Life insurance?

Question

I'm 22 years old guy, I just got my life insurance. I pay like 200 bucks each month,and $65 of it goes to the life insurance and the rest is going to my cash value account. my coverage amount is 250K and is increasing. I was wondering what you guys think about life insurance? Is it a good thing to have? Is it a good insurance or not?

Answer 1

I think you've got a crap deal.

Run the numbers. AT your age, you can buy a term policy for that amount, for 20 years, for maybe $150 A YEAR. If you invest the rest, using this calculator: http://www.msfinancialsavvy.com/calculators/monthly_deposit_savings_calculator.php You'd have $184,000 at 42 years old, that you could do whatever you want with. If you kept it up another 20 years, it would be almost $2.2 MILLION.

Obviously, at 42, you wouldn't NEED more insurance, because your BANK ACCOUNT would cover it.

But my question is, why does a 22 year old NEED life insurance?? What GOAL is this acheiving? Odds are, if you're not married and don't have kids, YOU DON"T NEED THIS. If you DO need this, odds are, you can reach the goal MUCH CHEAPER than the way you're doing it.

Answer 2

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RE Life insurance?

I'm 22 years old guy, I just got my life insurance. I pay like 200 bucks each month,and $65 of it goes to the life insurance and the rest is going to my cash value account. my coverage amount is 250K and is increasing. I was wondering what you guys think about life insurance? Is it a good thing to have? Is it a good insurance or not?

Answer 3

Here are two articles about insurance. Insurance should be a part of anyone's financial plan if they have any dependants- people who would miss your monthly income if you were to pass away prematurely.

Just so you know, your $65 is going to cost of insurance. The company uses this to pay for annually rewnewable term. Each year as you get older, more of your premium will go to COI and less will go to savings. At some point, usually twenty years down the road, COI will cost more than the two hundred bucks. By signing for the insurance, you are allowing the company to come in at that point and use your savings to begin paying what is left of the premium. A few years like this and you will have no insurance, unless you come up with a huge amount of money each month.

For first several years, you do not have any cash value- it goes as fees to the company and the agent as commission. When it does earn,it will receive ONLY 1-4%- again because of fees and commissions. You can take a loan out- but repay back at 6-8% interest. You have to plan to take it out- they can make you wait up to 6 months to receive it. Your beneficiaries will receive EITHER face amount OR cash value. You could pay more in premiums so they receive both.

I only recommend term for my clients. I help them put a plan together that will allow them to save money in mutual funds. By the time they retire, they will be self insured and we can knock them down to just a burial policy. That is all they need at that time. Insurance IS temporary- you need it only until you are self insured then the need for it drops. Insurance and savings are two different things but both are needed in a financial plan, just not jointly in a program.

Answer 4

Life insurance is the cheapest and most immediate way to displace a huge risk. At your age, the policy you have probably isn't a bad idea as long as you don't miss the $200/m, but there are a number of different ways to design individual coverage. Increasing death benefits are almost always sold on a non-guaranteed basis, so learn and understand how to do your own policy review with an inforce illustration each year. This is important because your agent may move, leave the company, or die.

Good luck

Answer 5

The best insurance is the cheapest insurance. Get term insurance and the rest of the premiums that would go to building cash value, put in an I.R.A. You will build more cash value that way, and take advantage of some additional tax deductions.and still have insurance. When you make a payment to a Whole Life policy, a portion of your money goes to pay for insurance, some goes to the insurance company, some goes to the broker and some goes to building cash value. The other way, a portion goes for Term Insurance and the rest goes to building cash value, nothing else.

Answer 6

I would recommend one to visit this site where you can compare rates from the best companies: http://QUOTESDEAL.NET/index.html?src=2YAacyUtob39

RE :Life insurance?
I'm 22 years old guy, I just got my life insurance. I pay like 200 bucks each month,and $65 of it goes to the life insurance and the rest is going to my cash value account. my coverage amount is 250K and is increasing. I was wondering what you guys think about life insurance? Is it a good thing to have? Is it a good insurance or not?
Follow 19 answers

Answer 7

PLEASE READ THIS. Yes. Life insurance is a good insurance. You must evaluate what your needs are for all insurance, right?

Life insurance provides protection from loss of the income earning potential of an individual. You should look at what responsibilities you have. Do you have children, wife, home, and debt? Are you the main breadwinner in the family? Do you wish to provide college funds for children, or partial? Would you want final expenses paid? Does there need to be income for dependents in case of your passing?

There are many things to consider. Just curious, did your agent ask you what your needs and goals were in an insurance policy, or did he ask you how much you could afford?

Life insurance agents make a lot of money on cash value insurance products. It appears that you have an agent who is probably making a good commission on you policy. Choose another agent. Don't go back to the one who took advantage of you.

Have you heard of Suse Orman? She is a personal finance author and she detests all kinds of "cash value" life insurance. Term is the only way to go. Life insurance is not necessary for total life. You invest for later (retirement). You want to be financially independent at retirement, right? If you are financially independent at retirement, do you need final expenses? No, you've got it, and have had it for years.

The company I work for would advise you to buy term, the appropriate amount, at a good cost, and begin saving for long term, outside of the "insurance policy". Separate so you can have the control of your investement. My company can put in place a $250,000, 35 year, level premium (or increasing if you wish) for less than you are paying (even if you are a tobacco user with no other significant health issues) for your coverage with your current policy.

Investing the $135.00 (or more) for 35 years at an average rate of return of 12% would be over $850,000.

Given this, at age 57, would you still have a need for life insurance?

I don't care what numbers are on your policy, none of them are in the six figure range.

History on life insurance. In the mid 1970's there was more money invested in life insurance than any other investment in the US. The Federal Trade Commission did an investigation into how life insurance worked for the people of the US. After over a year long investigation, the FTC revealed that while there was more money invested in Life Insurace there was very poor return, usually 1 to 2%. A bill going through Congress that would have changed life insurance forever. The lobby group with the most money(insurance Co.s) couldn't let that happen, and it didn't then. President Jimmy Carter was forced to not sign it. They furthermore passed a resolution that the FTC could never again investigate the Insurance industry. At that time, Whole life, Universal life and other "cash value" stuff was what was marketed. That was then.

Life insurance is simply one of many financial tools you will need in your lifetime. Use it for the term which you need it. Plan long term with investing. If you have 200 dollars to commit to your future, get with someone who can help you put it to work for you as is proper for a 22 yr. old.

Hope this helped. Can help you if needed.

Good luck.

Answer 8

You mentioned just some aspects of your financial life but not others. How much money have you saved? How much debt do you have? How much do you earn each year? Will your income go up? How many people are dependent on you and your income? Are you in a high risk profession? Do you skydive or scuba dive? Do you film sharks underwater?

Without knowing these facts, it is hard to say if insurance is wise for you.

Go meet with several financial professionals and start a financial game plan for your life.

Good Luck.

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Answer 9

Why did you get life insurance? Do you have family who will need help if you die? Otherwise, why have it? It's a terrible investment if you're going whole life, which apparently you are. It's much better to go term life, and that's only if you need it for your family. A life insurance salesperson's only goal is to make money for him or her self. If you want to see how it works, ask your agent if you can go to a talk about becoming an agent. You'll hear the real deal about how they benefit. Then, go out and get term and learn how to invest. If you JUST got it, you have three days to change your mind, I think, and frankly, that's what I would do.

Answer 10

It sounds like you have universal life insurance. Excellent choice to get started so early in life..you will have tremendous cash value in future years and the option for a tax-free income many times worth what social security benefits provide. Stick with it!