Author Topic: LIFE INSURANCE  (Read 112205 times)

Online ExGingi

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Re: LIFE INSURANCE
« Reply #240 on: April 30, 2021, 11:03:55 AM »
The primary need for insurance - and this is what we're talking about when we talk about everyone needing to be insured for their family's sake - is the confluence of the possibility of losing one's income earning potential and one's family's dependence on said earning potential. At age 50, there's a lot less income earning potential remaining than at 20 or 30, and many of the dependencies have lessened. If someone's income is not sufficient to support their family, that's a separate problem, one that LI can't fix (due to underwriting limiting how much you can get).

I don't know how old you are. My age isn't a big secret 'round here. I am talking from the perspective of a person who has lived through his 20s, 30s and 40s, and has experienced various financial ups and downs throughout the years. That's just talking about personal experience, to which I can add my observations of what I have seen around me with friends, family and clients.

When I was in my 20s or even early 30s I had no clue what my earnings potential would be. And now that I'm in my 50s I see various avenues where it can be higher over my future working years as opposed to what I could have conceived when I was in my 20s.

If I would have bought a 30-year term when I was in my early 20s (I don't believe they were available yet back then, I think 20 year term was the longest form of term insurance back then, I did buy a VUL policy then which served its purpose for quite a few years until I intentionally lapsed it) that coverage would be close to its end at a point where almost all my children aren't married off yet. And while it is true that I have accumulated other assets along the years (along with some debts), those aren't the equivalent of cash.
« Last Edit: April 30, 2021, 12:27:38 PM by ExGingi »
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Offline Dan

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Re: LIFE INSURANCE
« Reply #241 on: April 30, 2021, 11:04:35 AM »
Relying on a hope that someone will have adequate assets to provide for a family without a breadwinner is folly. The typical keren looks to raise close to a million dollars. What percentage have anything close to that saved at 55?
Who said rely only on hope? After 10 years you can add another 30 year term.
But even if you can't C"V, getting to your 50s should mean you have less people relying on you to put food on the table and for tuition bills and that you have more saved income.
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Re: LIFE INSURANCE
« Reply #242 on: April 30, 2021, 11:08:06 AM »
I think the answer is YES for exactly the reasons you gave (income increase, family grows, buy a house, move, etc.). Based on where the family is right now the 30 year term gives reasonable security for a reasonable price. When iy"h the family grows, income increases, etc. they will need more coverage and they should buy additional policies as appropriate. The original 30 year policy will do it's job for the original needs and any needs that come later would be covered by later policies.

In one word, laddering.

Your response is great in theory, but in practice, that isn't what often ends up happening. I won't go into my entire dissertation that I share with clients and potential clients about the possible outcomes with a long-term term policy purchased early on, but the bottom line is that in the real world there are many more factors and changes, as well as many unknowns (you of all people should know that!).

A huge drawback that I see with long-term term policies is that they "put people to sleep" in regards to the need to periodically review their insurance coverages.
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Re: LIFE INSURANCE
« Reply #243 on: April 30, 2021, 11:11:33 AM »
Who said rely only on hope? After 10 years you can add another 30 year term.
But even if you can't C"V, getting to your 50s should mean you have less people relying on you to put food on the table and for tuition bills and that you have more saved income.

Again you're using fuzzy terms. AFAIK you haven't reached that age yet (nor are you close to it). In my 50s I have more people relying on me to put food on the table, take care of tuition bills (that are higher than I had ever imagined) than I had in my 30s or early 40s.
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Offline skyguy918

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Re: LIFE INSURANCE
« Reply #244 on: April 30, 2021, 11:14:11 AM »
I don't know how old you are. My age isn't a big secret 'round here. I am talking from the perspective of a person who has lived through his 20s, 30s and 40s, and has experienced various financial ups and downs throughout the years. That's just talking about personal experience, to which I can add my observations of what I have seen around me with friends, family and clients.

When I was in my 20s or even early 30s I had no clue what my earnings potential would be. And now that I'm in my 50s I see various avenues where it can be higher over my future working years as opposed to what I could have conceived when I was in my 20s.

If I would have bought a 30-year term when I was in my early 20s (I don't believe they were available yet back then, I think 20 year term was the longest form of term insurance back then, I did buy a VUL policy then which served its purpose for quite a few years until I intentionally lapsed it) that coverage would close to its end at a point where almost all my children aren't married off yet. And while it is true that I have accumulated other assets along the years (along with some debts), those aren't the equivalent of cash.
Your response is great in theory, but in practice, that isn't what often ends up happening. I won't go into my entire dissertation that I share with clients and potential clients about the possible outcomes with a long-term term policy purchased early on, but the bottom line is that in the real world there are many more factors and changes, as well as many unknowns (you of all people should know that!).

A huge drawback that I see with long-term term policies is that they "put people to sleep" in regards to the need to periodically review their insurance coverages.
Anybody selling LI worth their salt will check in with their clients on a regular schedule - whether it's annually or less frequent - to help clients review their situation, both as it relates to changes on the dependents side and the income earning side. This is not to say 30 yr is always the right answer from the start, or that any specific arrangement is always the right answer. But to dismiss a longer term policy offhand for all situations, without regard to why it is or isn't right for a specific individual with specific circumstances is a red flag IMO.

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Re: LIFE INSURANCE
« Reply #245 on: April 30, 2021, 11:15:55 AM »
Again you're using fuzzy terms. AFAIK you haven't reached that age yet (nor are you close to it). In my 50s I have more people relying on me to put food on the table, take care of tuition bills (that are higher than I had ever imagined) than I had in my 30s or early 40s.
+1

I haven't reached there yet, but I have more than double the number of people relying on me now than when I was 30 in addition to them all now relying on me alone while when I was 30 it was more of a group effort.
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Re: LIFE INSURANCE
« Reply #246 on: April 30, 2021, 11:17:00 AM »
Anybody selling LI worth their salt will check in with their clients on a regular schedule - whether it's annually or less frequent - to help clients review their situation, both as it relates to changes on the dependents side and the income earning side. This is not to say 30 yr is always the right answer from the start, or that any specific arrangement is always the right answer. But to dismiss a longer term policy offhand for all situations, without regard to why it is or isn't right for a specific individual with specific circumstances is a red flag IMO.
@YitzyS would find this thread missing without this
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Offline Euclid

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Re: LIFE INSURANCE
« Reply #247 on: April 30, 2021, 11:17:49 AM »
when I was 30 it was more of a group effort.
ALOL

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Re: LIFE INSURANCE
« Reply #248 on: April 30, 2021, 11:19:48 AM »
ALOL
I am quite serious. At that point my wife was working and my parents helped (besides some help from everyone's favorite uncle)
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Online ExGingi

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Re: LIFE INSURANCE
« Reply #249 on: April 30, 2021, 11:20:24 AM »
But to dismiss a longer term policy offhand for all situations, without regard to why it is or isn't right for a specific individual with specific circumstances is a red flag IMO.

There are situations and places for everything. The theme on this thread was more about people making their own life insurance decisions (and "buying directly", Haven Life - which isn't convertible, etc.) as such I put forth my opinion that in most cases I don't think people in their early 20s should be getting 30 year term. That being said, I also don't think people should be doing this without talking to a professional. A professional will listen to people, and make appropriate recommendations while educating the clients, with the ultimate choice and decision in the client's hands.
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Offline Euclid

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Re: LIFE INSURANCE
« Reply #250 on: April 30, 2021, 11:22:56 AM »
I am quite serious. At that point my wife was working and my parents helped (besides some help from everyone's favorite uncle)
I know exactly what you meant. The description cracked me up.

Offline Euclid

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Re: LIFE INSURANCE
« Reply #251 on: April 30, 2021, 11:25:15 AM »
There are situations and places for everything. The theme on this thread was more about people making their own life insurance decisions (and "buying directly", Haven Life - which isn't convertible, etc.) as such I put forth my opinion that in most cases I don't think people in their early 20s should be getting 30 year term. That being said, I also don't think people should be doing this without talking to a professional. A professional will listen to people, and make appropriate recommendations while educating the clients, with the ultimate choice and decision in the client's hands.
The theme of this thread was "don't let perfection get in the way of good". Just get any policy and take it from there - even if it's not an optimal financial decision, it's still worlds better than ZERO life insurance.

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Re: LIFE INSURANCE
« Reply #252 on: April 30, 2021, 11:27:39 AM »
The theme of this thread was "don't let perfection get in the way of good". Just get any policy and take it from there - even if it's not an optimal financial decision, it's still worlds better than ZERO life insurance.

The easiest way for that to happen is with a lower cost short term policy which can be (hopefully) easily replaced.
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Offline farmbochur

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Re: LIFE INSURANCE
« Reply #253 on: April 30, 2021, 11:59:47 AM »
Difference is, auto claims are much more common. Most young people think they won't die until they are very old
More common, indeed, but the losses covered by collision/comprehensive insurance are much easier to sustain.

It is more probable for a family to become permanently destitute as a result of untimely death than a totaled vehicle.

My philosophy with insurance in general is to obtain coverage for losses that I cannot sustain, but that it's not worth subsidizing the insurers margin for losses that I think I can reasonably "self-insure" against.

Unless of course you feel that underwriters are mis-pricing your risk, which can be the case due to information asymmetry as well as regulatory guidelines.
Risk is opportunity

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Re: LIFE INSURANCE
« Reply #254 on: April 30, 2021, 12:26:22 PM »
More common, indeed, but the losses covered by collision/comprehensive insurance are much easier to sustain.

It is more probable for a family to become permanently destitute as a result of untimely death than a totaled vehicle.

My philosophy with insurance in general is to obtain coverage for losses that I cannot sustain, but that it's not worth subsidizing the insurers margin for losses that I think I can reasonably "self-insure" against.

Unless of course you feel that underwriters are mis-pricing your risk, which can be the case due to information asymmetry as well as regulatory guidelines.

To put it in the words of Ben Feldman (paraphrasing): There are two types of problems, big ones, and small ones. The difference between the big problems and the small problems is, that you can swallow a small problem, but a big problem could swallow you.
I've been waiting over 5 years with bated breath for someone to say that!
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Offline yos9694

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Re: LIFE INSURANCE
« Reply #255 on: April 30, 2021, 12:32:14 PM »
There are situations and places for everything. The theme on this thread was more about people making their own life insurance decisions (and "buying directly", Haven Life - which isn't convertible, etc.) as such I put forth my opinion that in most cases I don't think people in their early 20s should be getting 30 year term. That being said, I also don't think people should be doing this without talking to a professional. A professional will listen to people, and make appropriate recommendations while educating the clients, with the ultimate choice and decision in the client's hands.

A professional will listen to people? Lol. Look how hard it is in this thread for the professionals to listen to anything besides their own shpiel. KV"Ch any layman who goes to them will get a predtermined dissertation and pushed into something didnt want. Is it any wonder people are reluctant to go to salesmen for this kind of stuff?

Haven and Ladder and others are a G-dsend

Offline Mordyk

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Re: LIFE INSURANCE
« Reply #256 on: April 30, 2021, 12:46:09 PM »
If death was only planned so nicely...
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Re: LIFE INSURANCE
« Reply #257 on: April 30, 2021, 12:47:11 PM »
Just want to throw out an idea that may help solve the issues of convincing young couples to buy insurance, or potential issues with subsidizing insurance.

Instead of working to convince healthy, unmotivated couples, there can be a campaign to try to convince parents to pay for a 10 year term when their kids get married. If the kids see the parents value insurance, they are more likely to learn about the benefits, understand that it's as important as paying food bills, and eventually pay for their own plan.
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Offline Dan

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Re: LIFE INSURANCE
« Reply #258 on: April 30, 2021, 12:48:31 PM »
Save your time, I don't answer PM. Post it in the forum and a dedicated DDF'er will get back to you as soon as possible.

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Re: LIFE INSURANCE
« Reply #259 on: April 30, 2021, 01:02:56 PM »
A professional will listen to people? Lol. Look how hard it is in this thread for the professionals to listen to anything besides their own shpiel. KV"Ch any layman who goes to them will get a predtermined dissertation and pushed into something didnt want. Is it any wonder people are reluctant to go to salesmen for this kind of stuff?

Haven and Ladder and others are a G-dsend

There are TONS who do. That may be the most important qualification to call them a professional.
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