questionslife insurance - can you help me/share your…

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@smtatertot13: (cont.) Between all of my debt that's either being taken care of by my parents or is in their name (like the mortgage), and all of their debt which is much higher because they've supported me, I would like to have life insurance that pays out around $250k. This would wipe out all of the debt left from me, for my husband and for my parents, leaving everyone at 0, which is the best possible outcome I can see from my dying before my parents/husband.

This is the part where i tell you that i know NOTHING about insurance and am quite overwhelmed by the serious amount of information on the internet, which is why i'm asking you fine folks! (cont.)

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@smtatertot13: (cont.) I've had a term policy with New York Life for about 3 years now, but am interested in folding it into something more permanent. The interest started due to an offer from NYL to take some credit from my current term policy, but i thought it was worth looking into. My insurance agent thinks it's a great idea (of course!), so i'm looking for some impartial data before jumping further into bed with them.

What are the real-world pros cons to staying term, or going with a whole or universal policy? Am i too young to be putting this much money into life insurance? How do i know if i'm paying too much? What else should i be asking or looking for?

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I know nothing about life insurance. But I have been told that Whole Life is not a good investment by people who know more about this stuff than I do. Term life insurance is very cheap, and you may be able to get it even cheaper through your work or your husband's. I would suggest doing it soon, before your diagnosis comes in, and make sure you answer every question completely honestly, even if it means they may not give it to you. There's no point in paying for an insurance policy then leaving them room to wiggle out of it. And wiggle they will if they can.

BTW, any chance I could convince your parents to adopt me? Mine saw their responsibility as putting a roof over my head and food on the table till I was 17 and then we were done. What wonderful support system your parents have given you. How nice that you recognize that and want to give back.

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Whole Life or Universal Life is a decent investment if you are trying to move money to heirs. Their is a lot to life insurance but the easiest way to think of it is this. Term life insurance is like car insurance you pay into it and unless something heppens you never see a return on your money. Universal aka Whole life is basically term life with a mid to high yeild savings account on top. You are insured better and if you don't use it you get a return on part of your investment.Their is more to it than that but that i sthe basic example you might find in a finance text book.

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Universal life is a pretty decent way for wealthy people to pass on wealth to their heirs and get around some of the taxes. For the average Joe it is situational. IMO having life insurance is a smart move. The kind you get is dependent on you. It may be prudent to tak to a finanical planner. Your bank may have one available to you for a small fee or some communities offer them through the city. They can help you with life insurance and possibly setting up a living trust or at least a will. Usually the fee that is charged for consulting a Certified Financial Planner (CFP) is out stripped by the money they can save you in cost of insurance and tax consulting.

IMO I would get some kind of insurance b4 the tests come back because you may be underobligation to disclose the results to the insurance company. I hope they come back negative and everything is ok but you sound like you want basises covered.

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@moondrake & @philosopherott: thanks for the responses!

@moondrake: i've heard that whole is not a great idea, but never really knew why. and i don't really understand the difference between whole and universal to know if the 'it's bad" applies to universal as well. i'll definitely be honest on the paperwork - it's definitely not worth the negative possibilities later. as far as the adoption goes, i'll have to run it up the familial flagpole, but i suspect they're full up ;)

@philosopherott: Thank you for the simple explanation. Do you happen to know the difference between whole and universal? As for wealth, i have none. My assets are the condo (not worth too much these days), my husband's & my cars (both 10+ years old), and the assorted stuff we buy. Do 3 cats count? ;) On top of that, we're not having kids, so any wealth we build up would be put towards retirement. Anyways, I'll be checking with my bank for financial services - great suggestion!

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the purpose of life insurance, in most cases, is to take care of your spouse or kids in the event of your premature death. ANYONE trying to sell "whole life" or "universal life" either has no clue what a bad deal it really is, or they are being dishonest trying to sell it to you because they KNOW it's a bad investment. They try to sell you whole/universal life as an investment, but the same money invested in a ROTH IRA or traditional IRA, deposited into 2-4 mutual finds that invest in broad markets, will over the long term return you much much MUCH more on your investment. RUN AWAY From anyone selling whole/universal life insurance, unless you are that 0.5% of the population that for some totally rare reason should buy this insurance. The management fees and the outrageous up-front commission to the seller of whole/universal life start you off at a loss.

If you are looking to buy insurance to protect your spouse/kids, simple level term life is the way to go 99.5% of the time.

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@smtatertot13: whole/universal life insurance are bad deals because the commisions that are paid out upfront.
quick explanation:
. http://www.clarkhoward.com/categories/insurance/life-insurance/
and:
http://money.usnews.com/money/blogs/my-money/2012/07/12/4-life-insurance-policies-you-should-never-buy (pay attention to number 4 here!)

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Any debts you have that are in your name only will be wiped out if you die (assets in your name may need to be sold to cover them as much as possible first). Your parents won't be liable to continue paying even if they've been paying unless they're cosigners. So you may not need so much insurance. Since you don't have kids and your husband presumably has his own income, you may only need enough insurance to cover a funeral and part of the condo.

I couldn't tell you the differences between whole, universal, variable universal, permanent, and all the other investment/insurance combos, but in general they're all a poor choice compared to term because they pile on lots of hidden fees. It's like a combination of decent term life plus a terrible investment component. They're good for avoiding estate taxes if you're leaving more than $5 million behind, but for anyone else it's almost always a bad deal.

Insurance agents love them because they get a great commission.

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I wanted to add that you can also often get a good deal on term life through your credit union. Mine gives me a $10K policy for being a member and sends me mail all the time trying to get me to increase that at a pretty reasonable rate. If you are not a credit union member, you may be able to join. I don;t know if it's state law or federal, but a change to the law recently required all the credit unions to open membership to the general public. Too bad because our interest rates went up and we lost some perks as a result of our credit union being able to restrict itself to City employees with stable jobs and payroll deductions from the City for loans.

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For what this may be worth...My late husband had a 10K whole life policy. I had insisted that he get an insurance policy outside of work. (I had one, too. Later cashed in.) Had I not had that, I do not know what I would have done when he died.. Day to day, monthly expenses are overwhelming. As are the expenses for a funeral, cremation, etc.

The life insurance provided by his employer took a long time to get to me. I was no longer working, and had zero income. That insurance policy may not have been the best purchase, but it helped me to survive. Not for everyone. A term policy purchased independently probably would have been as good. I don't know.

Am not recommending whole life or ANY insurance, just saying it worked for me. BTW: I no longer have any policies. Have enough money to cover expenses and leave an inheritance. If I wish...I may spend every cent. ;-)

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I would highly recommend getting some disability insurance, if you don' t have any through work. That is if you can get some w/ the blood work mentioned. If no dx and you can get it I would act fast.