Life Insurance? - VeggieBoards
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#1 Old 02-10-2005, 09:13 AM
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I'm thinking about getting some life insurance. I have a couple of poor friends that I would like to leave something to, as well as one young neighbor girl that I am very fond of. I'm not planning on dying anytime soon, but you never know.



I don't want to talk to my parents about this because they would just think something is up, and nothing is. I'm just the cautious type.



Where do I start looking? Advice? Thanks.
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#2 Old 02-10-2005, 09:49 AM
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An insurance agent will be helpful. Generally, life insurance exists so that your dependents are not crippled by loss of income in the event of your premature death. It also helps to cover funeral expenses. Wouldn't naming people with whom you don't have a legal relationship raise some red flags?
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#3 Old 02-10-2005, 09:52 AM
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I'd suggest you start by reading the chapter on life insurance in Jane Bryant Quinn's Making the Most of Your Money. Buy it or get it out of the library.



One of the things you should do, in my opinion, after picking the amount of life insurance you feel you would need, is to price a term policy for that amount and price a whole life policy for that amount. The whole life policy is likely to cost 5 or 6 times as much as the term policy.



The slogan is "buy term and invest the difference." To do that, you need to find out the difference in prices, as I've suggested above. Then you need to invest/save (at least) 5 or 6 times your term premium through an IRA or other savings/investment vehicle, probably in a stock mutual fund that would provide you with growth.
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#4 Old 02-10-2005, 10:06 AM
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Quote:
Originally Posted by kirkjobsluder View Post

An insurance agent will be helpful.



I am skeptical of this advice. An insurance agent is likely to be paid by commissions, and whole life policies pay a lot more in commissions than term policies. An insurance agent is likely to steer delicious to a whole life policy, even if that is not in her best interests.



Quote:
Originally Posted by kirkjobsluder View Post

Wouldn't naming people with whom you don't have a legal relationship raise some red flags?



No. There is an "insurable interest" test, but that only relates to the difference (if any) between who is buying the policy and whose life is insured under the policy. Generally, a person cannot buy life insurance except on his own life, the life of a spouse, or the life of his child. It is illegal to buy a policy on the life of a "stranger." (This rule is designed to prevent me from buying a policy on the life of kirkjobsluder and naming myself as the beneficiary, then arranging for kirk to have an untimely accident a week later, so I could collect on the life insurance.) But you are free to name practically anybody as a beneficiary.
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