Insurance Part 2: Life for Life Insurance

[lockets]

Insurance is so confusing to me. I'm asking a few different questions here and welcome any help or suggestions! Here's the second question...

Received this brochure from my alma mater. https://meyerandassoc.com/wp-content/uploads/2022/09/Life4Life-SAP-20-Final.pdf ]

(more information here too: https://meyerandassoc.com/life-for-life-sap/#1505740321913-1cde7794-1887a76a-02ea)

Should I do it for myself?

Should I take out the policy for someone else in my family and name myself as the beneficiary as an investment vehicle? The person I'm thinking of is a 63 year old male.

 

[tvguy]

Insurance is so confusing to me. I'm asking a few different questions here and welcome any help or suggestions! Here's the second question...

Received this brochure from my alma mater. https://meyerandassoc.com/wp-content/uploads/2022/09/Life4Life-SAP-20-Final.pdf ]

(more information here too: https://meyerandassoc.com/life-for-life-sap/#1505740321913-1cde7794-1887a76a-02ea)

Should I do it for myself?

Should I take out the policy for someone else in my family and name myself as the beneficiary as an investment vehicle? The person I'm thinking of is a 63 year old male.

Insurance is not an investment. It is insurance.

 

[amcnj]

My basic understanding of life insurance is that there is term (a policy paying x dollars in benefits should you die for a “term”, a certain number of years, and upon expiration of that term, had 0 value), and whole life/universal (which went on “forever” and had some investment/cash value aspect).

My personal view was to use term to cover certain expenses (mortgage, college, income replacement) should I die prematurely, and invest the difference in cost myself. So I had several overlapping policies at one time, with up to 20 years of coverage. Work also offered a term policy which was more reasonable when I was younger, but I dropped it as I aged and was able to obtain better rates on my own.

Some may realistically assess themselves and conclude they would never save and invest the money on their own.

 

[Christine]

You don't say enough about yourself to know. My view on life insurance is that it's good to get a term policy (say 20-25) years during the years that if you or your partner/breadwinner of the family dies, the major expenses would be covered so that the remaining survivors don't lose their home and their financial security. So when I was younger and had my two kids at home and a mortgage, I took out enough insurance so that my mortgage would get paid off, burial expenses and outstanding debt would be covered, and money would be set aside for the kids to go to college. That term insurance expires next year and I won't be renewing because my death at this point would not create a financial hardship on anyone (mortgage paid, kids grown and out of the house). The monthly premium was dirt cheap.
Once you take on insurance when you're older, it gets really steep and probably not worth it for most situations.

 

[Jml813]

Former life insurance agent here, the older you are and the more medical issues you have. The more expensive insurance would be to take out a new policy.

I read your first thread. I would not convert policy for the 63-year-old who doesn't have a lot of assets and I would question continuing to pay for $15,000 term life policy just for burial expenses. Whole life is almost always going to be more expensive than term and the older you are when you convert the more expensive it is. I agree with the other posters, might be best to save that money or prepay for a final expenses. You can do a funeral for a few thousand dollars.

I don't know enough about your situation to make a suggestion for you. How old are you, what are you trying to accomplish with the insurance? Do you have other assets you need to protect? That's usually why folks do insurance. There are many other investment vehicles that will potentially do a better job of accruing for longer term benefits than insurance but it depends on what you're trying to do.

 

[Jml813]

You don't say enough about yourself to know. My view on life insurance is that it's good to get a term policy (say 20-25) years during the years that if you or your partner/breadwinner of the family dies, the major expenses would be covered so that the remaining survivors don't lose their home and their financial security. So when I was younger and had my two kids at home and a mortgage, I took out enough insurance so that my mortgage would get paid off, burial expenses and outstanding debt would be covered, and money would be set aside for the kids to go to college. That term insurance expires next year and I won't be renewing because my death at this point would not create a financial hardship on anyone (mortgage paid, kids grown and out of the house). The monthly premium was dirt cheap.
Once you take on insurance when you're older, it gets really steep and probably not worth it for most situations.

This is how I personally approach things. My husband and I have no children but we have enough term coverage to cover the mortgage and other expenses should one of us pass before the mortgage is paid off. Once the mortgage is paid off, we won't extend it. We're still working and rather young so it was pretty inexpensive.

We also have a small whole life policy that was structured to be paid in full in eight years and that will likely be turned into an annuity later.

Most employers also give you the option of purchasing insurance during annual enrollment. I would look at their policies as they tend to be less expensive. However, if you leave your employer, you have no coverage. The younger you are when you take out a policy, the cheaper it is, but that doesn't mean you have to pay for the rest of your life. But please understand your options and ask questions. Most insurance salespeople do not do a good job of explaining options and many people buy things they have no business paying for because somebody was trying to line their own pockets.

I was a former insurance agent and it was awful how many people had no idea what they had or why they had it. There's plenty of good insurance agents out there but do take time to do your homework and ask questions. Agents like to sell you on the idea of leaving a legacy, but you can do that with other investment vehicles for a lot less money a lot of the time.