life insurance total waste of $? why do you/don't you have life insurance

[yesitsthatdude]

does anybody have life insurance? that's single with no kids? i met this girl recently shes 25 no kids no bf never been married and she has life insurance. 

i don't have it because i feel like it is a complete waste of 4 at this point i'm 25 no kids no girl and i don't go out and do dumb things or drugs, i do get into situations where i might get killed or injured. 

why do you have it? why don't you have it?

 

[shiznut123]

I do but it's a very cheap policy. Just enough money to cover immediate expenses if I were to pass. 24 y.o. no kids.

 

[bobbyphills]

I do but it's a very cheap policy. Just enough money to cover immediate expenses if I were to pass. 24 y.o. no kids.

Same here, 25, single, no kids. Money goes to my mom to cover any expenses should I pass

 

[mr jordan04]

Same boat, no life insurance. Who would my money go to that I have in the bank if I die?

 

[solexsup]

18, dont even know how life insurance even works. *kanyeshrug*

 

[jt solemates lm]

I have a policy. Mine is a Global Index Universal Life. I'm covered until I'm like 100+ years old and over time the investment grows, which is also tax free.

 

[Nawzlew]

18, dont even know how life insurance even works. *kanyeshrug*

 

[Betonblck]

I got no kids and no need for life insurance because my assets> liabilities. If the time ever comes, you can just buy a term life insurance policy for like 20 years, or until your kids are out the house.

I technically have life insurance through my job though, but you know that's only while you are working there.

 

[antidope]

I'm 23 and I have life insurance simply for the fact that if I die no one has to be burdened with my debts.

 

[picknroll24]

Wall Street Journal -Life Policies: The Whole Truth

By LESLIE SCISM

The recent market turmoil is rekindling interest in a financial product designed to provide safety and stability: whole-life insurance.

The trick, advisers say, is to find a policy that combines reasonable fees and generous dividends—and that isn't always an easy task.

Whole-life sales spiked after the 2008-09 financial crisis, when many families fled to them for safety and guaranteed annual dividends. Since then, sales of the policies—which combine life insurance with a "cash value" account—have continued to grow.

In a whole-life policy, the insurer pays an annual dividend, of at least a guaranteed minimum amount, and the account rises tax-deferred.

Yet many of the policies still have the same issues they always have had: often-steep agent commissions, high cancellation rates and annual costs that can be both high and difficult to understand. As with other life policies, the price depends on the buyer's age and health.


While sales of individual life-insurance policies, as measured by annualized premiums, rose 3% in the first quarter to an estimated $3.05 billion, compared with a year earlier, whole-life premiums increased 10% to $982 million, according to industry-funded research firm Limra.

Certain types of "universal life," a cousin of whole life, also have seen stronger sales. Both whole- and universal-life policies—which are both also called "permanent life"—are designed to be in place until a person dies. Term-life insurance, by contrast, is basic coverage that pays out if death occurs in a specified period. During the first quarter, term-life premiums edged up by 1% to $663 million.

Many small investors, feeling burned by the financial markets, are using permanent-life policies in place of other investments.

George Carapella, a tax preparer in Staten Island, N.Y., soured on stocks and funds after the tech-stock and housing bubbles burst. The investments "didn't work out," the 53-year-old says. "Too many crashes. I said, 'Who am I kidding?'"

Instead, he bought a $500,000 whole-life policy from National Life Group, a policyholder-owned insurer in Montpelier, Vt. Mr. Carapella says he likes that the insurer invests the money in bonds and real estate.

Here's what to consider before shopping for a whole-life policy.

Many people aren't good candidates for whole life.

Under a whole-life policy, the insurer deposits your premium, less insurance costs and other expenses, into a cash-value account. Currently, many insurers are paying 4% to 6% annual dividends, with guaranteed minimums of 2% to 4%.

Individuals are able to withdraw tax-free much or all of what they put into a whole-life policy, though they must follow strict rules; if not careful, policyholders can end up owing taxes.

The policies can make sense for people who need insurance and have maxed out contributions to 401(k)s and other tax-advantaged plans, advisers say. But many buyers underestimate how difficult it can be to pay the premiums year after year, and they end up canceling their policy before they break even.

In a study released in December, the Society of Actuaries found that 20% of whole-life policies are terminated in the first three years, and 39% within the first 10 years.

Early dropouts would have been much better off in cheaper term-life insurance, advisers say. "One needs to keep a cash-value policy at least 20 years to amortize the acquisition costs and produce a decent investment," says James Hunt, an actuary at the Consumer Federation of America, an advocacy group.

Your agent has an incentive to sell whole-life policies.

Agents and their managers typically receive upfront commissions and other compensation totaling well over half the first-year premium. That means very little of the premium goes into the cash-value account. The industry defends these commissions as fair compensation for agents' services.

Brian Fechtel, an agent who runs a website called BreadwinnersInsurance.com, recommends "blended" policies, which combine permanent- and term-life components in a way that holds down costs while still providing the tax-advantaged benefits of permanent-life coverage. Agents earn less in commission on these policies, so they might not readily pitch one.

Policies can have other high fees that will eat into the value of your account.

There are annual charges for the insurance itself, often higher than what term-life insurance costs if bought as a stand-alone policy, the Consumer Federation's Mr. Hunt says. There also are administrative costs.

And there isn't an easy way to compare these costs across companies. "Cash-value policies are impossible for laypersons to penetrate," Mr. Hunt says.

Costs can go up, and dividends can go down.

In their pitches, agents typically use "illustrations" to project the cash-value account's growth over time. Mr. Fechtel calls these "fanciful sheets of numbers" because there is no certainty they'll work out.

Under state regulations, agents must show a worst-case scenario, reflecting maximum allowable costs and the guaranteed-minimum dividend rate. Many agents dismiss the gloom-and-doom as unlikely to occur.

Yet with interest rates at ultralow levels, many insurers have been ratcheting down their dividend payments, and many are nearing the guaranteed minimums, according to financial advisers and stock analysts.

What to do. To find a reasonably priced policy, you could hire a fee-only life-insurance adviser, or use the policy evaluation service offered by the Consumer Federation of America at www.evaluatelifeinsurance.org. It typically costs $90 for the first analysis and $65 for each additional one.

The federation's Mr. Hunt and some financial advisers like the low-cost universal-life policies issued by TIAA-CREF, which sells through staff employees.

Peter Katt, a fee-only life-insurance adviser in Mattawan, Mich., recommends mutual insurers, which are owned by policyholders. The four biggest are Guardian Life Insurance Co. of America, Massachusetts Mutual Life Insurance, New York Life Insurance and Northwestern Mutual Life Insurance. These firms have track records for delivering value, Mr. Katt says, including long histories of generous dividends.

 

[nationaltruckerdave]

I had life insurance since I was 8 yrs old.. Idk why my mom insisted on getting me life insurance so young but cool I guess

 

[Bert.]

i dont even understand how these companies make money and what not.

my dad recently passed away but he was never able to get life insurance. too sick with too many things plus he started smoking when he was 11

 

[Betonblck]

i dont even understand how these companies make money and what not.
my dad recently passed away but he was never able to get life insurance. too sick with too many things plus he started smoking when he was 11

This is a basic very dumbed down explanation(I'm not an expert in the field so bear with me)

Life insurance co sells policies to like 100 people. An actuary calculates that 1 of them will die over the next year. Each person pays $5000 a year for a policy. ($5000 x 100 = $500,000)

The payments are invested. 1 person dies in year 1, life insurance company pays out $250K from the policy, keeps the rest invested. Next person dies, they pay out, and so on. All the while the premiums replenish what is paid out from people dying.

 

[Bert.]

guess that makes sense but what happens if that insurance company goes bankrupt? i guess you gotta be smart choosing a company thats been around for ages.

 

[Betonblck]

guess that makes sense but what happens if that insurance company goes bankrupt? i guess you gotta be smart choosing a company thats been around for ages.

Insurance companies generally have what's called reinsurance, which is insurance for the life insurance company. So like the life insurance company will buy insurance from another company. One of the biggest reinsurers is General Re, a subsidiary of Berkshire Hathaway (Warren Buffet's fund)

Also, you are right in thinking like that. You want to check out the financials of any company that you decide to give your money to.

 

[hodog16]

I didn't get life insurance until I had children. Actually need to re-do my policy at some point.

 

[ksteezy]

I've had mines since I started my career...before my wife I had my mother as the beneficiary, Ive always helped my mom out and if I passed I think is only right she gets something, why not?... Is my question....

Now I have both my wife and mom, wife gets a check for whatever my annual salary is at the time of passing and so does my mom, also have insurance on my wife, so say she passes in an accident involving any type of public transport I get I believe 250k and vice versa....

Life insurance is your last selfless act, you do it for your loved ones, not for yourself obviously.

 

[oidreez]

i signed up with it at my jon but i dont remember the terms or benefits. im 25 single etc

 

[BANLEU]

Life insurance is your last selfless act, you do it for your loved ones, not for yourself obviously.

Quoted for emphasis. What many of you fail to realize is that even if you don't have a wife or child someone is still going to have to pay your funeral expenses. My dad passed away last year and you would not believe how expensive it is. Just to have a small viewing, an hour long ceremony, and cremation is like $7,000.

That was on the cheaper side because with burials and all the different options that come with a burial it can be way more. My wife's grandmother passed away in June and her family chose to bury her, which ended up costing like $15,000.

Now I don't know about any of you, but I wouldn't want to leave anyone with the burden of paying those expenses in addition to any debts I may have at the time.

 

[sage909]

24 years old. I have it for my son. have my moms as the beneficiary, cause if it was my BM. That jump off would spend it on herself and get more plastic surgery. I wouldn't want to leave my family with my debt and leave my son empty handed..

 

[georgehimself]

does anybody have life insurance? that's single with no kids? i met this girl recently shes 25 no kids no bf never been married and she has life insurance. 

i don't have it because i feel like it is a complete waste of 4 at this point i'm 25 no kids no girl and i don't go out and do dumb things or drugs, i do get into situations where i might get killed or injured. 

why do you have it? why don't you have it?

It can go to your mother if you don't have kids. Chances are if you die between now and when you have kids, it will help her with the expenses.

 

[sage909]

I've had mines since I started my career...before my wife I had my mother as the beneficiary, Ive always helped my mom out and if I passed I think is only right she gets something, why not?... Is my question....

Now I have both my wife and mom, wife gets a check for whatever my annual salary is at the time of passing and so does my mom, also have insurance on my wife, so say she passes in an accident involving any type of public transport I get I believe 250k and vice versa....

Life insurance is your last selfless act, you do it for your loved ones, not for yourself obviously.

does she know you have life insurance on her ?? lol jk

 

[ksteezy]

does she know you have life insurance on her ?? lol jk

yeah she was made aware

 

[BANLEU]

24 years old. I have it for my son. have my moms as the beneficiary, cause if it was my BM. That jump off would spend it on herself and get more plastic surgery. I wouldn't want to leave my family with my debt and leave my son empty handed..

I've read cases where judges have forced fathers to get life insurance policies that name their children's mother as the beneficiary. The reasoning is that if the father dies both the child and the mother stand to lose from the fathers loss wages. This is especially true if the father pays child support to the mother. With that said I would look up the laws in your state if I were you.

If your sons mother isn't named on any policy she may be able to sue your estate, which in this case would be your mother. A better alternative to your current arrangement is to set up an irrevocable trust with your mother as a trustee for your son. That way your mother can manage how your son gets the money.

 

[toughmoney]

Definitely not a total waste of money. Can't begin to tell you how many family members I got that left the burden to other family members(Nobody in my family gets cremated either).

I don't have because of my assets. I plan on getting in the upcoming years still tho.