Life insurance help...please

[denisenh]

We are insured by State Farm currently. Our 10 year term is ending. I just got the new premium amount in the mail and it is nearly double the old one. I expected an increase of course.
We were told, when we purchased the term insurance, that eventually our premiums would be nearly covered by the dividends it pays out, so by the time we are old, State Farm would actually owe us money every month. Well, 10 years ago we fell for it, hook, line and sinker. I am not happy now.
I am wondering where you have your life insurance through and need some ideas on where to apply.
We only need a 10 or 15 year term, just until our kids are self sufficient. How do I know if it is a good and honest company?
Thanks for any ideas.

 

[Obi-Wan Pinobi]

I wouldn't be happy, either, because it sounds like someone lied to you about the dividends. IIRC, term life insurance doesn't accrue value and mature to pay dividends the way a whole life insurance policy does.

This is actually something I need to do. I have a life insurance policy through work, but I need something independent of that.

 

[Pop Daddy]

If you buy life insuance you will die

 

[kpgclark]

It depends on why you want the life insurance. If you are getting it because you want to be sure your family is taken care financially of in the event of your death then go for the term policy. Premiums will be lower. Get the longest term you can. Short terms are a waste because you are really protecting yourself against a disease like a terminal cancer. You want to be sure your policy lives longer than you do because you won't be able to renew a policy once you get the cancer. Get the policy while you are healthy and get a lot of estimates. You can go through a person who is a broker for several agencies to get an idea as to how much they cost.

Now if you are getting the policy for a payout at the end so you can pay for college or whatever for your kids, use a different route such as the stock market.

 

[Kristi1357]

I listen to the talk radio financial people on the weekends alot and they always recommend SBLI. Maybe try them - I keep meaning to! Although DH is a cancer survivor and I don't think we'll be able to get anything now, unfortunately. We have a very small whole life policy and that just might have to do.

 

[denisenh]

Originally posted by Pop Daddy
If you buy life insuance you will die

That's true, LOL...and if I don't buy it I will die.
I would rather not think about it at all, but I have to.

Thanks for the help. We do have dividends though. I had to report them on my Federal taxes this year. State Farm went from #1 story: the dividends will pay part of your premiums and eventually we will owe YOU money, to # 2 Story: we can't do that, we will send you a check yearly, to # 3 story: we can't do that, we will pay the dividends with your insurance to your beneficiaries when you die.
It is clear why I want out of State Farm.
Our house and cars are insured with them too, unfortunately.
I did want term because it is less expensive and we only need to have the insurance while our kids are dependent on us. It will help the surviving spouse or guardian with making sure that our kids have food, shelter, healthcare, etc., and sitters/nanny if needed.
I don't plan to need it of course but there are no guarantees.

 

[Toby'sFriend]

we just recently bought additional insurance. I sent you a PM with a link to the Broker I found with the cheapest rates for us. We went with a 20 year level Term policy. By then our house will be paid off and the kids grown.

Alot depends on your particular health circumstances though, it does pay to shop around.

 

[Dan Murphy]

Originally posted by denisenh
...We do have dividends though. I had to report them on my Federal taxes this year...

Dividends, from life insurance, are generally not taxable. Interest however, if any, on the dividends, is taxable.

 

[denisenh]

Originally posted by Dan Murphy
Dividends, from life insurance, are generally not taxable. Interest however, if any, on the dividends, is taxable.

Yes, you are right Dan. I just went to check and it is form
1099-INT for interest on dividends.

Thanks Toby'sfriend! What excellent rates! How do you spell relief.

 

[denisenh]

I kept meaning to respond to you, Kristi1357. That's good news about your DH surviving cancer!
I think that after so many years, and I don't think it is too many (5 or 6?), he would be eligible for a non cancer rate. At least that's how it went for a friend of mine.

 

[floridafam]

I'm confused. I didn't think term policies paid dividends. It sounds like what State Farm was talking about in the beginning was a whole policy.

Anyway, we have a whole policy. We pay around $100 a month. We purchased because there were 2 deaths in my family at a fairly young age. I wanted my DH to be financially secure should something happen to me and same with me if something happened to him.

We pay a lot per month but the policy already has some cash value and that will only grow as we get older.

Our policy is through Farm Bureau. We have used them for auto, home and life insurance for years.

Good luck with your decision.

 

[denisenh]

Originally posted by floridafam
I'm confused. I didn't think term policies paid dividends. It sounds like what State Farm was talking about in the beginning was a whole policy.

I don't know much about insurance, obviously, but I did take our policies out of their dusty box and we have "Ten year convertible and renewable term life insurance" And it has a section on "Dividend provisions". It also says "we will credit interest (on accumulated dividends) at a rate not less than
3 1/2 % a year."
And like I said, I had to report the interest on my fed. taxes.

 

[floridafam]

How long do you have to decide if you are going to continue coverage?

 

[Toby'sFriend]

Well the good news is - if you are receiving dividends then you most likely have a Cash Value built up on the policy. Don't cancel until you get new insurance in place though. At that point, you can get the Cash Value that you have built up and invest it in something that will pay you a little more than 3 1/2 percent.


Convertible Term policies can be switched to Whole Life without having to provide additional proof of insurability. From the way it sounds, I suspect your agent "converted" you from the beginning and you perhaps really didn't understand what you were buying.

 

[Kermit]

If you were insured for the correct amount when you got your policy 10 years ago, the good news is that you'll need less insurance now. If you're buying term life insurance (which you should be, you can do a whole let better investing money yourself than by buying a whole life policy), then you should just be getting enough to replace your income for the rest of your working life, at most. If you're 45 and planning on working until you're 65, then you don't need any more than what you would earn in the next 20 years. Actually, you could get by with less because you'll get the whole lump sum at once and be able to invest it, so the money will earn some of the extra money for you. Therefore, if you got enough insurance 10 years ago, you need less now since you have less income potential for the rest of your life now. Getting less insurance will obviously help your premiums.

It's okay to get a policy only as long as you expect your kids to be dependent on you provided that your spouse is okay with earning a living without any extra income if something happens to you. Longer policies do cost more, but like Kristi135 mentioned, if you get sick in the future, you'll basically do away with your ability to get any insurance at all.

There are a few companies online that allow you to enter in how much you want, the length of the term, and basic health information, and they'll show you the rates of the companies they sell. We just got a policy from Zander Insurance that way.

 

[denisenh]

Well, our insurance expires May 17th. I did quick a quick quote on DH and got awesome rates. I also called a local broker and his rate is still good. Mine is sky high to match my weight (more that ideal) and BP (getting higher by the minute) .
ugh. I don't know what I am going to do yet.

Thank you all for your help!

 

[clh2]

My DH and I just went through the life insurance process. His was painless, mine was a PITA, since I had a huge problem with the nurse they sent out to do my exam. But, everything in the end turned out fine.

We went through an internet company for both. We also went for 20 year level term for each of us. Long enough for DD to get through college. We could have done 15's but opted to go for 20.

I will be dumping my whole life policy, which is hardly any insurance at all. The premium on that was more than the cost of 15 times more life insurance. And, we'll be getting our cash value back soon!