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Old 09-22-2015, 11:10 AM   #1
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Default Please school me on life insurance...

Stats: 39yrs old, non-smoker, zero health issues, perfect vision and hearing, no surgeries, excellent history of family health...

Military officer of 15yrs, retirement in 5... currently have the standard military SGLI (Servicemember Group Life Insurance) that pays out $400k that I pay $29mo for.

I think I understand how term and life work... will probably keep it real and stick with USAA or through MOAA.

What have you got, why, and what do I need to know?
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Old 09-22-2015, 12:23 PM   #2
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Stick with term coverage and don't fall for the whole life trap. Term life is the best deal for a life insurance product. Whole life generates a ton of commissions for the people who sell it to you but delivers suboptimal returns on the 'investment' portion of it. Beyond that I don't have much for you as best price and desired coverage is really going to depend on your specific situation.
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Old 09-22-2015, 01:20 PM   #3
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Yup, I think term is the way to go... military retirement makes a lot of things real easy, so don't have a lot of the long-term concerns most people might.

Also doing the homework on an umbrella rider for our homeowners/vehicle... seems fairly reasonable to bump all our coverages up to $1mil for $230yr... that includes all our vehicles, home, rental, pets, and any other random fuckups. Also covers anything stupid the kids might do.
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Old 09-22-2015, 04:24 PM   #4
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Stick with term coverage and don't fall for the whole life trap. Term life is the best deal for a life insurance product. Whole life generates a ton of commissions for the people who sell it to you but delivers suboptimal returns on the 'investment' portion of it. Beyond that I don't have much for you as best price and desired coverage is really going to depend on your specific situation.
Well said.. The whole life deal is a scam pretty much.
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Old 09-22-2015, 04:53 PM   #5
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Yup, I think term is the way to go... military retirement makes a lot of things real easy, so don't have a lot of the long-term concerns most people might.

Also doing the homework on an umbrella rider for our homeowners/vehicle... seems fairly reasonable to bump all our coverages up to $1mil for $230yr... that includes all our vehicles, home, rental, pets, and any other random fuckups. Also covers anything stupid the kids might do.
A good umbrella policy should be on everyone's radar. It's the best way to protect your assets from a lawsuit in the event something goes wrong or you cause an accident. Most people don't really consider how easily a simple civil suit can bring you from financially secure to financial ruin in the blink of an eye. Given how low the premiums are for how much protection these policies provide I really think they are a no brainer. The best way to determine the correct coverage limits is to first know the tort laws in your state and if there are any limits on damages that can be awarded. Usually this is a calculation that has to do with net worth and/or salary. Then you can use your own net worth and salary figures to determine the appropriate level of coverage for you given your risk tolerance. I am sure an insurance agent would be able to assist you with this.
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Old 09-22-2015, 05:06 PM   #6
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Yes, term life insurance is the only thing that's worth it. You don't try to combine investments with your car insurance, why should you do it for life insurance?

The key to approaching life insurance is to think of it as lost-income-in-case-i-die insurance, so that your family won't suffer from the loss of money. The amount you need depends on your income level/lifestyle, the savings you have, and the size of the family you're supporting with expected college education costs for kids/etc.

So do a price comparison between two or three choices and pick the best one. When I did it, I shopped between State Farm, Farmer's, and an independent broker who handled a bunch of other companies. I have one policy through American General, another through State Farm (added the second one when my second child was born).

Insurance for your spouse (if you have one) should be guided the same way. My wife stays home, so we have a smaller policy on her, because the primary ongoing financial hit if something happened to her would be for things like child care.

--Ian
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Old 09-22-2015, 10:22 PM   #7
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Whole life at your age would be expensive, it goes by age. I got whole life policies for my kids the week they were born. At the age of 20, they will own it, and hold a cash value. They also have a savings account attached to them with a 4% interest rate. Good deal for a kid for the future.
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Old 09-22-2015, 10:47 PM   #8
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<p>I have annual term, but with guaranteed pricing for XX years (XX can be 5, 10, 15, 20). I had one on my wife when we had kids at home. Now, none on her.</p><p>I will likely drop mine when I retire (rates will not be fixed at that time) as I would expect to be independently wealthy at that time (isn't that what retirement means... not just that you quit working, but that you can afford to quit working).&nbsp;</p>
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Old 09-23-2015, 01:20 AM   #9
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I have a term life policy with Northwestern Mutual right now, 44yo, non smoker, healthy, costs me $46/mo for ~$500K payout.

My broker keeps trying to get me to convert to whole but I have not bitten on it. Does not seem like a good way to save/earn interest, though frankly I'm not all that literate when it comes to investing. When I read through the breakdown of what the first 10 years looks like regarding cost vs actual value it seems like there's a boat payment being made somewhere, and I don't own a boat.
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Old 09-23-2015, 03:04 AM   #10
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I have a term life policy with Northwestern Mutual right now, 44yo, non smoker, healthy, costs me $46/mo for ~$500K payout.

My broker keeps trying to get me to convert to whole but I have not bitten on it. Does not seem like a good way to save/earn interest, though frankly I'm not all that literate when it comes to investing. When I read through the breakdown of what the first 10 years looks like regarding cost vs actual value it seems like there's a boat payment being made somewhere, and I don't own a boat.
TANSTAAFL. There's nothing magic about combining insurance and investments that's going to make for better investment returns, it's far more likely to be the opposite. All it does is make the terms confusing so that you can't figure out how it's screwing you.

IMHO, go with standalones for both. Invest in low/no-load index funds, buy term life.

--Ian
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Old 09-23-2015, 08:45 AM   #11
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They also have a savings account attached to them with a 4% interest rate.
Huh?
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Old 09-23-2015, 08:57 AM   #12
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Huh?
Pm me, I'll hook you up with my insurance guy and more information.
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Old 09-23-2015, 12:08 PM   #13
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Sam, you can convert your SGLI to VGLI when you get out through Prudential.
Mine is $90 a quarter, but I'm younger than you.
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Old 09-24-2015, 10:53 AM   #14
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TANSTAAFL.
Had to google that one lol.
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Old 10-11-2015, 12:21 AM   #15
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A few things as I see them:

1) Whole life is a huge rip off. Do not get taken by that scam.

2) You are only looking to replace income should you croak. 10x yearly expenses is the rule of thumb. If you have enough money saved up you do not need life insurance. My company gives us $50K for free and allows us to purchase more. I decline the extra insurance each time they offer.

3) Umbrella policies are cheap but come with strings. It would cost us $350 for $2M but I have to increase my house and insurance on all 4 of my vehicles. It would end up costing us a fortune to actually get it. I need to bite the bullet and get it anyway but I can't seem to write the check.

4) Getting life insurance through your employer is a bad idea. If you get cancer and then lose your job you are uninsurable.
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