Life Insurance Poll

Claud- I am no expert but I agree with you BOTH parents need insurance. God Forbid that both parents died or that a husband would need take care of a child alone.

I had private life insurance prior to dating Scott, along with work insurance. My reason was that at 26 life insurance is a heck of a lot cheaper than at 30+ or 40+ and what if I didn't work for a while later on, or what if I got laid off (which happened). Scott also has insurance thru work and now we just got him a private policy. I am not taking any chances with our child's future.

Both private policies are term.

Regarding work insurance: with the economy many companies have cut back on benefits. your company can cancel this benefit at anytime. or if you are laid off you lose it as well. The older you get the more expensive it gets so getting a policy now is still the best bet. IMO

This is a good thread. We were looking into this as well. We don't have kids but now that we bought a house and two car payments and blah blah I know that if something happen to one of us the other person would have more than grief on their hands.

However I am completely confused with getting term or whole life policies.

The term insurance expires eventually and I thought even if we bought a 20 year policy right now. When that policy expires we would be in our 40s and I would think the rates would be sky high by then.

But then I have read that whole life policies are not a smart idea.

I am confused on this one. I just know we need something.

Claud, you're so right. I read something once that calculated the 'salary' of a SAHM and when you add everything from the cost of daycare to money saved from lunch eaten at home to gas money it came to a number i don't recall exactly but for the NY area it was close to 30k.

What you do is priceless, though.

DH is an insurance agent with the Knights of Columbus and is in the process of getting the fraternal equivilent of Certified Financial Planner certification. Over the past 5 years he's talked about his job so much I think I could almost do it. That said, I'll throw out some comments that relate to the discussion which may be helpful.

Term vs Whole Life - both have a place in your financial planning strategy. Term is a great low cost alternative for short term needs, or a need that will expire - a home equity loan, credit card bills, covering your children's college education. Eventually, you will become too old for Term - after a certain age you can't get it (in your 70's I think) so don't count on it to support an elderly spouse. Whole Life builds equity and returns dividends in the way of cash, or additional insurance. It is in effect for your whole life and eventually your heirs will get the benefit (or you can withdraw the cash for living expenses later in life once the needs are no longer as large). At the very least, many consider it advisable to have a small whole life policy to cover burial costs which can run $10,000 to $15,000 dollars currently.

'Buy Term, Invest the Rest' - you may hear this advice, often from someone who's recommending that you cover your needs with a term policy and gamble in stocks or mutual funds with the money you might have put into Whole Life. Remember, insurance is to insure your needs. If you want to gamble with the coverage of your needs you can put it into the market. Variable and Universal funds can be risky and often the projections look good, but in a down market you can lose, and often the projections show an unrealistically rosy future. If you are looking at them be sure you really understand what you are buying.

Waiting until you have children, a house, etc....
This is another gamble. Health problems can mean you cannot get insurance. It's not like buying a car or tv, you have to qualify medically. Just see how likely it is after you've had a heart attack - they don't want to insure a known bad risk. This is a good argument for getting it now while you are young and healthy plus it's cheaper when you're younger. If you're waiting til you have children and develop a problem before then you may not be able to get the coverage and where does that leave you. Things like smoking, high blood pressure or just being overweight can get you a rated policy that costs more. I think you can challenge a rating annually - if you stop smoking, request to get your rates dropped.

Consider your insurance policies as part of a financial planning strategy. Ask yourself what need or expense do you want to cover if you or your spouse should die. Make a list and tally up the expenses - Mortgage, other loans, credit card bills, day care or maybe to help support a career change for DH so he could be home more with the children if you're gone, children's college, a daughter's dream wedding or just monthly bills and time off from work while you grieve. Consider a blend of term and whole life, perhaps some term to cover the loans & credit cards and drop that when they are paid off, some whole life to build equity and for burial.

OK - this is long enough - I hope it helps - FM me if you have questions and I'll answer what I can, or get DH to respond

Karen ... you are to cute ... are you sure you don't want to be a CFP?

My DH is a CFP and knows all about this stuff too. We decided right now what we are doing works for us for many different reasons.

This is a useful thread though ... !

Claud, Although I do not sell life insurance and am not qualified to give financial advice, I would definitely agree that both parents should be insured. Even though you are not working outside the home, you are making contributions to the household that carry a very large monetary value. God forbid something would happen, this money would help cover some of these expenses.

ETA - Just wanted to add that you also never know how your life circumstances will change and it is better to have purchased life insurance at a younger age than later on in life when you feel you might need it more.