Life Insurance question

[Shagley]

I need some help with deciding what to do with my life insurance. I am currently paying $42 a month for a "permanent" $50,000 life insurance policy. I really need to cut that expense down as much as possible. I will be turning 40 in June and I am single with no dependants. I don't drink or smoke and I have never had cancer or any other illnesses or disabilities (however I am a bit overweight). I do have sleep apnea, so I am not sure if that will prevent me from getting another life insurance policy if I cancel this one. I live with my sister, and we co-own a house together and we owe about $25,000 on the mortgage (total, not each). I am not sure what I should be looking for in a life insurance policy - I guess just enough to pay off my bills and pay for my funeral should something happen to me. I don't have to worry about leaving enough to care for anyone since I don't have any dependants. What is the cheapest, yet bet life insurance option for me?

TIA

 

[ceecee]

By permanent, do you mean "whole" life or is it term? If it's whole when is it paid for?

 

[NancyIL]

I had annual renewable term insurance years ago. Just before turning 40, I bought a 20-year level premium term policy. I pay $246/year for a $100,000 policy. You might check a site like Select Quote (www.selectquote.com) to get an idea of life insurance prices.

 

[SleepyatDVC]

I had a VAL policy. I just got a 30 year term policy and canceled and cashed in the VAL policy. The cash value of the VAL will basically pay for the term policies for myself for the next 30 years and then some. We will also get a new term policy for DH.

I'm putting the cash value in a separate bank account just to pay for these 2 policies. Hopefully, with the interest earned there will be money left even after the 30 years are up.

So, we will have life insurance coverage for at least 30 more years without having to put any MORE money in. I have put in $$$$$ already.

 

[Shagley]

By permanent, do you mean "whole" life or is it term? If it's whole when is it paid for?

Sorry, I mean whole life. I have had this policy about 18 months, and if I cancel it now, I won't have any cash value that I would get back.

 

[CarlisleMom]

Just before turning 40, I "purchased" a 10 or 20 yr term policy for $250,000. My dependent are DH, DD7, and a mortgage. I only pay about $350 a year. No cash buildup, but at the end of 20 years, I will not need as much coverage....figure just enough for final expenses.

I got advice from a CPA and a financial manager before deciding what to get.

 

[tinatark]

Can your sister pay the mortgage without you? If she can, you should look into prepaying (at a funeral home) your final expenses, and don't carry life insurance - you don't have any dependents to take care of, or final debt to pay so that seems the way to go.

 

[BridgetBordeaux]

If you do a little research you will find that most of the planners and magazines recommend getting term life. It represents a good value. Whole life policies are often misrepresented as being a good investment.

You could either get loads of coverage for you present monthly premium or get 50K coverage for a fraction of your current cost.

You ALWAYS purchase the new policy BEFORE cancelling any policies you presently own.

Good luck, it's good that you that you are open to saving a few bucks.

 

[silmarg]

Can your sister pay the mortgage without you? If she can, you should look into prepaying (at a funeral home) your final expenses, and don't carry life insurance - you don't have any dependents to take care of, or final debt to pay so that seems the way to go.

I agree, if you have no dependents, then why bother with life insurance?

 

[Chicago526]

I have a term $50,000 for $8.50 a month, so if you're looking for the same level of coverage, you can do a heck of a lot better than $42. I got mine in my 20's, I didn't want my parents to be out money for funeral expenses should something happen. Since I got married, DH and I both have a seperate $250k policy, we got them to have them in place so we would have one less thing to put into place once we had kids, and anyway I wanted to make sure DH could get it as he has health issues, for him, sooner was better.

If your sister would really be in a bind with the house payment and funeral expenses, then a small policy isn't a bad idea, especially if you can find a really cheap on. $8.50 a month is two trip to Starbucks, hardly a budget buster! And if it turns out she didn't really need the money, then she can have a heck of a party in your honor!

 

[aanderson5]

That seems an awful lot. We pay $105/month for a 20 year term but DH is insured for $1M and I am insured for $500K. I was 35 and DS was 38, both in good health/non smokers, when we got the policy.

 

[AnnaS]

Whole life is more money than term and does not end after so many years.

The price sounds right/good. I was recently quoted $50 a month (late 40s) with Metropolitan (same as yours $50,000).

My dh has a 20 year term (has had it for about 7 years and a smaller whole life - has had it for about 20 years. You really never know if and when you will need it. Please don't cancel unless you purchase a new one. The older you are, the more money you will pay, the one you have will never increase.

My dh recently became disabled and we don't have to pay his premiums anymore (Prudential) - it was in his contracts. We tried to purchase additional Life Insurance since he became disabled (that's how I ended up with a quote - I was not shopping for one) and he is not insurable (is that a word). We were told maybe in five years with no incidences and then he would pray through the nose.

 

[Skatermom23]

Whole life is more money than term and does not end after so many years.

The price sounds right/good. I was recently quoted $50 a month (late 40s) with Metropolitan (same as yours $50,000).

My dh has a 20 year term (has had it for about 7 years and a smaller whole life - has had it for about 20 years. You really never know if and when you will need it. Please don't cancel unless you purchase a new one. The older you are, the more money you will pay, the one you have will never increase.

My dh recently became disabled and we don't have to pay his premiums anymore (Prudential) - it was in his contracts. We tried to purchase additional Life Insurance since he became disabled (that's how I ended up with a quote - I was not shopping for one) and he is not insurable (is that a word). We were told maybe in five years with no incidences and then he would pray through the nose.

I have a whole life policy for $90K with a rider for DH (so basically we are both covered for the same amount) and pay $54 a month for it. I keep it for the security of always having a little something. In the mean time it does have a cash value if I decide not to renew it. If money is an object for you then I would get a term policy for just the amount of your funeral expenses plus your share of the house you own.

 

[silmarg]

IMHO Whole Life is a product most should not be buying. Whole life is pushed hard by agents as it has excellent commissions.

Its basically life insurance with a savings vehicle wrapped around it.

Most would do far better with a term policy and save the money themselves.

If I told you I would sell you car insurance for twice the price, and save some portion of the premium (after paying me a hefty commission) would you do it? Its sort of what whole life is in my eyes.

When I got my term policy I cant tell you how many agents tried to talk me out of it and into a whole life policy.

I think whole life is appropriate with parents of special needs children who would be financially dependent on their parents even when the child is an adult. My reasoning is that a term policy will expire at some point (lets say 20 years) and by then a replacement term policy would be prohibitively expensive.

 

[chemysterygal]

DH and I got a 20 year level term policy in our late 30's for 250K and the cost is between $15 and $20 a month for each policy.

The agent we worked with for our other insurance gave us the hard sell on whole life back then, but I looked at it and thought we'd be better off just investing the difference and taking out the term policy. As long as we're disciplined enough to bank the difference between a term and whole life policy cost each month, we come out way ahead.

I think one important thing to check when you are doing any kind of insurance is to check the rating of the company you are considering going with, BTW.

 

[Shagley]

Thanks everyone for the great advice. I checked with my employer and found out that I have life insurance that is free through them that is equal to one time my yearly salary. Since that would be plenty to pay off my half of the mortgage, pay off all my other bills and have enough for funeral expenses, I am thinking I will just cancel the whole life policy and I won't bother getting a term life policy.

Thanks again for all the advice!

 

[NancyIL]

Thanks everyone for the great advice. I checked with my employer and found out that I have life insurance that is free through them that is equal to one time my yearly salary. Since that would be plenty to pay off my half of the mortgage, pay off all my other bills and have enough for funeral expenses, I am thinking I will just cancel the whole life policy and I won't bother getting a term life policy.

Thanks again for all the advice!

That's great - as long as you stay with your current employer the rest of your life.