Comments on: Why We Don’t Buy Life Insurance

By: Susan

Susan — Thu, 08 Jan 2009 17:48:15 +0000

just came across. Nice blog

By: Kim

Kim — Thu, 25 Sep 2008 23:47:16 +0000

I’m with Julie – I see no need for life insurance over and above what I get at work. I would imagine that most DINKs are actually in a similar situation – if you have a reasonable mortgage and no dependents, I don’t see the value of extra life insurance at all.
Correct me if I’m wrong, but if your retirement savings and other assets go to your spouse when you die, isn’t that a little more ‘insurance’ anyway?

By: julie

julie — Thu, 25 Sep 2008 16:06:12 +0000

Ahh.. Tom.. I see you are an insurance salesman.. so I doubt my comments about thrift have much resonance with you. Except, of course, I see that you are also a financial advisor so surely thrifty people are probably also of interest

By: julie

julie — Thu, 25 Sep 2008 15:59:04 +0000

Hi Tom. Yes, as Geoff mentioned, I do have 2x salary insurance. I’m not wealthy by our society’s standard and I don’t earn a terribly high income, but I live well below my means and that affords me a great deal of financial independence. I realize that it is not possible for everyone to have the same freedom as I have, but I do think that too many people live at or beyond their means and that requires them to spend even more money insuring against contingencies. I think we could learn more about thrift from our relatives who lived through the Depression. As the report from Merryl Lynch released yesterday starkly told us: our savings rates are inadequate. We have to redefine what is a want and what is a need. We need to waste less, buy quality, and start using things until they wear out. A report out of Quebec also released yesterday found that 75% of surveyed people were constantly stressed about money. It’s not worth it. One of the things I love about Gail’s show is how people realize that they can be closer and better to one another when they spend time together on simple things that cost little or no money. Incredible “wealth” is offered to us every day, all we have to do is slow down and focus on what really matters. Sorry for going on..

By: Geoff

Geoff — Thu, 25 Sep 2008 13:23:35 +0000

@ Tom – Julie said that she has life insurance through work (2x salary, which is better than my 1x salary / 2x salary if accidental).

By: Erin

Erin — Thu, 25 Sep 2008 02:06:57 +0000

I just called my broker today to inquire. Thanks for bringing this subject up. I felt that I had a little more knowledge that I was able to ask the right questions. We just had our second child and I was denied life insurance four years ago when we bought the house at 23 (cancer). It’s been two years since I was cleared so hopefully it will work out! Sometimes I feel horrible that if anything were ever to happen, my husband wouldn’t be able to afford to keep the house and pay for daycare. Since I am a self employed daycare provider, we don’t pay for daycare and I have no benefits of my own.

ps: Gail I love your show!! We are climbing out of debt quickly and saving money!!!

By: Tom

Tom — Thu, 25 Sep 2008 01:51:50 +0000

Julie, that’s great if you and your partner are so well off financially that you can “self insure” and easily absorb any losses that result from either of you passing, most people are not so lucky!

By: Geoff

Geoff — Thu, 25 Sep 2008 01:30:05 +0000

@ Cynthia and Jessie – if you have life insurance through work and reasonably young, then I personally don’t think you need additional insurance. There is an exception — if you get a 20 year term policy at age 30, for instance, it may be cheaper than a 20 year term at age 40, unless you keep your health up.

Most financial planners, of which I am not, recommend against insuring against the death of your children. This is a personal choice, but ultimately I agree with them – insurance is meant to replace a lost income, and the death of a child actually represents an increase in income. Even after funeral expenses, etc, the financial benefits of not paying food, clothing, etc will quickly become apparent. (This ignores emotional aspects, but insurance is meant to be a calculated choice after all).

By: brandi

brandi — Wed, 24 Sep 2008 20:47:42 +0000

Maybe I am the only one but..my dad had life insurance that he paid into for 23 years with a major insurance company. This was only a $50,000 policy (This seemed like alot of money in the 80’s to my dad) and when he died I had to fight for OVER A YEAR to collect on it. They gave every excuse, sent more and more documentation (he died in hospital of cancer), it was an ordeal for my mom to deal with (she is deaf) and at the end I almost gave up dealing with them but it was the principle of my poor dad having paid into it for soo many years and thinking my mom would have a cushion when he was gone. I hate insurance companies and I am sure I’m not the only one. I would never rely on getting paid out.

By: Stacey

Stacey — Wed, 24 Sep 2008 18:41:06 +0000

I agree, we need life insurance. For myself and my partner, it’s peace of mind that the other one is taken care of if something were to happen. Or that our kids will be taken care of. Especially when you own a home and have a mortgage, it’s nice to know that it would be paid off if one person were to die and leave the other behind to take care of everything. At least the other person would have some peace of mind in life after a horrific event like that.

We purchased life insurance outside of work and kept our basic one at work (included) so it’s like a bonus. With setting up life insurance, at least you can lock in at a lower rate when you’re younger whereas changing jobs means changing insurance and insurance rates.

By: Jenn

Jenn — Wed, 24 Sep 2008 18:39:50 +0000

We purchased a joint term life insurance policy when we were only 25. With two babies and our good health it totally made sense. We also added our children as a rider on the policy. So in the event of the unimaginable, at least we wouldn’t have to worry about the cost in the midst of the grief. At the time, my husband had a job that also offered an insurance plan and as life changes, he now owns his own company and doesn’t have the same options. Now we have four children and I am a stay at home mom who babysits from my home. If something happened to me now, our mortgage would be paid with our mortgage insurance and I would be able to live like we are now for about seven years before I had to start making some changes. At that time I would still have to start subsidizing our income, but childcare for four children? My family lives overseas, and his parents are in their mid 70’s. It is the peace of mind that we do not have to think about the future the day a spouse dies. Our best friend passed away two years ago from cancer at 33. Never thought it would happen. No insurance, couldn’t get any because of health problems that developed. The mom is left with one salary that does not cover all of the bills. Without her family’s help, she wouldn’t make it. Budget it in. I would choose my spouse over the money, but we couldn’t live without the money if he was gone. Life insurance is the only way to have total peace of mind.

By: Jessie

Jessie — Wed, 24 Sep 2008 18:28:37 +0000

So just to be clear, even though I am young and single – with absolutely no dependants – and am covered by my work policy I should STILL go out and purchase a separate life insurance policy?

I understand that by doing this it is portable while my work one is not, however I am not convincied this is a wise investment for me at this stage in my life. Earlier this year I DID purchase a Long Term Care policy, and feel comfortable with that because that is something I will use if I need it – not something that will go to my parents who don’t really need it.

By: Tracy J

Tracy J — Wed, 24 Sep 2008 18:05:14 +0000

Our kids are still young so Life Insurance is a must. The hard part was finding a provider that would agree with us on what our needs are. Hubby and I ended up getting joint-term since we are almost the same age and in good health — and we found a provider that puts the kids on as a rider, so if the unthinkable happens and one of the kids pass away, then the funeral expenses and greiving time won’t kill us financially. We went for term for the cheaper monthly rates mostly (young kids, lots of financial commitments) but we made sure it was enough to cover our ass-ets. I just want the kids to be decently cared for until adulthood and an appropriate amount of time off work for hubby to adjust to the new situation (if heaven forbid the kids are young when I go).
When the kids are grown and the house is paid for, our insurance will be going WAY down. Our savings should be decent by then and will last longer if only me or my husband is drawing from it, right? That is my master plan anyhow.
I dislike thinking about it too much, but there is some peace of mind knowing it’s covered.

By: Cynthia

Cynthia — Wed, 24 Sep 2008 17:59:28 +0000

I have more insurance that I probably need, but at the same time, you don’t know when you will die, and what that expense will be. Who wants to burden their family with final costs. Nobody. The fact that I am young allows me to have decently low premiums.

By: ~K.

~K. — Wed, 24 Sep 2008 16:52:02 +0000

Julie and Geoff – just as long as you have enough to cover funeral expenses, etc. You wouldn’t want to put that on friends or family… dependants or not.