Life Insurance - your opinion

[vivftp]

Heh, with my likely banning comming, I wanted to get one last thread out there. I tried a similar thread on SB a while ago and was interested in the results and would like to see how this turns out, even if I can't participate later.

I ask the question since it's part of the industry I'm in, and most everyone has some sort of opinion on this topic. So my question is to you, do you believe the concept of life insurance is a good thing? Or do you believe it's useless?

I know the actual application of this concept will differ depending on what country you're in, what companies you've dealt with and your own personal situation of weather it warrants it or not. Naturally feel free to comment on those - but the main question has to deal with the concept. Do you feel it's a good or bad thing?

[Big Phil]

Of course it's a good thing - you're betting the unlikelihood of your dying against the potential payoff if you do. It doesn't really matter to you... you're dead, but your family probably will breath a little easier with a 250,000, 500,000 or million dollar payout in the event of your death. It means being able to pay off mortgages, put kids through college, pay bills, etc.

[Jalinth]

Life insurance is very useful in the right place. As an accountant, I've seen it used (and suggested it) for key man insurance, funding buyout arrangements upon death of a major shareholder, and certain other purposes.

On the personal level, it is advisable if you have a family. If the major wage earner dies, you can be left with zip and your spouse and kids forced out. Life insurance can help get the family through to the university age with less financial discomfort (emphasis on less - finances are still going to be tighter than they otherwise would be). But once your kids have grown up and moved out, the only time I'd think it should be bought is if the death of one would cripple the couple (a husband/wife where the husband gets a pension that isn't transferrable at all to the wife. I don't want my loved one impoverished for 15 years before she joins me). Often it isn't truly necessary since you have a large amount of capital trapped in a house. Also, the family's existing capital only needs to support one person, so the remaining capital could be enough. As a practical matter, once you start getting up in age, life insurance becomes very expensive. It is one of those "look at the situation" type things.

But the insurance industry itself is very good at pushing "product" that I don't believe always helps the client. I've seen some that are very complicated sold to people who aren't. My own view is that a KISS policy works pretty well - keep your structuring as simple as possible given your circumstances. You really don't need a super convoluted policy with a few million bells and whistles in many cases. Term life works well for what many people need - whole and univeral life often don't. Many of the more exotic varieties are even less useful - they might be tax beneficial, but are also very beneficial for the agent.

[Mrs Kendall]

Yes I think it's very useful.
My parents paid into a plan for me and my 4 other sisters right from birth, not much just as much as they could afford month to month, my older sisters used it to go to college, saved it up for a home...etc..but that is the money I used to get married. I cashed it out, got married and started a new plan for myself with payments coming out of my bank account.. later we started plans for the kids once they were born. I mean 50 bucks a month for me and the two kids is nothing for the peace of mind it gives us.
My husband would have insurance if we could find a company who would offer him some. With his accident and PTSD not many companies want to offer him anything. We're getting close though, I've always been with London Life, my kids are with London Life and my husband will be trying to apply again with the help of our new life insurance broker... my sister. Hopefully they accept him this time cause it would be nice to have something more than what Veterans Affairs will give me should he die.

In my opinion it's just like house insurance, car insurance.. etc... if you don't have it you should get it asap before you leave your family in financial ruins.

[Big Phil]

Yes I think it's very useful.
My parents paid into a plan for me and my 4 other sisters right from birth, not much just as much as they could afford month to month, my older sisters used it to go to college, saved it up for a home...etc..but that is the money I used to get married. I cashed it out, got married and started a new plan for myself with payments coming out of my bank account.. later we started plans for the kids once they were born. I mean 50 bucks a month for me and the two kids is nothing for the peace of mind it gives us.
My husband would have insurance if we could find a company who would offer him some. With his accident and PTSD not many companies want to offer him anything. We're getting close though, I've always been with London Life, my kids are with London Life and my husband will be trying to apply again with the help of our new life insurance broker... my sister. Hopefully they accept him this time cause it would be nice to have something more than what Veterans Affairs will give me should he die.

In my opinion it's just like house insurance, car insurance.. etc... if you don't have it you should get it asap before you leave your family in financial ruins.

Generally, you can't actually be refused insurance (at least not here in the States), but they can set the rates so high that you go away and stop bothering them.

[Aaron]

Generally, you can't actually be refused insurance (at least not here in the States), but they can set the rates so high that you go away and stop bothering them.

In one case I was flat out refused and in another case they dragged the process out so much asking for more info on my PTSD that I eventually gave up. And I beleive the rates were going to be quite high. Risk of suicide and all that. We're going to reapply at the end of October, Mrs. Kendalls sister is now our broker and she said she should be able to offer me something with less hassle and a lower rate now that the risk of suicide is lower. I was going through a pretty rough time with my PTSD the last times I tried to apply.

[lance]

Generally, you can't actually be refused insurance (at least not here in the States), but they can set the rates so high that you go away and stop bothering them.

Risk of suicide and all that.

I thought that life insurance didn't cover suicide. Though I think I got that from "Death of a Salesman" so the info is kinda dated.

[Aaron]

I thought that life insurance didn't cover suicide. Though I think I got that from "Death of a Salesman" so the info is kinda dated.

Thats what they told me. They could have been bullshitting me. I'm not up on the laws governing life insurance in Canada. I wasn't exactly in my right frame of mind either at the time so I didn't push the issue.

[Darth Wong]

Generally, you can't actually be refused insurance (at least not here in the States), but they can set the rates so high that you go away and stop bothering them.

Unless there's some law mandating insurance availability, the insurance companies can and will refuse full life insurance coverage. If there is a law mandating insurance, the insurance company will just add a shitload of disclaimers on it (like the pseudo-life insurance policies they sell to old people which only cover accidents, not any kind of disease).

PS. Regarding suicide, in Canada there's a two year exclusion policy; if you buy life insurance and commit suicide after having held the policy for at least two years, they have to pay up. The reasoning is that some disturbed person who wants to commit suicide is unlikely to be stable and patient enough to wait two years so that his beneficiaries will get insurance.

[J]

It all depends on where a person is in life, it doesn't make much sense for a poor single college student yet it would be quite irresponsible for a parent to be without it. My personal opinion is that one should seriously consider life insurance upon being engaged and have the policies written up by the time the marriage takes place or shortly thereafter at the latest.