Let's assume we make a combined income of $100k per year.
Let's say we have a $300K mortgage with 30 years left.
How should I approach finding out answers to these questions?
Posted by ketchupqueen (Member # 6877) on :
There are several sites that have calculators. What the calculators don't address is that your individual circumstances/preferences may be different, and also that there are several kinds of non-standard life insurance that may be good for certain situations, and that you may want to plan for things changing in the future, etc. But they're a decent place to start. I'd suggest playing with some of the calculators, then finding (preferably through friends and family and co-workers in the local area) a reputable agent who brokers for several companies, not just one, and sitting down with him or her for a chat about your short- and long-term goals, your anticipated needs, your budget, etc. That's where you'll get the best advice and the best rates.
Posted by FlyingCow (Member # 2150) on :
I'd definitely touch base with an insurance agent to discuss products and premium tolerances.
I currently work for a department in MetLife that allows Met agents to sell other companies' insurance policies. Essentially, if Met doesn't have an appropriate product or their underwriting isn't competitive, we offer Met agents the opportunity to sell products outside of the MetLife proprietary portfolio.
That being said, there are several carriers out there that I have had some experience with - though some (such as Genworth and AIG) are going through some financially difficult times at the moment.
Just a couple of items to consider: - If there are any height/weight issues to consider, Prudential and West Coast Life are very competitive, generally offering better rates than other companies. - If either of you are pipe or cigar smokers, Prudential will offer nonsmoker rates (almost all others designate this as "smoker") - Banner generally has very cheap term insurance rates, though their products aren't as robust as those offered by some other companies (especially their universal life products) - MetLife is financially strong right now, relative to other insurance companies in the field, mainly based on pretty conservative underwriting and investment. The products are good and the company stable, but the products might be a little more expensive.
Also, just some basic terms: Term insurance - The cheapest insurance you can buy, but only lasts a predesignated amount of years at that cheaper rate. After the term expires, the rate jumps dramatically to continue the insurance. Generally sold in 10, 20, and 30 year term lengths, but also sometimes in 15 year lenghts. Some companies (AIG, though they're not so strong at the moment) offer "Return of Premium" (ROP) term products that will return your premiums (without interest) at the end of the term period if no claim was made (though these cost more than normal term policies).
Whole Life - These are significantly more expensive than term policies, but they cover you for your entire life. In addition, they will acrue a value as you pay into them, and (ideally) will grow to the point where the interest on the value will pay the periodic premiums. These will be worth cash value later in life.
Universal Life - This is sort of a hybrid between term and whole life. They last the entire course of your life, but they only generate value for a set number of years. They then peak in value and lose value over another set number of years, eventually ending up with no cash value.
Survivorship/2nd to Die - These are universal life policies that are on two lives, though they don't pay out until both parties are deceased. I believe they are somewhat cheaper than taking out two separate universal life policies.
Variable policies - These are tied to the market and invest your money, creating a payout that can grow over time. These are above my understanding, so don't ask me too much about them.
Definitely reach out to an insurance agent to talk about future financial planning and what sort of insurance best fits the risks you are exposed to (mortgage, loans, children, etc). It is a good bet to ask around to people you trust and see who they recommend. And if it's a MetLife agent, don't think they are limited to just selling MetLife products (they aren't, though some are better versed in other carriers than others).
Posted by Jhai (Member # 5633) on :
Also check with the companies you work for - they often have good deals on life insurance, or even give some free automatically.
Posted by Stephan (Member # 7549) on :
Don't forget disibility insurance. Being in your 20s you are far more likely to become disabled from an accident than to die. Becoming disabled can also be much more financially devastating.
I second Jhai, check the comany you work for first. Group life is usually much cheaper, just make sure it is portable, can be taken if and when you leave.
[ December 03, 2008, 03:37 PM: Message edited by: Stephan ]
Posted by Farmgirl (Member # 5567) on :
Are you considering Mortgage Payoff insurance? Or just thinking any death benefit from standard life insurance would be used to pay off your mortgage?
Posted by Stephan (Member # 7549) on :
Mortgage payoff insurance I don't believe is generally cost effective. First of all the mortgage company lists itself as beneficiary, when your survivor may not want to pay off the mortgage. It also decreases as the mortgage goes down, wheras a term policy keeps its benefit amount the same.
Also, most people are in a better position to get universal than the were in the 80s. In the 80s interest rates were high, and policies were funded assuming they would stay that way. When rates fell, many people lost their policies or had to significantly increase their premium payments. Now, rates are low, so if anything in the future you may be able to reduce your payments if rates go back up.
Posted by Artemisia Tridentata (Member # 8746) on :
You can insure the mortgage payoff with a decreasing term life policy. Then you name the benificiary, and your survivor has the option of paying off the mortgage or not. Or, you have the option of paying the mortgage off early, and retaining the coverage. It is generally cheaper than Morgage insurance too.
Posted by AvidReader (Member # 6007) on :
Whatever you get, Rival, make sure you understand how long it's good and how long you have to pay for it. There was an article in the paper today about a woman who's in foreclosure because she and her husband misunderstood his policy.
He bought a ten year term life policy. But it was financed for the whole twenty years of their mortgage. So when the policy was up, the payments kept coming out. A year later, he dies, she stops paying the mortgage thinking the insurance is paying it off, and she's now losing her home.
We have an insurance company in the lobby at the credit union. I'd see if your bank or credit union has a trusted parter that they can recommend. (Let's face it, it's in our best interest to make sure your loans get paid if you die. Morbid, but to your advantage for once.)
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