Investing money no life insurance

[disneymarie]

I ran into difficult times, my life insurance would have been paid had I kept up with my disability verification...but it lapsed 2 years ago. I am 56, had it since I was 24.

But I have $120,000 between two children to park. One teen one 27.
I did speak to financial officer at the bank. His suggestion was in a one time payment of $50,000 into a life insurance policy that at death benefit $131,000. It will sit at a bit more $50,000 the first years. I can always pull it out at that face value amount and interest gained.

Another $50,000 to invest in bonds.Not just one type, but two, reinvesting the monthly disbursements.
Right now I have it in a money market. The college is over except two yr. Jr. College, but dd really prefers cosmetology. That is where I started my career.

I have never had more then 2 dimes in my pocket. DH is retired, I work pt with my PI license. We owe on the mortgage a small amount which is not part of these monies set aside.

I also have the chance to save the old family homestead from foreclosure for the payoff on a home equity for older son to have.
Charge rent for now, make sure it is kept up. It is not much more then the price of a new car.
He is living at home paying room and board.

I am not a risk taker: should I leave it in the money market, or set up funds, so confused.

 

[johnsontrio]

I am not clear if the money is for your retirement years or money you are investing for your children's future.

Is the DS you mention one of the 2 children? And the teen is DD?

If the money is to be investing for your children the money to save the homestead should come off of DS's half if that property will then go to him.

Should DD's education (cosmetology) be coming out of this money? Is that how the other children got their education paid for or did they not have college paid for by you? I thought you had mentioned that you have at least one disabled child. Is this one of the 2 mentioned?

I need more information in order to give advice.

 

[ilovemk76]

I ran into difficult times, my life insurance would have been paid had I kept up with my disability verification...but it lapsed 2 years ago. I am 56, had it since I was 24.

But I have $120,000 between two children to park. One teen one 27.
I did speak to financial officer at the bank. His suggestion was in a one time payment of $50,000 into a life insurance policy that at death benefit $131,000. It will sit at a bit more $50,000 the first years. I can always pull it out at that face value amount and interest gained.

Another $50,000 to invest in bonds.Not just one type, but two, reinvesting the monthly disbursements.
Right now I have it in a money market. The college is over except two yr. Jr. College, but dd really prefers cosmetology. That is where I started my career.

I have never had more then 2 dimes in my pocket. DH is retired, I work pt with my PI license. We owe on the mortgage a small amount which is not part of these monies set aside.

I also have the chance to save the old family homestead from foreclosure for the payoff on a home equity for older son to have.
Charge rent for now, make sure it is kept up. It is not much more then the price of a new car.
He is living at home paying room and board.

I am not a risk taker: should I leave it in the money market, or set up funds, so confused.

Is this the money that you got in the suit you just won. I have read about it here. Is the $120K all of it or did you hold back some for yourself.

From my reading you were in an extreme place financially before this. First I would pay off all the personal debt you accrued.

I would NOT buy that insurance policy or "save the homestead". Both will not generate any income for you now or as you age. Your 27 year old son needs to get a loan for the house if he wants to buy it. If a car payment is all he needs a 27 year old male should be able to buy that himself. You need to cut the umbilical cord with a 27 year old and let him fly on his own.

What pensions do you have? Will they increase it each year for inflation or is it a flat payment? Based on what you have said I am guessing that you have little to no retirement saving.

Not knowing any of the above this advise is just what I would do.

I would buy bonds due to your ages. Your DH is over 60 so you should only have a small amount in the market.

 

[disneyfreakk]

To me, life insurance should be enough to cover your end debt and funeral / burial as to not be a burden on your family. If you have money left over when you and your DH die, great. But I would not set aside $120,000 for your children if you have no retirement.

Personally, I would speak to a financial planner and not the bank.

 

[ceecee]

You need life insurance to care for minor children if you die or to bury you...that's it!
I also would let your DS buy the house (sounds cheaper than rent anywhere else) and keep it up, especially if he is 27!
Save it all for your retirement...talk to a finanical advisor (credit unions offer this service free as do some banks) look for a no load investment for YOUR future.

 

[ilovemk76]

I just saw you other thread on taxes. Since your DH's SS, pension, your income and the SS for your DD (a minor who is over 16) was not enough to cover your expenses and you had to pull from your 401K that tells me you need the money from this $120K.

It is nice for a kid to get an inheritance but it is not a requirement.

How much did you pay for DS's post high school education? I would put that much in a CD for your DD and put her SS check away each month. That should be enough for her.

She is only a minor for a short time and she is old enough to get a job. Plus she is getting money from SS. If she lost both of you before 18 she would get lots of free money for college so not much to worry about there.

 

[starry_solo]

Look for a fee-only financial planner (one that charges you a flat rate fee, rather than getting commission on what he/she sells you).

Also, you might consider doing a money makeover with the LA Times.

See:
http://www.latimes.com/business/la-fi-money-makeoverbox-20110323,0,6224877.story

I know there's an address; let me see if I can find it (mailing address).

Maybe your local paper has something similar?

 

[ceecee]

Look for a fee-only financial planner (one that charges you a flat rate fee, rather than getting commission on what he/she sells you).

A lot of financial advisors don't charge a flat fee or make commissions on everything they put you in. Get several opinions and choose yourself.

 

[a1tinkfans]

Life insurance is one of lifes BIGGEST rip offs.
Anyone that purchases anything other than a term policy is seriously making a financial mistake and taking a big risk...usually never gets to collect on that "whole life"... case in point, not being able to pay it or it suddenly taking much longer than what they "told you" you'd be paying as far as the period of time goes. ....it is a sad fact that people are driven to these policies by Ins SALES people..who make a LOT of $$ off the "sale" of the policy. The default rate, the "never ending" payments.... if they were invested conservatively would have been better spent. Some people feel that their investing in the policy is better as they are "forced too" But that is just part of the sales schtick...I am sorry you seem to be in a financial "down" period and hope that it works out.
When a term policy can be used as an inheritance it is icing on the cake (for a child to recover some day), but it is not really the actual purpose for it. (Ins companies will have everyone at 20 times their salary...do you really know anyone that ever collected that type policy, ever? Not many ever will....The purpose is to pay off your estate for what had to be tidied up, like a funeral and expenses........I agree with Disneyfreakk!!

 

[a1tinkfans]

I could not edit above????
anyway, my final thought was Insurance Rich and and life Poor is not a good way to be..Good Luck OP!!

 

[disneymarie]

To combine some info yes it is some of the settlement.
Sucked to have the 2nd litigation cost added on that was avoidable but finally over. This is the worst thing to happen to have received money.
The splurges were budget trip to Disney in the fall and purchased a car that my sister was turning in from the lease for the balance, $16,300.

The total was well over what is put aside for the kids.
This is just an amount I would want to grow for the kids to have when I am gone.

The 35,000 one time payment has a death benefit of $91,000.
The balance into bonds.

We had to pull from the 401K prior to the retirement funds and after the UC ran out for the mortgage.

I have SSDI and pt work.
DH has a pension, it will be mine if he pre- deceeds me.
401K some left
The house I can pay off.
Soc Sec for him and an added $850 for dd 15 yrs.
She has severe anxiety/panic disorder and moderate agoraphobia.

DS 27 has heart problems, seizure disorder, he works pt time security where there are people around and is slowly healing from depression; the loss of his sister, and last year a half brother. Pays room and board, that helped with our cost.
He is going to take a few college classes, and spend more into my P.I. business, I hope the boys will carry on.

I worry about who will care for them, housing wise, when I am gone.
I was on the fence about paying one lump $35,000 but then having $91.000 death benefit.

The dh term insurance would cost $2,000 a year for 15 years. dd will be 30 by then, he 77. We do have other insurance on him, but that one is $100,000 in coverage.

Oldest son I am placing a modular on my lot and I will receive rent. It will be left to him and grandson...sooner or later.
The homestead is next to that. I would pay off the $25,000 and receive rent. or leave it to younger ds and he could live in or rent out.

The fee for the bonds is 4% on my initial investment once. Then each month I would reinvest the annuity or what ever that is called.
So bonds should be okay?

My head is still spinning and heart aching.

 

[Jeff_G]

4% seems really high, that would be 2,000 on 50k I would check into a financial advisor outside of your bank. Get two or three opinions go with someone who will take the time to clearly explain things to you. I would NEVER invest in something I didn’t fully understand and anyone who would let you do so should not have one dime of your money.

 

[ilovemk76]

The more you explain your plan the less I like it.

You need to get a financial advisor to figure this out.

 

[RitaE]

Given the health and special needs of your family, as well as the amounts of money and property you seem to be talking about - I'd recommend that you begin by you and your husband meeting with a competent Estate Planning attorney to first put in line your own affairs in regards to trusts, wills, and other documents.

Then he/she will most likely be able to refer to you to a competent local financial adviser who will be able to help you secure whatever money you wish to gift to your children.

You are skating on the edge of many topics here - long range planning for you and your husband as well as future health care needs you might have, tax issues, gifting monies to children in ways that will not disqualify them from future government benefits if they need them. I really think you need to pay a couple thousand of dollars to do this correctly.

 

[PatsMom]

A financial planner should be able to help you out quite a bit. Try to find a fee planner if you can. Some charge an hourly rate rather than a flat fee. If you limit the advice to areas that you most need help with, that would keep your costs down.

IMHO a 4% front end sales load for a bond mutual fund is outrageous but not uncommon. The sad part is that you can call or go on line to any discount brokerage (Schwab, Fidelity, Vanguard for example), open an account, and choose a decent bond fund just using the tools available on their web site. Vanguard in particular has a reputation for good bond funds.

 

[disneymarie]

Thank you Thank you Thank you so much.
When you are still in shock mode, and thrilled in such a bitter sweet way.

We do have a Vanguard. I should talk to them great idea. Right now it is parked in a money market. I will make an appointment for the Estate planner.
I don't need anything (dh and I), we will be okay. I needed to hear that about the trust so the homes could be maintained and not affect benefits. I am hoping that with time and counseling things improve for the kids.
It has been a long legal and emotional strain on top of the loss.

I was riding in the car today and with a case to work on and dh had to pull over for me as I just break down in loss and heart ache.
my Dis friends are wonderful.
di