Life Insurance

[gilana]

 Does anyone know anything about life insurance?  It's occurred to me that that's one of those grown-up type things that might be good for us to have, at least enough to cover any funeral and burial expenses, but googling it is a little overwhelming, since there seem to be more kinds and options than I can easily wade through.  Do any of you understand this stuff, or can you point me in a useful direction?  We have renters and auto insurance through Liberty Mutual, so I'll likely go through them unless there's a reason to go elsewhere, but apparently my agent is out of town for a few weeks, so I can't just ask him right now.  Thanks! 

Comments

[chanaleh]

Definitely a good thing to set up - especially if you don't have cash on hand that would (God forbid) cover funeral expenses, which can easily run to $10k. Ideally you should get a large enough amount to help cover the loss of the person's income, at least for a year or two.

"Term life" means you have the policy only for a fixed term, and if the insured person survives that period, the policy just expires. This is good for addressing long-term but finite obligations like a mortgage or a minor child's college education. With a "whole-life" policy, you pay into it forever at a fixed rate, but you are guaranteed a certain minimum cash payout at time of death even if you live to 120. So the $ you pay for a term life policy is "wasted" in one sense, but the benefit is that you get a much larger payout per policy dollar -- IF you get the payout. It's true insurance, not an investment vehicle. Conversely, whole-life usually isn't the best return on your money as investment vehicles go, but some people like it for simplicity I guess.

*hugs*

[gilana]

Thank you, that's super helpful!

[desireearmfeldt]

I *have* life insurance but I can't claim to know anything useful about it. :/

[ceelove]

There's a requirement to maintain life insurance in my divorce contract, and we were pointed at SBLI as good, straightforward, no-frills, reasonable cost life insurance. I think I pay $120 a year so my kid will get $100K if I die. (I have house and auto through LM, which is to say it didn't factor into choosing where to get life insurance.)

[gilana]

Thank you!

[skreeky]

It's a very good idea, even if you have no dependents, if it would be difficult to maintain your household on one salary through such a crisis. I'm not all that well insured because my income is not critical to maintaining the household, but Jon is insured well enough to pay off the mortgage and other major debts, and keep the household running at its current level without his income for several years. He also has very good disability insurance for the same reason. I simply don't make enough on my own to support this house.

I forget which type he derides as being a complete scam. But he sure feels very strongly about it. I'm gonna guess there's a chapter in "Personal Finance for Dummies" which is sort of his financial Bible.

[gilana]

That sounds like something I should probably read. I hate the "for Dummies" title -- I'm not a dummy, I'm just ignorant on the topic -- but the contents as generally pretty good. Maybe I should parse it as "As If For Dummies".