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School Me On Life Insurance....

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School Me On Life Insurance....

Old 10-30-11, 03:43 AM
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School Me On Life Insurance....

So since I have become a father, it's been more important to me to have life insurance just in case. My wife has some sort of policy through GAFRI, but all I know is they take something like $300-$500 every couple of months out of her check and put it in an account.

Apparently we can take money from the account (about 10% of it) or close it entirely, and get it all back minus a few hundred bucks. I guess it's considered Whole and not Term? I am new to this, I just read some stuff online, but I figured I'd ask you guys first.

Now here is my big question. Say we have ten grand in the account. If something happens, do they just take that ten grand and send it to us? Or is there some big 100k or what not windfall that kicks in? I'm sure it says on a contract somewhere, I just haven't had the chance to look for it.

I think I'd rather pay for some big policy than have a glorified savings account. I could put that money in the bank and earn interest.

Thoughts?
Old 10-30-11, 05:46 AM
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Re: School Me On Life Insurance....

There are so many different life insurance products that it's hard to tell without reading the policy.

Term life insurance is for a specific time period, say ten years. You pay for ten years then it expires and you have nothing.

Whole life you pay premiums for the rest of your life. The policy accrues cash value which you can borrow against. If you decide to cancel the policy you can take the cash value.

Yours sounds like an insurance/investment combo. There is the face value/death benefit amount(ex: $100,000). The cash value amount which increases over time, and an accumulation value.
Part of the premium being paid is earning interest. There are restrictions on accessing the money, hence a higher rate of return. As time goes by these restrictions are reduced. Eventually the accumulation value will eclipse the cash value and become the amount you can borrow against or walk away with. At a specific point there will no longer be any withdrawl charges. The earnings in the account will probably be taxable.

Your big question. The death benefit is probably way more than the $10,000 value of the account.

Another way to look at it: Say you put $100 a month into a 401K. $80 goes into the account and $20 goes toward the life insurance. The 401K is worth $10K but if you die the account is closed and your beneficiary is paid $150,000.

Last edited by rw2516; 10-30-11 at 06:02 AM.
Old 10-30-11, 06:18 AM
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Re: School Me On Life Insurance....

You die, they pay. Otherwise you pissed money down a rathole. You HOPE they win and you pissed money down a rathole. So, piss as little as possible for the insurance you need.

Whole life is usually a pretty bad deal compared to other investments. Buy term to cover your needs and if possible invest the difference between term and whole-life premiums. You will come out WAY ahead, and have the coverage needed in case you die young.

As mentioned above, I am sure there is a higher death benefit, and the $10K is only the current cash value of the policy. You need to find the contract to evaluate the policy. However, I would guess that you don't have a large enough death benefit and the monthly premium is too much.
Old 10-30-11, 06:23 AM
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Re: School Me On Life Insurance....

The monthly premium isn't a problem, we never miss it. I was just looking at the web site the other day and I didn't see any terms or contract. I know if I ask my wife she'd say she has no idea where it is.
Old 10-30-11, 09:35 AM
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Re: School Me On Life Insurance....

Talk to your hr. a lot of companies will offer some for free
Old 10-30-11, 10:21 AM
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Re: School Me On Life Insurance....

We just got a 30 year term policy for my wife and myself. All those whole life ones are a rip off. You pay more so you can have an "account" you can borrow against. They offer shitty return rates, that you could probably beat with a little research. If you really want something like that, buy a term policy and take the difference you'd pay from a whole life policy, put it in a bank or stocks. Same thing.
Old 10-30-11, 10:31 AM
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Re: School Me On Life Insurance....

Check the payout of your policy. Sounds like whole, and the payout probably isn't enough. Term life insurance is cheap. We bought 15 year when we had kids. Total premium is about $500 a year and it is for $500,000 for both my wife and me. The idea is that it needs to be enough to cover all current debts and replace income for her, and if she dies, it needs to be enough for a 18 year old French nanny until the boys are off to college.
Old 10-30-11, 10:31 AM
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Re: School Me On Life Insurance....

And a few years beyond, for good measure.
Old 10-30-11, 02:46 PM
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Re: School Me On Life Insurance....

I'm a firm believer in term. we have 20-year policies that expire when our son is 22 y.o. If he needs insurance after that, it's his own fault.
Old 10-30-11, 03:44 PM
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Re: School Me On Life Insurance....

Go term. Way cheaper. And if something happens to your health while the term policy is in effect; most term policies will allow you to convert it to whole life insurance without further evidence of insurability.
Old 10-30-11, 04:13 PM
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Re: School Me On Life Insurance....

Originally Posted by cdollaz View Post
I'm a firm believer in term. we have 20-year policies that expire when our son is 22 y.o. If he needs insurance after that, it's his own fault.
Pretty much what the wife and I did, although we did 30 year terms, I think. Figured that would get us to retirement so if the wife or I kicked the bucket before that, the money would recover the other's retirement.
Old 10-31-11, 12:49 AM
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Re: School Me On Life Insurance....

yeah, I did a 20 yr term when I had a kid. ENough to pay off the mortgage and leave a little nest egg.
Old 10-31-11, 08:49 AM
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Re: School Me On Life Insurance....

As others have noted, "whole life" or "cash value" insurance is rarely a good investment. Buy term insurance. If you don't die you're out the premium, period.
Old 10-31-11, 04:25 PM
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Re: School Me On Life Insurance....

What about the way you die? I know there is usually a indemnify clause for suicide within some first 5 years of the term life, but other than that, any kind of death is covered? Homicide, gross negligent, terrorist act, act of god?
Old 10-31-11, 06:15 PM
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Re: School Me On Life Insurance....

Originally Posted by SuperJim88 View Post
What about the way you die? I know there is usually a indemnify clause for suicide within some first 5 years of the term life, but other than that, any kind of death is covered? Homicide, gross negligent, terrorist act, act of god?
actually that's not true. there's no "suicide" clause in ours. that's a common myth. if i die, someone gets paid. unless of course my wife (the beneficiary) or my kid(s) (secondary beneficiary) have a hand on my death.
Old 10-31-11, 06:58 PM
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Re: School Me On Life Insurance....

Originally Posted by Deftones View Post
actually that's not true. there's no "suicide" clause in ours. that's a common myth. if i die, someone gets paid. unless of course my wife (the beneficiary) or my kid(s) (secondary beneficiary) have a hand on my death.
I suspect there is some clause in your policy whereby pre-existing conditions (which includes suicide) are not paid out initially. My policy is 2 years, I believe. If there was no such clause, suicidal people would get insurance and then kill themselves.
Old 10-31-11, 07:04 PM
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Re: School Me On Life Insurance....

Originally Posted by LurkerDan View Post
I suspect there is some clause in your policy whereby pre-existing conditions (which includes suicide) are not paid out initially. My policy is 2 years, I believe. If there was no such clause, suicidal people would get insurance and then kill themselves.
do you want me to fax you the paperwork to see that there isn't?
Old 10-31-11, 07:28 PM
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Re: School Me On Life Insurance....

Not that I'm doubting you but I couldn't imagine a legitimate life insurance company not having some type of suicide clause.
Old 10-31-11, 07:34 PM
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Re: School Me On Life Insurance....

Originally Posted by TomOpus View Post
Not that I'm doubting you but I couldn't imagine a legitimate life insurance company not having some type of suicide clause.
I've gone over all the paperwork and there's nothing in there. Unless they didn't give me a document or something, but it was all in a packet folder, bound together.

Edit: I think I may have figured out why. This is through my work and not from a company I just called up. I'm wondering if there is some sort of group policy thing where it is not needed. I dunno, but it's not in there.
Old 10-31-11, 07:45 PM
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Re: School Me On Life Insurance....

Interesting. You could be right about the group policy thing.
Old 10-31-11, 07:48 PM
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Re: School Me On Life Insurance....

A couple features I found about recently and think are valuable are the abilities to take some of the life insurance proceeds in advance if you've been diagnosed as terminal or need to go into a nursing home. You could have a pretty fun last 6 months!
Old 10-31-11, 07:55 PM
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Re: School Me On Life Insurance....

Originally Posted by X View Post
A couple features I found about recently and think are valuable are the abilities to take some of the life insurance proceeds in advance if you've been diagnosed as terminal or need to go into a nursing home. You could have a pretty fun last 6 months!
Yeah, ING had something like that when we were looking at term policies. Probably more for care like hospital bills or hospice, but I guess you could have some fun too.
Old 10-31-11, 08:32 PM
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Re: School Me On Life Insurance....

My policy will just plain pay you cash, up to at least 1/2 the policy amount if you're terminal. They might as well, they're going to pay it soon anyway.
Old 10-31-11, 10:54 PM
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Re: School Me On Life Insurance....

Originally Posted by Deftones View Post
I've gone over all the paperwork and there's nothing in there. Unless they didn't give me a document or something, but it was all in a packet folder, bound together.

Edit: I think I may have figured out why. This is through my work and not from a company I just called up. I'm wondering if there is some sort of group policy thing where it is not needed. I dunno, but it's not in there.
You should look into getting a term policy out of work. You lose that group term insurance once you leave your job. You have to quit because of some illness, means you lose your group term and then are not insurable for a term policy on your own.

Outside of group term, all term and whole life policies have a suicide clause (usually 2 years).
Old 10-31-11, 11:10 PM
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Re: School Me On Life Insurance....

Originally Posted by tbone View Post
You should look into getting a term policy out of work. You lose that group term insurance once you leave your job. You have to quit because of some illness, means you lose your group term and then are not insurable for a term policy on your own.

Outside of group term, all term and whole life policies have a suicide clause (usually 2 years).
actually, it's portable. i made sure before i started paying for that. but, even if it weren't, it's cheap and i plan on being there for the next 20 years or more, so it would almost cover the term that we were looking for.

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