Life Insurance

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ohjodi
Posts: 930
Joined: Sun Aug 30, 2015 3:57 pm

Re: Life Insurance

Post by ohjodi » Tue Apr 02, 2019 11:34 pm

clemencia2us wrote:
Tue Apr 02, 2019 10:20 pm
And i agree with colonial girl about your nephew's future needs

Look into that also. He might be okay and not need anything from you

Ask if he is already getting benefits.
He is getting some social security, not sure of the amount.

I just would like to leave a little life insurance so my sisters can get him situated. Depending on his age and independence level, he could end up living with one of them, and this would help them out a little.
ohjodi

colonialgirl
Posts: 1502
Joined: Sat Aug 29, 2015 2:01 am
Location: Central Illinois

Re: Life Insurance

Post by colonialgirl » Tue Apr 02, 2019 11:46 pm

Jodi term insurance has no value. However whole life does. That being said life insurance is really only for that, insuring life - it is a poor investment vehicle.

Here is how it works. Let's say that the actuary calculates your life expectancy due to multiple factors and says it costs $10 per month to insure you. A term life policy will add on a percentage for sales costs (commission to the agent) cost of administration of policy, various other cost factors and charge you say $15.00 per month.

Whole life will take that $10 per month add in the same factors, then adds in an investment amount that will be placed in account drawing a savings rate. So the same policy coverage would cost $35 per month. But not all of that money goes into savings because the costs are higher to provide that interest rate and administer it. Also - they will need several years to break even so they will assess a surrender charge against that cash value to discourage you from with drawing it. Also let's say the policy is for 10k - if you die your beneficiaries get 10k and the insurance company keeps the cash value in the policy. The only time the savings is accessed is if you cash out the policy after the surrender term has expired. Whole life is usually a rip off.

these figures aren't actual - just for illustration purposes. Term has no cash value and should not affect your net worth. Hope that is clear. Like I said, if you have any questions, let me know.

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LWolfT
Posts: 1837
Joined: Fri Aug 28, 2015 10:46 am

Re: Life Insurance

Post by LWolfT » Wed Apr 03, 2019 8:08 am

Jodi ... I believe your nephew would get Social Security benefits until age 18, whether your parents are around or not.

If you do end up taking him in, how will his Social Security (or other benefits if he qualifies) affect your assistance?

Anyway, my family has had policies through Prudential and MetLife over the years ... not sure what prices are now, but might be worth a look.

ohjodi
Posts: 930
Joined: Sun Aug 30, 2015 3:57 pm

Re: Life Insurance

Post by ohjodi » Wed Apr 03, 2019 11:48 am

colonialgirl wrote:
Tue Apr 02, 2019 11:46 pm
Jodi term insurance has no value. However whole life does. That being said life insurance is really only for that, insuring life - it is a poor investment vehicle.

these figures aren't actual - just for illustration purposes. Term has no cash value and should not affect your net worth. Hope that is clear. Like I said, if you have any questions, let me know.
Thanks for explaining that! So term is cheaper to pay for, and it has no asset value.

Funny how State Farm (who i"ve been with for 30 years) never mentioned term life, just told me about whole life, lol

You're my go-to for any questions, thanks!
ohjodi

SandiSAHM
Posts: 1034
Joined: Fri Aug 28, 2015 11:46 am
Location: Oklahoma

Re: Life Insurance

Post by SandiSAHM » Wed Apr 03, 2019 12:04 pm

ohjodi wrote:
Tue Apr 02, 2019 11:31 pm
Yes, I'll start looking around. I think I heard that if you donate your body to science, eventually they cremate you and send the ashes to your family, for free I might actually do that. It's not that we're that broke at all, it's just I really don't care about what happens to me after death.

My step-sister's ashes are buried in a plot that I can actually use, too, so that will be easy. I think you can put up to three sets of ashes in one plot.

Maybe this is what they mean by "the sharing economy" lol
DH's grandfather donated his body to a state medical school. When he died the school arranged to have him picked up from the coroner's office; his ashes were returned about 9 months later. Didn't cost his estate a cent.

MIL (it was her dad) asked about him once after 5 months or so, they told her they freeze the remains until they're needed, use them, then have them cremated. When he died they had "stock," so it took a while. The whole thing must be quite the sight.

SandiSAHM
Posts: 1034
Joined: Fri Aug 28, 2015 11:46 am
Location: Oklahoma

Re: Life Insurance

Post by SandiSAHM » Wed Apr 03, 2019 12:10 pm

It's time for a discussion with your parents, your sibs, etc., about what sort of $ he's getting, if anything (once you're adopted don't SS benefits based on deceased parents stop?), and if the plan really is to place him with you in the event that both your parents die, rather than a perhaps more financially 'set' sibling. He'll be an adult in 6 years and frankly I'd be more worried on the whole, as a family, about getting him through college and set up to function as an independent adult.

We have term life on both of us and my dad bought whole life to cover both our kids with us as beneficiaries. The whole life cash value on DD17 now exceeds what the payout would have been if something had happened to her.

I leave the $ alone intending to give what's there to each of them when they hit 25, but right now I wonder if we should be investing it instead of letting it sit. I wonder what the tax implications are of moving it. Tax guy question.

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