Author Topic: Life Insurance - Whole vs Term vs Universal  (Read 32795 times)

bobozou

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Re: Life Insurance - Whole vs Term vs Universal
« Reply #20 on: January 09, 2018, 02:13:23 PM »
Emily - I happened to shop for life insurance recently;  I'll share my methodology/recommendation below;  If you don't care for for the details, try havenlife.com (i receive no compensation for endorsing them... felt compelled to say that since I'm peddling life insurance after all)

In addition, I agree w the above posters in that I bought enough coverage to last me until the anticipated age that my family wouldn't need my life insurance (~55 yrs old).

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My main goals are to a) get (LOTS) of quotes, and b) avoid spending hours talking to financial-sales-people (FAST).  In total, I got what I needed in <1 hour.


0) General Info - there's a lot of complexity out there.  I can't help you here.  If you want simple, just stick to 'term life insurance' (which is what I opted for)


1) Nerdwallet - they have a list of life insurers, as well as a multi-insurer online quoting aggregation system.  Pretty helpful.

https://www.nerdwallet.com/blog/insurance/best-life-insurance-companies/#methodology (list of insurers)
https://nerdwallet.quotacy.com/quote.php#basic (multi-insurer quoting system)


2) Geico/Lifequotes - Geico uses a site (lifequotes.com) create another multi-insurer online quoting aggregation system as well.

https://www.geico.com/life-insurance/  (start a quote)
http://www.lifequotes.com/


3) Haven Life - this is an insurer (fully owned subsidiary of Mass Mutual).  They are all about making it easy/simple.  It took about 5 minutes to complete their process, and they gave a (single) competitive quote (no medical exam required - many other places may/will require this to start the policy).  This is also who I ultimately opted to go with.

www.havenlife.com


emily

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Re: Life Insurance - Whole vs Term vs Universal
« Reply #21 on: January 09, 2018, 02:26:25 PM »
Should I get an agent or apply online? Is it better to get multiple term life with smaller amounts? I was checking online and the premiums increase more with higher coverage (and not in the same ratio). Is that any of their business if I get insurance from multiple companies and later cancel as I wish? I am thinking of 10 years as 20 years is very expensive.

If yo are going for the shorter term, be sure it is renewable if your health should change

Or that it lasts as long as you think you'll need it.  Do you really need life insurance in your 60s+?  You shouldn't have any debts or young children, and should have saved a substantial amount by then that paying for life insurance isn't necessary.  If you are 65 or 70 years old and need life insurance you are doing it wrong.

emily

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Re: Life Insurance - Whole vs Term vs Universal
« Reply #22 on: January 09, 2018, 02:33:45 PM »
What do you mean by 'if you do not care about the details'?

I am reading that getting insurance without medical exam is not recommended.

Is there a way to figure out how much term life amount I may need? It appears that if you apply for too much at random, it is a red flag.

TonyG

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Re: Life Insurance - Whole vs Term vs Universal
« Reply #23 on: January 11, 2018, 07:50:40 AM »
Emily,

Usually they will ask you if you have any debts (mortgage,line of credit, etc). Add them all up. Any kids? Add 40K per kid in case something happens to you so that they are covered for university/college. Funeral Expense say round 15K. Then if something happens to you and you work and support your kids, take your annual salary and multiply it by 3-6 times. Thats a general number of how much you would need. if you feel you need more or less, you can add to that number or subtract  from it.

mhdousa

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Re: Life Insurance - Whole vs Term vs Universal
« Reply #24 on: January 11, 2018, 05:12:16 PM »
Should I get an agent or apply online? Is it better to get multiple term life with smaller amounts? I was checking online and the premiums increase more with higher coverage (and not in the same ratio). Is that any of their business if I get insurance from multiple companies and later cancel as I wish? I am thinking of 10 years as 20 years is very expensive.

If yo are going for the shorter term, be sure it is renewable if your health should change

Or that it lasts as long as you think you'll need it.  Do you really need life insurance in your 60s+?  You shouldn't have any debts or young children, and should have saved a substantial amount by then that paying for life insurance isn't necessary.  If you are 65 or 70 years old and need life insurance you are doing it wrong.
i'm looking at layered policies. E.g. buying 3 different policies, one for 10 year, one for 20 year, and one for 30 year. Let's say each policy is for $500k each. You would have 1.5m in coverage for years 0-10, then 1m in coverage for years 11-20, then 500k in coverage in years 20-30. This is much cheaper than buying a 1.5m 30 year policy.

Something to think about if it applies to your situation.
-M

jmp8822

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Re: Life Insurance - Whole vs Term vs Universal
« Reply #25 on: January 11, 2018, 06:56:28 PM »
What do you mean by 'if you do not care about the details'?

I am reading that getting insurance without medical exam is not recommended.

Is there a way to figure out how much term life amount I may need? It appears that if you apply for too much at random, it is a red flag.

emily -

I used to be in the insurance business and think I can help you think through this.

Step one - find one brokerage firm or agent that will quote 10-20 top companies term insurance. (i.e. don't go to state farm, then allstate, then northwestern mutual, that would be too time consuming. Find a single agent/firm with access to all the major term life companies - that's all you need to get the best pricing.) Examples of top companies would be Protective Life, Principal, AIG, Mutual of Omaha, Brighthouse, Minnesota Life, North American, John Hancock, etc. There are lots of good ones.

Step two - Go through underwriting with whoever has the best top-line pricing, from the list of possible prices the agent quoting multiple companies provides. I.e. the top of the list cheapest per 100k of term with the best health class (see attached example).

Other notes: Most companies term policies now have conversion options that are built into the policy. So, you could hypothetically get a 10 year term policy for cheap (relative to 20 year term) and get a new 10 year policy (reapply) in year 9+ of the first policy. The conversion option is important because if you have good health upfront (meaning you qualify for the best rates), you can convert it inside the policy limits to a permanent policy at the same health class you had at the beginning of the 1st policy if your health changes for the worse. In other words, you get a decent/good rate on a permanent policy via conversion if your health gets much worse over the first 10 years, in a worst case scenario. However, ideally you stay healthy like you might be today for the next 9+ years, and you pocket a large spread of money over the next 19 years with two 10-year term policies versus one 20-year term for example.  The conversion option of the first 10 year policy is your fallback if you need the insurance for longer with a negative health result.

Also, have the agent show you differences in pricing between 500k and 1M etc. It should get cheaper per $1k of insurance as it goes up. There is a fixed policy fee in every policy that makes larger amounts cheaper, all else held equal.  I.e. $500k 10-year term could be $250 per year, while $1M might be $400 per year. So, you only pay $150 per year more for the 2nd $500k of insurance.

If anything above doesn't make sense, please ask questions. Hope that helps some.


Peregrino

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Re: Life Insurance - Whole vs Term vs Universal
« Reply #26 on: November 09, 2018, 09:22:51 AM »
What do you mean by 'if you do not care about the details'?

I am reading that getting insurance without medical exam is not recommended.

Is there a way to figure out how much term life amount I may need? It appears that if you apply for too much at random, it is a red flag.

emily -

I used to be in the insurance business and think I can help you think through this.

Step one - find one brokerage firm or agent that will quote 10-20 top companies term insurance. (i.e. don't go to state farm, then allstate, then northwestern mutual, that would be too time consuming. Find a single agent/firm with access to all the major term life companies - that's all you need to get the best pricing.) Examples of top companies would be Protective Life, Principal, AIG, Mutual of Omaha, Brighthouse, Minnesota Life, North American, John Hancock, etc. There are lots of good ones.

Step two - Go through underwriting with whoever has the best top-line pricing, from the list of possible prices the agent quoting multiple companies provides. I.e. the top of the list cheapest per 100k of term with the best health class (see attached example).

Other notes: Most companies term policies now have conversion options that are built into the policy. So, you could hypothetically get a 10 year term policy for cheap (relative to 20 year term) and get a new 10 year policy (reapply) in year 9+ of the first policy. The conversion option is important because if you have good health upfront (meaning you qualify for the best rates), you can convert it inside the policy limits to a permanent policy at the same health class you had at the beginning of the 1st policy if your health changes for the worse. In other words, you get a decent/good rate on a permanent policy via conversion if your health gets much worse over the first 10 years, in a worst case scenario. However, ideally you stay healthy like you might be today for the next 9+ years, and you pocket a large spread of money over the next 19 years with two 10-year term policies versus one 20-year term for example.  The conversion option of the first 10 year policy is your fallback if you need the insurance for longer with a negative health result.

Also, have the agent show you differences in pricing between 500k and 1M etc. It should get cheaper per $1k of insurance as it goes up. There is a fixed policy fee in every policy that makes larger amounts cheaper, all else held equal.  I.e. $500k 10-year term could be $250 per year, while $1M might be $400 per year. So, you only pay $150 per year more for the 2nd $500k of insurance.

If anything above doesn't make sense, please ask questions. Hope that helps some.

Layering is what I did, it was cheaper.  Got a 10-year and a 20-year in my mid-30's.  Figured if I needed more coverage, it would still be cheaper to buy a shorter policy when the first expires.

I also recommend diversifying your insurers, on the off-chance one decides to start up a Financial Products division

Mephistopheles

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Re: Life Insurance - Whole vs Term vs Universal
« Reply #27 on: July 27, 2019, 04:28:14 PM »
Who would have thought all these fancy life insurance policies would be so hard to understand, even for investment experts like us?

My dad has had a "flexible premium variable life insurance" policy for many years. I'm sure it was a bad deal when he signed up but after all these years I'm trying to figure out whether it's worth to keep going or to cash out. I have very little information at the moment but can look more things up and post.

For now what I know is:
- Face amount of policy is $350,000
- Portfolio value is about $200,000
- Death benefit adds the 2 to make $550,000
- Every year there is like a $1,000 + in insurance fees taken from the portfolio

The portfolio is invested in a mix of equity and bond funds. If we move the money out now, we'd lose the $350,000 potential in terms of death. However we'd save whatever thousands of annual on insurance fees.

Can anyone tell me how to figure out what the most economic course of action is?

John Hjorth

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Re: Life Insurance - Whole vs Term vs Universal
« Reply #28 on: July 28, 2019, 01:20:21 AM »
It's getting a bit morbid here, Mephistopheles, - but I guess we must live with that here,

I've been in exactly that situation twice within the last four years in an advisory role for family members.

To me, it's a two-step process mentally.

1. Please don't start with even trying to do some calculations. [Here, I assume - and hope - that you still have your mother.] The thing you have to acknowledge and realize is, that this decision is actually not about your father, but about your mother. So start mentally thinking about that you tomorrow get a call from your mother about that your father has suddenly passed away. What is your mothers situation then - with and without the USD 350 K? - You have to take a view at the economic sphere of your parents, as whole, to make some overall judgement about that. [Perhaps the saved balance can be split from the coverage and the life insurance coverage can be maintained, -likely not possible, but sometimes possible here in Denmark.] The real key here is to understand that this should actually be a conversation with your mother as the decision maker with your father as a listener, not the other way around. So draw the overall picture of these two alternatives for your mother, and listen carefully to her reaction, and draw a final conclusion with her on that basis. Your mother will never forget that you have cared for her by assisting her through that particular exercise.

2. [if any step 2] Calculations on taking control of the savings.
« Last Edit: July 28, 2019, 01:24:55 AM by John Hjorth »
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Mephistopheles

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Re: Life Insurance - Whole vs Term vs Universal
« Reply #29 on: July 28, 2019, 05:34:51 PM »
It's getting a bit morbid here, Mephistopheles, - but I guess we must live with that here,

I've been in exactly that situation twice within the last four years in an advisory role for family members.

To me, it's a two-step process mentally.

1. Please don't start with even trying to do some calculations. [Here, I assume - and hope - that you still have your mother.] The thing you have to acknowledge and realize is, that this decision is actually not about your father, but about your mother. So start mentally thinking about that you tomorrow get a call from your mother about that your father has suddenly passed away. What is your mothers situation then - with and without the USD 350 K? - You have to take a view at the economic sphere of your parents, as whole, to make some overall judgement about that. [Perhaps the saved balance can be split from the coverage and the life insurance coverage can be maintained, -likely not possible, but sometimes possible here in Denmark.] The real key here is to understand that this should actually be a conversation with your mother as the decision maker with your father as a listener, not the other way around. So draw the overall picture of these two alternatives for your mother, and listen carefully to her reaction, and draw a final conclusion with her on that basis. Your mother will never forget that you have cared for her by assisting her through that particular exercise.

2. [if any step 2] Calculations on taking control of the savings.

Thanks for the kind response. Fortunately, my mother would be well off with or without the policy. This is something my dad signed up for many years ago at the urging of the an insurance salesman.

I guess step 2 it is.