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...buying life insurance
Posted by: richie rich
Date: January 23, 2006 08:15AM
hey all,
am starting to look into life insurance...
what are some of the features i should look at?
what features are overrated/overlooked, etc...
what is the wrap around?

am gonna read up on it online, but figured
i should also learn from the experiences here...

tia!

rr
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Re: ...buying life insurance
Posted by: SteveJobs
Date: January 23, 2006 08:21AM
Look into VUL (variable universal life). It will have a cash value. But, if money is short, and your wage-earning is relied upon by others, you might just want to start with Term. If your employer offers cheap group term, it'd be affordable to get that, first. Then supplement with VUL if you have the money.
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Re: ...buying life insurance
Posted by: elmo3
Date: January 23, 2006 08:27AM
Life insurance is:

a) income replacement, and

b) a fungible.

Get the amount you need to replace your income should the worst happen, and get coverage for the period of time you need that.

And buy it for the lowest price. There is no advantage to paying more for the exact same life insurance product. It's a fungible.

That being said, there are sub-issues: renewability is one that comes to mind.

The item you're looking for overall, though, is term insurance. Term life is like car insurance--if you find yourself without the car, are you covered? If you find yourself without income, are you covered? And to what degree?

There is life insurance being sold as investment; that's whole life insurance. Unless you look into it very carefully, avoid it.

Even if you have insurance as investemnt, that's still different from insurance as income replacement. You'll want term life insurance if you need income replacement, regardless of anything else you're doing.

Now the big question: do you have dependents that would require that your income be replaced should the worst happen? If the answer is no, think carefully about why you're buying life insurance. If you die tomorrow and no one else depends on your income, there's really only one reason to get term life insurance: to ensure your insurability.

That's right. If you think you'll need life insurance later, you should think about buying it now and buying the product that allows you to renew without evidence of insurability.



---------------


In the words of DharmaDog: "it may or may not be utter horse@#$%&, but it shouldn't be dismissed simply because it doesn't agree with your opinion."

Never underestimate the power of stupid people in large groups.

Trying is the first step to failure. -- Homer Simpson
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Re: ...buying life insurance
Posted by: Michael
Date: January 23, 2006 08:35AM
Ask Clark Howard...

[clarkhoward.com]
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Re: ...buying life insurance
Posted by: honu
Date: January 23, 2006 09:30AM
elmo pretty much covers it.

I would like to especially point out one thing he said: avoid whole life/variable life/annuity unless you really know what you are getting into. Do not use life insurance as an investment or means of retirement income unless you have absolutely used up all other retirement avenues (eg. IRAs, 401(k)s, etc.) IMHO, the rate of return just isn't there.



-----
"This Macresource Forum rocks!"
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Re: ...buying life insurance
Posted by: SteveO
Date: January 23, 2006 10:41AM


I have had both whole life (the variable "investment" life ins described above) and term. I found the whole life to be a total waste of my hard-earned money and not at all what my insurance agent at that time represented it as. But I was 23. What did I know about the world? Nuthin'.

My wife and I each got term policies in our early 30s. Tragically, I had to find out for myself the value of having life insurance as she passed away very suddenly in 2001.

Get term life. This is coming from someone (me!) who has been through the fire. I would recommend getting it through a company with positive user reviews (that means user reviews of people who have had to ACTUALLY USE IT due to loss of a loved one). Insurance is great to have, but it's not worth a dime unless the vendor follows through on its commitment in a timely, easy manner. I wish I could say this was my experience with our term ins, but it wasn't. Yeah, they paid it, it just took far too long and put me in a bind on top of the tragedy that had already happened.

There are a lot of very competitively priced, affordable vendors out there. Do your research and you should be fine. I'd recommend getting a 10- or 20- year policy that gives you a rate lock (rate does not increase as you get older). Read all the fine print, too.
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Re: ...buying life insurance
Posted by: Dennis S
Date: January 23, 2006 12:34PM
Don't get whole, variable annuity or anything fancy or as an investment. Get term and get it from an A++ company. Find it yourself and don't let a salesman "sell" it to you.
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Re: ...buying life insurance
Posted by: NewtonMP2100
Date: January 23, 2006 03:16PM
you only need life insurace if you have dependents or some debt to pay back like a mortgage, etc. ..

don't buy it as an "investment" because it sucks as such. . better to put your money in the stock market.


whole is the biggest ripoff. .. .get term. . .most just need that. ..

for the most part. ..there are exceptions.



_____________________________________

I reject your reality and substitute my own!
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Re: ...buying life insurance
Posted by: elmo3
Date: January 23, 2006 04:25PM
NewtonMP2100 Wrote:
-------------------------------------------------------
> you only need life insurace if you have dependents
> or some debt to pay back like a mortgage, etc. ..

or, as I said, to ensure that you can be insured later on.

The older you get, the harder and more expensive it is to get term life insurance. If you think you'll need it later (don't have kids now but plan on having them 5 years from now), get a 25 year term life policy now instead of waiting. And try to get one with a good renewal rate, if possible.

Or, roll the dice and wait to get insurance when the dependents do come along. If you're disciplined, pretend you have the policy; take the $700/year (or whatever) you'd pay and put that in the bank yourself.



---------------


In the words of DharmaDog: "it may or may not be utter horse@#$%&, but it shouldn't be dismissed simply because it doesn't agree with your opinion."

Never underestimate the power of stupid people in large groups.

Trying is the first step to failure. -- Homer Simpson
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Re: ...buying life insurance
Posted by: NewtonMP2100
Date: January 23, 2006 04:31PM
that is true. . and the older you are the more expensive term is so gettin it younger is better. . .



_____________________________________

I reject your reality and substitute my own!
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Re: ...buying life insurance
Posted by: richie rich
Date: January 23, 2006 04:32PM
thanks for all the input so far. lots of things to consider and great info!! thanks elmo for the input, much appreciated along with the others.

steveO, sorry to hear that and thanks for sharing your experience. i'm getting the gist that term life is the way to go from input here and basically all my reading. so steveO, what company was that, if you don't mind me asking...

to all, how do i find a 'good' a++ company... that will pay out in a timely fashion. good idea bout 'user reviews' but does such a site exist?

it will serve me definitely not as an 'investment' vehicle, but more as an insurance.

(honu, you gonna do a march madness group for us or what?
gotta start thinkin bout that!! ;))

thanks y'all!
rr
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