So I have analysis paralysis here.
early 40s and looking to buy some life insurance. Company offers a group variable universal life through metlife. Allows money above premiums to be invested to pay future premiums, grow tax deferred etc.
Premiums do go up every 5 years pretty significantly.
Also considering term life. But I'm hoping someone could give some insight if it might be better to do say 50% through the GVUL and 50% through an individual term policy? (For simplicity say $800K policy with 400k in each (term and GVUL?) Are there any pitfalls to having two separate policies?
Thanks guys
Whole life (and other related products) combines pure life insurance (i.e. term insurance as income replacement) with a kicker of also trying to be some type of investment product. It has been my experience that the investment portion of anything offered by the insurance industry just isn't worth the high costs (with the possible exception of some annuity products).
But, at the end of the day, you need to get a good handle of your goals. You absolutely need to consider protecting your wife and young children against the possibility of your death while you are still producing income. Beyond that, is the investment portion of life insurance products something that provides you with an unique opportunity in your overall financial portfolio that makes sense (some very high income people who already max out their 401k contrib might find some life insurance products can offer tax relief, but again, it has been my experience that the costs of such products are prohibitively high).
Since it's a group plan you should be getting a very competitive product so sharing the cost details with an agent for competitive analysis shouldn't hurt anything.
By saying the fees are no higher than the ones in your retirement program isn't tell me much, because there is a pretty good chance the fees in your retirement program are obnoxiously high (and if your retirement funds aren't in Vanguard funds, then the odds just went up astronomically that your fees are obnoxiously high).
And, truth be told, a much better vehicle for someone your age is simply to purchase a stock fund in a taxable account that you never sell until you are in retirement. You pay no taxes until you sell the fund, presumably in retirement, and you will get capital gains tax treatment (it's possible capital gains taxes may no longer exist by the time you retire, but that is very unlikely and shouldn't be a reason to avoid holding stocks long term).
Vanguard offers a total stock market fund with annual fees of 0.04% … you should NOT be paying fees higher than 0.09% on any Total USA Stock Market fund (other funds like international, or small cap may be slightly higher but not more than 0.25%).
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BTW, it ends up being an enormous number that is at its maximum the younger you are, and slowly goes down as you age. And, alas, that is half assed backwards … we can't afford the cost of income replacement when we are 30 and we more likely can afford it when we are 60, but it isn't as drastically needed (good chance the kids are out of the house by then).
It’s cheaper, but it’s a bad choice. If you leave your job or get fired, the insurance ends. Then you have to go out and get new insurance. It’ll be more expensive because your older, and maybe a lot more if your health has changed.
It’s fine for a supplemental extra, but it should not be your primary insurance.
I was reffering to term insurance, which usually is not portable. IMO term is a better choice than GVUL.
Put the premium savings you get by choosing term into real investments and you’ll have more money later in life than your permanent policy amount.
My plan was to get a term policy that would carry my family beyond the time my youngest graduated college. And then I actually added a second term policy to take my kids into their 30's.
the key with term life is (obviously?) the younger you are when you get the policy and the better health you are in the cheaper the premiums. when I was 28 or so and got my first 20 year term it was much cheaper than the second 20 year term I got when I was 38, and both times I was in the highest health rating.
My employer offers term life at no cost for 2x my annual salary and then I can "buy up" this policy for a small fee, for an additional 3 times my salary, so this is a huge options (while I'm employed there) to get some "bonus" life insurance.
I now found the allure of whole life to be worth it given the other options to spend that money on.
Anyone else have any experience with this and/or recommendations?
To which you should reply " No".
To which you should reply " No".
Not when you get into larger policies. Most require a physical, usually in home, that includes blood work. Also, in the event the insured dies and they discover a false/fraudulent application it is possible they won't pay the benefit. In this scenario the premiums paid to date would be reimbursed but nothing beyond that. If your primary objective is to protect your family you are best to be honest on the application.
How and when is the "false/fraudulent application" determined? Wouldn't this be something that is determined BEFORE the policy goes into effect?
I've never bought such a large enough policy to warrant a medical history, but I'm guessing there could be a ton of questionable medical incidents even in healthy individuals. And who is going to spend the time to review every piece of your medical history (especially if most of it is in paper form)?
When the term ends, I can convert some to whole insurance and IIRC, the rates will be based on 40s me who got the insurance and not late 50s me who I will be when the term ends. It's more expensive than term, but can provide some coverage.
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Not when you get into larger policies. Most require a physical, usually in home, that includes blood work. Also, in the event the insured dies and they discover a false/fraudulent application it is possible they won't pay the benefit. In this scenario the premiums paid to date would be reimbursed but nothing beyond that. If your primary objective is to protect your family you are best to be honest on the application.
How and when is the "false/fraudulent application" determined? Wouldn't this be something that is determined BEFORE the policy goes into effect?
I've never bought such a large enough policy to warrant a medical history, but I'm guessing there could be a ton of questionable medical incidents even in healthy individuals. And who is going to spend the time to review every piece of your medical history (especially if most of it is in paper form)?
From my understanding, if I apply for a policy and say that I don't ever partake in Cannabis, and if I pass away within a few years of purchasing the policy, they'll routinely order a toxicology exam on the autopsy before paying out and if it comes up positive for THC, they could contest paying out the claim.
Seems like better solution is just to disclose it all up front and let them price it however they want. The reason I'm asking the question is because some insurance companies are a lot more progressive on this than others and I'd rather not pay more than I have to for the same product.
Seems like better solution is just to disclose it all up front and let them price it however they want. The reason I'm asking the question is because some insurance companies are a lot more progressive on this than others and I'd rather not pay more than I have to for the same product.
Well, it's not lying if you start smoking pot AFTER applying for the policy. But I digress...
I can understand fully egregious violations where you fail to disclose heart surgery or an instance of cancer. But it's the smaller things that I question.
Does short term treatment for depression due to a family member's death, qualify you for "depression" (which raises rates)?
Do multiple measurements for high cholesterol put you in the unhealthy rating class (even though a doctor might not feel the need to treat it based on one's overall health)?
It just seems like A LOT of things can be subjectively spun to either raise your rates or claim fraud upon death.
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From my understanding, if I apply for a policy and say that I don't ever partake in Cannabis, and if I pass away within a few years of purchasing the policy, they'll routinely order a toxicology exam on the autopsy before paying out and if it comes up positive for THC, they could contest paying out the claim.
Seems like better solution is just to disclose it all up front and let them price it however they want. The reason I'm asking the question is because some insurance companies are a lot more progressive on this than others and I'd rather not pay more than I have to for the same product.
Well, it's not lying if you start smoking pot AFTER applying for the policy. But I digress...
I can understand fully egregious violations where you fail to disclose heart surgery or an instance of cancer. But it's the smaller things that I question.
Does short term treatment for depression due to a family member's death, qualify you for "depression" (which raises rates)?
Do multiple measurements for high cholesterol put you in the unhealthy rating class (even though a doctor might not feel the need to treat it based on one's overall health)?
It just seems like A LOT of things can be subjectively spun to either raise your rates or claim fraud upon death.
Our NY Life agent explained to me that the earlier in the policy the death occurrs, the more likely it is to be investigation, specifically in the first two years. Circumstances of the death also come into play.
If you have a non smoker rate and you die in a car accident in the first year they won’t likely investigate. But if you have a non smoker rate and die of some sort of cancer or heart related illness early in the policy they will most definitely request blood work post mortim.
As for changing habits after the application, I suppose one could start smoking later in life, but the actuaries are betting that someone like myself, in their forties is not likely to take up smoking.
It isn’t a perfect science, and they know that one might be treated for ‘depression’ without having a chronic issue of it. In the end they look at your application, medical history, work history, etc and come up with a date of death for you. It’s a gambling but they are the house, so the odds are strongly in their favor.
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In comment 14018966 Rick in Annapolis said:
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Not when you get into larger policies. Most require a physical, usually in home, that includes blood work. Also, in the event the insured dies and they discover a false/fraudulent application it is possible they won't pay the benefit. In this scenario the premiums paid to date would be reimbursed but nothing beyond that. If your primary objective is to protect your family you are best to be honest on the application.
How and when is the "false/fraudulent application" determined? Wouldn't this be something that is determined BEFORE the policy goes into effect?
I've never bought such a large enough policy to warrant a medical history, but I'm guessing there could be a ton of questionable medical incidents even in healthy individuals. And who is going to spend the time to review every piece of your medical history (especially if most of it is in paper form)?
From my understanding, if I apply for a policy and say that I don't ever partake in Cannabis, and if I pass away within a few years of purchasing the policy, they'll routinely order a toxicology exam on the autopsy before paying out and if it comes up positive for THC, they could contest paying out the claim.
Seems like better solution is just to disclose it all up front and let them price it however they want. The reason I'm asking the question is because some insurance companies are a lot more progressive on this than others and I'd rather not pay more than I have to for the same product.