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Author Topic: How do I get Life Insurance for...
mytreeisempty
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.... for my wife and I?

Can anyone recommend any companies?

How do I know how much to take out?

How do I know how long the payout should be?

We are both 26.

For ease of use, I will use easy numbers.

Let's assume we make a combined income of $100k per year.

Let's say we have a $300K mortgage with 30 years left.

How should I approach finding out answers to these questions?

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munga
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Assuming you are paying for yourselves......

my experience NOT BCBS - Blue Cross/ Blue Shield.

8 years ago, during a self-employed period, we were paying about 900 bucks a month and got totally ****ty coverage- every little appointment we paid for. It was obscene.

If you are Mormon, or of any religion, have you heard of HealthShare, instead of regular insurance? I'm not sure about it, but it looked like a better alternative back then.

I can't remember if we actually did it.

quote:
In the meantime, medical sharing programs are growing
in popularity as Americans turn to a traditional, grass roots
solution to solve the modern health care problem. Billed as
an affordable health care alternative, these are private organizations made up of individuals who help pay for
each other’s medical expenses voluntarily.
Because these medical sharing programs are not insurance,
they set their own membership rules, such as requiring
that all participants be members of the same religious
denomination. Various Protestant groups have their own
programs; based in American Fork, Utah, Kirtland
HealthShare is currently the only medical sharing program
for members of the Church of Jesus Christ of Latter-day
Saints.
Because Kirtland HealthShare is for LDS members only,
it does not pay for medical care that results from destructive
activities like smoking, drinking and immorality. The
program is growing quickly and now has over 1000 members.
The program has a set of formal, written guidelines that
state which medical expenses are eligible to be paid. Each
member’s monthly payment is matched with another
member who has a medical need, so that payment is from
one member directly to another.
To find out more about Kirtland HealthShare, call 888-
244-3839, or visit http://zionshare.org.



[ December 02, 2008, 09:50 PM: Message edited by: munga ]

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Funean
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Call a bunch of brokers from reputable local firms, mtie. Set a rule for yourself that you *absolutely will not sign anything* and get them to explain their plans and recommendations to you. That's the easiest way to get an education about what's available and legal (most brokers deal with several providers), and to learn what the jargon means (term vs. life is an important choice, made harder if you don't know the difference between the two). Then, armed with some knowledge, you can websurf, then combine all your facts, and call the broker you liked best and tell him/her what you'll be buying from him. [Smile]

Munga, that's a health plan, not life, but I'm utterly fascinated. Administering the thing must be absolute hell. What happens if there is a catastrophe? That would empty the coffers pretty quick. I wonder if the organization has anything like umbrella insurance for such an event? And how the heck do they determine what "immorality" means? What if you catch an STD from an unfaithful spouse (god forbid)? Or live with a smoker? Can they determine when cirrhosis is caused by drinking versus some other cause, and will the plan pay for the testing to determine that? (I'm not shooting it down, just paralyzed by the difficulty of running something like this objectively--I'm all for alternatives to our artificial, market-divorced current system. Although maybe the best thing is to let the bloated thing collapse, so it can be rebuilt sensibly)(not while anyone I know is in the hospital, though [Wink] )

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hobsen
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The question is about LIFE insurance, munga.

Buying life insurance is always a bad bet, as policyholders on average pay out more than they get back. If you are both employed, and have no children, why buy it at all? A death in the family would be tragic, but how much would a lot of money help?

For young couples with children, a death may leave the survivor with half the income and the same responsibilities, so a big payout could really help. The way to get a big payout cheaply is to buy term life for whatever amount you think the survivor would need. And do not take my word for this, as I am only repeating what Consumer Reports told my wife and me forty years ago. Ask such consumer organizations, and maybe look for consumer information from the U.S. government; and they will probably still say insurance salesmen will try to push you into whole life because they make a lot more commission. But maybe things have changed since I was in the market. Anyway look for independent advice with no ties to the insurance industry. And also, unless things have changed drastically, policies of all the major companies are essentially identical, although each will promote minor differences. Life policies are fairly simple: you die, they pay. But do try to get a well-established and stable company, as one which goes bankrupt could cause you headaches, even if you finally collected something.

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scifibum
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quote:
Munga, that's a health plan, not life, but I'm utterly fascinated. Administering the thing must be absolute hell. What happens if there is a catastrophe? That would empty the coffers pretty quick. I wonder if the organization has anything like umbrella insurance for such an event? And how the heck do they determine what "immorality" means? What if you catch an STD from an unfaithful spouse (god forbid)? Or live with a smoker? Can they determine when cirrhosis is caused by drinking versus some other cause, and will the plan pay for the testing to determine that? (I'm not shooting it down, just paralyzed by the difficulty of running something like this objectively--I'm all for alternatives to our artificial, market-divorced current system. Although maybe the best thing is to let the bloated thing collapse, so it can be rebuilt sensibly)(not while anyone I know is in the hospital, though [Wink] )
Funean, you simply don't think like American Fork, UT Mormons. "Unfaithful spouse"? Pshaw! Live with a smoker? *snort*.

I'm 75% kidding, but 25% not. Based on the homogeneity of that community - I hail from 5 miles away - while I don't think they would have failed to imagine such complications, I do think it entirely possible that they intended to include only families showing no indication of such risks: fully church active families.

They'd sadly nod at the nice lady with the smoking drinking husband, but fail to see how it made sense to include her in their righteously low-risk health collective (let's face it, it wouldn't make sense). Not that they'd be stingy if someone like that was in immediate need - I've seen plenty of generosity that isn't at all restricted to people Like Us - I just don't think they'd consider this particular facility to be applicable to every situation.

There's also sort of a cheery optimism that goes with the hearty appreciation for living in a community of we-all-share-the-same-values, which I think may be fairly unique to Mormon-dominated towns like American Fork. It's not that sin and apostasy is unheard of, but rather that it's sort of brushed aside in favor of the preferred mode of striving for an ideal and convincing everybody that we're doing pretty darn good.

(I'm somewhat embittered by having become convinced that many who consider themselves fully worthy church members are more often than not unaware of or unconcerned about the ways in which they fail to be decent people - the ones conceiving fraudulent MLM miracle dietary supplement schemes go to church with their heads held high, for instance. Dr. Robert Young might be my favorite evil Mormon.)

Edit: yikes, I didn't intend to post such a rant. In case I've given the opposite impression, let me say that I don't think there's anything terribly wrong with the majority of American Fork, UT folks. I do however dislike and distrust the way that homogeneity seems to be valued and expected by some folks.

[ December 03, 2008, 11:38 AM: Message edited by: scifibum ]

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munga
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oh, yeah. didn't read the topic well.
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mytreeisempty
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Being a teacher, our union has some kind of connection with a life insurance company. Using their quick online estimates, for a 20 year payout with coverage up to 1mil each for my wife and I, it would cost us a total of 100 a month. I have no clue if that is a good deal or not. We don't have any kids yet, but might in a few years. (We just got married over the summer! No rush.)

Can you guys give a brief sumamry of the difference between term vs. life? I am off to google that right now.

Thanks for all of your replies!

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hobsen
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With term life, you just pay an annual or monthly premium to get an agreed sum if you die. Whole life combines that with a savings program which pays you a large sum at some time in the future, say twenty years from now. In general you can get better investment options elsewhere, and that feature will greatly increase your premiums. Once in a while this benefits someone who otherwise would never save a dime, as it amounts to automatic savings; but I used to make annual payments to a 401k plan, which I could then deduct from my taxable income, and which I now am withdrawing tax free after retirement. With such options out there, it usually pays better to use those rather than putting a lot of money into insurance premiums. But as I said, look for more recently informed advice than mine.

And you might ask someone from your union to explain their life insurance program. Some teachers teach accounting, so teachers' unions rarely get away with offering questionable financial advice. Most likely they offer a good deal, and they certainly should be considered even if you eventually decide you can do better elsewhere.

[ December 03, 2008, 04:10 PM: Message edited by: hobsen ]

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IrishTD
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Overview of life insurance from Consumer Reports:

http://www.consumerreports.org/cro/money/insurance/life/life-insurance-10-06/overview/0610_life_insurance_ov.htm

Most everything I've ever seen when discussing life insurance suggests to go with term life insurance policies.

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Talltwin
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mytree - you may also want to check out Clark Howard's website for additional recommendations.

General guidelines for life insurance is to be able to allow the surviving spouse to continue to live in similar circumstances. If you are newly married, both work, no kids and no mortgage, the amount of life insurance you will need will be minimal and probably available through your employer. If you have kids, a mortgage, car loan, etc, you will want to have some coverage on both of you. You can also add coverage as you get older and your needs increase. For example, say you own a house now but have a mortgage and you have no kids. Taking out a policy that is a 10 year level term might be appropriate since on average most folks stay in a home less than 10 years (this coming from someone who has lived in the same house for 14 years). When and if you have kids, you may want to take out a separate policy if you want to insure that there will be some funds for their college education if you die duing the next 15-20 years. In this case, a 15 or 20 year level term policy would be appropriate.

Level term is usually the best choice in these instances. Your premium is fixed for the term of the policy, and they are usually very reasonably priced for the amount of coverage. One of my policies was a 20 year level for just under $200,000 of coverage and my premium is under $200/year, and rates have come down since I took out the policy. You will want to stay with highly rated companies, and Clark Howard's web site can refer you to those web sites that accurately rate the financial stability of life insurance companies.

The old saw was that you needed 4-5x your annual salary in life insurance. That old saw came from those in the business, but it may be appropriate for some people.

If you have additional questions, just let me know.

talltwin

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scifibum
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Another example:

I currently get coverage at 6x my annual salary through my employer, for an annual premium of about .4% of my salary.

I figure this should allow my wife to pay off our mortgage, and continue to stay home with the kids until they are old enough to be in school full time. At that point, with a paid off house, it should not be too difficult for her to support the family on her income alone (she is currently not working, but if she was, she would not be able to make as high a wage as I do for a few years at least). I have equal coverage for accidental death & dismemberment insurance for 1/3 the cost (also through my employer). I figure if I die in an accident she'll get to drive a nicer car with better airbags and perhaps only work part time while the kids are still young.

My wife is only insured for $50,000, because that should cover funeral expenses and child care expenses for the first few years. Once the kids are in school full time the child care expenses should be manageable enough from my earnings. I should perhaps reconsider whether I want to increase the coverage so that I can spend more time with the kids if they lose their mother. Hmm.

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Talltwin
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Another coverage that many young people forget about (myself included until recently) is disability insurance. While more expensive than normal term life, if the situation presents itself through your employer, you should definately take advantage of that coverage.

talltwin

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jasonr
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Just don't buy State Farm, lol. (they really are notorious)

Is it me, or has anyone else noticed that the most wholesome sounding insurers are always the first to deny coverage or sell you down the river?

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Sakeneko
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quote:
Originally posted by hobsen:
Buying life insurance is always a bad bet, as policyholders on average pay out more than they get back.

(snip, but read)

For young couples with children, a death may leave the survivor with half the income and the same responsibilities, so a big payout could really help. The way to get a big payout cheaply is to buy term life for whatever amount you think the survivor would need.

In other words, buying life insurance is not always a bad bet. ;-)

Another place to check for insurance is through your employer. Mine has term insurance available as part of my benefits package. I don't have children, but at the moment (until my husband finishes his Ph.D.) I'm the main breadwinner for the two of us. So I bought the supplemental package through the company quite a bit more cheaply than I could have gotten it on the open market.

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hobsen
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quote:
Buying life insurance is always a bad bet, as policyholders on average pay out more than they get back.
Yes, Sakeneko, that was potentially confusing. I meant only that policyholders on average pay out more than they get back, so speaking of that as a bet added nothing to the meaning. As you say, letting your husband finish his Ph. D. if something happens to you is a perfectly good reason to spend something on life insurance premiums, particularly when you are young enough so term policies are cheap. And buying a policy through your employer is indeed a good deal in most cases, as insurance companies can offer better rates to such groups. They have found by experience that people who have jobs die less frequently than others their age, so the actuaries include that in their calculations.
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