Comments on: How to Save Money on Life Insurance

By: DDFD at DivorcedDadFrugalDad

DDFD at DivorcedDadFrugalDad — Thu, 02 Apr 2009 12:07:52 +0000

Good review!

I would point out that term is cheap when you are young, but is super expensive later on in life when you really need it. Most people should start with term, but work at converting it to cash value, permanent as soon as possible.

By: RAJEEV SINGH

RAJEEV SINGH — Thu, 02 Apr 2009 09:39:47 +0000

Not buying an insurance to save money is not a very smart thing to do. Insurance is a must for everyone and should not be done away with. However, one SHOULD NOT buy anything other than term plan. I agree with buy term and invest the rest policy as far as insurance is concerned.

By: GM

GM — Wed, 01 Apr 2009 16:40:47 +0000

Agree with the points above.

Getting a 30 year term when you are healthy is a great cheap option. Another insurance is long term care insurance. Planners advice that people in their 50s should look at this, but if you have health issues you are better off buying this earlier than later when coverage may be denied.

I would say that looking at one’s parents health would be a rough barometer to chart our future health issues after discounting any obvious conditions like smoking etc. So one can prepare with a little foresight.

By: Nickel

Nickel — Wed, 01 Apr 2009 15:43:02 +0000

Yeah, the point there wasn’t to wait until you get healthy, but rather to highlight the fact that the healthier you are, the lower your premiums will be.

By: Michael @ The Life Insurance Insider

Michael @ The Life Insurance Insider — Wed, 01 Apr 2009 15:20:44 +0000

Good points.

I wouldn’t advise waiting until you are healthy to get coverage. If you need the coverage get the insurance at the rates you qualify for now. Then you can work to improve your health status and apply for lower priced insurance in a few years. You don’t want something to happen to you while you are uncovered and waiting for lower rates.

By: Korey

Korey — Wed, 01 Apr 2009 03:20:09 +0000

I also need to buy life insurance within the next year, as I’m getting married soon and am also worried about aging parents. One major concern I have is the quality of the insurer — if I had my preference, I would buy life insurance from Berkshire Hathaway, as they strike me as the safest choice. But everything I read says that term life insurance is the best investment, and poking around on the BH site, I don’t see any way to buy term life insurance from a BH subsidiary. Am I missing something or do they only offer non-term life insurance products?

By: MITBeta @ Don't Feed the Alligators

MITBeta @ Don't Feed the Alligators — Wed, 01 Apr 2009 02:42:43 +0000

Quick tip: Don’t rely on workplace insurance. You could lose it tomorrow if you lose your job.

By: mapgirl

mapgirl — Tue, 31 Mar 2009 15:19:10 +0000

Sarah – Single people like me generally forgo life insurance beyond what our companies provide, simply because we aren’t trying to leave a home for our spouse or college educations for children. Most of us singletons just don’t need it.

That being said, this post is extremely timely because in the event of a tragic accident, I have parents that still need me to support them in retirement. I just talked to someone last night about universal life vs term insurance and I’m all hot to trot and buy extra insurance for myself very soon.

Thanks Nickel!

By: Noah

Noah — Tue, 31 Mar 2009 14:41:16 +0000

@ Sarah,
A general rule of thumb is 10x the income you want to replace. In this manner, if that person were to pass, you could invest (earning 10% or more) the proceeds and pull 10% off for the rest of your life; hence, replacing the lost income.

By: Sarah

Sarah — Tue, 31 Mar 2009 14:31:01 +0000

Since life insurance costs so little ($50-300 per year) for such peace of mind, I don’t get why so many people forgo it. I have $200,000 and my husband has $50,000 through work. Once we start trying to have kids, we’ll up his to $500,000 or so.
I’ve been unable to find any good calculaters to help us figure out exactly how much we really will need for him so I guess we’ll just go with $500,000 or so. It’s a bit hit or miss!!!
Great post!

By: Nickel

Nickel — Tue, 31 Mar 2009 12:17:55 +0000

FekketCantenel: While it worked out in this case, it’s probably better to have life insurance per se than to have credit life insurance (or mortgage life insurance, etc.). The rates will be much better, and you can simply carry enough to pay off all debts plus whatever other obligations you have.

By: FekketCantenel

FekketCantenel — Tue, 31 Mar 2009 11:52:12 +0000

An extremely timely post. Yesterday, I was drafting a letter for my lawyer boss to a man who’d just lost his stepdaughter. The woman had credit life insurance and therefore could pay off all her debts (except one, which was in question, hence the lawyer). I thought to myself that this is a fascinating and useful thing; if she hadn’t had it, who would get stuck paying her bills?

I go through AAA for all my insurance, so I did a quote on their website and came up with about $150/year for myself for a ten-year term and $500,000 payout. Half of it would go to my future husband; a huge chunk would go to my younger, college-bound brother, with a small bit going to my best friend, who has some massive debts to pay off. When I started thinking about how much more comfortable they would be with that money, I thought it might be a good thing to die. *rolls eyes*

It occurred to me to think of that $150 as wasted every year that I don’t die, but then, I’ve been pretty worried lately about what will happen to my family when I’m not around to support them. If I can pay $150 a year to worry less, I sure as heck will.

By: Baker @ ManVsDebt

Baker @ ManVsDebt — Tue, 31 Mar 2009 11:32:16 +0000

Short, Sweet, and effective. I have to admit I desperately need to add (just a small amount) of life insurance to our financial plans. We don’t own our own house, but do still have student loan debt and a 1 year old daughter. It would be nice to pay for funeral, pay off debt, and fund college if one of us were to pass away.

By: RJ Weiss

RJ Weiss — Tue, 31 Mar 2009 11:25:33 +0000

Great tips.

The only thing I would add is taking advantage of any life insurance without underwriting. A lot of the time your job will offer you up to $50,000 without having you get a physical. This is often the cheapest route to go.