Life Insurance: Scam or Good?

MendotoManteo

MendotoManteo

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I admit I have practically no experience with insurance claims of any sort because I've been fortunate enough not to have to be bothered by it much.

That said, I have a whole life policy with a major provider. Been paying in for several years now. And, if I understand correctly, my beneficiaries would currently only be given slightly under $2000 should I kick the bucket tomorrow. Which is far less than what I've spent on the policy thus far.

I am 40 years old and single (well, technically still married but divorce will be finalized this year likely). I have no children and do not anticipate ever having another wife or children. Both of my parents are still alive.

I guess what I'm asking is if this is worth it? I feel like the money I spend on this annually would be better "spent" by keeping in my savings. Which would be more than enough to chunk me in the ground.

What are ya'll's thoughts on life insurance? And should I keep renewing? My mom says yes, but I just don't think it's worth it, given my circumstances.
 
This is an unlikely scenario. If you kick the bucket tomorrow, your heirs would very likely be entitled to significantly more than $2,000. Look for the death benefit.

If you decided to stop paying the policy you would stop getting coverage in case that bucket gets kicked, but you would likely get $2,000. This is called the cash value.

And to answer your question, it's very unlikely the whole life policy is worth it. You're better off getting term insurance and investing the difference. And I would probably shop it with a different broker than the one that sold you the whole life policy. And if you have no wife or kids, you don't need it.
 
If your income is important to your survivors (which doesn't appear to be the case for you) then you need life insurance. But I wouldn't buy whole life. Term insurance through your working years is a more efficient way to "insure your income." Whole life is an "investment" and there are far better investments than life insurance.
 
gtyellowjacket said:
This is an unlikely scenario. If you kick the bucket tomorrow, your heirs would very likely be entitled to significantly more than $2,000. Look for the death benefit.

If you decided to stop paying the policy you would stop getting coverage in case that bucket gets kicked, but you would likely get $2,000. This is called the cash value.

And to answer your question, it's very unlikely the whole life policy is worth it. You're better off getting term insurance and investing the difference. And I would probably shop it with a different broker than the one that sold you the whole life policy. And if you have no wife or kids, you don't need it.
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Yes, my cash value is currently around $2000. So that's what my beneficiaries would get if I just stop paying for the policy? But you're saying it's worth more if I do? Sorry, I don't really understand all of this.

I agree though that I don't need it, but my mom tries to convince me I do because she and Dad are retired and on fixed income. And if I were to die before them, sort of thing. But I have enough in savings and believe my money better used by not paying and putting away in the savings.
 
gtyellowjacket said:
This is an unlikely scenario. If you kick the bucket tomorrow, your heirs would very likely be entitled to significantly more than $2,000. Look for the death benefit.

If you decided to stop paying the policy you would stop getting coverage in case that bucket gets kicked, but you would likely get $2,000. This is called the cash value.

And to answer your question, it's very unlikely the whole life policy is worth it. You're better off getting term insurance and investing the difference. And I would probably shop it with a different broker than the one that sold you the whole life policy. And if you have no wife or kids, you don't need it.
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Agree with most of this.

The primary advantage of whole life is the inside tax buildup that might not be available through other avenues (especially for higher earning individuals).

I remember an online discussion with a math professor (who was also a card counter) and described life insurance as a bet you are making with insurance company. The insurance company is betting you will live and you are betting you will die.
 
farce© said:
If your income is important to your survivors (which doesn't appear to be the case for you) then you need life insurance. But I wouldn't buy whole life. Term insurance through your working years is a more efficient way to "insure your income." Whole life is an "investment" and there are far better investments than life insurance.
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Thank you! Admittedly, I locked in the whole life (after originally having term) when I was still happily married and anticipating a family. But that's no longer the case, and I do not think it ever will be.
 
MendotoManteo said:
Yes, my cash value is currently around $2000. So that's what my beneficiaries would get if I just stop paying for the policy? But you're saying it's worth more if I do? Sorry, I don't really understand all of this.

I agree though that I don't need it, but my mom tries to convince me I do because she and Dad are retired and on fixed income. And if I were to die before them, sort of thing. But I have enough in savings and believe my money better used by not paying and putting away in the savings.
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But what is the death benefit of the policy (assuming you keep paying)?
 
MendotoManteo said:
Yes, my cash value is currently around $2000. So that's what my beneficiaries would get if I just stop paying for the policy? But you're saying it's worth more if I do? Sorry, I don't really understand all of this.

I agree though that I don't need it, but my mom tries to convince me I do because she and Dad are retired and on fixed income. And if I were to die before them, sort of thing. But I have enough in savings and believe my money better used by not paying and putting away in the savings.
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The cash value would go to whomever you wanted it to go to, but in your situation, it would typically be yourself. Just make sure it's set up that way before you cancel the policy.
 
gtyellowjacket said:
The cash value would go to whomever you wanted it to go to, but in your situation, it would typically be yourself. Just make sure it's set up that way before you cancel the policy.
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Are you saying that, if I cancel, I will get the cash value in return?
 
MendotoManteo said:
It's $100,000 policy.
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I asked because in your OP you said, “And, if I understand correctly, my beneficiaries would currently only be given slightly under $2000 should I kick the bucket tomorrow.”

If you kick the bucket tomorrow, your beneficiaries would receive the death benefit, $100,000.
 
MendotoManteo said:
Are you saying that, if I cancel, I will get the cash value in return?
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Yes, if you cancel you get the cash value back.

Term life is the way to go if you want a certain amount left to cover funeral expenses (if you don’t have anything for that through your employer) and a certain amount to leave for kids ( or whoever).
 
farce© said:
I asked because in your OP you said, “And, if I understand correctly, my beneficiaries would currently only be given slightly under $2000 should I kick the bucket tomorrow.”

If you kick the bucket tomorrow, your beneficiaries would receive the death benefit, $100,000.
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I see. Say I was to "make a decision" about my life. Would that affect the amount given to my family?
 
Delta74 said:
Yes, if you cancel you get the cash value back.

Term life is the way to go if you want a certain amount left to cover funeral expenses (if you don’t have anything for that through your employer) and a certain amount to leave for kids ( or whoever).
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I have a $10,000 life insurance via employer but no idea what it means.
 
MendotoManteo said:
I see. Say I was to "make a decision" about my life. Would that affect the amount given to my family?
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I think by law they have to pay out if you have had the policy for 3 (maybe 5) years.

But I hope you don’t make that decision.

Edit: it is two years. From NC department of insurance.

“Generally, after a policy has been in force for two years, the insurance company cannot contest the validity of the policy for any reason other than failure to pay the premiums.”

That seems standard. If there is not clause then they must pay out from the beginning but I think they all have a clause. It is just the clause can’t stipulate a period over two years.
 
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MendotoManteo said:
I admit I have practically no experience with insurance claims of any sort because I've been fortunate enough not to have to be bothered by it much.

That said, I have a whole life policy with a major provider. Been paying in for several years now. And, if I understand correctly, my beneficiaries would currently only be given slightly under $2000 should I kick the bucket tomorrow. Which is far less than what I've spent on the policy thus far.

I am 40 years old and single (well, technically still married but divorce will be finalized this year likely). I have no children and do not anticipate ever having another wife or children. Both of my parents are still alive.

I guess what I'm asking is if this is worth it? I feel like the money I spend on this annually would be better "spent" by keeping in my savings. Which would be more than enough to chunk me in the ground.

What are ya'll's thoughts on life insurance? And should I keep renewing? My mom says yes, but I just don't think it's worth it, given my circumstances.
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I wouldn't call insurance a scam, but there a reason you are offered insurance for most any electronic you buy on Amazon - it's a moneymaker.

IMO, adding life coverage into your mortgage, that pays off your home in the event that you die, is generally a better investment.
 
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