View Full Version : Term life insurance

Matt Day
02-15-2018, 9:42 PM
A friend of mine recently passed away from lung cancer at 40, and had $1M in life insurance which is (and will in the future) really help his family. This has me thinking I should get consider getting term life insurance as well.

Iím 38, pretty fit and very active, and got a quote from Health IQ (through Banner Life) for $85/month for 30 years. After a physical and reviewing my health records I qualified for the ďpreferred plusĒ class which apparently is the best health level which should be the best pricing.

Question is, is $85/mo a good price? I always shop things like this around and was hoping you all could chime in with your experience.

Frederick Skelly
02-15-2018, 10:24 PM
I was quoted $100 per month for 30 yr term. So if the company is secure - doesnt help your family if they go belly up in 2 years - I'd say you got a fair price.

Dan Friedrichs
02-15-2018, 10:37 PM
Everything you need to know:

Jim Becker
02-16-2018, 9:58 AM
It's a good idea to get a contract now while you're younger and in very good health. But before you sign for the contract you have a quote for, do some additional shopping around. The rate you have, assuming it's for $1M isn't bad at all, but this is something you can get multiple quotes from. If you are a member of AAA, for example, check with them on rates...they did a good job for me when I last bought additional term life insurance. It was much less expensive than the group life program with my former employer (I had an age change that ramped up the group rates) and I knew I was going to retire in some reasonable period of time when I made that change. With a special needs adult kid and my younger just starting in college, it was important to me to maintain a higher level of coverage for a some period into the future. (I envy you on those 38 yo rates... :) )

Matt Day
02-17-2018, 9:01 AM
Thanks guys - appreciate the information. Iím going to get a quote locally for comparison.

Also, I think Iím going to get a quote for a 15 year term. In 15 years the kids will be out of high school and independent enough where my wife wouldnt need to hire help for them. Iím a stay at home dad and my wife is the breadwinner, so I donít have a salary to replace.

Dan Friedrichs
02-17-2018, 10:02 AM
Matt, did you see the link I posted? There is no reason to shop "locally" - term life is a commodity, prices between agents are ~same, you'll find the all prices transparently available on term4sale.com (and you can tweak years/benefit/etc as much as you like and get immediate quotes). A local agent is likely to try to steer you to a more expensive product - much better to find exactly what you want on term4sale, print out the quote sheet, walk into the office of a local agent and say, "I want exactly this at the listed price"

Jim Becker
02-17-2018, 12:02 PM
I’m a stay at home dad and my wife is the breadwinner, so I don’t have a salary to replace.
I think you vastly underestimate your "salary"... ;)

Dan is generally correct that you can and should shop for term life online as that's often the best way to find the lowest rates. But I also do believe that there's no harm in shopping with a local independent agent, too, especially if you are an "informed consumer" who already knows what the general rates for your age and health should be.

Ralph Okonieski
02-17-2018, 7:51 PM
If you are a veteran, try USAA for term life insurance. I think they only sell to veterans now.

Marshall Harrison
02-17-2018, 8:02 PM
i just wanted to caution you about getting insurance information from strangers on the internet. Talk with one or more licensed local professionals.

Aaron Conway
02-21-2018, 9:19 PM
Don't just shop and base your decision on price. You need to consider the rating of the insurance company for financial stability. You may not get a better rate from a local company but you should get better service in the event your spouse needs to cash in that policy. I buy mine through the Knights of Columbus so I know that my wife won't need to worry about a thing should I pass and my local agent will take care of everything. Please do your research and make a decision to take care of your family should you not be around.

Andrew Kertesz
02-22-2018, 7:02 AM
Why do you want Term insurance? You need to talk to an educated agent and look at policies that build cash value. There are many ways to cover yourself and start generational wealth. Take the blinders off and look at different options before you sign on the dotted line....

Lee Schierer
02-22-2018, 8:08 AM
I agree with Andrew. With Term insurance when the term ends you have nothing. There are other policies that may cost a bit more, but build a cash value that you can cancel and get some return on the investment if you later decide you don't need it.

Malcolm McLeod
02-22-2018, 8:39 AM
... look at policies that build cash value. ...

... and get some return on the investment ...

There is an adage that's way older than I am, "Buy Term Life and invest the difference."

This certainly isn't in my experience wheel-house, but I believe the insurance product Lee & Andrew are referring to is called a Whole Life policy - tho' carriers probably disguise it with eleventy-seven other names. If you look at this as an investment, for equivalent death benefit policies a Whole Life policy costs more, but builds cash value. The catch is that the interest they pay on the accumulated cash value has traditionally been very low. I'd bet its near zero in today's low interest environment? IF you have the discipline, Term Life and investment has been, and probably will continue to be, a better long-term deal.

Most investment advisers would probably follow the adage. Most insurance salesman would probably sell you Whole Life.

As to investment discipline, in some ways it's like escrowing your property taxes with your mortgage payment: some people have the discipline to set aside money for their annual tax bill; others allow their mortgage company to 'force' them to save... YMMV.

Adder: pretty good explanation here .... https://www.consumerreports.org/cro/news/2015/04/is-whole-life-insurance-right-for-you/index.htm
Adder^2: Just read Dan's link :: even better.

Dan Friedrichs
02-22-2018, 9:27 AM
Adder^2: Just read Dan's link :: even better.

Glad someone saw what I posted. Seriously, folks - just read that link. It's the most information-dense and useful thing you'll ever read about life insurance.

Whole life is a terrible choice for most people. The reason you hear about it at all is because the commission made by an agent selling it is MUCH higher than a term policy, so they push it. That's another reason it's almost foolish to involve a "local" agent in your life insurance search - the "friendly, local guy" sitting across the table is going to talk you into a product that makes him the most commission, not what's in your best interest. The sales commission on a term life policy is roughly equal to 1x the annual premium - so, like, $200? You think a local agent (who has office rent to pay and staff overhead) is going to work really hard to get you the best policy in exchange for a one-time payment of $200?

Jim Becker
02-22-2018, 9:31 AM
I've been around the insurance business life-long...my father was extremely successful in the business for 30+ years and I spent some time there, too. While "whole life" may have a place for "last expenses", especially when purchased at an early age at a lower premium, for pure insurance purposes, term life brings the best bang for the buck when you are talking about the typical $500K-$1M that many of us purchase to provide financial resources to our families should we meet an early demise. That, combined with a sound, but separate, investment plan to "build wealth" is what I subscribe to personally. It is very true that price alone shouldn't be the deciding factor. Company stability and good service are also important.

Malcolm McLeod
02-22-2018, 9:54 AM
... the most information-dense and useful thing you'll ever read about life insurance. ...

... a sound, but separate, investment plan ...
Company stability and good service are also important.

No pun intended, Dan's description is dead-on (...Well, maybe just a little pun.:o), the linked article is much more succinct than I ever thought about being. It makes a good point about company stability too - - buy smaller policies from multiple carriers.

Lee Schierer
02-22-2018, 12:38 PM
The problem is many people don't have the determination to start and keep at the investment portion of the equation on their own.

Prashun Patel
02-22-2018, 1:13 PM
the younger you are, the cheaper it is. Everyone must make their own choice, but I can tell you that as I get older I always wish I purchased more of it , earlier.

Where it gets complicated is if you want to have flexibility in the policy to draw down the balance of your immediate needs change, or to pass on to your heirs, or to get something that lasts indefinitely.

Malcolm McLeod
02-22-2018, 1:56 PM
"After 20 years, the policy's guaranteed cash value is $181,630, and you will have paid $187,400 in premiums. But after 20 years, if you had bought term for $480 a year and invested the $8,890 difference, you'd have $480,806 before taxes and inflation at an average annual return of 8%."

- - This from a quick search (the rest is blocked, so can't give you the underlying assumptions), but you have to assume it compares equal payout death benefits. The guarantee seems to be that, assuming you don't die (we're talking investments here) the carrier will store your money for 20yrs, and only charge you $6000 for their trouble. You'd think that for a $300,000 difference in outcome we could all be determined, disciplined, and committed enough to write 2 monthly checks (1 to ourselves, 1 to insurance carrier), instead of 1 to the carrier.

By the way, I'm not in the insurance biz, but I'll bet they 'invest the difference', and that means that $300,000 gain goes in their pocket. Maybe I should be in biz?

Prashun Patel
02-22-2018, 2:50 PM
Itís not quite right to dismiss whole life out of hand. As a diversification and inheritance strategy it can make sense. But that is not what he Op is asking.

As a gross generalization, it is my personal belief that term is best bought first for pure safety reasons but whole life MAY be right as your wealth builds and you donít have other ways to diversify investments properly.

Sadly you wonít get the complete answer here on smc in a single thread. Like all investing, discipline is good, but inflexibility or unwillingness to adapt based on changing corcumstances is also ill advised.

Ken Fitzgerald
02-22-2018, 4:19 PM
There are a lot of people who believe insurance isn't a necessary evil. There are also those who believe that buying the cheapest is always the best answer.

Research the subject for yourself, consult trusted, close friends for their opinion and then make the decision that is right for you.

I'm sure a lot of people would think I'm over insured. Of course, I paid $8/month for over 24 years for 50% disability insurance. Do the math 96 dollars a year. For 24 years that comes to a total of $2304.

Then into that 24th year I awoke deaf. Care to guess how long it took me to reclaim and then exceed that $2304 when I could no longer work in the field I had enjoyed for 34 years? It wasn't long.

Most people who buy disability insurance don't get the opportunity to use it, thankfully!

My siblings and I buried my Mom last month. Thankfully she had a very small insurance policy. Three of us split the remaining costs among us so we could equally share the burden.

Jim Becker
02-22-2018, 4:44 PM
It’s not quite right to dismiss whole life out of hand. As a diversification and inheritance strategy it can make sense. .

I agree with this...there are a number of situations where these contracts are the right choice to meet certain particular goals, particularly when the insured is involved in a business and some other things.

Jerry Bruette
02-22-2018, 10:26 PM
I still remember the day I brought my whole life policies to the Prudential office and told the manager I wanted to cancel them. He called me names I can't put in this post. One of the best financial decisions I ever made.

I ended up buying three times as much term insurance for way less money and stuck the difference into the 401k that had justed started at work. And it's cost less in fees to get at least 6 times more cash value in 30 years.

Andrew Kertesz
02-23-2018, 5:59 AM
An 8% return is getting awful ambitious and is no way a guarantee....