Do I need life insurance?

I am 30 years old, single and have net worth around 400k. A life insurance agent is trying to rope me into buying his policy as he claims I can get almost a guaranteed 4-8% ROI which is better than a bank CD. This agent is quite pushy and does not take 'No' for an answer. From what I have read online, if you dont need life insurance then dont buy the policy. Is that correct in my case?

Reply to
oprah.chopra
Loading thread data ...

"I have no dependants, I need no life insurance." Small enough to fit a bumper sticker, really.

I only have life insurance because I have a Wife and Child. JOE

formatting link

Reply to
joetaxpayer

My answer is a definite "maybe"!

I would consider a new agent no matter what. He's not the only guy out there selling insurance and it doesn't sound like he is working for YOUR best interest. An 8% ROI for the average policyholder is a little over-zealous. Even if he is sincere, almost no good can come out of working with someone you don't feel comfortable with.

As for the insurance, we need a little more info about your situation. If you have debts that would be difficult for others to satisfy (like a mortgage or student loans), unfunded educational needs for children, or a spouse/family that relies on your income (or your ability to stay home and not spend money on daycare) then you may need term insurance.

There is also another consideration. A net worth of $400k is above average for your age. If you project this number to continue growing, you may be one of the lucky few that have to deal with estate taxes ($400k @ 5% annually for 55 years is over $5mil). If you expect this to be the case, you may want permanent insurance (like Universal Life) to cover estate taxes. In this sense you are insuring a problem that you don't yet have (and may never end up having). That's a risk you'll have to weigh yourself.

Paint your picture a little more and we can probably give you more specific advice. Good Luck!

Reply to
kastnna

This chap already has $400K in life insurance for free (his savings). What could he possibly ever need more for? The way he is saving, he will have a million in the bank in another 10 or 15 years, and not many folks that I know have a million in life insurance.

The easiest way to be broke is to keep giving your money to other people. In this case, there is absolutely zero reason to give any of this chap's money to anyone else.

-john-

Reply to
John A. Weeks III

Does the above somehow include Doctors - grocers - druggists - service people. The suggestion (by another poster) was to "protect the probability". No one suggested that he run out and buy insurance on a whim. He is young enough so that his future is still ahead of him. There is some small possibility that he might have a N E E D for insurance at some time in the future, and find himself in a position where it would NOT be available for one reason or another.

One would assume that if he drives a car, that he carries insurance. The State in which he lives might require some minimum of car insurance, but I would bet that he carries more than that. WHY? ? ? ? ?

The "investment" in a low cost term policy for THAT reason ONLY, seems to be a "prudent investment". (this from a person who has advised time and time again, that life insurance itself should not be bought as an investment tool).

Cal Lester CLU

Reply to
Cal

That's exactly why she may need insurance. Contrary to your belief, permanent insurance (note I didn't say, whole life) has a very useful and specific place in the insurance world. This "chapette" is on course to end up with an estate sufficiently large enough to trigger an estate tax in the millions (of course we don't know what the future tax law holds).

The OP never said she had a single penny in the bank (although I suspect she does). I have clients that do not have large sums of liquid cash but have homes and inherited properties worth millions. For them, insurance is the only way to ensure their heirs don't have to literally "sell the family farm" to pay the estate taxes. Sure she can wait, but she runs a huge risk of becoming uninsurable or "rated". By the time she discovers she needs the coverage, it may be too late. Even cheap term (that is convertible) would sufficiently secure her insurability.

There is a strong possibility that she doesn't need this coverage, but she didn't provide enough details and your broad generalities are dangerous. Not asking enough questions is probably the single biggest mistake advisors make and we chastize them regularly on this board.

Is it safe then to assume that you have no forms of insurance?

Reply to
kastnna

izaposibilty

Cal Lester CLU

Reply to
Cal

I do. I also advocate buying a policy to insure against being uninsurable at a later age. Thumper

Reply to
Thumper

I second that! In my (never humble) opinion, I think the greatest disservice associated with this otherwise fine NG is the constant position that the ONLY reason to buy life insurance is to provide for currently known dependents. While in fact most young Americans don't have a NEED for life insurance today, the cold reality is that many WILL in the future AND buying when they are young will get them a rate they would kill for once they get old enough to need it.

Of course, one of the nice things about a moderated NG such as this one is the free exchange of ideas and opinions. We can agree to disagree respectfully.

Gene E. Utterback, EA, RFC, ABA

Reply to
eagent

Maybe you or somebody else can run the numbers. A reasonable starting might be a happy, healthy, single 25 year old, who buys a 30 year term policy "just in case" vs. a happy, healthy, just married 30 year old who buys a 25 year term policy. What's the total cost in both cases?

How can our single 25 year old make a reasonable estimate of how much insurance they will need? That seems to require a guess as to how many kids they will have and when. How do both folks handle inflation? Since a dollar is likely to buy about $0.50 in 30 years, they need to forecast when they will die.

Another issue: What are the chances that our 25 year in prime health is uninsurable at 30? Percentages please, not "it happens".

I'm cynical about the "buy now just in case" argument because I see so many people (my self included) that have never needed life insurance and have no serious prospects of ever needing it.

-- Doug

Reply to
Douglas Johnson

The key here would be the definition of "NEEDED & NEEDING". One person's NEED would be anthers desire to own, or want to feel good or ? ? ? ? ? ? Cal Lester CLU

Reply to
Cal

Just out of curiosity, do you sell life insurance? That sounds like an agent's line.

People self insure for all sorts of things. Sometimes they are right, sometimes wrong. My homeowner's policy does not cover floods, earthquakes, mud slides, acts of war, and terrorism, so I am self insured for those.

Why is it unreasonable to consider self insuring for the chance that I will both need life insurance and be too ill to get it? The numbers would help to make the decision.

-- Doug

Reply to
Douglas Johnson

N o! I have NOTHING to do with life insurance except as a consumer. Thumper

Reply to
Thumper

A variation is "People don't deposit averages in the bank."

Somebody should compile a list of one-liners that are used by financial salespeople. My favorite is "Would you try to do your own brain surgery?"

There probably is not enough material to get it on the Letterman show, but a longer list might be good for some laughs anyway.

The granddaddy of them all is: "Someone who acts as his own lawyer has a fool for a client." There could be a grain of truth in that, but when a real estate agent claims that someone who tries to sell his own house is foolish, you need to stop and think about it before you bite.

Nowadays all kinds of salespeople are pretending to be professionals. People go for it. In the future it may come to: "Would you try to tie your own shoes?"

Reply to
Don

Dittos for the consumer...

- nobody every worked as hard to earn your money as you did.

- giving your money to other people is not a wealth building strategy.

- when a salesperson with education meets a client with money, the salesperson ends up with the money and the client ends up with an education.

- where are the customer's yachts?

-john-

Reply to
John A. Weeks III

Excellent. Viva the consumer. Also,

"If it is so good, why are you telling me about it?"

And one of my all time favorites:

"In a rising tide all ships rise ".

And my variation: "In a falling tide, all salesmen disappear." (Well, maybe half of them.)

Reply to
Don

BeanSmart website is not affiliated with any of the manufacturers or service providers discussed here. All logos and trade names are the property of their respective owners.