Buying life insurance for myself and wife

Hey everybody,

This is my first post, and I'm wondering what kind of life insurance I should get for myself and my new wife (we got married a few months ago). We are both 24 and have decent jobs, I was thinking of buying term and converting it later in life when my income is higher. I also was wondering what your thoughts were about what company I should go with. Thanks.

Aggie, God bless you for trying to make a good financial decision. however, with limited information no one can give you any kind of realistic answer about what kind to get either now or in the future.

as for the companies, i always recommend using an independent agent and the three companies i would recommend are Raymond James, NY Life, and Northwest Mutual. I see on another thread wherein you might not prefer NY Life. so here are two others to choose from as well. finally there are good individual and local shops in most every town. we cant know who they are cause we dont know where you are.

1MO you are really good at advising. one more time you proved to be an asset on this forum. Perfect disclaimer. Never saw such one.

thanks simoncalvin ... you made my day!

You can check out insurance companies ratings on Moody's websites, but you want to make sure that your company is a reputable one that will be around if and when the time comes for the policy to pay out. You also should meet with an agent and take your question in to them. But the buy term now to take care of the need and convert to permanent is not a bad start, just figureing out what and when is something you can figure out down the road!

chopper makes a good point. the answer is term. term protects your family NOW while you gather additional information on whether peramanent is a good choice. if you get with a reputable company, then you will be able to convert your term to peramanent if you later determine that is to your benefit.

finally, i wanted to amend my company recommendation. while still a good company mechanically ... i have discovered some issues with NWM that are somewhat disturbing. in light of that, i would remove them and add Mass Mutual. be very aware that most of my criteria on NWM which led me to remove them from my list are anecdotal having spent some time recently with our local office.

Now I'm curious, because I thought NWM was a reputable company; what changes your perspective?

-Joe

i think their products are stellar. however, i recently met with them to do some large case placement for estate planning where my primary company and the reinsurance pool are already max'd out.

i was disappointed in that they were so captive. they try to "explain" away the captivity part but it was a poor explanation. so, the fact that their reps can ONLY place NWM bothers me. there are sometimes when even a stellar company is not the right company for some clients. not being able to be flexible for those clients really bothered me.

also, in meeting with their top regional guy he tried to illustrate his company against two others. one of whom i work with and the other that while i dont work with them, i am a personal client of theirs. the NWM analysis of the two other companies was inaccurate. i dont mind when someone tells me their company is best ---- there are dozens of ways to measure "best". but when you skew numbers to prove that you are best, it makes me seriously concerned about the accuracy (er, truthfulness) of other things you have said.

i want to reiterate, this is based on meetings with ONE of their senior managers. so, it is only anecdotal on my part. but, like i said, it kinda disappointed me and freaked me out a little.

I can't vouch for skewing the numbers of the other companies, but I do know that they can broker with other companies. I know NM agents who are licensed and place insurance with other companies regularly. As a matter of fact, recently I had a conversation with someone in management who was discussing this very matter with me. Perhaps that office is completely captive (i.e., the top won't allow the agents under him/her to broker?)

Interesting, nonetheless.

-Joe

this was a major point with me. i was assured (not that it means anything) that their people could NOT broker with other companies. they did tell me that THEY would place product with outside companies (not counting reinsurance) but that it is done without the agents guidance or direction. but they were VERY clear about this. so, whether one of their advisors can broker or not is certainly not clear since you and i had polar opposite discussions.

that said, if one manager can allow it and another manager can dis-allow it ... that would be a whole other reason i would not be comfortable with the company. i like to know the rules and know that all are playing by them.

I don't know; that is interesting. I'll take a look into this and see what I can come up with. Thanks for the info!

-Joe

Perhaps the NW agent who brought the case to the table (personal contact for client) was a rookie in a captured status, thus he may have been prohibited from brokering to an outside compnay. This would explain why they would broker as a company, just without the use of the captured agent.

no price, this is certainly not the case. the case is with clients of mine. the NWM supervisor tried to recruit me to his company. i qualify for top of the table for MDRT so i am certainly confident i would be offered their best contract (ie, not a rookie). that contract is captured to NWM. so, i can make an allowance that their manager may have been telling me less than the truth (disconcerting in itself), but what they offered me was a captive agent contract to place my business.

Alright, I spoke with someone else who was a Managing Director up until a few years ago (who is still an active agent, just no longer an MD) who assured me that Northwestern agents are NOT captive. NMFN needs to be the primary company and should be considered first, but there are certainly many situations in which another company can and should be consulted. He also assured me that he has pretty good checks coming in from other companies. This is consistent with what I have heard from others.

That is strange that we are hearing two different things. Perhaps there was a miscommunication?

-Joe

in my case, I found permanent now was cheaper than term would be in 20 years.

So we bought term for 20 years to cover the immediate need
and also created much smaller permanent policies to lock in rates for wife and I in our low 30's.

No two situations are alike. Weight options and ask questions to anyone you take your business to.

i have to agree that it is strange that we are getting two totally different stories. the only way they could both be right (as far as i can see) is if your old MD is operating on a superceded contract. in other words, old folks got to retain their original contracts but new folks get a "new and improved" version. this is fairly common even with the best companies.

i can also make for an allowance that there may possibly be a comminication issue. but, i am a "professional listener" and the MD should, by default, be a "professional listener" so i have to err on the fact that we both heard what was said.

its not everyday that someone walks in trying to place 10s of millions in face amount. i would think that, if a person is EVER going to be clear, then this is the time.

i think their products are stellar. however, i recently met with them to do some large case placement for estate planning where my primary company and the reinsurance pool are already max'd out.

i was disappointed in that they were so captive. they try to "explain" away the captivity part but it was a poor explanation. so, the fact that their reps can ONLY place NWM bothers me. there are sometimes when even a stellar company is not the right company for some clients. not being able to be flexible for those clients really bothered me.

also, in meeting with their top regional guy he tried to illustrate his company against two others. one of whom i work with and the other that while i dont work with them, i am a personal client of theirs. the NWM analysis of the two other companies was inaccurate. i dont mind when someone tells me their company is best ---- there are dozens of ways to measure "best". but when you skew numbers to prove that you are best, it makes me seriously concerned about the accuracy (er, truthfulness) of other things you have said.

i want to reiterate, this is based on meetings with ONE of their senior managers. so, it is only anecdotal on my part. but, like i said, it kinda disappointed me and freaked me out a little.

I used to work for NML for over 4 years. I can say that the company itself makes good products, but the distribution system makes it hard on the agent. They also run the business a bit differently. The office that I was at had a very large expense structure, so much so that they didnt retain many reps under 5 years. I left after being tired of giving the local office so much of my income, as well as the stress of always trying to produce to run my office and give me some money left over to live on. I was told by someone who used to be on the management side that the home office wants the GA's to run their agency like a business, charging high rents and for almost all related business expenses. This is part of the reason why the products perform well, because agents like me took it on the chin for every little expense. Nothing was absorbed by the agency as part of them earning overrides from my sales.

They did provide me with some great training and overall was a good experience, but I have now affiliated myself with Mass Mutual as I felt the products are on par with NML's, as well as they have a better platform for the reps success. The investment platform is great, I can do fee based planning or regular commission sales. I dont have to give the company first right of refusal for my clients policies, and I can basically run the business ALWAYS in the best interest of the client.

I know of no time when whole life or other permanent insurance product is preferable but perhaps someone can tell us. I'm sure one argument will be future insurability concerns. If one's plan is to not be responsible, not have emergency funds, not have a paid off home, not have an appropriate retirement plan and not in any way be financially responsible for their lifetime then it would be a viable argument and what one should buy. If one plans differently then a good 20 year level term policy should be sufficient until one has no need for life insurance because they've fully self insured themself.

LDB, this point has been beleaguered many times on this forum; it would be a benefit for you to do a search.

-Joe

josephdegroff is correct, this issue has been discussed innumerable times here on kiplingers. further, it has usually been a good discussion in most cases.

LDB offers a bourgeoisie view of permanent insurance. while he may "know of no time when whole life or other permanent insurance ... is preferable" i most certainly know when it is. and interestingly enough it is WHEN you plan on being responsible. further, i am a professional in the financial services industry and i know of NO ONE who has ever been in a position to "self-insure". in fact, my largest clients are worth approximately 1/2 billion dollars and they have just shy of 200 million in PERMANENT insurance. the only reason they dont have more is that there simply is no more to be had (from reputable companies).

so the next time you hear someone telling you they can self insure, remember this person who made every penny of their money through their business savvy and that this person saw the value in permanent (universal and whole life) insurance and the folly of "self-insuring".

ory, i agree with you about Mass Mutual. when asked for an insurance company recommendation i now recommend them instead of Northwestern Mutual. of course, i still recommend NY Life as they still simply can't be beat. but, MM is a stellar company.

I'll have to do some searching. My understanding, potentially incorrect, is (made up figures for illustration since I don't know correct numbers) $100k term $20/mo and $100k whole life $80/mo. Pay into the whole life for a decade and have a cash value of a few thousand dollars, say $10k. Die tomorrow and term pays $100k and whole life pays $100k. If you took $10k out of the whole life last week then death benefit is $90k. Return on the premium of the whole life equivalent to about a 3% CD over the same time period. Not sure how or when you get anything over the face value though. I've always heard the advise to buy term and put the difference in good mutual funds. I'm not trolling or attempting to start trouble, just interacting and hoping to learn at the same time.

http://forums.kiplinger.com/showthread.php?t=10405 (right on point to the op)

http://forums.kiplinger.com/showthread.php?t=5493

http://forums.kiplinger.com/showthread.php?t=10918

those are some decent threads on both whole and vu life. also, while it is true that you may only get 3% return on a permanent product, the fact is that for fixed insurance like whole life it is much more likely that you are getting 6-10%. but this is if you are using a highly rated industry leading kinda insurance company.

there is a whole thread on here somewhere about why super dave ramsey (and another one on mammoth collar and screamer suze orman) cannot be relied on for financial advice beyond getting debt free. and if you dont believe me, refer to their own disclaimers they run at the end of their programs. but, they do offer "feel good" and "common sense" sounding advice. which is perhaps why their followers feel good and get common(ly poor) results.

if you really REALLY want to know how whole life works, and you want to know it from some super brilliant dude who has way too much time on his hands, then go here: http://r0k.us/insurance/vp/visibleLife.html

rich franzen is an engineer. and he took a whole life policy from one of the major carriers and reverse engineered it to find all the little gremlins hiding inside. the next time you hear super dave talking about cash value insurance being bad, ask yourself: "who understands cash value insurance better; super dave or that rich franzen guy?"

It seems McCain has found a valuable use for his whole life policy;

"McCain obtained a $3 million line of credit in November, but did not secure the loan with the matching funds. Instead he used his fundraising list and a personal life insurance policy as collateral."

http://news.yahoo.com/s/ap/20080211/ap_on_el_pr/mccain_money

well clearly if this guy is such a bufoon as to have purchased a whole life policy, he is unfit for the difficult choices he would face as President of the United States of America.

by the way, i have never used that particular strategy in my high pressure sales of this grossly overpriced and low benefit product; let me try it on for size:

"Sir, do you realize that if you are ever running for President of the United States of America and you need a quick infusion of cash for running campaign ads in Virginia, you could actually use the cash value in this policy so you could have plenty of money to slime your opponent just when you need it most?"

wow, that sounds pretty good! i should make a few extra sales a year with that one!

http://www.washingtonpost.com/wp-srv/politics/congress/fin_dis/2006/m000303.pdf

page 14 shows he has about $1 million in cash value in a whole life policy through New York Life. this was as of 2006 so with all the market volatility since then, we know it has only increased since then.

also of note is the the clintons carry considerable amounts of cash value insurance, also from a mutual insurance company.

i couldnt find anything firm on obama or huckabee.

According to the link to his disclosure, they were also stupid enough to use American Fund A shares. Hee-hee.

yea, i saw that too. out of respect for not pointing out evey possible stupidity of our candidates for President, i elected not to point out every possible stupid thing they did.

I'm still surprised (sarcasm) that someone so sophisticated and wealthy would see the value of whole life insurance and advisor directed investing. Go figure.

your comment ... I'm still surprised (sarcasm) that someone so sophisticated and wealthy would see the value of whole life insurance and advisor directed investing.

... makes me wonder. is he sophisticated and wealthy BECAUSE he used the advisor, or was he that way anyway? well, perhaps its not an easy correlation to make but it seems that the vast majority of those who are "wealthy" have advisors so perhaps there is some legitimate cause and effect going on.

Sounds like the chicken or the egg question.

it most certainly may be chicken or the egg. but either way, i think it certainly addresses your post #22 above.

If only McCain had bought term and invested the difference...

Think how much more he would have right now to put into his campaign :p

You know, at the end of 2007, I max funded my Roth 401k - $15,500. Put it all in the Vanguard Target Retirement Fund 2045. Bought around 1000 shares at 15.85. Anyone care to check the price now (VTIVX)? I'll save you the trouble - 13.87. And my par wl policy that I started 2.5 years ago... still plugging along. CV will probably be around $25K at the end of year 3.

And how come when people say I should be "investing the difference" they only suggest I buy winning stocks? Dontcha think somewhere in 1999 was a thread like this...

"Whole life?! Dude what are you doing? You need to surrender that trash and put the money into tech stocks. That's where it's gonna do some good - not languishing in some par WL policy. And if you really want to make some money, take about $5-$10K and put it in Enron. They're about to corner the energy market - you can't lose."

With the stock market tanking around me, it sure is good to see something that is growing (and guaranteed to keep growing).

I can tell you I've looked at cash value insurance from both sides of the fence. There was a time when I would've been right there behind Dave and Suze wearing a choir robe and singing "What a fool you are to buy that crap".

But now that I've got it, now that I've seen $15,000 turn to $13,000 in 1 month... I can tell you, I'm pretty happy I bet on two horses and not just one.

And another thing...

There was a heartbreaking story on the news the other night of a man who had a heart attack and died shortly after his term insurance expired. He received a notice from his life ins company stating that his term was about to expire and that if he wanted to renew his term insurance, his rate was going to go from something like $200/month to around $3,000/month. The medical examiner stated (I'm paraphrasing) that the sticker shock could have provoked his heart attack.

"Well, he should have converted to perm insurance."
"Well, he should have been investing the difference."
"Well, he shoulda done something a not just let it lapse."

Sure, all of that's true - but he didn't. Instead he died leaving his wife with little more than the bills to pay.

The term guys will pull out spreadsheets and graphs and show you how the market always beats cash value growth. The term guys talk theory. The perm guys talk real life.

The perm guys talk about things you that you never think about - the things that happen in everyone's life that you never think will happen in your life. Didn't invest the rest like you should have? What's the term guy gonna say? "Well, but if you had ..."

I bought my WL policy almost 3 years ago. At a time when I had zero need for insurance. I could've lined up people around the block to tell me what I fool I was. Was I a fool or not? That all depends on what the future holds doesn't it?

Now 3 years later, guess what... I do need insurance. I'm about to be married and take on a little 6-year old to boot. Not only do I have $500K in perm insurance, but I've also been overfunding it (paying more for PUA's than the base policy) so that when it comes time to pay for my wedding, I can pull a John McCain and leverage my cash value for my own marital campaign.

Theory says I should have bought the same coverage and taken the difference and invested it. Real life says "Who are you kidding! You'll get that term coverage and blow the difference and then you'll be scrambling to pay for that wedding!"

so that when it comes time to pay for my wedding, I can pull a John McCain and leverage my cash value for my own marital campaign.

Theory says I should have bought the same coverage and taken the difference and invested it. Real life says "Who are you kidding! You'll get that term coverage and blow the difference and then you'll be scrambling to pay for that wedding!"

Okay, I'm no life insurance brainiac, so maybe 1-Mo can help me out here. But if you pull out the cash value, don't you decrease the amount that will be paid out to your dear wife and dear child, should you die while choking on the wedding cake? How is that being responsible, at a time in your life when you should be triply responsible?

How is it being responsible to have more wedding than you can afford? How is it responsible to that dear wife and dear child to borrow against THEIR future, just to have a splashy party? If you have to borrow against your life insurance for a wedding, perhaps you should consider toning it down.

What do you mean that with Term, you would be scrambling to pay for a wedding? What's wrong the Justice of the Peace and a bottle of Cold Duck? -- however, I do agree that if you have to borrow money for THAT kind of wedding, then you are indeed in deep financial doo-doo, and TL-versus-WL is the least of your problems.

I wasn't being precise with my words. I don't plan on actually withdrawing cash value - just taking out a loan against the policy

We're talking about $10K - $15K here ...a bdunklau wedding, not a John McCain wedding

What do you mean that with Term, you would be scrambling to pay for a wedding?

Because I would have bought term and spent the difference.

puck, there is another thread herein on "infinite banking" which is essentially using your life insurance (above policy premium) as your savings account. if bdunko dies, then the enire amount passes as the face amount PLUS the fully Paid Up Additions he has overfunded by using it as his savings account. if he needs the cash he can sell back the PUA to the insurance company or he can take a secured loan against the cash surrender value.

it is a wash, more or less, but he has favorably leveraged his savings account where 1. he gets CONSIDERABLY more interest than money markets are paying now and 2. he gets some extra free insurance along the way.

What would be the best options for me and my family? If I want to get the best insurance plan for me and my wife but I want to include my son on it too? are there any available plans that could cover us nationwide? we travel a lot

thanks

Why don't click on your link for "Travel Insurance"?

If you have travel insurance coverage for the state of Colorado and you intend to ski there, is that included in the package, or must you also purchase the ski insurance on the side???

I think there are different plans right? some include everything some others just don't. so be careful with that, make your you get what you are paying for.
good luck!