Ladies!! Please, please,please talk with your spouses.

[ZachnElli]

My dh brings it up every few months or so. We both have term life insurance policies and he has more through work. We are even updating our will/trust on Friday and he is making me go! I hate going! Our third child is not specifically named in our current will, so that will change, but we do have that clause or whatever it's called, that says anymore children born or adopted into the marriage. But still, he wants it updated.

 

[JoiseyMom]

Excellent post. We are covered for DH, and we have wills and living wills. I am the one lacking in life insurance though... just not sure what to get etc...

 

[Handbag Lady]

Wrong. Whole can be cashed out, but if you had put that money into another investment, it would be worth A LOT more. With term, it's pretty inexpensive, you only get the money if you die, but the payout is MUCH larger than what you would've gotten if you had spent the same amount on whole. DH is a CFP, and says that for most people, term is much better, and even if you have whole (my parents got it on me - I cashed it out years ago), you still need term.

Thank you. Is term for just a set period of time or once you have term, you just hold it with no cash-outs?

 

[cats mom]

what is the difference between term and whole life insurance?

Term life policies offer death benefits only, so if you live past the length of the policy, you get no money back.

Whole life policies offer death benefits and "cash value" so it's possible to get some of the money spent on premiums back; either by borrowing against the policy, or by cashing it in.

For comparable coverage whole life premiums are more than term premiums because a portion of the money is invested for you. I had a finance professor who always said if we only remembered one thing from his class, he wanted it to be: buy term, invest the difference on your own.

Very important subject OP!

 

[golfgal]

Sicne a few of you here seem to know insurance, what is the difference between term and whole life insurance?

I have one small one as whole, and it is time to look at changing our term insurance.

I always was told that whole was better but term was cheaper...

Whole life insurance has a cash value component to it, term life doesn't. The best way to think of them is that term insurance is like renting, you pay into it and have nothing when it is done where as whole life is like having a mortgage, eventually you will own the policy and have equity all along. In the long run whole life is always less expensive then term but term is less expensive up front.

We own both whole and term and right now I wish we would have bought a LOT more whole life. Our rate of return on our whole life cash value is around 9%--which is better then the long term returns on any stock investments.

1,000,000 of life insurance will get you about $50,000 of income for about 20 years.

For those relying on work life insurance policies, any policy over $50,000 is TAXED when you get the benefit so if you are planning on getting $500,000 you will really only get about 1/2 of that once state and federal taxes are taken out. Just something to think about.

 

[HelenePA]

I read thru quickly so forgive me if I repeat but please make sure your policies are up to date with beneficiaries. I begged my grandmother for a few years to change her as she still had my mom listed on hers, which would have been fine if my mom was still alive! Well she never got around to changing it and when she died I was next of kin.. I had to go to the courts to be named beneficiary on her policy since my mom wasn't around any more.

 

[mhsjax]

Hopefully - you have a policy as well. As a SAHM - your value to the household is priceless...

Thanks , and yes I do.

 

[bumbershoot]

And if your spouse won't talk about it, consider it a red flag.



We got to help MIL after FIL died..it was awful. No one thought their marriage was good; she stayed in the early days b/c her only way out was to go back to Korea, and she convinced her that she would never see the kids again. She stayed later b/c she would be too ashamed to go back to Korea. She stayed once they were retirement age b/c he'd promised her for YEARS that once he retired, they would travel and have a nice time....

After his final retirement (at 78), he was dead within a year. Turns out she did always know he had no life insurance, but the kids didn't know this, thought he had provided for her! They kept insurance on her, because of her two heart attacks, and strangely controlled diabetes, and they figured she'd die first (despite being 10 years younger).

So, no life insurance. She went to cash out her own whole life insurance. The value was around $200. Because he had forged her name (and their oldest son's partner-at-the-time signed as a witness) and took a loan for almost the entire value. She could have paid back the loan along with the premium, but she didn't do that, and no one needs insurance from her anymore.

Then she found out he hadn't filed taxes in 6 years. This was accomplished b/c the year before he stopped, he used TurboTax. As DH and I well know (b/c we e-file with them or taxact), they only require the signature to be sent in the FIRST time. Rest of the time it's all PINs and whatnot, and of course the person doing the taxes sets those things up...if you're a sneaky person, as FIL was, you can do all of that and not tell the spouse.

Because their relationship was a man-first, woman-be-quiet, sort of relationship, she could not ask to see the tax forms, and he would never have offered.

Worse, in those years, he had worked as an independent contractor, and didn't have taxes withheld at all. He also took his union pension, and told them that taxes were being paid from his job. So nothing was being taken out tax-wise.

She does get the widow's SS check, and his union pension, so she's not destitute. But she is paying back a total of 50K in back taxes, penalties, fees, and interest on it all.... And will be for the rest of her life. Sigh.


So if you're relationship is the type where you're not allowed to ask questions...get out now, IMO!

 

[kilee]

I feel for your friend. I do have to wonder though, why only a shout out to ladies?? Ironically I carry the life insurance for both the whole family through my work and I am the primary wage earner and w/ dh's profession the only wage earner. In our case, I'd be more worried for him if something happened to me.

 

[Muushka]

Eliza, kindred spirit that you are

My college bud of 37 years is in the process of losing her husband of 35 years. I don't know if you remember me visiting MA/NH in Jan, well that was the family I stayed with. I am so sad.

I believe she is all set because she is a planner, but your message is a good one.

 

[SpecialK]

I feel for your friend. I do have to wonder though, why only a shout out to ladies?? Ironically I carry the life insurance for both the whole family through my work and I am the primary wage earner and w/ dh's profession the only wage earner. In our case, I'd be more worried for him if something happened to me.

That is true. I know a man who lost his wife and was completely helpless. He was only in his early 40s, but he didn't know anything about their finances or even how to write a check. It just added to the tragic circumstances of his wife's death.

 

[Forevryoung]

Even as a pre-teen (age 10-11) I was well aware what would happen if my parents both died (who I would live with, who would take care of money, what would happen to our house...). It wasn't a conversation we had frequently but it was one that was brought up to reassure and remind.

Now that both my sister and I are adults, we still have the "what if" conversations once in awhile- where the papers are, where the phone numbers are of the professionals who would help (my dad owns a business that could be sold so it gets complicated), and how money is set up in the trust.

My mom is the one who takes care of the family financials and it's very organized. However, I can't imagine NOT having the conversations we have had as a family throughout the years.

 

[wdwfan16]

I am so glad that I am not one of those wives who lets the husband hand all the finances. I know we have enough insurance on both of us because we checked without financial planned. If DH died today I would have the future that I would have if he did not pass. Not a happy thought but a necessary thought.

Wives need insurance as much as husbands. Leaving a husband with young children is just as much of a burdon as his leaving the wife with young children.

 

[CandyMandy]

Wrong.

Yes, you are, in implying all term is good and all whole life is bad.

It's not that simple. Term can make sense when people are (a) diligent about forecasting their liability (higher when in prime earning years and when children are in college, lower as they approach some for of "retirement" and (b) diligent about makiing long term investments with the difference in the term vs. whole life premiums.

However, most people who buy term are not diligent about either. They simply buy term because it is initially "cheaper" -- which it is until you start getting older. By the time people are in their early 40s, those who purchased whole life in their mid 20s will often have built up enough cash value to make their policies self funding, while those who purchased a similar face value of term back in their mid 20s will end up eventually forking over more in premiums than the whole life buyers did. And most term people never seem to get around to "investing" the difference in premiums (which evaporates by the time you are in your late 40s).

Bottom line: whole life = owning. Term = renting.

AND EQUITY IS GOOD.

 

[barkley]

having recently gone through a nightmare trying to track down life insurance for a deceased family member i'll offer some STRONG suggestions-

if you have it, have the name of the company, their phone number and the policy number ACCESSABLE where whomever needs to deal with it knows where it is and can get to it (if it's locked in your safety deposit box with only your name on that box it can be a minimum of 40 days before that box will be opened),

KNOW WHAT KIND OF POLICY/POLICIES YOU HAVE-there's MAJOR differences between funeral or "burial" insurance and life insurance. with some funeral/burial insurance it has to be applied for PRIOR to making arrangements with the mortuary (or the policy does not pay), so if the policy information is not accessable or the person who will take care of your final arrangements does'nt know about it you've paid all those years for nothing,

leave information with your policy information on who the current beneficiaries are, and what the last address you provided to the company for them was. this was a HORRENDOUS issue for us. no policies to refer to, just a rough idea of what companies-and even the executor of an estate can't get information. it came down to guessing who was named and telling each person to submit a claim, then putting in change of addressess for addresses dating back 15 years when we presumed the paperwork was most recently updated,

EDUCATE yourself on what life insurance is. far too many people think it can go initialy to cover your "final" expenses and bills, then go on to the needs of the beneficiaries. NO-NO-NO. life insurance proceeds go directly to the beneficiary and are not a part of your estate. if the beneficiary CHOOSES to put this money towards your burial (cremation) costs/existing bills, that's their choice-if not they are under no obligation to do so. so what can happen, is if a person has planned their estate such that they want say $50,000 to go to one of each of their adult children so they set it up that #1 and #2 will both inherit 1/2 of their $100,000 savings account (inherit, not through pod or co-ownership), while #3 is listed as beneficiary on the $125,000 life insurance policy (which they figure has the extra $25,000 to cover the final expenses/few bills/misc expenses)-unless #3 VOLUNTARILY CHOOSES to pay those expenses, #1 and #2 will have all the estate's expenses (burial, any bills, any claims, cost of administering the estate....) come off the top of that savings account while #3 walks away with their entire $125,000,

last but not least-do not underestimate the cost of even a non funeral death.

even "simple" cremation can be VERY expensive and costs vary GREATLY from place to place. we've lost 2 family members in less than 90 days. with one the costs of JUST cremation, a simple urn, and transport of the body from the hospital was over $2000. the burial plot (12"x12" square) was pre-purchased about 7 years ago, and back then it was over $4000. a small (12"x12") grave marker-close to $700. the other family member's cost for cremation, body transportation and an even more simple urn-for the region he lived in-was over $3000.

price quotes for the second family member, had he not been cremated (no embalming, least expensive wood casket, no viewing/no service)-at minimum $10,000 BEFORE the cost of a plot or grave marker


know what you have, know what those you will leave behind will need, make sure those persons know where to find the paperwork they will need.

 

[livie1205]

When blended families are involved, estate planning can be a bit trickier. If you don't want your ex to control money left to the children, then it is really simple to set up a revocable living trust. You should never name young children directly because of the control they get at 18. Also, if a trust is set up in your will then it is always subject to probate court supervision which is a pain in the butt and can be expensive as well.

THAT is why my dh and I get everything and in the event something happens to both of us the kids get everything,with someone else controling it until they are 18.We had alot to change when we got married.

 

[eliza61]

I feel for your friend. I do have to wonder though, why only a shout out to ladies?? Ironically I carry the life insurance for both the whole family through my work and I am the primary wage earner and w/ dh's profession the only wage earner. In our case, I'd be more worried for him if something happened to me.

Absolutely!!
I think the shout out went to the gals because I posted immediately after getting off the phone with my pal. She was a wreck and the entire time she kept repeating over and over, how she never thought she'd end up this way.

She's an Executive Administrative Assistant here at my company so she does have a salary but evidently what outside insurance was just enough to cover the funeral. And folks my dad just passed away and funeral cost were over 11K and he already owned his burial plot, so if you get nothing else please make sure your loved ones don't have this burden.

 

[mjkacmom]

Yes, you are, in implying all term is good and all whole life is bad.

It's not that simple. Term can make sense when people are (a) diligent about forecasting their liability (higher when in prime earning years and when children are in college, lower as they approach some for of "retirement" and (b) diligent about makiing long term investments with the difference in the term vs. whole life premiums.

However, most people who buy term are not diligent about either. They simply buy term because it is initially "cheaper" -- which it is until you start getting older. By the time people are in their early 40s, those who purchased whole life in their mid 20s will often have built up enough cash value to make their policies self funding, while those who purchased a similar face value of term back in their mid 20s will end up eventually forking over more in premiums than the whole life buyers did. And most term people never seem to get around to "investing" the difference in premiums (which evaporates by the time you are in your late 40s).

Bottom line: whole life = owning. Term = renting.

AND EQUITY IS GOOD.

What I am saying is SMART people invest the difference into profitable ways of savings, and IGNORANT people use whole life insurance policies as a poor choice of a way of saving for the future. DH's job for the past 20 years has been to advise clients as to how to save for retirement (CFA, CHFP, MBA), plus he teaches a class PT at Rutgers on the subject. A good friend of his sells life insurance. We have term. In our mid-twenties, we didn't have insurance. We didn't own a home, and we didn't have children.

 

[mjkacmom]

1,000,000 of life insurance will get you about $50,000 of income for about 20 years.
.

Sure, if you stick it under the mattress. However, most would invest the money, and it will come out to way more than that.

 

[FlightlessDuck]

When I first read the title and scanned the part of the description I could read from the thread list, I thought this was a "make sure to value all the time you have with your SO" type thread.