Comments on: Insurance Heads-Up

By: Bankruptcy Blog

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By: Geoff

Geoff — Thu, 04 Dec 2008 21:04:18 +0000

Emiliano – the first question should be “Do I think I will need insurance at 60?” before being concerned about not being to get it. As long as you answer that then I think whatever decision you made is great.

In a way, all life insurance is for a term — some are fixed and some are variable depending on when – not if – we die.

By: Emiliano

Emiliano — Thu, 04 Dec 2008 00:43:47 +0000

Thanks Gail and Geoff….
Gail: what I liked about the universal life insurance is that part of the premium is invested and i could get that money if i needed let’s say in 20 years, for my son’s education…

Geoff: I didn’t like term, because even though it was cheaper, it was just for a TERM… and it kind of scared me for some reason.

Since I was paying that robbery insurance that banks put on the mortgages, and on the lines of credit, i cancelled them, and i decided to just have one insurance…

Thanks for answering me, and thanks Gail for the example of that other guy… for sure I would not be able to get insurance when I am 60 if I would have gone with Term… I am very happy !

By: Geoff

Geoff — Wed, 03 Dec 2008 17:50:23 +0000

Gail – I recommended Emilani *consider* term life instead, not go out and cancel anything. I guessed based on his question that he was a little unsure on his options and he should broaden his knowledge. Asking for a quote never hurt anybody. It’s impossible to decide what’s best for you without knowing what options you have, and am a bit concerned that a life insurance salesperson/advisor had just told him what to do and what to get and glossed over the huge fees and poor investment returns insurance companies make.

As for the estate protection offered by whole life – well true but really only applicable if personal assets exceed $2 Million dollars. RRSPs are now protected from bankruptcy claims so unless Emilano is maxing out his rrsps and is raking in the cash it seems this is a superfluous benefit – and if he is making that much his $250K coverage is far too low.

Now your final point – about getting life insurance at the end of the term – that’s a good point to consider. But I have no interest in life insurance at 60; either all my liabilities will be resolved by then or I will have far more pressing financial obligations to deal with than life insurance if they’re not. Personally I can’t imagine anyone planning on needing life insurance in their 60s; most policies terminate at age 75 regardless.

@ Saver Queen – My wife and I (non smokers, early 30s, average health/weight) have a $250K coverage for the two of us for $560 / year for a 20 year term. What I would ask Emilano is how many companies he called for a quote before accepting the one he took.

@ Shannon – a similar story. My father paid insurance from age 60 to 75, $1000 / year, and he turned 75 and policy was cancelled. He’d have been far better advised to invest, keep or even spend the $15,000 he gave away.

By: Doreen

Doreen — Wed, 03 Dec 2008 01:29:10 +0000

I think Gail is right when she says to buy the policy for the right reasons. We are in our late 40s/early 50s. About 8 yrs ago we bought a Universal Life insurance that we pay $200 / month. The fee stays the same until our death – yet we are also growing some funds too. We also have $400K 10 Yr Term for while we own this big house and have 2 kids to put through university. Once the 10 yr term is up – it’s done with. Then we move and scale down, no longer needing that type of insurance.

The point is ‘know yourself’ and your situation best and get at the least, 2 different opinions from brokers + do our own research. We don’t just blindly do as others tell us to do – even our dear Gail. We think for ourselves and do the research.

By: admin

admin — Tue, 02 Dec 2008 22:30:42 +0000

Emiliano: Don’t react to what Geoff said and go out and cancel your policy. As long as you bought the policy for the right reasons (i.e., you want to keep the policy in place for the rest of your life) then your premium isn’t outrageous in light of what you’re getting.

Geoff: Term doesn’t suit everyone; it’s a matter of what you need and what works best for YOU. If you plan to keep your insurance in place first as income protection and then as estate protection then a whole/universal life policy is exactly the right choice. Try buying/renewing term insurance at age 60 and see what high premiums look like.

When Ken found himself with a young family and not enough insurance, he ended up coughing up over $3K a year just to get the coverage he needed to see his new family through to the end of high-school because he was 50+! And that’s without estate protection.

By: Shannon

Shannon — Tue, 02 Dec 2008 21:08:20 +0000

Ugh, when my dad passed away in April I found out that his life insurance was an accidental death only policy, which was just utterly ridiculous for a 63 year old in poor health and on a fixed income. He would have been better off just keeping the money he spent on the coverage for himself.

By: Saver Queen

Saver Queen — Tue, 02 Dec 2008 21:03:14 +0000

Good questions to ask! Finding a reliable source on issues like insurance is so tough. Geoff, what do you consider a reasonable amount to pay? I’m new to this. Thanks!

By: Jim

Jim — Tue, 02 Dec 2008 16:35:23 +0000

Gail, are you saying that because under 3% of all insurance claims are paid out because of accidental death it is not worth covering yourself for this risk? I think 3% of all insurance claims must be a significant number.

By: psychsarah

psychsarah — Tue, 02 Dec 2008 15:32:31 +0000

When I was a starving student, I took a soul-sucking telemarketing job (gotta keep the roof over your head and textbooks in your bag in grad school!) and I had to try to sell bizarre insurance like Gail is describing (accidental death and dismemberment). It was cheap-a few dollars a month on your credit card-but I was always surprised when people actually bought it. I wondered what the odds were that you would die in an accident, and from what Gail says, I had the right idea. If they rarely have to pay out, the insurer was taking everyone’s “few dollars” and having a party with it! I was also always shocked that people would buy odd insurance over the phone from someone they had never met, without reading the fine print…I guess I’m kind of anal that way!

By: Geoff

Geoff — Tue, 02 Dec 2008 15:00:54 +0000

Emiliano – I’m not Gail but that sounds like highway robbery (that’s $1100 / year!). Consider term-life instead and get a 20 or 25 year term coverage instead. You can likely do a better job of investing than the insurance company can. You can get quotes online from a variety of places.

By: Emiliano

Emiliano — Tue, 02 Dec 2008 14:11:40 +0000

Gail:

What’s your opinion on Universal Life type of insurance? I am currently paying 92 CAD a month for 250K. I am 28 years old non-smoker.

Thanks for your comments.
Emiliano