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Life insurance: If there is someone is relying on your income, you need life insurance.
Your wife should also be insured, even if she doesn't work.  The need to insure her comes from the expenses of replacing her for childcare and housework. And if she does work (or is the breadwinner), then you need to insure her for income replacement - don’t be too macho to insure her.

How much to get?
First figure out how much you live on for real.

One school of thought is to get enough life insurance that you don't use up that payout, only live on the income that money generates.  So to make $80,000 of income at 5%, you need an initial investment (insurance amount) of $1,600,000 or over 1.5 million dollars! This piece of advice makes very little sense in today's low interest rate environment - since to chase a 5% return you need to risk the principal.

A better plan would be to estimate how many years of income replacement or expense coverage you need for each spouse. A big part of the need for income comes from child related expenses, which will end after the children reach a certain age. Or, at younger ages it is reasonable to expect that a widow/widower could get remarried, and therefore won't need as many years. Take all this into consideration and consult a financial adviser if you can afford it.

Another plan.  She'll be able to go to school, or otherwise get set up for a high paying job with a few years of full support.  So you only need a few years’ worth of income.  Let's say $80,000 X 5 years = $400,000.  Realize that her expenses without a husband might be higher than now as a couple.  (babysitter, tutors, etc) 


Term insurance vs Whole life
Term insurance is the cheapest and simplest.  You pay a premium and  if chv”sh the insured person dies, the beneficiary gets the insurance amount. The higher the risk a person is, the higher the premium.  So people with worse health  will pay more than healthy people for the same amount of insurance, and older people will pay more than younger people.
Level term.  One popular type of term insurance has a level premium for a fixed number of years. Many people prefer this to the traditional type of term insurance where the premium each each year pays for coverage only in that year (and as a result the premiums increase every year, because you are aging). In contrast, a level premium term insurance policy has an unchanging premium amount that is guaranteed for a specific number of years. As a result of the design you are overpaying in the early years of the policy to subsidize your cost in the later years. Popular guarantee periods are 10, 20 or 30 years.  As with any insurance, it pays to get one while you are healthy to lock in the lowest rate possible (in general, health only declines, you rarely hear of people getting healthier with age).
Whole life has a level premium that is guaranteed not to increase for as long as you live. Because of insurance laws in the US, this type of insurance policy must always have a "cash value", which is the amount of money you get back if you cancel the policy. That makes Whole Life a much more expensive choice relative to pure insurance coverage (where you'd get nothing back if you cancel) and therefore a bad choice for most people who are not rich (this is complicated to explain in great detail, but it is an effective summary of who is most likely to see good value in buying Whole Life). One fringe benefit of having a cash value in Whole Life is that you have saved money which can be used for your retirement or any other purpose if you are still alive.  For most people though, other savings vehicles will be better.
Universal life is very similar to whole life, in that it is meant to provide insurance coverage for as long as you live (as opposed to Term, which is meant to for a short to medium period of time). The most important difference is that the premium rates for Universal Life are not guaranteed, unlike Whole Life which is completely guaranteed. The concept behind Universal Life is that the insurance company tells you all the charges you are paying for and lets you pay as much or as little as you want for the coverage. Anything extra that you pay goes into an account that can earn interest, and as long as that account doesn't run out of money you stay insured.
Variable Life is an offshoot of Universal Life. The difference is that instead of the extra money going into an account that earns interest, you can choose to invest the extra money in mutual funds. Take my word as an expert in insurance that Variable Universal Life is only for the most investment oriented people (meaning that they barely care at all about the insurance part of the policy). If you are trying to decide on Term or Variable, the answer is always Term.

How long a Term Insurance companies make tons of money on people who buy 30 year terms and then let it lapse after 10 years, since they paid 30 year rates for those 10 years.  Consider a long term Term the equivalent of insuring against the possibility you will be uninsurable in 10 years.  Consider also that you would be able to convert the short term Term into a whole life policy at that time regardless of insurability.

Life insurance has some very favorable tax treatment on the cash value (or account value), which is a big selling point, especially for people in certain tax brackets who have all but run out of tax advantaged places to save money. The exact details are very technical and could not be fairly explained without making this wiki extremely long.

Reevaluate your situation and the amount of insurance periodically.  As things change- income, spending, family additions-  the amount of coverage you need will need tweaking.

In addition to buying insurance, don't forget to set up plans for how your beneficiaries can use the insurance money to live with their needs taken care of. Providing for your family in case of a tragic event is perhaps as selfless an act as a person can do, don't do it halfway! Make sure there will be money AND a plan for how to live on it. In my experience I have seen all types of unqualified people get involved with "helping" a family live off huge amounts of money and getting it wrong 10 times out of 10.

Plan for guardians to care for your children if cv"sh both parents are unavailable.


« Last edited by henche on July 09, 2014, 10:40:28 PM »

Author Topic: Do you have life insurance?  (Read 71313 times)

Offline Menachem613

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Re: Do you have life insurance?
« Reply #100 on: January 31, 2014, 08:48:37 AM »
Do the people who do refrain from buying life insurance on principle also not buy medical insurance?

No.  The lack of health insurance harms themselves while lack of life insurance only harms others. 

Offline Ergel

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Re: Do you have life insurance?
« Reply #101 on: January 31, 2014, 08:52:53 AM »
Life isn't about checking the boxes. Nobody cares.

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Re: Do you have life insurance?
« Reply #102 on: January 31, 2014, 10:00:04 AM »
(I know cv it's not fair it's your thread, sorry...
NP, go right ahead. It is not like I didn't know this was going to happen.  :)
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Offline alpicone

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Re: Do you have life insurance?
« Reply #103 on: January 31, 2014, 11:09:13 AM »
I have a 20 year term policy for myself and 30 year term for my wife.

Offline churnbabychurn

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Re: Do you have life insurance?
« Reply #104 on: January 31, 2014, 11:12:51 AM »
For the record, the Chazon Ish was against people getting life insurance.
He used to say that many times a Rosha is only kept alive so that he can provide for his wife and kids. With life insurance he is losing his insurance policy.

Many others were matir and even recommended it.

Offline avremie

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Re: Do you have life insurance?
« Reply #105 on: January 31, 2014, 11:19:55 AM »
Next question to be asked is how old were you when you first got a policy

Online myb821

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Re: Do you have life insurance?
« Reply #106 on: January 31, 2014, 11:21:30 AM »
For the record, the Chazon Ish was against people getting life insurance.
He used to say that many times a Rosha is only kept alive so that he can provide for his wife and kids. With life insurance he is losing his insurance policy.

Many others were matir and even recommended it.
and what abt the talmid that dies at a young age? I'm sorry but that logic..........

Offline sky121

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Re: Do you have life insurance?
« Reply #107 on: January 31, 2014, 11:22:27 AM »
and what abt the talmid that dies at a young age? I'm sorry but that logic..........

It has nothing to do with logic. It's just different opinions and beliefs.
"Not all who wander are lost"

Offline churnbabychurn

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Re: Do you have life insurance?
« Reply #108 on: January 31, 2014, 11:25:13 AM »
and what abt the talmid that dies at a young age? I'm sorry but that logic..........
Not sure what you are asking? Tzadik vera lo?

(BTW There is nothing wrong with asking a kasha on the chazon ish. No need to apologies, im sure this is not the only Shtikel chazon ish that is hard for many to understand.  ;))

Offline Menachem613

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Re: Do you have life insurance?
« Reply #109 on: January 31, 2014, 11:34:11 AM »

It has nothing to do with logic. It's just different opinions and beliefs.

I refuse to believe that the Chazon Ish didn't base on logic and it was merely his belief.

Offline churnbabychurn

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Re: Do you have life insurance?
« Reply #110 on: January 31, 2014, 11:43:48 AM »
Are beliefs illogical by definition according to you?

Offline sky121

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Re: Do you have life insurance?
« Reply #111 on: January 31, 2014, 11:44:27 AM »
Are belief illogical by definition according to you?
No.
"Not all who wander are lost"

Offline henche

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Re: Do you have life insurance?
« Reply #112 on: January 31, 2014, 11:44:57 AM »
For the record, the Chazon Ish was against people getting life insurance.
He used to say that many times a Rosha is only kept alive so that he can provide for his wife and kids. With life insurance he is losing his insurance policy.

Many others were matir and even recommended it.

I'm afraid I'm such a rasha that even that won't save me

Offline churnbabychurn

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Re: Do you have life insurance?
« Reply #113 on: January 31, 2014, 11:45:28 AM »

Offline churnbabychurn

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Re: Do you have life insurance?
« Reply #114 on: January 31, 2014, 11:46:05 AM »
I'm afraid I'm such a rasha that even that won't save me
The insurance company will probably screw you too!

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Re: Do you have life insurance?
« Reply #115 on: January 31, 2014, 11:49:31 AM »
Next question to be asked is how old were you when you first got a policy
62  :)
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Offline chaimmayer

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Re: Do you have life insurance?
« Reply #116 on: January 31, 2014, 01:18:43 PM »
You probably could have phrased in a nicer considering how many people he's helped (and how many Almanos have/will be spared the embarrassment of having to become Tzedakah cases)
Sorry if it didn't come across the right.  As I recall the text of the ads used to say something like "I am really mad...." That is why I used the word crusade.
There was someone else involved also, he may have been the one to publish the ads.

Offline chaimmayer

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Re: Do you have life insurance?
« Reply #117 on: January 31, 2014, 01:20:49 PM »
A very interesting pice from rabbi Horowitz basically calling areivim a bad idea
http://www.rabbihorowitz.com/PYes/ArticleDetails.cfm?Book_ID=1310&ThisGroup_ID=262

Offline Yosel

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Re: Do you have life insurance?
« Reply #118 on: January 31, 2014, 02:36:16 PM »
I have to hear from an אלמנה that actually received money from arievim...... And yes I did research.. .

Offline Achas Veachas

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Re: Do you have life insurance?
« Reply #119 on: January 31, 2014, 02:37:35 PM »
Do you know of one who DIDN'T receive even though her husband was a member?

Maybe being in Areivim is a Segulah for Arichus Yamim? ;D
« Last Edit: January 31, 2014, 02:49:09 PM by Achas Veachas »