Brief and to the point: Do any of you carry term life insurance beyond that offered by your employers?

To expand a bit, I'm now commuting 126 miles daily, between north of King of Prussia and my new office location in Mount Laurel, NJ. That's taking a hell of a toll on me and especially my new Subaru Forester.

I am lucky enough to be allowed to work at home one day a week. I'm hoping to expand that to two days at some point. But right now, it's costing me $60 a week in gas, or $120 per pay period. That's wreaking havoc on our budget. So I'm cutting back, or trying to.

Hence the question. I bought this third-party life insurance way back when another employer was in financial difficulty. I was hoping to be able to ditch it. What are your thoughts? We have no kids, no plans for any, and my wife works (even though she'd rather not).

Craig

Yes. But I have a child and a wife. I've always heard at least 10 years worth of your salary as a baseline, but that number goes down as you get older and your kids get older. So at 30, it should be significantly higher than at 40, and much less at 50 when if you die, your kids are presumably grown and on their own.

I would say, find a number your spouse is comfortable with should you die. It should at least pay off all your personal debts (house, any cars, land, credit cards etc.) and it should keep your wife comfortable for several years (especially if your retirement is underfunded). If your employer offers enough, take it, it's usually a fraction of the cost of independant insurance. Use 3rd Party to get to the number you feel comfortable with. Kids take at least $200k per child just to get them to adulthood. Tack on half that same amount for college (probably twice that in 18 years). Don't forget medical expenses as you grow older (or rather your wife does).

So, figure out your income, your debt and what your spouse can survive on. Also remember it's easier to pay for insurance that you got years ago vs. a new policy you get when you are older.

Plus, do you really want to cut back on life insurance when driving 126 miles a day? <img src="/images/graemlins/smile.gif" alt="" />

No. I don't believe in insurance. There are far better investments that you can make with that money, especially since the insurance companies make it as difficult as possible for you to collect.

My grandfather never had life insurance, even though he had a wife and 11 kids. Instead, he bought small parcels of land in each kid's name. That land became worth multiple times what an insurance payout would have been.

I have employer-based insurance. We're covered there. I 've got the maximum I'm allowed to have without a physical exam and questions about my meds. I have Chronic Daily Headache, so what I take is A LOT compared to your average joe.

I can't touch the 3rd-party plan without cancelling it altogether. At the time, I took the Grade A plan because I figured my old employer would be firing us all.

Now, if I try to dial back on the plan, they cancel that plan, keep the money, and make me start all over on a new, cheaper one. I'd rather do that than keep pouring money into this one.

I'd rather pour that money into my gas tank because the money has to come from somewhere. I'm draining savings right now.

Wow!

>> keep the money

They keep the money? What money? This is term insurance right? If it's not then hell YES cancel it. Full Life policies are usually a pretty bad investment over time. Just about anything trumps them. If this is Term and you were going to get some money, you'll have to explain the policy. That's sure as hell not how mine works. <img src="/images/graemlins/smile.gif" alt="" />

Again, Insurance is about comfort levels. If your wife can live comfortably on what company insurance would pay out and what you have in your retirement, you don't need this.

Don't believe in insurance? There are countless types of policies. Perhaps you mean full term. As a person who has had to accumulate my own wealth, and who wanted my family to be able to survive until my kids were adults, I opted for a term policy. As I grow older and my investments grow and I save more and put more into retirement, I need less and less "death benefit" from the Term Life Insurance.

When your kids are fully raised, you should have been saving all along, but many do not. If you aren't disciplined enough to save money, then I'm not sure what to tell you.

Term life is intended to provide a death benefit to your loved ones. It is not an investment vehicle. SOME insurance policies are "okay" when it comes to investments if you are really risk adverse. Buying land is a nice investment, but you 1) have to have the money with which to buy it in the first place and 2) have to live long enough for it to appreciate. If you sink money into land when your kid is born and die 3 years later, they get the land plus whatever it has increased. If they sell it, that's likely not a lot to live on. In that same 3 years, it would cost you probably $30-$75 (depending on health and age) to have half a million in term life. If you croke off when your kid is three, they get half a million. No land maybe, but you would have to buy a HELL of a lot of land up front when they were born to compete with the price/profit ratio.

I agree, full life isn't really a great investment, especially if you are young. But Term life covers the gaps while you live below your means and invest (land is a good choice). <img src="/images/graemlins/smile.gif" alt="" />

The reason I don't believe in ANY insurance is the same reason I don't go to Vegas. The odds are stacked against you. Who makes more money, insurance companies or casinos?

I don't know, but I know in my lifetime I still have yet to pay auto insurance premiums equal to the amount of two totalled vehicles I've claimed (black ice on sharp curve, and speeding driver blind-siding me through an intersection). <img src="/images/graemlins/smile.gif" alt="" />

Not all insurance is bad, and it's hardly like gambling. In fact, most would argue that NOT having insurance is gambling. Do you believe in Health Insurance? Auto Insurance? Home Insurance? What happens to you if a fire turns your house and all your posessions (including your 2 cars in the garage) into a smoldering cinder?

And I'm not shill for the Insurance companies. I hate the hard sell pitches as much as the next guy. But it certainly has it's place. Am I wrong here? I see Insurance as being as invaluable as any other preparedness item. Am I the only one? <img src="/images/graemlins/confused.gif" alt="" />

Oops, my mistake. You're right. This is term. The point I was trying to make is, this plan is not offered via my employer and the premiums increase every quarter. As I am otherwise covered by my employer, can I or should I cancel my third-party term life insurance.

Premiums increase quarterly? Sorry, I'm not the best person to advise you here. My policy is locked for 10 years as far as I know. Like I said... there are lots of policies. I think the answer depends on two things.

1) Can you afford it if you keep it?
2) Can you afford to die (or rather, can your spouse afford you to die) on the policy you have via your employer?

Some of that depends on your age, the ease with which you can get another policy later down the road when you can afford it, and your debt and comfort level.

I would talk to your insurance agent and explain the situation. I would also talk to your manager. I've know employers are more flexible than we think. You might be able to get mileage (like 40 cents a mile now) for all or part of your daily commute. Or they might be willing to extend your life insurance maximum. Or give you a raise or other compensation in some other manner.

Fair enough. That begs another question. Our insurance is a patchwork of policies. How does one go about obtaining an agent?

Aloha Craig,

Here's what I would do to find an agent. I would ask around to people I know and trust if they have one that they are happy with. I would google your state and "insurance division" to get a list of licensed agents. I think you can also find out if they have any problems or issues. Then I would do a search for for your state and "certified financial planner" and see who is on all three lists. Then call and see if you like them and feel you can trust them.

The reason I suggest both the insurance division and certified financial planner is that they will probably be able to give you more comprehensive advice. I have found in my dealings with insuance agent only and certified financial planners who are also insurance agents is that the former generally thinks you should always get more insurance while the latter tends to take a more wholelistic look and advise according. I truly believe that sometimes insurance is the most appropriate way to go and sometimes it isn't. So, let the buyer beware and try to get objective advice from someone who will look at your overall financial well being and you are comfortable divulging ALL of your financial information to. I say ALL because garbage in garbage out. And I for one would like accurate and appropriate advice.

My two cents.

Thanks!