Life Insurance Policies You Should Never Buy
1. Mortgage Insurance
When you purchase a house, insurance companies will try to sell you mortgage insurance. Do not buy a separate policy to cover your mortgage. Simply determine the amount of insurance (if any) that you need to protect your dependents, buy a cheap term life insurance policy and make your spouse the beneficiary.
2. Accidental Death</strong> Insurance
Death is death. Your dependents do not need more money if you die in an accident rather than as a result of an illness. As with mortgage insurance, determine the amount of insurance (if any) that you need, buy a cheap term life insurance policy and make your spouse the beneficiary.
3. Cancer Insurance
Since your life and health insurance will pay out regardless of the diagnosis, you do not need a special policy to cover a particular illness.
4. Credit Insurance
This pays off your credit card or consumer loan balances if you die. Since this coverage is extremely expensive, skip it and take out a low cost term policy as discussed above.
5. Children’s Life Insurance
The purpose of life insurance is providing for your dependents if you die before accumulating enough assets that you do not need life insurance. As much as you love your children, you probably are not dependent on the financially. So, skip the policy on them. If you insist on having sufficient coverage to pay for final expenses on children, add a child rider to your own life insurance policy. It will cost less than $50 per year.
If you have any of these policies, you should seek to cancel as quickly as possible.
In order to protect your dependents, shop for the lowest premium term life insurance.
Receive low cost life insurance quotes at http://www.howtocutexpenses.com
Watch the video related to Death insurance
Il Cannone at a special concert in San Francisco, California. It was the farthest the violin had ever been from Italy. Conditions of its travel included a multimillion-dollar insurance policy and an armed escort of Italian police officers. Paganini lost a valuable Amati violin as a result of his penchant for voracious gambling. He was able to take possession of a neglected Guarneri violin, a gift from an amateur violinist and businessman. Paganini played on this instrument for the rest of …
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With over 20 years of experience as a personal financial educator and counselor, Vernon Williams has developed in depth knowledge of what it takes to achieve financial success. Today, he is a sought after trainer and speaker by organizations from both the public and private sector. He is the author of 425 Ways to Stretch Your $$$$ and 3 Rules that Guarantee Financial Success. Visit Vernon at http://www.howtocutyourexpenses.com
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Posted by American Car Insurance on July 27th, 2009 filed in Death Insurance | 18 Comments »
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18 Responses to “Life Insurance Policies You Should Never Buy”
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July 27th, 2009 at 10:13 am
How do you pronounce “Kogan”?
July 27th, 2009 at 10:58 am
I found the tone to be rather mellow though…and like mellow tones ^^
July 27th, 2009 at 3:59 pm
ha haa..good question for a bad question ! Thank you -ik3333- for a description:-) and for posting this video.Give me now the most famous in the world violin or the ‘’shittiest one” as -akm5176- put it !..I will never be able to play that BRILLIANTLY!!! like LEONID KOGAN just did
…Thanks for sharing!
July 27th, 2009 at 10:22 am
Under insurance regulations, which I think is upheld by all 50 states, there must be insurable interest between you and the homeless guy. If the homeless guy dies, what financial and emotional impact would he have on you?
July 27th, 2009 at 11:34 am
Yes, you can – but he has to consent to it, and he has to submit to blood, urine and saliva tests and release his medical records, and fill out parts of the application.
And it might be pretty expensive, if he's a recreational drug user or has health issues.
You can't do it without his consent and cooperation.
July 27th, 2009 at 9:57 pm
From what you've described, they are both "whole life" type policies. These carry a "cash value" and pay out "dividends" that go toward paying the premium. As you noted, you never really get that cash value back. Swapping one whole life insurance policy for another is rather pointless. Whole life in general is not the best type of insurance – it's a hybrid of insurance and investment, so it not optimal for either. As you noted – the agent's main motivation is commission. First year commissions are insanely high, so it pays for him to pump new policies even if he already gets ongoing commissions from an existing policy.
You need to consider two things:
Is this agent the best for you? Insurance agents are a dime a dozen, you can probably find one who will be a bit more geared toward your needs.
Do you really want whole life? The point of life insurance is to leave money behind when you die. Using whole life, you build up a "cash value" over time – but at a cost of high premiums. Go for a good Term Life policy – it's plain life insurance without all that other goobly-gook added in. As a pure insurance product, it is much more efficient at providing a death payout AND costing much less in premiums.
July 28th, 2009 at 5:09 am
That’s pretty crazy. Holding Paganini’s own violin would be for me like holding King Arthur’s sword. It’d probably feel pretty unreal. I’d also be pretty afraid to use it, afraid I may shame the memory of Paganini or be in some way or another unworthy of playing it. Must be a real honor for Kogan.
July 28th, 2009 at 8:32 am
wow what an honour that must be, i wish i could play on liszts piano
July 28th, 2009 at 5:49 pm
No you cannot legally take out an insurance policy on someone, unless they are a minor child of yours, without their knowledge. The other person is required to sign the insurance policy. The insurance company doesn't care who owns or pays for the policy. If you paid them $20 for their signature, depending on what you disclosed about your reasons for the signature, it could be considered fraudulent. Also, the insurance companies are interested in the general health of a prospective insured. They are under no obligation to issue a policy to someone who is deliberately endangering their health through drugs, alcohol, etc.
July 29th, 2009 at 7:17 am
Moonbeam purchased the Carter CD–she is playing the Il Cannone but more frequently in the mid registers–we were excited for the chance to hear the violin in this range. We were also disappointed. If you are curious about the violin, get that CD. Cannone has its brilliant “spots” but some of the violinists that own fine violins that are played consistently just sound better..get the CD and make your own call.
July 29th, 2009 at 5:02 am
Well, you've been pretty well beaten over the head with some of the answers here so let's look at a bit more of what you're asking.
There are some other considerations here. In your variable product depending on your asset allocation of your sub accounts, you're likely making anywhere from 8-12% over time. That should more than make up for any increase in cost of insurance over time, plus provide you surplus. In a guaranteed UL (I'm presuming since you didn't say so that it's not an equity indexed product), you're liable to be guaranteed only about 4-6% or so. (Inflation is running at about 3.5% nationwide right now.) There is a good chance too that the accounts that generate this are part of the general accounts of the insurance company and are not outside subaccounts.
If they are part of the general accounts than that leaves them liable to being taken by a creditor if, for whatever reason, the insurance company goes belly up (unlikely, but it has been known to happen). Sub-accounts in the VUL are not liable to that potential problem.
You say you aren't using the VUL as an investment. Why not? Your money can grow tax deferred within it and you can access it tax free and needn't wait till your 59 1/2 as you would if it were in some other tax free access products.
Has your agent shown you the possibility of an Equity Indexed UL? You seem to be somewhat fiscally conservative (at least from the tone of your note here) and an equity indexed product might be something to look at. Most such products have guarantees of about a floor of 1-2% with a cap of about 12% or so and likely average about 8% over time which is above your standard UL but most likely less than the potential returns of a VUL.
I would suggest you might also like to simply call your own insurance company and speak to them. First, see if they can explain all the ins-outs and potential tax benefits that your VUL can perform for you. You might find out if they have an equity indexed product that they might be willing to do a 1035 exchange into that would perform the best for you. They might even be willing to do so without any surrender charges being imposed, if you ask, though they likely would start a new contestability period.
Lastly, I wouldn't take anyone's ideas on a board like this (including my own) without first determining just what it is that YOU and your HUSBAND need. What is your strategy? Where do you want to be 10, 15, 25 years from now? Do you already have your retirement funding going? If so, is it all in a tax box that might leave you vulnerable to taxation on withdraw?
Have you considered simply reallocating your funds within the VUL to see if you can bring its performance more in line with what you'd prefer to see? If the need for $100,000 extra coverage exists, is it a permanent one or could it be handled by adding a small term policy outside the VUL? Or even adding on one within it?
These are just SOME of the questions you might wish to consider. Good luck
July 29th, 2009 at 4:59 pm
Even so, it is still not played enough..there is a video of Mintz trying to get it into playing condition before his performance and it took 2 weeks of work with a luthier and hard playing–same with Regina Carter–when she was interviewed on NPR she said she had to play it HARD just to get it’s “throat cleared”, that it had a very congested sound for quite some time.She said it improved the more she played.
July 30th, 2009 at 1:17 am
They have a luthier there on the spot to take care of any problem that might crop up
July 29th, 2009 at 10:44 pm
Well, no, it doesn't work that way. Your paying the policy doesn't automatically change the ownership to her. Possibly the executor of her estate cancelled the policy, or possibly it lapsed.
There's no central database where you can look it up. There's no web site. The state insurance department doesn't track it. It's a private information. Your ONLY hope of tracking it down, is to find YOUR old cancelled check. But it's probably a waste of time, as the premium would have to be paid EVERY YEAR, or the policy would automatically cancel anyway. Even if it's been paid every year, cashing it out is probably worth less than $200 – WAY less than has been paid into it.
Life insurance policies on kids are a HUGE ripoff. IMO.
July 30th, 2009 at 12:10 am
You are correct to buy it while young because it is cheaper. You can probably get a 30-year level term policy quite cheaply. Consult an independent insurance agent and get several quotes. Beware of the on-line insurance pitches. Go with a quality insurance company.
July 30th, 2009 at 11:32 am
Okay, the sound is worse than I expected, but at the same time, I’m relieved.
It proves violin is an instrument of passion. Paganini must have had an amazing sound with it because he LOVED his violin and has developed a technique to do so =).
July 30th, 2009 at 3:05 pm
Your question is a curious one. The part that makes you look deceitful and selfish is when you say, "too me it seems like a wise investment. Can I purchase the life insurance w/out them finding out about it? Because I think they may feel like I am just using them as an investment, but I really am not, I just think that If I ever lose my parents it would be a major loss in my life, and if a little money would help ease the pain and make my life a little easier it's the least that I can expect to compensate for my loss…"
Firstly, how can you even suggest that "a little money would help ease the pain and make my life a little easier it's the least that I can expect to compensate for my loss …"? How can you say that MONEY can compensate for the loss of a loved one? *IF* they are loved and not looked at only as a cash cow to "make my life a little easier." How does MONEY ease the pain? What a mercenary view of life!
LIfe insurance is designed to compensate for an economic loss. If you are 36, unless your parents are supporting you now, how would their death be an economic loss to you? At the most, if they are totally destitute, you'd need a little to pay for a funeral; and, they may have already taken care of that.
"Investment"? Investing in the liklihood of their dying? Wow, now that is a new way of looking at "blood" relations!
If you even have to ask if you can buy it without their knowledge, you are revealing that you suspect they would not approve; and, you are revealing a lot about yourself and your motives.
Your parents' death at some point in the future is not designed for the purpose of you making money off of it so your life can be a little easier.
"Am I the first to look at it this way?" I'm sure you're not the first to see mom and dad's deaths as a way to make money. Some have even 'arranged' for mom and dad to trigger the payment of proceeds through various means. However, based on your questions and comments, I suggest that maybe it should be *THEY* who live longer and have insurance on YOU!
July 30th, 2009 at 3:54 pm
Call the company directly. Use the internet and find out seperate numbers to call.
Also, could be your grandparents or parents got you a policy when you were a baby. Now, you are older and now the "owner" of the policy. In order to complete records at the particular company's home office, they would need your ss#. But call them to be sure. Good luck.