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Always max out your PIP options. I pay about $1.40/mo more to have 100k vs ... 10k min in my state I think? You have no idea how much less stressful life is when you're unable to work for 6mo and have 50k+ in medical bills that are just taken care of.
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Sep 1, 2013 18:03
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So if I have good health insurance, i.e. I'm a resident physician and any treatment at our major level 1 trauma center hospital is 100% covered as long as you don't mind your friends and coworkers looking at your weiner, then I don't need UM coverage? I already have disability insurance. And UIM isn't needed as long as their policy is able to cover your out-of-pocket costs after your health insurance pays out, am I correct? Btw apparently I was wrong in that I just found out that I can't have both UMPD and collision coverage at the same time. So I guess I'm on the hook for my deductible either way, and the UM/UIM is only for medical expenses.
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Sep 1, 2013 19:15
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INTJ Mastermind posted:So if I have good health insurance, i.e. I'm a resident physician and any treatment at our major level 1 trauma center hospital is 100% covered as long as you don't mind your friends and coworkers looking at your weiner, then I don't need UM coverage? I already have disability insurance. The thing about the auto is that dollar for dollar it tends to be cheaper than the other insurance that you have. Your disability would kick in if you were ever disabled, so that is good, but the small amount you'd pay for UM can help bridge the gap over any deductibles you may have. You may be in a situation where tons of extra insurance isn't necessary (I mean, how many people can claim free coverage at a hospital?), but it still serves its function. Also, if you're injured in an auto accident, your auto policy tends to pay out BEFORE your health insurance pays out, so it'd be the other way around. Medical would cover after your auto pays out. But yes, UIM is if they are UNDERINSURED, so it can bridge the gap over what they can't cover. This can be useful if they do have insurance and its not enough. It allows your insurance company to pay you up so you're fine, and then they can go after the other person on your behalf. Otherwise, you'd have to go after them for whatever their insurance doesn't cover yourself. Sheri is right, I am only describing the states I operate in. UMPD is the other half of the UIM/UM stuff for vehicles, but it works the same way its been described, just may go under a different and separate title in some states.
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Sep 1, 2013 19:25
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INTJ Mastermind posted:So if I have good health insurance, i.e. I'm a resident physician and any treatment at our major level 1 trauma center hospital is 100% covered as long as you don't mind your friends and coworkers looking at your weiner, then I don't need UM coverage? I already have disability insurance. Couple clarifications on your second and third points. Jastiger mentioned auto insurance paying before the health insurance for injuries. Maybe its not with every insurer but I think its pretty common across the board. If payment is coming from med pay/pip, auto insurance pays before health insurance, as you treat. If it comes from um/uim or or the other party's BI(bodily injury) coverage, health insurance pays first and auto insurance pays after ALL treatment is done and you, the injured party, are ready to settle. For UMPD, Sheri is right and its not offered everywhere. Many people get UM/UIM and mistakenly think auto damage is part of it. As for your deductible, depending on your insurance company, they may waive your deductible, even if the other guy is uninsured, once the investigation is completed. Don't hold your breath on that but it is possible. Both companies I've worked for will do it under certain circumstances.
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Sep 1, 2013 20:26
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Jastiger posted:The UI/UIM is useful if there is an accident and they do not have insurance or not enough insurance. If a car hits you and they have no insurance, and you don't have UI/UIM, then you're more or less screwed and will fork over whatever it is plus your deductible. Remember, the liability limits are to cover the other persons car, not your own, so if they have no liability limits, then you're out whatever it costs to fix your car. With UIM/UI there is no deductible and it covers everything, not just your vehicle. This one is optional of course, but it can be quite useful if you are ever in that situation. UM/UIM is injury coverage only. If the other party is uninsured and you have UM coverage through your own carrier they will step in and offer a settlement for your generals + specials (loss of livelihood/ability/general inconvenience oef being injured and medical expenses). If the other party has minimum limits (let's say 15k) and the accident causes significant injury (say you have 60k in medical bills) your UIM coverage will apply up to the limits of liability you purchased from your carrier. UMPD is coverage for your vehicle should it be struck by an uninsured motorist. States have different ways of applying this coverage. Some states require a deductible, some don't. Some require you to have identifying information on the other vehicle, some don't. Generally the benefit of UMPD is a lower deductible than collision coverage, however many times UMPD has limits of liability that can restrict it's usability. (3500 in CA, etc.). There are a couple important things to note: most carriers will require your liability limits (BI/PD) to be higher or the same as your UM/UIM limits (no getting a 250/500 UM/UIM and 100/300 BI/PD). Also, in many states UIM isn't stackable - the amount that will be paid from your UIM limits will be reduced by the amount of any 3rd party BI payments. If the guy that hits you has 25k in BI coverage and you have 25k UIM, you won't see any UIM from your own carrier. If you have 100k UIM you'll be looking at up to 75k from your own carrier. UM/UIM are extremely important coverages to carry with moderate to high limits. Most people who aren't insured (or have minimum limits) probably don't have assets either and you could be stuck with footing the bill for their negligence.
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Sep 2, 2013 18:03
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My wife and I have recently gone from being poor college kids to making a very good wage, and now I'm wondering about our auto policies. How do I make sure I have enough coverage so that if we were in an at-fault accident, the other guy's lawyer doesn't find out what we do for a living and smell blood in the water and sue us for a ton of money?
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Sep 2, 2013 20:34
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RebeccaBlackFriday posted:UM/UIM is injury coverage only. If the other party is uninsured and you have UM coverage through your own carrier they will step in and offer a settlement for your generals + specials (loss of livelihood/ability/general inconvenience oef being injured and medical expenses). If the other party has minimum limits (let's say 15k) and the accident causes significant injury (say you have 60k in medical bills) your UIM coverage will apply up to the limits of liability you purchased from your carrier. Thanks for correcting me. UMPD is different than UIM/UM. Chrysotile posted:My wife and I have recently gone from being poor college kids to making a very good wage, and now I'm wondering about our auto policies. How do I make sure I have enough coverage so that if we were in an at-fault accident, the other guy's lawyer doesn't find out what we do for a living and smell blood in the water and sue us for a ton of money? Really the best thing to do is get a good policy. Make sure your limits are high enough to cover any potential liabilities you may have. 100/300 is a good place to start if you're genuinely worried about being sued. Really, if it all goes the way it should with a good company, they shouldn't even be talking to you, just your insurance company. If you make significant money and are genuinely concerned about being sued, I'd look into an umbrella policy. Umbrella's are what they sound like: Umbrellas over all your other policies. They are purchased by people who have a lot of assets and/or may be in a position where their daily activity could find them liable for being sued. They aren't super expensive for what you get and they do often require that your auto and home policies cover a minimum threshold amount. The auto/home pays out first, THEN your umbrella would.
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Sep 3, 2013 00:03
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Jastiger posted:Let's start with Personal Injury Protection (PIP). This is only available in some states, so if you're in a state that has this, PIP is different than simply medical because it also can cover things like lost wages in addition to medical expenses. The value there is that you get that extra coverage. In a lot of those states that offer it, its also often mandatory since it puts some of the risk of an unemployed insured onto an insurance company rather than the state for income during times you can't work. Here's what I got out of this: 1. PIP also covers lost wages. But how is this valuable if I have disability coverage through work? 2. Medical can cover my health insurance deductible and is put into effect before health insurance. How is this valuable if I have a low deductible health plan? 3. Seems like Medical can cover other people in your car, that's one unique benefit (although not valuable to me in particular because I don't drive others around). 4. I still don't understand why UI/UIM is useful. If a car hits me and they have no insurance and I don't have UI/UIM personal property coverage, wouldn't I put in a collision claim and just be out the deductible? I don't see how I would be "out" anything except my collision deductible. I could also use my health insurance (non-auto) for any health expenses, and my disability coverage (non-auto) for time missed from work. It seems like the only thing UI/UIM would be useful for is pain and suffering money, but in practice, wouldn't my health insurance go after (I believe the term is "subrogation?") the limits on my UI/UIM policy and leave me with almost nothing for pain and suffering anyway? The logic here being that if an accident was bad enough to cause me to seek pain and suffering compensation, it was probably bad enough to max out my UI/UIM limits for medical expenses. Let me know how wrong I am! Also, for the record, I currently carry 100/300 UI/UIM, but I'm just curious about the utility.
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Sep 3, 2013 05:50
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Pissingintowind posted:Here's what I got out of this: Well, lets go down the list. 1. Well PIP is often required in states that have PIP, so there is that  It's definitely something that would supplement, not replace your existing disability policy. One thing that I notice is that you said its through work. Policies that are through work are often pretty specific on what they do and do not cover. I'd make sure your disability policy through work is full disability and not just "disabled while working at THIS job". If you have a good employer, then this isn't an issue, but its worth going over. If its solid disability, PIP would be supplementary to the disability portion. Don't forget it is also medical coverage too. 2. Its valuable because it covers other people in the car and is again, supplemental. When worse comes to worst its better to have more coverage than not, and dollar for dollar medical isn't expensive at all. Plus it'd cover a piddly deductible if ya had one. 3. Yup! Regardless of fault. 4. "Subrogation" is what would happen if the insurance company paid you for your vehicle and then went after the offender for the money back. They are subrogating in that instance. Insurance is about sharing risk. If you feel confident that if you were ever in an accident that would max out your UIM/UI limits as far as legal fees and restitution, then that is a risk you may be happy enough taking on. If someone was going to max out, in "pain and suffering" your limits, I would think it'd be better to get paid immediately from my auto carrier and have them bat for me rather than rely on myself and health insurance company to do it. It's like them writing you a check up front and saying "we got this" before hand instead of you going after them yourself. It's completely up to you though, and everyone is different. For me, I'd rather pay a few extra bucks a month for triple protection than rely on the other forms that are more expensive. Its simply an additional layer of risk protection.
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Sep 3, 2013 06:57
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Jastiger posted:Thanks for correcting me. UMPD is different than UIM/UM. I guess it isn't so much that I think we're terrible drivers and are gonna get sued, but I know that we make pretty good money and will have assets in the coming years worth suing over. My wife and I make about $275000 combined a year, and we do work in a field where individual liability is a concern. Our employer ensures us for work related liability for 5 million per incident so I'm not sure if an umbrella policy is needed. I just don't know how car stuff works and if they can sue for future assets / garnish my wages / whatever. I just see PI lawyer ads on TV where they specifically talk about how the earning potential of the at fault driver can figure into the process etc. We have coverage at 50/100 right now, I'll look into how much more it is to raise that.
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Sep 3, 2013 19:01
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Chrysotile posted:I guess it isn't so much that I think we're terrible drivers and are gonna get sued, but I know that we make pretty good money and will have assets in the coming years worth suing over. My wife and I make about $275000 combined a year, and we do work in a field where individual liability is a concern. Our employer ensures us for work related liability for 5 million per incident so I'm not sure if an umbrella policy is needed. I just don't know how car stuff works and if they can sue for future assets / garnish my wages / whatever. I just see PI lawyer ads on TV where they specifically talk about how the earning potential of the at fault driver can figure into the process etc. If you're making $275K a year, you need to definitely increase your limits. The PI lawyers are right in that if you're insurance isn't enough to cover damages then the insurance company's liability ends and yours begins. The higher the limits, the more they are on the hook for. Its true, there are some that would find out who you are at that point, see the dollar signs and go after you. That is where an umbrella can come in. I'd definitely suggest it for you guys. Your policy at work only covers WORK related incidents, and they get to decide what is a work related incident. They usually can't sue for future assets or whatever, but that is really sussed out in court. I'd probably snag an umbrella, raise your auto policy limits, and make sure all your ducks in a row.
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Sep 3, 2013 19:29
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This is about auto insurance. I bought auto insurance about a week ago in order to buy a car, I only have learner's permit and won't be taking my road test until Sept 9th but when requesting a quote I said I have a driving's licence under a year old and I had a defensive driving certificate(which I didn't) to get a better rate, I didn't think much about it at that time because I wanted to switch to a better insurance at another company right after I get my licence. I paid 6 month in full to receive a one time discount and I knew I can get the rest of the money back anytime I cancel my policy. Then after I paid the full amount online, they send a email telling me that I should mail them my defensive driving certificate and my driving licence by sept 1st...of course I didn't. Then s**t happens, 2 days ago I was practicing my parking in a parking lot of my apartment, I brushed another car's rear bumper with the head of my car when pulling out and left some scratches. It was nothing major, no one was around, no camera or anything, I could have run but I stayed and called the police and reported it, the police found the owner of the car. I talked with the owner saying that since the damages were minor we could go to a car mechanics and I would pay out of the pocket.
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Sep 3, 2013 22:26
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Chrysotile posted:I guess it isn't so much that I think we're terrible drivers and are gonna get sued, but I know that we make pretty good money and will have assets in the coming years worth suing over. My wife and I make about $275000 combined a year, and we do work in a field where individual liability is a concern. Our employer ensures us for work related liability for 5 million per incident so I'm not sure if an umbrella policy is needed. I just don't know how car stuff works and if they can sue for future assets / garnish my wages / whatever. I just see PI lawyer ads on TV where they specifically talk about how the earning potential of the at fault driver can figure into the process etc. If you're making 275k combined please max out coverage with whatever carrier you have (generally it'll be a 500k or 1mil CSL) and get some kind of an umbrella. If for some reason your wife or you are involved in an accident that results in significant injury (or even a heavily inflated minor injury) and the decision goes to the courtroom you could be looking at a significant risk to your assets. Liability coverage is extremely cheap and can save you a lot of hassle, only having 50/100 is a huge disservice.
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Sep 4, 2013 01:27
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Well I went online and maxed out my Bodily Injury / Property damage from 50/100/50 to 250/500/100 and decided I could shoulder an increased comp/collision deductible from $500 to $1000. Resulted in a decrease of $2 per 6mos. I'll be looking into an umbrella next. Thanks goons!
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Sep 4, 2013 03:27
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askholic posted:This is about auto insurance. Weeeelllllllllll. poo poo. You paid for insurance so they will more than likely cover you if the other person makes a claim. Keep in mind, if you gave them insurance information, they are completely within their rights to call and make a claim. They have a police report, you admitted to it, its all official. If you're lucky they will have no problem just doing the out of pocket thing. Let me tell you, if you're young and this is your first license do what you can to NOT have a claim. Its already ridiculously pricey for young drivers, having an incident will compound this for you. As far as the defensive driving cert and stuff, this is where it can get sticky. They COULD: Cancel your policy. Pay out and cancel your policy. Raise your premium accordingly without the discounts and ask for the difference. This is the most likely option. The only reason the first two are even options is because you didn't tell them the truth up front and then you had a claim within that period. If it was serious enough, companies will cancel outright for that kind of thing. Be careful!
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Sep 4, 2013 05:35
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What's up with progressive's snapshot thing? I've had it, and I locked in my discount of 25%, (drove with it in for like 5 months) I'm considering getting a new car, and I emailed them to ask if I had to do the snapshot thing again, and they replied, you must call for this answer! Everyone's program is different. 
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Sep 4, 2013 17:34
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TLG James posted:What's up with progressive's snapshot thing? Well I've only dealt with it a little bit, but it should carry over *shrug*. They'd want to reassess which vehicle it is since they rate each vehicle differently, but I would assume your discount would stay in effect since your driving habits haven't changed. But...I dunno maybe they want to re-do it. Just call and find out I guess.
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Sep 4, 2013 18:28
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What are some good rules of thumb for when you should and shouldn't file a claim for damage? There seems to be a huge aversion to actually using insurance unless it's for larger claims in fear rates will rise, but will they have a drastic enough impact to make it worth paying $1-$1000 claims out of pocket instead? I have a vespa scooter in addition to my car that regularly gets vandalism damage in the city and always ends up being around $500. Each time there's a big debate if I should file a claim or just deal with the damage...
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Sep 4, 2013 18:34
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Thuel posted:What are some good rules of thumb for when you should and shouldn't file a claim for damage? There seems to be a huge aversion to actually using insurance unless it's for larger claims in fear rates will rise, but will they have a drastic enough impact to make it worth paying $1-$1000 claims out of pocket instead? Well, what's your deductible? You have to pay that for each claim.
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Sep 4, 2013 18:40
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Thuel posted:What are some good rules of thumb for when you should and shouldn't file a claim for damage? There seems to be a huge aversion to actually using insurance unless it's for larger claims in fear rates will rise, but will they have a drastic enough impact to make it worth paying $1-$1000 claims out of pocket instead? Well the basic rule of thumb is that you make a claim, your insurance rates will go up. If it doesn't its because you are either a great customer, have a policy that explicitly forbids it (accident forgiveness type stuff), or you have a premium insurance company where you're already paying a bit more than the cheapest. If your deductible is $500 then it doesn't really make sense to make a claim and pay 80% of it in your deductible. This would just make your rate increase and you'd be out $500, especially if its multiple claims. The reason the premium is what it is is because they do take into consideration the crime rate and frequency of claims in you area. If a customer keeps making claims no the same thing over and over again then wouldn't you raise the rate? If your deductible is $500 or more, its not worth it. If its seriously an issue that you are consistently getting damage then I'd either A) just accept your gonna have damage and don't worry about fixing it B) lower your deductible on comprehensive coverage so the insurance company will almost always fix it, just understanding that your rates may likely go up, or C) continue paying out of pocket to fix the damage.
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Sep 4, 2013 18:45
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Jastiger posted:Well the basic rule of thumb is that you make a claim, your insurance rates will go up. If it doesn't its because you are either a great customer, have a policy that explicitly forbids it (accident forgiveness type stuff), or you have a premium insurance company where you're already paying a bit more than the cheapest. My deductible is only $50, so that's quite a bit of money I'd be missing out on if I didn't file a claim. My rates would have to go up $30 or $40 a month to justify not filing a claim like that yearly, but that seems unreasonable considering my current monthly rate. How much have you seen rates spike with multiple claims? Is it typically 10%-20% or more like 50%-100%?
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Sep 4, 2013 18:57
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Thuel posted:My deductible is only $50, so that's quite a bit of money I'd be missing out on if I didn't file a claim. My rates would have to go up $30 or $40 a month to justify not filing a claim like that yearly, but that seems unreasonable considering my current monthly rate. How much have you seen rates spike with multiple claims? Is it typically 10%-20% or more like 50%-100%? Oh wow a $50 deductible. Yeah you'd have to have the rate go way up to not justify that. It really depends on the type of incident. You get a DUI, you can look at doubling of rates! Something like an increased comp claim frequency I'd say like 15-20% tops if its a good company.
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Sep 4, 2013 21:40
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Progressive's snapshot thing: How does it work? Does it meter braking force and acceleration force? I've considered doing it but I fear it will end poorly. I drive a underpowered land barge, throttle and brakes are utilized as needed!
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Sep 4, 2013 23:10
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SiGmA_X posted:Progressive's snapshot thing: How does it work? Does it meter braking force and acceleration force? I've considered doing it but I fear it will end poorly. I drive a underpowered land barge, throttle and brakes are utilized as needed! Not acceleration. Though it does measure top speed. It doesn't mater if you brake a lot. It matters if you slow down more than 7 MPH in a second. That's a "hard stop" I would get them on highways with stop lights all the time.
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Sep 5, 2013 03:00
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SiGmA_X posted:Progressive's snapshot thing: How does it work? Does it meter braking force and acceleration force? I've considered doing it but I fear it will end poorly. I drive a underpowered land barge, throttle and brakes are utilized as needed! Hard stop, times of driving (rush hour + night time) and speed. There's no risk of doing it (they won't increase your rate based on snapshot data) so it's worthwhile to at least try. askholic posted:This is about auto insurance.  The insurance company can do the several things mentioned above. They can also outright deny the claim for material misrepresentation/fraud if the defensive driving certificate took a large enough effect on your policy premium. Also, a bumper scratch will be somewhere around 1k USD depending on local labor rates. Don't forget to factor in the cost of a rental car (at least 4 days worth) as well as diminished value of the vehicle (if you live in a state that allows for such, especially for one that automatically calculates it into the loss payment). RebeccaBlackFriday fucked around with this message at 04:04 on Sep 5, 2013 |
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Sep 5, 2013 03:56
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Mods, how can we have the insurance thread genuinely endorse whole/universal life policies? It's not really much of a subjective debate, they are almost always worse deals for consumers for a variety of reasons Grack already called out. Buy term and invest the difference is a superior strategy. Anyone who is lost in the debate just consider that the simple fact that an insurance agent typically gets three to four times the commission pay for an equivalent sized policy whole life policy as compared to term. Why are insurance companies willing to pay agents so much who sell these? Because they are significantly more profitable and that profit comes from your pocket.
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Sep 5, 2013 07:37
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The snapshot is what TLG James said, almost verbatim, from the Progressive rep I knew. It doesn't track movement but tracks: "Hard" brakes Time of driving Top speed Its NOT a GPS and is generally wroth while if you feel like you should be getting some discounts. They won't raise your rates because of it. kansas posted:Mods, how can we have the insurance thread genuinely endorse whole/universal life policies? It's not really much of a subjective debate, they are almost always worse deals for consumers for a variety of reasons Grack already called out. Buy term and invest the difference is a superior strategy. I don't think that has been "called out" sufficiently by Grack at all. I think its an important product that has uses and applications for specific people. One policy type does not fit all, nor does one strategy fit all. I also feel like I've done a good job of representing all of the PROS and CONS of each type and not just one side.
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Sep 5, 2013 07:43
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Jastiger posted:I don't think that has been "called out" sufficiently by Grack at all. I think its an important product that has uses and applications for specific people. One policy type does not fit all, nor does one strategy fit all. I also feel like I've done a good job of representing all of the PROS and CONS of each type and not just one side. You already said in this thread that 'always recommend that you get whole policies on kids if you can swing it. It builds equity, it protects the family, and its giftable to the child once they come of age'. This is objectively bad advice. The thing is this isn't some subjective debate about which whether vanilla or chocolate is better. You can run the numbers and see whole life being the worse financial deal in nearly every single scenario. How else can you explain the fat commission you get for a whole life policy?
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Sep 5, 2013 16:17
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kansas posted:You already said in this thread that 'always recommend that you get whole policies on kids if you can swing it. It builds equity, it protects the family, and its giftable to the child once they come of age'. This is objectively bad advice. It is not objectively bad advice. I've explained how and why it isn't. It allows them to have equity while also providing a life insurance policy in the event they find themselves uninsurable when they reach the age of majority. If your goal is to MAKE MONEY, then invest. If your goal is to PROTECT FAMILY WITH LIFE INSURANCE, then get a whole life plan.
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Sep 5, 2013 16:22
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If your goal is to make money, you are correct, invest it. If your goal is to protect your family buy the cheapest term policy from a reputable insurer. To put some real numbers around it, I am in the process of buying a $1 million dollar policy on myself. I wasn't looking for whole, but decided to ask for quotes on both types for shits and giggles and the guy just got back to me. These are my real numbers, qualified at the non-tobacco top rating: Term Quote: $484/year Whole Quote: $10,380/year Explain to me how I am 'protecting my family' by wasting the money on the whole policy when the cash value will be significantly less than the additional $9,896 I am putting in every year? I could take that additional money and put it in bonds and come out way ahead. My family is protected by the term policy. You do not need a whole life policy to protect your family. Even though the cash value is 'guaranteed' as you love the tout, the fees and expenses kill the actual return such that the cash value will be less than the sum of my payments which doesn't even include the opportunity cost of if I had invested the difference.
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Sep 5, 2013 19:29
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kansas posted:If your goal is to make money, you are correct, invest it. If your goal is to protect your family buy the cheapest term policy from a reputable insurer. Well, if the term runs out they aren't protected. Whole life is a long term product that is designed to provide flexibility with the cash value and guaranteed coverage for your entire life. It isn't designed to make you a ton of money. Just because you can save money on term doesn't make life a bad product.
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Sep 5, 2013 20:06
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Jastiger posted:Well, if the term runs out they aren't protected. Term will run out in 30 years. Saving the $9,896 every year at 7% will leave you with over $1 million by 30 years. That is how your family is protected. Plus if you end up living for 20 years past the term, which is very reasonable (assume you die at 80 and bought a 30 year term at 30 years old), the investment account will be comically larger than payout of the whole life policy. Continuing my example, it would be to the tune of ~$4.3 million dollars vs $1 million. Having an investment account provides better access to the money as well as more investment choices than the cash value of a whole life insurance policy. Term plus saving the difference is also the more flexible option. kansas fucked around with this message at 23:08 on Sep 5, 2013 |
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Sep 5, 2013 22:54
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If you're buying a million dollars in whole life I'd have to assume you either have assets enough where an investment would make more sense. My recommendation was for young children and certainly not a million dollars.
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Sep 6, 2013 01:50
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I have to ask, have you taken a finance course and can you calculate the time value of money? Reason I ask is because it is entirely irrelevant whether the policy is for $1,000,000 or $100,000. The premiums and payouts scale nearly linearly and the investment growth factor remains constant. The math is the same regardless of amount and you'd still come to the same conclusion, term is the better deal. You do realize that the earlier you start the comparison, the more it favors term, right? The biggest differentiating factor between whole and term is the compounding return on investments and the earlier you start (i.e. young child) the more compounding will occur in the investment account. Rather than 50 years of compounding, it would be 60 or 70 years for the investment account to build.
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Sep 6, 2013 04:54
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kansas posted:I have to ask, have you taken a finance course and can you calculate the time value of money? Reason I ask is because it is entirely irrelevant whether the policy is for $1,000,000 or $100,000. The premiums and payouts scale nearly linearly and the investment growth factor remains constant. The math is the same regardless of amount and you'd still come to the same conclusion, term is the better deal. If your goal is to make money. If your goal is to guarantee there is something for the childs family in the event of their demise then a whole policy is a safe bet, or a combination of policies that includes a whole one. I get what you're saying and the financial adviser part of me is with you. I just see them as two completely different vehicles to accomplish a goal. Personally I wouldn't recommend anyone buy $1M in WHOLE life unless they had a very specific reason or wanted to gift money to a relative tax free. That doesn't mean all whole policies are bad. Term is a better deal if you know you're going to be insurable in the future, you're healthy, and you can withstand the platforming premium increases if you plan on having insurance forever.
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Sep 6, 2013 05:51
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The goal of insurance is to mitigate loss, plain and simple. Loss of vehicle, loss of home, or loss of income in the case of life insurance. If an adult dies there is still a mortgage that needs to be paid, children to take care of, etc. This is why adults with dependents buy term life insurance policies. Outside of a tiny policy to cover funeral expenses (which could more cheaply be obtained through a rider on a term policy if you couldn't absorb the costs) why would you take out any insurance policy on a child? How does losing a child increase the financial burden on that child's family such that they need insurance? All you're doing is placing a bet that if the child dies soon the whole policy will pay off massively. If the child continues to live then, due to the miserable returns of cash value portion, the policy is a financial drain (see prior posts on why). Once a kid makes it past a couple years old, their chances of dying any given year is minuscule so it is much more likely the whole life policy will be a huge waste.
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Sep 6, 2013 06:39
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kansas posted:The goal of insurance is to mitigate loss, plain and simple. Loss of vehicle, loss of home, or loss of income in the case of life insurance. If an adult dies there is still a mortgage that needs to be paid, children to take care of, etc. This is why adults with dependents buy term life insurance policies. Outside of a tiny policy to cover funeral expenses (which could more cheaply be obtained through a rider on a term policy if you couldn't absorb the costs) why would you take out any insurance policy on a child? How does losing a child increase the financial burden on that child's family such that they need insurance? Life insurance can server other purposes too. It can be designed to provide a legacy for a person or drastically improve the standard of living or even make up for not realized income down the road. You would take a policy on a child because A) They may not be insurable at an older age, and a guaranteed plan can still provide that. Things like diabetes, obesity, a multitude of other illnesses, and so on can effect a childs insurability down the road. If you have a whole life policy with guaranteed options to purchase more this could be the ONLY WAY to insure some people or at the very least hold down their costs. B) Provide a gift to the child upon their age of majority. I know when I was 21 or so paying for life insurance was kind of out of the question as a college kid, but having a whole life policy that you use the cash value to pay for another 10 or so years can be great before they pick up a term policy of their own if they so choose. C) For many very wealthy people, providing a legacy. A lot of college funds, scholarships, or local community projects are financed with life insurance bought on a young child or young adult that passed away. D) For some, and it sounds cold, but getting a life insurance pay out when an unexpected child dies can assuage some people. You can use the proceeds from the other whole life to provide for the other child if you have multiple children
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Sep 6, 2013 07:50
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A) You can't justify the enormous premiums of whole life on the chance that they have some real disease that makes them uninsurable. Things like diabetes will increase the cost of a term policy but no where near enough to justify a decade plus of paying whole life premiums just so you can add guaranteed coverage at a later date. B + C) Both scenarios simple investment account would perform better. No reason to pay the costs of a life insurance policy. D)If this is the case just buy a term policy on the kids, no reason for whole life. This is why every serious financial adviser (and I mean a real CFP, not an 'adviser' who sells insurance) is against these policies. They are just overly expensive, complex and all around a bad deal for the consumer. kansas fucked around with this message at 20:27 on Sep 7, 2013 |
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Sep 7, 2013 04:19
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You can justify it if you want them to be able to buy insurance at all. Remember, its life insurance first, an investment second, sometimes a distant second. The advantage for life insurance is that it'll be tax free and guaranteed. You are paying for the guarantee. You could invest sure, and if you want to make money, then invest. If you want to guarantee a certain amount and be done with it, get a whole life policy. Key word, guarantee. I wasn't aware an entire profession was against whole life policies. Can you explain this more?
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Sep 8, 2013 04:51
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Not sure if you'll have an answer, but I figured I'd ask anyways. I purchased health insurance through my work specifically to have gall bladder removal surgery - I've had stones for 2.5 years and have been told multiple times to get it out, but without insurance it would cost anywhere from $10-20k depending on where it's done. I had the surgery on Friday August 23rd, and today received three "explanations of benefits" for it - notice that there will be a bill in a few days. They are: $1298.00 for Anasthesia, insurance pays $0 $3542.38 for "OP EXPENSE DIAG," I assume that's stuff during the surgery that isn't the surgery, insurance saves/pays $111.23 $837.14 for Surgery, insurance pays $0 but saves $291.86 This is my benefits coverage through the insurance:  Would the $10,000 hospital limit not cover any of this? This was the sole purpose of getting insurance, and I am terrified of being stuck with almost $5800 in medical bills that I can't afford. If you know somewhere else I should ask too, please let me know.
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Sep 10, 2013 05:17
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