Life insurance sad story

[Ashlotte]

My MIL was widowed at the age of 28 when her kids were just 7 and 5 years old (my dh). Her husband (aged 33) was killed in a car accident by a drunk driver in the middle of the day. It could happen to anyone. She had married at 19 without any college or work experience, and went right into being a SAHM, married to a pharmacist. It was a nice life until he died and left her with no life insurance or means of supporting herself. She went through the savings, had to sell the house, ended up living with other people, and eventually went bankrupt. Losing your spouse it bad enough, especially when you have small kids to raise. But having the financial burden on top of that is really too much to bear. I have wondered what my husband's life would have been like if his dad had lived, but I also wonder what it would have been like if they had just purchased life insurance. So much additional hardship could have been avoided for them.

 

[Jeff_G]

Could someone please explain the difference between term insurance and whole life? Which is cheaper? Can I get a policy on my husband without him knowing it?

Term life insurance is an insurance policy that has the same price per month for a certain duration ie the term, you can get 5 10 20 or 30 year terms. As long as you pay the premium you have insurance, much like home or auto insurance. If you die they will pay out the face value of the policy. At the end of the term you can renew usually at a higher price or drop it all together.

Whole life Universal life and other policies are an insurance policy that also has an investment component built in. They run a LOT more per month and they do not expire as long as you pay the premium. To get the investment out of the policy you barrow against your own month. If you die they pay the face value and retain your investment.

Most financial experts suggest buying term insurance then do your own investing. If you follow this rule you will come out ahead. True your insurance will expire after 20 or 30 years but investing the different for 20 or 30 years and you become self insured ie you have enough money in the bank to pay your bills and funeral costs.

You also need to consider what you insuring against, mostly an income depending on by others. You should have 10 times your annual pay in insurance, that way you family can invest the insurance money and live off of the interest to replace your income.

 

[tellemarie]

What term are these policies for? Some of these costs seem awfully low for million dollar policies, unless the term is very short. Also, do the costs increase as you age? Some policies have the cost locked in for the entire term of the policy, and I would suspect the premium for that type of policy would be greater than one where the premium increases as you age. (Or maybe I have no idea what I am talking about... LOL!)

Most term policies are only for a certain amount of time, and of course if you're younger when you get it and you get a shorter term then you'll be paying a lower premium. For any term (at least with a reputable company) your premium will be locked in for that amount of time (for example you might pay $15/month for a 5 year term but after those five years, your rate will go up for another five years and so on). Term is definitely good if you need a little extra coverage for a certain amount of time, IE to cover a mortgage, 20 years for your children to grow, etc.

Could someone please explain the difference between term insurance and whole life? Which is cheaper? Can I a policy on my husband without him knowing it?

Term is generally going to cost less, but you'll see the premium increase after each term period (that's explained above). The major difference between term and permanent (which is whole life and universal life) is that one if temporary and the other will stay "forever". Another good thing about whole and universal is that they have what are called "living benefits". For example with a Universal Life policy, if you have cash value in the policy you can stop paying the premium and it will still be in-effect as long as there is cash in there to fund it. I work for State Farm in NC (selling Life & other products haha) and my boss said she hadn't paid into her UL for 3 years and it was still funded.

As far as I know you're not really able to place life on someone without their knowledge, especially since the person to be covered may need to undergo an exam to determine eligibility and premium.

 

[lucigo]

I have a question for the life ins. professionals - my DH is uninsurable outside of the max he can get through work. So what happens if he becomes disabled before he dies, or retires before he dies, will he lose it?

 

[dizkids]

What is a good reputable company to buy it from?

I would be interested to hear any ideas on this too.

 

[tinatark]

I've seen a couple of posts about people killed in car accidents with no insurance - car insurance usually has a death clause - and it typically covers funeral expenses first.

We have a couple of policies through Western and Southern Life, the mortgage through ING, and my kids' policies are with Woodmen of the World. Most major insurers (call your car or homeowner's companies) offer life insurance as well. Many times, you qualify for a multi line discount.

 

[ameraumi]

I have a question for the life ins. professionals - my DH is uninsurable outside of the max he can get through work. So what happens if he becomes disabled before he dies, or retires before he dies, will he lose it?

This is what happened to my late-DH. He was diagnosed with pancreatic cancer when he was 46. He immediately went on STD the day of diagnosis and since he was paid from the company they still took out his small premium. Even when STD ran out and he went on LTD the company still took out the premium. I read up on the policy and there was an option for him to pay the company directly for his premium. The same went if he would have retired. So the best thing to do is ask your HR rep for the full policy terms and see if those terms are in there. I am so thankful I read up on that because we were able to keep the policy active and I had that to fall on when he passed away.

Like the others have said, YOU NEED LI!!!! No matter if you can only afford the policy thru your employer, get it. Then as you have the extra money get a policy with a good company. Also make sure you sign up for STD/LTD with your employer. If we hadn't, I cannot imagine the position we would have been in.

Also make sure you stay up to date on any pension plans you and your SO have. Keep them updated on changes because that will become additional income.

 

[GetGlowing]

Whole Life insurance is an expensive product that is usually sold (at high commission, btw) as insurance + savings vehicle. But it's a bad savings account. Get term insurance, and do your saving and investing outside of the insurance.

There are aggregator sites on the internet that will give you quick life insurance quotes from many companies at once.

 

[pixiewings71]

I have a life ins. policy, it's for $350,000, I pay $28 a month for it....I won't cancel it.....no way, it's too important to have life ins. I don't feel it's a "luxury" at all, I feel it's absolutely necessary to have life ins.

 

[ChisJo]

I have whole life insurance for $250,000, and have had it since I was 28. It also has an investment plan attached to it to help it grow faster. I pay $80/month (the insurance itself is only $60). I decided on whole life because I didn't want to lose it when I was 65, and then get dinged with a whole new insurance policy that I couldn't afford as a senior.

I think life insurance is incredibly important. My best friend lost her husband suddenly, and she was only working minimal part time. His insurance was enough that she was able to pay the house mortgage, and put away for the kids college education. She was able to keep part time work, just picking up some extra hours every week. The insurance was paid within a week of his death. He also had insurance through his work that ended up paying $10,000 for the funeral. I don't know what she would've done without that insurance.

I know people who are completely against life insurance and it saddens me. I feel like I am securing my husband should I die suddenly (how many people do you know that I have died in car accidents??, or get an unexpected disease (cancer is on the rise!). I love my husband very much and if I can ease the burden of my death in any way, paying a measly $80/month is completely worth it.

 

[snarlingcoyote]

A dear relation's husband died in his sleep at 50. Unbeknownst to the dear relation, her husband had overinsured himself. She is quite comfortable today and still talks about how much her husband cared for her to have done this.

DH and I, due to this, are also v. well insured; if either of us goes unexpectedly, we don't want the survivor to have to work for a while, but to be able to grieve and have some financial backing.

 

[PA DISNEYLOVER]

My husband was killed in a freak accident at work when I was 32. We had 3 children. Thankfully he had life insurance. What I do want to add and I can not stress this enough...PLEASE PLEASE PLEASE have a will. It made my life so much easier when it came to closing out his estate and dealing with the banking and accounts that were in his name only.

 

[tellemarie]

I've seen a couple of posts about people killed in car accidents with no insurance - car insurance usually has a death clause - and it typically covers funeral expenses first.

Not all insurance policies have this. Most companies don't sell this - it's actually a special endorsement, often called Death & Indemnity, and it only applies if you die at the SCENE of an accident. Even if you die on the way or shortly after you reach the hospital will it apply. It also only provides you with $10,000 in coverage, and that's only at my company, I don't know about others.

 

[tellemarie]

I have a question for the life ins. professionals - my DH is uninsurable outside of the max he can get through work. So what happens if he becomes disabled before he dies, or retires before he dies, will he lose it?

Generally there is a small amount of life he can take with him from work when he leaves, although this will be at a cost and it's not normally the exact amount that he would have now. I would seriously consider starting a savings vehicle like a Roth or Traditional IRA if he's uninsurable.

 

[tellemarie]

I would be interested to hear any ideas on this too.

Any company that has been around for a LONG time would be best. You can look up companies on TheStreet . com and each place is given ratings by CONSUMERS, not stock holders.

 

[KELLY]

Is ad&d the same as term? We have a policy but I should check and see I know it is for 200,000.00. I'm not sure I'm thinking it is ad&d and that isn't the same as term life?

 

[tellemarie]

Is ad&d the same as term? We have a policy but I should check and see I know it is for 200,000.00. I'm not sure I'm thinking it is ad&d and that isn't the same as term life?

AD&D is Accidental Death & Dismemberment which is definitely not the same thing as Term insurance. It's a weird sort of policy that isn't often sold, but there is a more in depth explanation here: http://en.wikipedia.org/wiki/Accidental_death_and_dismemberment_insurance

 

[TammyAlphabet]

Another widow here, my DH died at 41. Thankfully we had some insurance although a little more would have been nice. Please take care of this for your family.

 

[DisneyFansInLINY]

My husband is a financial advisor for Metlife. He meets with clients every day trying to avoid sad stories such as this one. However, most people think that they have alot of time before they die and put off life insurance. People have to come to grips with their mortality and accept death as a part of life. You should get life insurance when you are young and healthy as once you become diagonsed with certain ailments and illnesses, you become uninsurable. My husband has to deal with it every day trying to explain that a the loss of a loved one is very sad, but think how tragic it is when that family becomes financially burdened by their loved one's death. It's terrible but true that the bills will still have to get paid, funeral costs are very high, and without life insurance, there will be no income after death. Noone wants to place a value on someone's life, but it is reassuring to know that after you are gone, you can still take care of your loved ones.

 

[RadioFanatic]

I pay $236 annually for $500,000.00 policy. My dh has his through work.

Our wake up call came when my dh's bf's brother died at 38 in a freak electrocution accident. Not only did he not have life insurance, he was also not married to his gf of 12 years although they already had one child and she was pregnant with another. She was not named on the house, car, etc. bc she had lousy credit. Things have been a mess for her since.

Although we had none of those issues, it just reminded us that we need to make sure everything is all set, especially with having a child.