered myself to be relatively healthy/young, but you never know what life throws at you.

Do you or have you ever bought life insurance? Is it needed for people our age? Just wanted to get some idea what people my age are doing...

[PenforPrez]

Consider this: There's a good chance your company has taken out life insurance on you, so you might as well. There's a LOT of companies that take out policies on their employees; Wal-Mart does that with all one million plus workers in their company. No reason to let them benefit while your next-of-kin doesn't.

On a more practical note, I think it's a very good idea. My parents took out $10,000 of life insurance on me when I was born. That would just barely cover my funeral cost now, nearly 27 years later. But it is good for me to know that is there. One less thing to worry about.

If you can part with the $3 biweekly, I strongly recommend it.

Paul

[AshleyJordan]

If you don't have dependents/a spouse, it's certainly not the highest priority, but the idea of your estate/family being unable to pay for your funeral is a pretty ugly one.

Also, if there's a charity that you are really into, you can designate them as a full or partial beneficiary. I've done that b/c I'm not very close to my family but do have a lot of philanthropic interests.

$1.50 a week is pretty cheap. I say go for it.

[TinyDancer]

My company covers 1X my salary in life insurance. I pay 2X supplemental. I think it only costs me ~$2.70/bimonthly paycheck. Maybe a bit overboard for not having dependents, but it's cheap so whatever.

I also have long-term disability, which is a little pricier. . . maybe ~$7.00/paycheck.

It's worth it to me.

[Kitty]

Yeah, I have something like 5 times my annual salary. It goes to my boyfriend and then my mom if I die.

It costs next to nothing..I think a few dollars every month.

[vxmike]

Seeing as how nobody depends on me financially, I have zero reason to purchase life insurance even if it costs $.04/month.

[Kitty]

A lot of times it's used to cover funeral costs, etc. It doesn't really matter whether or not someone is financially dependent on you.

[and1grad]

Seeing as how nobody depends on me financially, I have zero reason to purchase life insurance even if it costs $.04/month.
Totally agree. Unless you're married or have a house, I dont see a reason to have it.

[spokes]

There's a LOT of companies that take out policies on their employees; Wal-Mart does that with all one million plus workers in their company. No reason to let them benefit while your next-of-kin doesn't.

i'd like to think i am pretty knowledgeable with respect to group benefits and i can say i have never heard of this and i doubt that too many group insurance companies would be overly excited to underwrite such a policy. also the underlying finacial arrangment for a policy that big would no doubt ensure that any "extra" premium that is left over after the claims, plan expenses and required plan reserves are funded would go back t wal-mart in the form of a plan refund.

some companies will take out policies on key employees.

normally there has to be an insurable interest in order to take out a policy - i.e. I could not tkae out a policy on you because if you die my finaces would not be affected.

to answer the op's question i think it is worth it - if you were to get your own individual policy it would be more exspensive, probably offer less coverage, although it may have some type of saving componet built into it unlike your group policy.

[wordsmith]

If I died right now, I would be a financial burden on somebody to bury/cremate/whatev.

[WorkInProgress]

I have probably more than I need right now, honestly, but I will need it in the future, when I have a family of my own. But I don't mind paying on it now, and having it locked in so that I can't be removed should I become seriously ill (and I didn't have to pass a physical for it).

My parents took out a small policy when I was a very young child, which was really just enough to bury me, since they didn't have that kind of money laying around. I just took over the policy last month, actually and the opai (sp?). I've also got my life insurance that I purchased after I got a full time job, which should be enough to help them pay off their house (or come close) after settling all my debt, etc. And then, one of my company's benefits is a $50k policy that they pay for but the employee designates the beneficiaries. (Plus employees can purchase additional insurance on themselves and/or family members, up to a certain amount. I don't do this, since I already have my own.)

It's a good thing my parents like me. ;):

[SmilesSoSweet]

A lot of times it's used to cover funeral costs, etc. It doesn't really matter whether or not someone is financially dependent on you.

I agree. I have two policies. One with State Farm and one with another company that is in conjunction with my credit union. I think my work has one too, but we don't have to pay for it. It's only about $15k from the work one. My other two are about $50k each. I have my parents on there.

My retirement funds go to my godchildren if anything should happen to me. Until I get married I won't be changing any of my beneficiaries.

[redsail]

My company pays for 1x salary life insurance. I do not pay for any supplemental insurance. Its just not something I feel is necessary at this point in my life.

[pisces2473]

I don't really feel it's necessary, esp. since my parents are in good financial standing (meaning: they could pay for my funeral). Maybe I'll think about doing it after I get married, but we don't have a house or kids that would facilitate a major shock to lose one income.

My employer doesn't offer one, I don't think. My former employers all did, though.

[Syracuse]

My mom has one on me. I guess just because it's cheap when your young.

[embrassezla]

I have life insurance because I have a mortgage with someone. I also have it because if I died I would want my mom to be able to retire and not worry about money.

My mom recently paid around $10K to completely set up her funeral so that when she dies, someone just needs to contact the funeral home and everything is pre-arranged. I like that idea a lot. You get to have exactly the funeral you want, and no one has to pay for or plan it.

[pisces2473]

My mom recently paid around $10K to completely set up her funeral so that when she dies, someone just needs to contact the funeral home and everything is pre-arranged. I like that idea a lot. You get to have exactly the funeral you want, and no one has to pay for or plan it.
My grandmother did this years before she actually died, and it was great for my mom and her sibs. It was such a peace of mind--and they actually got money back because the funeral home over-invested the money that my grandmother paid, and things weren't THAT expensive.

[weary]

i really think if it's feasible ppl should have it. i mean, kids, family, spouse, house, whatever...whether you have them or not, it's going to cost something to bury/cremate you when you die. why leave that for someone else to cover if you can afford it?

[spiritedaway]

Thanks for all the thoughts/suggestions!

My last company paid for life insurance for 2x my salary (part of the company benefit), so I didn't have to worry about it. My current company doesn't.

I'm leaning toward getting it, which is why I am looking into my company benefits this time around. I'm still new to life insurances, but it seems like most people are talking about the cash value life insurances?

Is the term life insurance any good?

[PenforPrez]

i'd like to think i am pretty knowledgeable with respect to group benefits and i can say i have never heard of this and i doubt that too many group insurance companies would be overly excited to underwrite such a policy. also the underlying finacial arrangment for a policy that big would no doubt ensure that any "extra" premium that is left over after the claims, plan expenses and required plan reserves are funded would go back t wal-mart in the form of a plan refund.

some companies will take out policies on key employees.

normally there has to be an insurable interest in order to take out a policy - i.e. I could not tkae out a policy on you because if you die my finaces would not be affected.

It's done; several states have banned the practice. More than 6 million American workers have had life insurance taken out on them by employers. My opinion: it's just cold.

http://moneycentral.msn.com/content/Insurance/P64954.asp

Paul

[redav]

My company provides 1x my salary. I also bought more to cover my mortgage. Before I bought my house, I only went with the 1x salary.

If you are offered group insurance through work (as opposed to individual ins. on your own), that will typically be the cheapest way to go.

For people who are young with no dependents, disability ins. is more important than life ins. Young, healthy people are more likely to survive (but seriously get messed up by) accidents that would kill older people. And then, you have to continue to live despite potentially not being able to provide for yourself.

I'm leaning toward getting it, which is why I am looking into my company benefits this time around. I'm still new to life insurances, but it seems like most people are talking about the cash value life insurances?

Is the term life insurance any good?
Each type is good for its intended purpose. (I am not an expert on this, so I don't know all the details. I've got some info/notes at home, I'll have to look them up.)
Term = covers you for a limited time. If you die during that time, they pay your beneficiary. If you don't, they don't pay. I think this is the cheapest option.
Whole = covers you for the remainder of your life.
Universal = This type is like a life ins. policy plus investment. IIRC, this is where you start getting into the "cash value" side of things. As you continue to pay for the coverage, you become entitled to part of those moneys (in some ways like social security). These moneys may be paid back to you like a dividend. Or, you can withdraw some of their value later in life, or borrow against them. There is also a type called Variable Universal that gives you more control over how the cash value is invested. There are also types of Universal where you can pay a single one-time fee and get a guaranteed payment at death.
Variable = I'm not sure on this type, but I think it's one where you can get either the face value of the policy or the invested value.

[yankeeyosh]

My company provides 1x my salary. I also bought more to cover my mortgage. Before I bought my house, I only went with the 1x salary.

If you are offered group insurance through work (as opposed to individual ins. on your own), that will typically be the cheapest way to go.

For people who are young with no dependents, disability ins. is more important than life ins. Young, healthy people are more likely to survive (but seriously get messed up by) accidents that would kill older people. And then, you have to continue to live despite potentially not being able to provide for yourself.


Each type is good for its intended purpose. (I am not an expert on this, so I don't know all the details. I've got some info/notes at home, I'll have to look them up.)
Term = covers you for a limited time. If you die during that time, they pay your beneficiary. If you don't, they don't pay. I think this is the cheapest option.
Whole = covers you for the remainder of your life.
Universal = This type is like a life ins. policy plus investment. IIRC, this is where you start getting into the "cash value" side of things. As you continue to pay for the coverage, you become entitled to part of those moneys (in some ways like social security). These moneys may be paid back to you like a dividend. Or, you can withdraw some of their value later in life, or borrow against them. There is also a type called Variable Universal that gives you more control over how the cash value is invested. There are also types of Universal where you can pay a single one-time fee and get a guaranteed payment at death.
Variable = I'm not sure on this type, but I think it's one where you can get either the face value of the policy or the invested value.


Looks like you've got some solid background knowledge for Actuarial Course III. Ever thought of doing that for a second career? :)

[analogman]

I have two types of insurance through my employer (that I do pay some premiums for): Life and Accidental Death and Dismemberment. The total is around 10x my salary. Half of the money goes to my wife. That should be plenty for paying off the house and since she has a job and gets all of our investments, she should be fine on money. Half of the money goes to my parents to help support their retirement (I am not convinced they have saved enough for it).

If you can get it cheaply, I don't see any reason to not get insurance.

[spokes]

It's done; several states have banned the practice. More than 6 million American workers have had life insurance taken out on them by employers. My opinion: it's just cold.

http://moneycentral.msn.com/content/Insurance/P64954.asp

Paul

well hush my mouth - i would say that this practice is non-exsistant in Canada

[spiritedaway]

Thanks for the info...it' definitely helps to know! :) I finally checked into it and it turns out that the (voluntary) benefit offered through my company is the term life insurance only. I think I'm going to to buy 1x or 1.5 times my salary, which should be good enough to cover expenses should anything happen. My company pays for the short and long term disability, so this should round out all bases.

Each type is good for its intended purpose. (I am not an expert on this, so I don't know all the details. I've got some info/notes at home, I'll have to look them up.)
Term = covers you for a limited time. If you die during that time, they pay your beneficiary. If you don't, they don't pay. I think this is the cheapest option.
Whole = covers you for the remainder of your life.
Universal = This type is like a life ins. policy plus investment. IIRC, this is where you start getting into the "cash value" side of things. As you continue to pay for the coverage, you become entitled to part of those moneys (in some ways like social security). These moneys may be paid back to you like a dividend. Or, you can withdraw some of their value later in life, or borrow against them. There is also a type called Variable Universal that gives you more control over how the cash value is invested. There are also types of Universal where you can pay a single one-time fee and get a guaranteed payment at death.
Variable = I'm not sure on this type, but I think it's one where you can get either the face value of the policy or the invested value.

[spiritedaway]

I recently switched jobs and had to review my benefits again, and this thread came in handy! I actually didn't end up upping my coverage to 1x or 1.5 times my salary at my last job since I found out there was the hassle of going through evidence of insurability (since I did not have a life event at that time)

Now that I have a life event, I could start from scratch, and the responses in the thread stands today as it did then. My new job is providing .5 coverage of my salary (which I think should cover for a basic funeral), though I'm not sure how much funeral costs these days. It's not much, but I suppose it's still better than having no coverage.

I've also elected to purchase 3x my salary on the supplemental life insurance, and splitting it between two beneficiaries. It won't be enough to cover the full amount of the property that I own with my sibling, but it should cover my half at a minimum. I was thinking about buying life at 4-5 times my salary, but it seemed a bit wasteful since the biweekly premium will cost me as much as the long term disability (also not covered by employer and I don't have money to burn even if - relatively speaking, it's not too expensive).

Anyway, I still have the following outstanding questions that I haven't found the answers to (yet), but please chime in if you happen to know or came across it before:

1) My employer covers .5 of my annual salary (basic life). I'm buying 3x supplemental. Does the supplemental automatically cancels out the "basic", or am I technically cover for 3.5x in this case?

2) Would the insured amount (amount * x times of salary) stay the same, even if salary increases at the next annual review? Or is that insured amount adjusted and pegged to the salary level as the level is adjusted and the employee just have to pay a higher premium? I think it's the former, but I'm not sure.

[winneythepooh7]

Both my husband and I have had our own policies for awhile that cover something up to $30K each (not through work though). I pay about $250.00 every January towards it.

However, now that we own our own home, and have a child on the way, we've decided to take out another policy each through State Farm that should cover a great deal of our mortgage and such if something were to happen to one or the both of us.

In the area I reside, this is something hugely important to think about. It would be hard for one of us (if not downright impossible!) to swing that and other expenses on our own, let alone if a child is involved.

We are also upping our car insurance policies a bit too. We've been advised that you can get screwed if you get in an accident and it is found out that "you own property", but carry minimal car insurance.

I think it's going to be about $70.00 a month for the both of us for the life insurance policy. It will be about $10.00 more a month for the more expensive car insurance.

My husband also has disability insurance, since he is self-employed in a profession that is highly likely he will get seriously injured

[steph78]

My husband and I both have something like $50k of life insurance provided by our employers, but my husband has the option of purchasing additional life insurance and have the cost withheld (pre-tax) from his paycheck. We filled out the form to do that, it's important to have good life insurance for him since he is the primary breadwinner for our family and we have a child now.

And you know what? He was rejected for the additional coverage because he has type 1 diabetes. So now we have to go looking to an outside source for life insurance. We should have done this months ago, we have just kind of put it off. Does anyone have any recommendations for companies that will provide supplemental life insurance at a reasonable price based on a medical evaluation? Hubby is healthy enough, he manages the diabetes so well that his long-term blood sugar numbers are in the non-diabetic range and he does not have any of the associated health problems like heart trouble, eye trouble, etc. Any suggestions of companies people have had good experiences with would be great, we are basically searching on Google at this point and that's giving us information overload!

[lostandconfused]

Hi steph78,

I'm sorry to hear that your husband was denied the additional coverage due to his type 1 diabetes. I'm actually a life insurance underwriter for a large company (a job which I am trying to get out of). I just don't get a warm feeling inside when I deny insurance to people because the have a medical condition. It's like... oh, it sucks that you have a medical condition that probably has a huge impact on your life... but guess what? It sucks even more now because I can't give you insurance to protect your family in case something happens to you. I just don't like how I have to deny insurance to the people that are the ones that actually need insurance.

Sorry about the rant... even though I don't really like my job, I can answer your questions about insurability if you'd like. Feel free to PM me. When was your husband diagnosed with type 1 diabetes, and how old is he now? How many units of insulin does he take per day? What was his most recent hemoglobin a1c reading? (you mentioned that his long-term blood sugar numbers are in the non-diabetic range, so I'm guessing his a1c is less than 7). Unfortunately, most people with IDDM are a decline with many insurance companies, mainly because of the long-term complications that can occur. However, reinsurers will sometimes make an offer on a case if the diabetes is extremely well-controlled. However, the premiums would be very high.

On an unrelated note, people on this thread have been discussing whether they need life insurance or not. I'm guessing a lot of these people are in their 20's, single, and healthy. In that case, I do not see the need for insurance, except possibly for future family planning, or a small policy to cover funeral costs, etc. If you are married and your spouse does not work, I would say it is important to get a fairly large insurance policy to replace your income for a while if something were to happen to you. If your spouse works, you probably don't need as much insurance, but it is still wise to have a decent-sized policy. If you have children, you absolutely need insurance, and a lot of it. There are also other things to consider, such as loans, mortgages, etc.

If anyone else has questions about how medical conditions can affect eligibility for life insurance, feel free to ask!

[lostandconfused]

By the way, I think that term policies are the best way to go for people that are young and healthy. If you are planning on getting married or starting a family, a 20 year term policy should cover you during the time you are financially responsible for your children. The premiums will be a lot lower than a whole life policy. Another option is to get a small whole life policy and a large term rider on the policy. Either way, insurance should not be expensive for people who are young and healthy because the mortality risk is extremely low.

[steph78]

Hi steph78,

I'm sorry to hear that your husband was denied the additional coverage due to his type 1 diabetes. I'm actually a life insurance underwriter for a large company (a job which I am trying to get out of). I just don't get a warm feeling inside when I deny insurance to people because the have a medical condition. It's like... oh, it sucks that you have a medical condition that probably has a huge impact on your life... but guess what? It sucks even more now because I can't give you insurance to protect your family in case something happens to you. I just don't like how I have to deny insurance to the people that are the ones that actually need insurance.

Sorry about the rant... even though I don't really like my job, I can answer your questions about insurability if you'd like. Feel free to PM me. When was your husband diagnosed with type 1 diabetes, and how old is he now? How many units of insulin does he take per day? What was his most recent hemoglobin a1c reading? (you mentioned that his long-term blood sugar numbers are in the non-diabetic range, so I'm guessing his a1c is less than 7). Unfortunately, most people with IDDM are a decline with many insurance companies, mainly because of the long-term complications that can occur. However, reinsurers will sometimes make an offer on a case if the diabetes is extremely well-controlled. However, the premiums would be very high.

Thanks! I sent you a PM.

[BLK95TA]

It's done; several states have banned the practice. More than 6 million American workers have had life insurance taken out on them by employers. My opinion: it's just cold.

http://moneycentral.msn.com/content/Insurance/P64954.asp

Paul

yeah, could you imagine if there was a company that was in financial turmoil that had insurance on a bunch of employees they were planning on laying off??? instead they decide to put all the employees on a bus and send them on a retreat, and the bus has an "accident" on the way there, goes off a cliff, and then the company rakes in a shit ton of money....

not saying it would happen but it sounds like it would make a good CSI episode or something, lol

[winneythepooh7]

Steph, we are going with State Farm. My husband is a former smoker and our agent advised us to dodge the physical for about a month for him to get "everything out of his system". He did say that they would still ensure him but at a higher rate if he chose to continue smoking and have the physical sooner. (I think like $30.00 more a month if not slightly higher). Maybe it would be the same for them in your husband's case if you want to check them out (eta: pay a higher rate).

[lostandconfused]

Hi Steph,

I tried to respond to your PM but it told me that your mailbox is full... let me know when I can send you the message. Thanks!

[steph78]

I've cleared out my pm's now - sorry!