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Before I begin, if this isn't the proper forum for this, please point me to the proper place. So the question of purchasing life insurance came up recently, and I realized that I have no concept of what's good, bad, or necessary. A bit about myself, I'm a 29 year-old single guy who recently got out of the active military. During that period I was covered under SGLI, which to my understanding, now only covers me during active call up periods. Effectively, I have no life insurance day to day. I am in good health, have sound finances, good health/dental insurance (TRICARE), etc... and an undergraduate degree in Finance. My father recently went to end his term policy due to the ridiculous rates that will now be charged, simultaneously he offered to open a universal policy for me in which he'd pay the rates for a time. Now, the whole 'free' thing aside, I sat down with the agent to discuss the policy and found that he couldn't answer basic financial questions on the policy, things like: - When or why are the rates adjusted for the savings growth on this policy? - Why would I not be better off investing the monthly fee into a Vanguard retirement account instead? After asking him the first question, and sputtering for an answer, he told me he didn't know when or how State Farm adjusts the savings growth rate (currently 2.5%) and I told him straight up, "That's a bad answer." I have had reason to mistrust this guy previously for a bad deal he had given my father, and now I'm sure he's either a) ignorant, b) malicious. Either way, I simply don't trust anything he's offering and I told him I wouldn't sign for anything I don't understand. Near as I can tell, at my current age, I'd be much better off taking the monthly charge and investing it. At an average return rate, 40 years compounded, the simple return would be larger than the savings growth on the policy and the death-kicker combined. There are some tax variables here that I haven't sat down to figure out yet, but I wanted to get a general thought on the issue and perhaps some help in pointing me towards where I should focus on further reading about this. Boon fucked around with this message at 17:57 on Apr 27, 2016 |
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Apr 27, 2016 17:54
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| # ¿ May 16, 2024 05:27 |
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Fistful of Dynamite posted:First question I'd have to ask: as a single guy, why are you considering life insurance in the first place? It's something my parents offered to purchase as they know I don't have it (and they purchased one for my sister long ago). Frankly, I have no idea since I've never had to deal with it, they have no idea because they don't know how financial instruments really work (and are inclined to believe a salesman who draws simple diagrams on paper). Based on what I know, it doesn't seem like it's worthwhile and my parents should just save their money for retirement.
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Apr 27, 2016 23:13
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Thanks guys, I appreciate the help!
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Apr 28, 2016 03:25
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