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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 71340 times)

Offline CountValentine

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Re: Do you have life insurance?
« Reply #60 on: January 30, 2014, 04:56:22 PM »
Count, you have to understand. For Jews, religion doesn't get brought in. Torah doesn't just tell us how to lead our ritualistic lives. Torah is meant to give us guidance in the nitty-gritty details of life.
I know I will regret asking this. What does the Torah say about having or not having life insurance.
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Offline rots5

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Re: Do you have life insurance?
« Reply #61 on: January 30, 2014, 05:00:36 PM »
I guess both!
Just had a kid, and just started thinking about it.
My wife doesn't like thinking about it:)

I was also just told by a family member who is a broker that living primarily in Israel, and not having a real job can both be an issue in getting well priced life insurance...
(And since we don't have jobs- don't know if we can afford it right now)
So I have to decide if worth it to wait a year or two till we move back to the states and get jobs .

My rebbe just sent me today a email with  two interesting stories:
 
1-"There is a really beautiful story about Rav Aryeh Levine in Rav Simcha Raz's book. Someone was trying to persuade Rav Aryeh to get life insurance but he refused. The man persisted saying how will your family survive if chas vesholom something was to happen to you

He replied that were he to die early and go up to the Heavenly Beis Din he would petition that while it is true that he has done many things wrong and maybe does not deserve to live any longer, what have his wife and family done wrong to be denied their husband and father to financially support them. And this would be a very persuasive argument. Until from the side a malach would step forward holding a life insurance document and say, there is no reason to worry about the family, he has life insurance! And then the beis din will decide to keep him dead!"

2-"For the record, I asked Rebbe ((rabbi Berkowitz of Jerusalem kollel)) myself about 7 years ago (living in Chu"l). He said its neither a chiyuv nor assur. I told him I was having trouble and it would be costly and I could instead give maaser (financially it wasn't shayach to do both and I was definitely patur from giving maaser at the time). He told me that doing that would be a much better insurance policy."
I hope this is not the same rebbe i was at!

So make sure you don't know hatzoloh's phone number, this way you'll never have an emergency. Right?

Don't buy a shovel and it won't snow.

Don't get health insurance and you'll never get sick.

Don't read DansDeals and Hashem will ensure you're rich enough to pay full price ;).

Gimme a break sir.
Your talking to the guy who paid full price for a buggabboo lion54


I know I will regret asking this. What does the Torah say about having or not having life insurance.

Can someone please advise me with who to call. Where to start?
If you have any questions please search and then ask. PM me for detailed help.

Offline Menachem613

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Re: Do you have life insurance?
« Reply #62 on: January 30, 2014, 05:01:14 PM »

I know I will regret asking this. What does the Torah say about having or not having life insurance.

The Torah was written prior to the advent of life insurance policies.

Offline Let3

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Re: Do you have life insurance?
« Reply #63 on: January 30, 2014, 05:01:23 PM »
I know I will regret asking this. What does the Torah say about having or not having life insurance.
Two posts up I posted an article on the topic...

Offline Let3

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Re: Do you have life insurance?
« Reply #64 on: January 30, 2014, 05:02:37 PM »
I hope this is not the same rebbe i was at!
It was!
But again- this is not his shita-
Just sent me these quotes

Offline churnbabychurn

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Re: Do you have life insurance?
« Reply #65 on: January 30, 2014, 05:04:59 PM »
The Torah was written prior to the advent of life insurance policies.
now you barfed!

Offline good sam

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Re: Do you have life insurance?
« Reply #66 on: January 30, 2014, 05:07:11 PM »
If there is enough of a big reason to pay $2 a day to shelter homeless cats in Namibia you would pay!
Right, my point exactly. You have to decide if it makes sense for you. Just because it's affordable, doesn't mean it's a good idea.
If you don't care why would you comment?
HT: DMYD

Offline Achas Veachas

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Re: Do you have life insurance?
« Reply #67 on: January 30, 2014, 05:10:28 PM »

Can someone please advise me with who to call. Where to start?

I'm sure there are insurance salesmen on DDF...

Offline ckmk47

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Re: Do you have life insurance?
« Reply #68 on: January 30, 2014, 05:12:22 PM »
When I was expecting my first child, I brought up life insurance with my husband, and he was squeamish.  But I insisted that we make a decision.  My reasoning was that without children, I could afford to support myself (or move back with my parents) but once I had a child, I would need a babysitter etc.
We also got life insurance on me to pay for the housekeeper and babysitter that would be needed in my absence cv"sh.

At this point we have lots of insurance to cover lots of cv"sh lost income and as part of retirement planning.

The cheapest and simplest is 20 year level term.  Your premiums stay the same for 20 years even if your health changes.  Get a policy now in your 20's and maybe start a new one in your late 30's before any health changes potentially start in the 40's.  Then you have reasonably priced insurance until they're ALL grown up. iy"H.

How much to get?
One school of thought is to get enough that you don't use up that money, 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!

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.  Her expenses as without a husband might be higher than now as a couple.  (babysitter, tutors, etc) 

Reevaluate your situation and the amount of insurance periodically.  Many of you are just starting families and your working (and spending) lives, so things will need tweaking, Perhaps every year, certainly with every new family addition.

[Don't forget to plan guardians for your children if cv"sh both of you are unavailable. ]
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Offline Let3

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Re: Do you have life insurance?
« Reply #69 on: January 30, 2014, 05:12:42 PM »
I'm sure there are insurance salesmen on DDF...
I have a family member who is a salesman , and I'm sure would be happy to give info on policies to whomever may be interested.
I am calling him myself tonight...

If anyone interested pm me for info...

Offline CountValentine

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Re: Do you have life insurance?
« Reply #70 on: January 30, 2014, 05:16:11 PM »
The Torah was written prior to the advent of life insurance policies.
So was the Bible but does not stop the RC's from having an answer for everything.
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Offline mb1

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Re: Do you have life insurance?
« Reply #71 on: January 30, 2014, 05:16:25 PM »
Can someone please advise me with who to call. Where to start?

Probably start now so when you are in US for Pesach you can get the blood tests done.

Offline Aaaron

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Re: Do you have life insurance?
« Reply #72 on: January 30, 2014, 05:17:37 PM »
When I was expecting my first child, I brought up life insurance with my husband, and he was squeamish.  But I insisted that we make a decision.  My reasoning was that without children, I could afford to support myself (or move back with my parents) but once I had a child, I would need a babysitter etc.
We also got life insurance on me to pay for the housekeeper and babysitter that would be needed in my absence cv"sh.

At this point we have lots of insurance to cover lots of cv"sh lost income and as part of retirement planning.

The cheapest and simplest is 20 year level term.  Your premiums stay the same for 20 years even if your health changes.  Get a policy now in your 20's and maybe start a new one in your late 30's before any health changes potentially start in the 40's.  Then you have reasonably priced insurance until they're ALL grown up. iy"H.

How much to get?
One school of thought is to get enough that you don't use up that money, 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!

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.  Her expenses as without a husband might be higher than now as a couple.  (babysitter, tutors, etc) 

Reevaluate your situation and the amount of insurance periodically.  Many of you are just starting families and your working (and spending) lives, so things will need tweaking, Perhaps every year, certainly with every new family addition.

[Don't forget to plan guardians for your children if cv"sh both of you are unavailable. ]

Great post, but I would recommend a 30-year term.  I have a pretty large policy, and my wife only has a policy through her employer that covers basic funeral expenses.  Our thoughts were that I could survive without her income, but she'd have a very hard time without mine, especially continuing to live the lifestyle we've become accustomed to. 

Offline skyguy918

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Re: Do you have life insurance?
« Reply #73 on: January 30, 2014, 05:19:08 PM »
I didnt get one PM yet :'(
If you want to know rates, this is a great place to start. If you want guidance, either read up on the subject or contact a broker.

Offline rots5

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Re: Do you have life insurance?
« Reply #74 on: January 30, 2014, 05:19:48 PM »
If you want to know rates, this is a great place to start. If you want guidance, either read up on the subject or contact a broker.
Thanks.
If you have any questions please search and then ask. PM me for detailed help.

Offline CountValentine

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Re: Do you have life insurance?
« Reply #75 on: January 30, 2014, 05:21:16 PM »
Two posts up I posted an article on the topic...
Sorry missed that. Interesting.
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Offline Let3

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Offline Achas Veachas

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Re: Do you have life insurance?
« Reply #77 on: January 30, 2014, 05:39:23 PM »

Reevaluate your situation and the amount of insurance periodically.  Many of you are just starting families and your working (and spending) lives, so things will need tweaking, Perhaps every year, certainly with every new family addition.


Thanks for reminding me, we got our policy when we were newlyweds, should probably take a look and update...

Offline CountValentine

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Re: Do you have life insurance?
« Reply #78 on: January 30, 2014, 05:41:56 PM »
Reevaluate your situation and the amount of insurance periodically.  Many of you are just starting families and your working (and spending) lives, so things will need tweaking, Perhaps every year, certainly with every new family addition.
...and for some of us the kids are grown and gone.  ;)
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Offline ckmk47

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Re: Do you have life insurance?
« Reply #79 on: January 30, 2014, 05:43:21 PM »
...and for some of us the kids are grown and gone.  ;)
So now the only reason to have insurance is retirement planning or not at all. 
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