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Life insurance


IBTG81

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How far are you in law school. A buddy of mine is in his first semester, and I can't believe the amount of reading that is required.

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Im currently still in my bachelors (Business) degree with interim classes of Law related and corresponding with law school. Unfortunately, I have to wait until I have officialy graduated with my bachelors in business to officially begin law school. That being said, we are hoping that those credits from my current intermin law classes (quite a few) will transfer. :doh: (highly improbable)

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Honestly, look into whole life, cant hurt.  The product woudlnt be out there if it wasnt right for someone...but I dont like it and would never buy it.

 

My problem with whole life is this....

 

Premiums are higher for the same coverage.  This is because you are basically buying a term policy, and paying to develop a "cash value".  The "cash value" eventually generates enough income of its own to continue paying the premium, and thus you can stop paying and still keep insurance (hence whole life).  They promote your ability to borrow against this money.  WHY WOULD YOU DO THIS?  You pay extra to develop a cash value, then borrow against your own money? Not sure why this is a perk.  In addition, that 100k you have in "cash value", you have no control over.  The insurance company invests it as they see fit.  So instead of earning 10% on your 100k ($10,000/year), you wind up investing this in a safe and secure 4% government bond or somethign to cover your premiums.  And lastly, (i think i mispoke earlier), in an environment with lowering interest rates, you have to be extremely careful because low interest rates mean the cash value of your account isnt earning enough to cover the premium, and you could suffer a deficit...and have to cut a check for the difference. 

 

Term life is much cleaner.

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Borrowing from your cash value is a great way to draw income without paying taxes. Term is good, Universal (not Whole) is good. Both together in a blend is best.

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If she's a college professor she may soon figure out that you're worth more dead than alive! :doh:

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I joked about that with her. I told her that if she's going to off me, do it the quickest and least painful way possible. :huh:

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But it begs the question, if she works for a university, chances are she gets some kind of life insurance policy. And chances are once you are married, you can be added to her policy. Something else to check out.

 

Not in every instance. I can't add my wife to my policy through my employer. I took a separate policy through my job for her, but its max is only 20k. Compared to my $1 mil, it would do very little in the event something happened.

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Yeah she wouldn't want to use the rope they don't usually pay for what appears to be suicide the first couple of years right?

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Correct. There however would be a challenge with murder as well. Everything is challenged in the first two years. Even cancer.

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Not in every instance.  I can't add my wife to my policy through my employer.  I took a separate policy through my job for her, but its max is only 20k.  Compared to my $1 mil, it would do very little in the event something happened.

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About as much as she'd get if you lost your job due to illness that you eventually died from. Zero!

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Borrowing from your cash value is a great way to draw income without paying taxes.  Term is good, Universal (not Whole) is good.  Both together in a blend is best.

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Yeah, its tax free....but so would be taking the cash and stuffing it in your mattress and then pulling it out 10 years later. Except in this case you pay extra per month for the privlage.

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Yeah, its tax free....but so would be taking the cash and stuffing it in your mattress and then pulling it out 10 years later.  Except in this case you pay extra per month for the privlage.

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How much interest does the money under your matress earn?

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Since I'm getting married soon, I guess it's a good idea for me to get life insurance.

Anyone know of any good company to go through? I keep getting offers through HSBC. For 30 year, 250k, it's like $45 a month. Is that good?

 

Thanks.

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Good post, Ed. Who says you never post anything good. :doh:

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How much interest does the money under your matress earn?

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Point is, you pay 100/mo extra for a whole life policy. Invested at 5% in whole life policy. Borrow the money for 10% interest tax free & start making additional payments to pay back the borrow....

 

or....

 

Save $100 per month for the same coverge. Invest the money as you see fit and (presumably) earn more than 5%. Use that money to for college education for your kids or whatever... far better option IMO.

 

But like I said, whole life policies are obviously used, so they must have a spot for someone, they just dont make alot of financial sense to me.

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Point is, you pay 100/mo extra for a whole life policy.  Invested at 5% in whole life policy.  Borrow the money for 10% interest tax free & start making additional payments to pay back the borrow....

 

or....

 

Save $100 per month for the same coverge.  Invest the money as you see fit and (presumably) earn more than 5%.  Use that money to for college education for your kids or whatever... far better option IMO.

 

But like I said, whole life policies are obviously used, so they must have a spot for someone, they just dont make alot of financial sense to me.

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How about a policy with wash loan policy? Meaning they credit the interest on the loan back to your cash value. Gee this is almost as much fun as arguing cooking with a certain someone.

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No hiking in the Adirondack mountains.

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Reminds me of the joke, my old boss would say to new employees. Of course he wound up getting fired:

 

Always went something like this:

 

Boss: Do you like camping?

New Employee: Sure

Boss: Would you tell anyone if you went camping and woke up with a used rubber in your ass?

NE: Umm.... No

Boss: Wanna go camping?

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