Wills & Life Insurance - VeggieBoards
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#1 Old 12-27-2002, 02:48 AM
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Anyone know where I can find out about Wills?



Are there any cases in which Life Insurance can be held?
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#2 Old 12-27-2002, 03:44 AM
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What do you mean, are there any cases in which life ins. can be held? Do you mean that someone passes on and has life ins but the ins company is refusing for some reason to pay out benefits to the beneficiary(s)? Let me know..I'm able to help with the life ins part, but it looks like I need a little more info.
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#3 Old 12-27-2002, 04:28 AM
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I just PM you.
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#4 Old 12-27-2002, 05:27 AM
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I just pm'd you back
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#5 Old 12-28-2002, 12:25 PM
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i dunno but my mom wants me and my bro to get life insurance cause her neighbour's son died really suddenly and was only 32 and it got my mom thinking about funeral costs and whatnot and thinks we should be covered just in case, cause she'd never be able to cover the costs.

never too early for it really, i heard about 2 people my age passing over the holidays in car accidents, two seperate incidences.

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#6 Old 12-28-2002, 12:41 PM
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i have a $400,000 policy on myself. If i die, mom and sis will have something to ease the pain. It also has an investment(stocks) feature which is tax free as long as i never terminate the policy, i can borrow from it whenever at a nominal interest rate like 1%(for the 1st 10 yrs, 0% after that) but they dont require me to pay back any money, it will just come out of the payout when i die. The policy itself is like $25 a month, but i make a payment of $200, which the rest goes into the investment part.
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#7 Old 12-28-2002, 01:28 PM
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nice. sounds like a good plan, plus it means you have a backup source of cash in case you end up in a bind. i may have to go for something like that

I'm singin' here to get rid of fear
Hope it disappears right here with the rain
But I know life is pain, not like a fairytale
Meaningless to pray, so just goin' on my way
~Miyavi "Torture"
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#8 Old 12-28-2002, 01:42 PM
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I've heard many consumer groups say that the only kind of life insurance that is worth the money usually is term life insurance for when you may have dependents and not enough time for your investments to build up for them to live off of. Much cheaper. Until then, my money will be in IRA's and mutual funds, etc. But I don't doubt there are some good ones out there, say, if you start at a very early age.



I have some minimal coverage for free from work. Will pay like 10,000. More than enough for my folks to cremate me and buy some vegan snacks for a wake. Funeral businesses really take advantage of people and my family is wise to that. We would never want more than a few thousand spent on us. We'd throw ourselves in the river if we could.
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#9 Old 12-28-2002, 02:52 PM
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Apple, in most states you can't sign a valid will until you reach age 18. You've got a while to read up on them . . .
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#10 Old 12-28-2002, 03:03 PM
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Thalia, the investment section of my life ins is set up similiar to 401k plans inwhich your investment is spread out over mutual funds of your choosing, you can switch them as you wish. In direct investing into these funds you have to pay taxes on your earnings, with a 401k im pretty sure there are still taxes at some point and huge penalties if you need to withdraw money before you are 65, in addition to taxes on that withdraw, with the plan i have im able to borrow against that money, loans arent taxed, and since i dont really have to pay it back if i dont want to, its pretty much the same as withdrawing it, except no taxes or penalties exist, my beneficiaries just receive less money, but never less than $400,000. Does my family need $400,000? no, and i will probably be switching that at some point to donate it to charity, minus the cost of my death services.
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#11 Old 12-28-2002, 04:00 PM
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I've got no life insurance and have advised I want to be buried in a cardboard box in the back garden with no fuss. If my husband pegs it I shall sell his motorbike to pay for a cremation service.
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#12 Old 12-28-2002, 09:56 PM
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For all I care, shove my body in a snow drift, let me rot in a pile of leaves, just don't leave my body around to trip over, ya know? It's not like I'll give a hoot, because the dead don't care. Funerals and the like are for the living, not the dead.

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#13 Old 12-29-2002, 09:42 AM
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Majake - I would double check some parts of your policy, in particular the part about loans and not paying them back. I am a licensed insurance agent and I hold my Series 6 (investments), and what you describe sounds odd. It sounds like some sort of universal life policy, except I have never heard of one that allows you to take a loan at such a low rate, and not pay it back. (The part about the unpaid portion of the loan being taken out of the insurance amount upon death is correct.) At some point, the interest would start coming out of your cash value.



There can be tax implications in the scenario you suggest, as being allowed to take a loan out at almost 0% interest could be construed by the IRS as a withdrawal. I also see no advantage to the insurance company in this case - they are letting you shelter money and avoid taxes with nominal gains to themsleves.



Double check the interest rate on the loan - make sure it is not a variable rate. It could be that the rate is low now, but could be higher in the future.



I will look up some information on universal life policies, to see if there are some other catches I am not thinking of at this time.



Thalia - term life is the way to go. Keep plugging money in those IRAs and mutual funds - it will pay off.
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#14 Old 12-29-2002, 10:40 AM
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Tame, i did a bit more research into it. It is referred to by the company as a Variable Life Ins Policy



It is an annual interest rate prepaid each year at 5.2%, the loan amount and interest amount are put into a reserve account which earns an interest rate of 4.75%. So if the loan isnt repaid the interest rate would be at 5.2%. Each year the interest is calculated on the unpaid balance plus perviously accrued interest. So far i have found no indication of non-payment penalties or tax penalties on a loan, they do have withdrawals i can make which would be taxed.
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#15 Old 12-29-2002, 12:22 PM
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Majake - a variable life policy is (I think) a variation of the universal life.



Check into what happens to the insurance amount if the investments you have chosen go awry. Also, check into what your premiums would do in such a case.
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#16 Old 12-29-2002, 12:23 PM
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Also, the only part of your withdrawals that would taxed would be your interest/dividend earnings. The original premium plus future premiums in your cahs value are not taxable.
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#17 Old 12-29-2002, 12:41 PM
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i believe the $400,000 would be the minimum that is paid out, minus whatever fees that the ins company puts on and any outstanding loans, even if my investments go south, the investments wont affect the base $400,000. The investment are added onto the $400,000 payout upon my death. Im not required, except for the 1st year to put money into the investment portion, after that i only need to pay the monthly preminum for the $400,000, which is age banded.
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#18 Old 12-29-2002, 01:35 PM
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Quote:
Originally posted by Tame

Also, the only part of your withdrawals that would taxed would be your interest/dividend earnings. The original premium plus future premiums in your cahs value are not taxable.



Wouldn't he get a 1099r for the total withdrawal and have to claim it as income on his taxes?



My company sells VUL (variable universal life), and you are right in your earlier post as well that variable life policy is a variation of universal life.
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#19 Old 12-29-2002, 01:36 PM
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Majake,



Here are some links on variable life insurance policies. They have some serious issues as investment plans.



http://www.finaid.org/savings/variablelife.phtml



http://moneycentral.msn.com/articles...sics/10481.asp



http://www.riskylife.com/insurance/policyloan.html



I *think* that any non-payment of premiums will come out of your cash value, and if you cv becomes zero, the policy can forfeit. Everey source I can find recommends policy loans for short periods of time only.



Also, from what I can find, the investment portion of your policy does not go to your heirs if you die. Wholelife policies (standard, variable, and universal) are written in a way that assumes you don't die. Annuities are the same way - they are great if you outlive them.



In short, based on the commissions and fees involved, you are better off to but term insurance and invest the difference.
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#20 Old 12-29-2002, 01:43 PM
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Thanks Tame, ill check out your links
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#21 Old 12-29-2002, 01:48 PM
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BTW, I hope you don't think I'm hassling you about this.



FWIW, I sell nothing other than term policies. Because of the commission and fee structures of the others, I feel they are a poor investment for *most* people. Some exceptions due apply.



Hey, at least you invest. I worked with a couple 15 years from retirement that had salted away $20,000 in net assets (inluding their house). Their yearly net income? $180,000. Un-freaking-believable. Oh, and they wanted to retire early.
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#22 Old 12-29-2002, 01:57 PM
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no, im glad to hear the feed back and learn more about it, anything to make my financial future more promising.
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#23 Old 12-29-2002, 05:21 PM
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Tame,

When do you recommend getting life insurence? I'm 19, and though I've never really thought about life insurence much, doesn't 19 seem a bit young? I have noooo idea.

Q: How many poets does it take to change a light bulb? A: 1001...one to change the bulb, 1000 to say it's already been done.
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#24 Old 12-29-2002, 05:39 PM
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It depends.

Typically, if your family has enough money to see your funeral, etc. I would recommend not having insurance.



However, if you could get a rider on your parents' policy which allows you to increase the value when you are 25, it may not be a bad idea. This rider (attached to your parents' master policy)would be for $5,000 - $50,000 and is usually fairly inexpensive. It would give you the option of increasing the face amount by 5 or 10x the original when you turn 25, and it would be come your own policy at that time. The advantage is that if something were to happen to you between now and when you are 25 that would cause you to be uninsurable, you would still be able to convert the rider if it has a guaranteed insurability clause (no medical or health questions when you convert it at age 25, most child riders have this clause.)



The other advantage to insuring a child for more than funeral expenses is that it gives the family some extra money so that more time can be taken off work to deal with the loss of a child. Sounds morbid, but it's true.



I carry $25,000 policies on each of the kids for this reason (and also, so that they have the advantage of guaranteed insurability.)



A friend of mine had heart surgery at age 12, and his parents covered him with child ridres on their policies. He converted them at age 25 and had about $250,000 in coverage. He passed away from heart failure at 29 and left a wife and young son - this coverage was invaluable to his family. Had they not purchased this coverage, he would have not been insurable at age 18.
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#25 Old 12-29-2002, 05:48 PM
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Quote:
Originally posted by Tame



Hey, at least you invest. I worked with a couple 15 years from retirement that had salted away $20,000 in net assets (inluding their house). Their yearly net income? $180,000. Un-freaking-believable. Oh, and they wanted to retire early.

They write about this in the book, "The millionaire next door."



Often the people with the most money in the bank are those who seem the poorest or at least the most modest and simple.



They said that the people you would think most capable of having a million or two in investements (doctors, lawyers, etc.) are often the most in debt. They have an image they want to project, so they buy a huge house (major liability), fancy cars, and take everyone out to the best restaurants, buy nice clothes, etc. Basically throw all their money away.



I don't have money put away, but I almost have my credit cards paid off, and I plan on living modestly and squirreling away as much as I can. I have a financial plan, and try to learn about money little by little. Money earning money is freedom. Having a lot of useless crap isn't.
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#26 Old 12-29-2002, 06:30 PM
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"He/she who dies with the most toys still dies anyway." I heard that from... oh, some financial planner. I'm not sure exactly who. This is kinda a piggyback on Thalia.

Q: How many poets does it take to change a light bulb? A: 1001...one to change the bulb, 1000 to say it's already been done.
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#27 Old 01-01-2003, 07:36 AM
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Originally posted by Bankruptor

Apple, in most states you can't sign a valid will until you reach age 18. You've got a while to read up on them . . .



My mother has a policy on me. I was just wanted to know how it all works.
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#28 Old 01-06-2003, 01:03 PM
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Quote:
Originally posted by majake

i have a $400,000 policy on myself. If i die, mom and sis will have something to ease the pain. It also has an investment(stocks) feature which is tax free as long as i never terminate the policy, i can borrow from it whenever at a nominal interest rate like 1%(for the 1st 10 yrs, 0% after that) but they dont require me to pay back any money, it will just come out of the payout when i die. The policy itself is like $25 a month, but i make a payment of $200, which the rest goes into the investment part.



FYI. The Gov just finalized regs that were proposed in Aug 2002 regarding loans in investment plans/vehicles. The new regs apply to loans made after Dec 31, 03. Include in the list of items subject to the loan rules: Code Sec. 403 (a) qualified annuities. This may pertain to your investment; I'm not sure. Just be aware that you may have to now make regular payments based on an amortorization schedule if you take a loan against your policy after 12/31/03.
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