Topic Wiki

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 71176 times)

Offline CountValentine

  • Dansdeals Lifetime 10K Presidential Platinum Elite
  • *******
  • Join Date: Mar 2013
  • Posts: 17350
  • Total likes: 7851
  • DansDeals.com Hat Tips -1
  • Gender: Female
    • View Profile
  • Location: Poland - Exiled
  • Programs: DAOTYA, DDF Level 3, 5K Lounge
Do you have life insurance?
« on: January 30, 2014, 03:15:51 PM »
I will start.
Yes
Only on DDF does 24/6 mean 24/5/half/half
Dow Jones Industrial Average Tops 40000 for the First Time

Offline HowYaDoin

  • Dansdeals Platinum Elite + Lifetime Gold Elite
  • ******
  • Join Date: Jan 2013
  • Posts: 896
  • Total likes: 26
  • DansDeals.com Hat Tips 1
    • View Profile
Re: Do you have life insurance?
« Reply #1 on: January 30, 2014, 03:17:05 PM »
Yes

Offline HowYaDoin

  • Dansdeals Platinum Elite + Lifetime Gold Elite
  • ******
  • Join Date: Jan 2013
  • Posts: 896
  • Total likes: 26
  • DansDeals.com Hat Tips 1
    • View Profile
Re: Do you have life insurance?
« Reply #2 on: January 30, 2014, 03:17:25 PM »
Why the question?

Offline Achas Veachas

  • Dansdeals Presidential Platinum Elite
  • ********
  • Join Date: Jul 2012
  • Posts: 4806
  • Total likes: 115
  • DansDeals.com Hat Tips 3
    • View Profile
    • Torah && Tech
Re: Do you have life insurance?
« Reply #3 on: January 30, 2014, 03:18:41 PM »
Sure

Offline Yosel

  • Dansdeals Lifetime Platinum Elite
  • *******
  • Join Date: Jan 2010
  • Posts: 1071
  • Total likes: 66
  • DansDeals.com Hat Tips 1
    • View Profile
Re: Do you have life insurance?
« Reply #4 on: January 30, 2014, 03:26:29 PM »
זיכער

Offline Let3

  • Dansdeals Lifetime Platinum Elite
  • *******
  • Join Date: Dec 2012
  • Posts: 1108
  • Total likes: 34
  • DansDeals.com Hat Tips 0
    • View Profile
  • Location: New Jersey
Re: Do you have life insurance?
« Reply #5 on: January 30, 2014, 03:26:41 PM »
Not yet,
Actually in middle of deciding on it...

Offline MeToo

  • Dansdeals Gold Elite
  • ***
  • Join Date: Aug 2010
  • Posts: 134
  • Total likes: 0
  • DansDeals.com Hat Tips 1
    • View Profile
Re: Do you have life insurance?
« Reply #6 on: January 30, 2014, 03:27:47 PM »
Yes. On both of us.

Offline Menachem613

  • Dansdeals Lifetime Platinum Elite
  • *******
  • Join Date: Jun 2012
  • Posts: 1211
  • Total likes: 61
  • DansDeals.com Hat Tips 0
  • Gender: Male
    • View Profile
  • Location: NYC
Re: Do you have life insurance?
« Reply #7 on: January 30, 2014, 03:27:48 PM »

Not yet,
Actually in middle of deciding on it...

Why the hesitation?

Offline CountValentine

  • Dansdeals Lifetime 10K Presidential Platinum Elite
  • *******
  • Join Date: Mar 2013
  • Posts: 17350
  • Total likes: 7851
  • DansDeals.com Hat Tips -1
  • Gender: Female
    • View Profile
  • Location: Poland - Exiled
  • Programs: DAOTYA, DDF Level 3, 5K Lounge
Re: Do you have life insurance?
« Reply #8 on: January 30, 2014, 03:28:33 PM »
Not yet,
Actually in middle of deciding on it...
Deciding between policies or deciding to get insurance?
Only on DDF does 24/6 mean 24/5/half/half
Dow Jones Industrial Average Tops 40000 for the First Time

Offline CountValentine

  • Dansdeals Lifetime 10K Presidential Platinum Elite
  • *******
  • Join Date: Mar 2013
  • Posts: 17350
  • Total likes: 7851
  • DansDeals.com Hat Tips -1
  • Gender: Female
    • View Profile
  • Location: Poland - Exiled
  • Programs: DAOTYA, DDF Level 3, 5K Lounge
Re: Do you have life insurance?
« Reply #9 on: January 30, 2014, 03:29:07 PM »
Yes. On both of us.
Thats the answer I like to see.  :)
Only on DDF does 24/6 mean 24/5/half/half
Dow Jones Industrial Average Tops 40000 for the First Time

Offline myb821

  • Dansdeals Lifetime Presidential Platinum Elite
  • *********
  • Join Date: Mar 2011
  • Posts: 7592
  • Total likes: 28
  • DansDeals.com Hat Tips 2
    • View Profile
  • Location: New York
Re: Do you have life insurance?
« Reply #10 on: January 30, 2014, 03:30:01 PM »
working on it

Offline peacenlove613

  • Dansdeals Platinum Elite
  • ****
  • Join Date: Jan 2013
  • Posts: 374
  • Total likes: 4
  • DansDeals.com Hat Tips 1
    • View Profile
  • Location: monsey
Re: Do you have life insurance?
« Reply #11 on: January 30, 2014, 03:30:35 PM »
I just had this conversation with my wife. Starting to loon into polices. 

Offline ilherman

  • Dansdeals Lifetime Presidential Platinum Elite
  • *********
  • Join Date: Jun 2013
  • Posts: 8968
  • Total likes: 248
  • DansDeals.com Hat Tips 35
    • View Profile
  • Location: Brooklyn
Re: Do you have life insurance?
« Reply #12 on: January 30, 2014, 03:32:07 PM »
Sure! It's a seguleh for ariches yumim!!! Count, post in your thread someone should explain you......
You can say what you think when you think what you say.

Offline yehuda S

  • Dansdeals Platinum Elite + Lifetime Gold Elite
  • ******
  • Join Date: Jul 2011
  • Posts: 790
  • Total likes: 11
  • DansDeals.com Hat Tips 1
    • View Profile
Re: Do you have life insurance?
« Reply #13 on: January 30, 2014, 03:33:41 PM »
This would be more interesting if people post their premiums and policy amounts.
Work is what you do between vacations.

Online zh cohen

  • Dansdeals Lifetime Platinum Elite
  • *******
  • Join Date: Dec 2013
  • Posts: 1744
  • Total likes: 1768
  • DansDeals.com Hat Tips 1
  • Gender: Male
    • View Profile
  • Location: 412
Re: Do you have life insurance?
« Reply #14 on: January 30, 2014, 03:34:18 PM »
Yes.

Offline CountValentine

  • Dansdeals Lifetime 10K Presidential Platinum Elite
  • *******
  • Join Date: Mar 2013
  • Posts: 17350
  • Total likes: 7851
  • DansDeals.com Hat Tips -1
  • Gender: Female
    • View Profile
  • Location: Poland - Exiled
  • Programs: DAOTYA, DDF Level 3, 5K Lounge
Re: Do you have life insurance?
« Reply #15 on: January 30, 2014, 03:36:27 PM »
This would be more interesting if people post their premiums and policy amounts.
You will also need age amoung other things.
Only on DDF does 24/6 mean 24/5/half/half
Dow Jones Industrial Average Tops 40000 for the First Time

Offline Name Changed

  • Dansdeals Presidential Platinum Elite
  • ********
  • Join Date: Sep 2011
  • Posts: 4832
  • Total likes: 6
  • DansDeals.com Hat Tips 13
    • View Profile
  • Location: Lakewood
  • Programs: Avis Presidents Club, National Executive Elite, Hertz Presidents Circle, Sixt Platinum, SPG Gold, eBay Platinum
Re: Do you have life insurance?
« Reply #16 on: January 30, 2014, 03:40:21 PM »
This would be more interesting if people post their premiums and policy amounts.
I have life insurance.

667k Term (convertible)
333k Whole Life

I pay $330 Monthly Total

There are a lot of factors in the price. There are 100's of variations of policy's.


Offline avadah

  • Dansdeals Presidential Platinum Elite
  • ********
  • Join Date: Sep 2012
  • Posts: 2549
  • Total likes: 38
  • DansDeals.com Hat Tips 0
    • View Profile
  • Location: Jerusalem
Re: Do you have life insurance?
« Reply #17 on: January 30, 2014, 03:42:12 PM »
I will start.
Yes
How big of a policy did your wife take out on you?

Offline CountValentine

  • Dansdeals Lifetime 10K Presidential Platinum Elite
  • *******
  • Join Date: Mar 2013
  • Posts: 17350
  • Total likes: 7851
  • DansDeals.com Hat Tips -1
  • Gender: Female
    • View Profile
  • Location: Poland - Exiled
  • Programs: DAOTYA, DDF Level 3, 5K Lounge
Re: Do you have life insurance?
« Reply #18 on: January 30, 2014, 03:44:37 PM »
How big of a policy did your wife take out on you?
None that I know of. She has the bigger policy but I also have insurance from my employer.
Only on DDF does 24/6 mean 24/5/half/half
Dow Jones Industrial Average Tops 40000 for the First Time

Offline ilherman

  • Dansdeals Lifetime Presidential Platinum Elite
  • *********
  • Join Date: Jun 2013
  • Posts: 8968
  • Total likes: 248
  • DansDeals.com Hat Tips 35
    • View Profile
  • Location: Brooklyn
Re: Do you have life insurance?
« Reply #19 on: January 30, 2014, 03:50:53 PM »
but I also have insurance from my employer.
Since when does DDF provide insurance?
You can say what you think when you think what you say.