Question about life insurance?
Here is a little background info…I am a month away from joining the navy and going to flight school, I am 26 no health problems and my wife is 23 with no health problems. I went to get car insurance and the lady suggested i get life insurance now why I am still considered a substitute teacher. She said once I join the military It will require A lot more info and also my career will be considered hazordous. Does this sound right? And finally she just did a quick quaote and to cover my wife and myself each for 250k it will cost just under 70 dollars. This is also whole life not term and she said after a certain amount of time I could also cash the policy out and even make money ( something like 30 yrs). Does all this sound legit and does the quote sound reasonable, it was also state farm if that makes a difference. Thanks
March 13th, 2010 at 3:02 AM
There’s a lot of different topics working here. With regards to those from whom you take financial advice, remember two things: Anyone who makes a blanket statement that whole or permanent life insurance is automatically a bad idea hasn’t a clue about life insurance; and most agents selling auto insurance don’t either. Anyone who refers to cash value as a savings or investment plan or component (although there are appropriate applications for this) doesn’t understand the purpose of cash value.
Life insurance should not be treated as an insurance product. It is an intricate financial tool to be employed as part of a complete financial plan. The "buy term and invest the difference" philosophy is often hard to argue with, except that it is based on several assumptions that simply don’t ring true for most people. There are also scenarios where permanent life insurance is the ONLY responsible option.
As far as the military and flight school, this isn’t a big issue either. War zone exclusions and policy rating based on aviation are very common, but will likely have litte effect on your insurability. While I’m not necessarily advocating lying to your carrier, a policy more than two years old must pay a death benefit regardless of the circumstances surrounding one’s death unless it is due to an activity specifically stated as an exclusion in the policy (contestibility rule).
I am an 11-year financial planner, head of the nation’s largest nonprofit financial advisory network, and a former military aviator; so I have a pretty good starting point in comprehending your situation. You should find the link below helpful in finding your answers.
March 13th, 2010 at 3:02 AM
Whole life is foolish. Don’t go there. You should get some life insurance, and if you plan on having a family then while you are young and healthy, I strongly suggest a 20-year level term for $500K on both you and your wife. It would likely cost about $150 a year. Yes, that’s a year. If you took the $55 per month you would "save" by NOT buying that whole life stuff, and put that into an IRA (diversified growth and income mutual funds) over the next 20 years you will be far, far better off. Avoid whole life policies. They offer little return on "investment", but big commissions to the sales agents. Insurance should be insurance … not investment.
Definitely buy insurance before you enlist. You never know when you or your wife will no longer be eligible or "healthy" … PTSD, a severe injury, an unexpected diagnoses of cancer or diabetes, even childbirth can put a person in a high-risk category that causes the insurance rate spike, or make you uninsurable.
And, once you join up … THANKS for Serving!
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March 13th, 2010 at 3:02 AM
She is taking advantage of your ignorance on the subject. Read "Life Insurance for Dummies" before buying anything so you can learn all your options without the pressure from a commission-based salesperson who may not spell out all the pluses and minuses of every option.
As the person above suggests, any life insurance containing an INVESTMENT COMPONENT is usually a bad idea. If you don’t understand what I mean by investment component, you definitely need to read that book and ask more questions:
Dear salesperson, how much would my policy cost without that investment component?
Dear salesperson, what is the annual rate of return in percent for that investment component? Anything under 8% is a bad deal for a 30-year investment.
March 13th, 2010 at 3:02 AM
At 20 years old I would not buy Whole Life, Term is the best price and pays the same way, you die - it pays. You could get a 20 or even up to 30 LEVEL term, meaning your rate NEVER changes, good deal in 20 years, for a lot less than 70 bucks. for both of you it would be about 15 to 20 a month. The company does make a difference in the type of medical exams they require, but, that is usually when you are older. THe only part that did make a lot of sense is that you want to buy coverage before you become active military, but, you should be aware that any "act of war" meaning you die during your tour, will not be paid - the US government provides Life Insurance to Active duty, So, when your are stationed somewhere the US Gov insurance would pay, when you come home and see your wife, if you were in an accident. your private insurance would pay. Her private insurance would be primary at all times.
March 13th, 2010 at 3:02 AM
Once you join the military, you automatically get life insurance through them.
She’s trying to sell you. $70 a month . . . she’s selling you whole life, obviously. It’s $840 a year. If you bought 20 year term, you guys could get it for maybe 1/4 the price.
Plus, what’s the POINT of the life insurance? What financial GOAL is it accomplishing, besides lining her pocket with an $800 commission? Why do you NEED life insurance right now? If there’s no GOAL, it’s just like running and buying power tools that you don’t need, either . . . just so that they’re cheaper than they will be if you want to buy them five years from now.
March 13th, 2010 at 3:02 AM
Term life would be the best option, but only if you weren’t joining the service. Unfortunately I do not think you will be able to pursue coverage. Life insurers have become very wary about insuring active duty military due to the current political climate. Flight school doesn’t really help out the your risk either. Every application I have seen asks if you have plans to join the military. This is to prevent someone like yourself trying to get coverage before they join. You may have to settle for the military’s federal life insurance plan, which provides adequate coverage for most younger folks that don’t carry much debt. Stay away from a "graded" policy. They don’t pay full benefits for 2 or 3 years and they are way overpriced for the coverage amounts.
March 13th, 2010 at 3:02 AM
MoneyMon is right. And don’t forget once you enlist the Navy pays for life insurance as well.
God Bless You for serving
March 13th, 2010 at 3:02 AM
Ask if the policy is whole life or universal life. And, ask for an illustration of future premiums and cash values. If the person in the office does not know what your talking about then tell them you will only take a level term policy.
An illustration would tell you exactly what the policy does and looks like in the future. Don’t buy a policy without looking at the illustration first.