Life insurance question

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2044bound
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Joined: Sun Feb 18, 2018 10:30 am

Life insurance question

Post by 2044bound » Tue Feb 20, 2018 11:19 am

Hello,

I am an employee of state of PA,
We have a no cost life insurance policy $40,000 coverage and also have supplemental life insurance available. I have always purchased the supplemental as it is extremely low cost (a dollar or two per pay at my age).

However, it is also true that as of retirement, we are no longer eligible to continue our life insurance policies.
I was wondering whether it would be wise for me to seek life insurance somewhere on the open market now (and ditch the state supplemental), while I am young (early 30s), to get a decent rate. I do have some health issues, chronic pain type but I don't think that would inflate the rate too much? :|

Let me know your thoughts.
Thank you so much.

mhalley
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Re: Life insurance question

Post by mhalley » Tue Feb 20, 2018 12:58 pm

In general, your main life insurance should be a 20-30 year level term policy, unrelated to your job, of about 10-12 x income. You could get hit by a bus tomorrow leaving you unable to return to work, so no life insurance. Or you could be fired, laid off, or downsized.
https://clark.com/insurance/life-insura ... erm-whole/
Last edited by mhalley on Tue Feb 20, 2018 1:04 pm, edited 1 time in total.

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David Jay
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Re: Life insurance question

Post by David Jay » Tue Feb 20, 2018 1:03 pm

The general view here is to purchase term insurance to provide for your dependents in case of your demise. Over the years, in most cases your dependents become independent and your portfolio continues to grow. Once your portfolio is able to provide for all needs in retirement, you have no need of life insurance.

This happened to me at age 58, I dropped my final term policy. It was a low-cost level term policy but I try not to pay for things I don't need.
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Minty
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Re: Life insurance question

Post by Minty » Tue Feb 20, 2018 1:04 pm

It would be helpful to know more about your dependents and savings. If you have dependents and not enough money to self-insure, I agree with mhalley. White Coat Investor has what is to my mind a very informed post about purchasing life insurance.
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123
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Re: Life insurance question

Post by 123 » Tue Feb 20, 2018 1:23 pm

For the most part employer-converted life insurance can be converted to individual coverage if work employment with the employer ends under provisions of COBRA, however the cost of the insurance can sky rocket since the insurance companies generally regard it as "death bed business" (the only persons buying it are those that can't get insurance elsewhere and are likely otherwise uninsurable ). You're wise to consider some form of renewable term insurance as an alternative.
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Admiral
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Re: Life insurance question

Post by Admiral » Tue Feb 20, 2018 1:28 pm

David Jay wrote:
Tue Feb 20, 2018 1:03 pm
The general view here is to purchase term insurance to provide for your dependents in case of your demise. Over the years, in most cases your dependents become independent and your portfolio continues to grow. Once your portfolio is able to provide for all needs in retirement, you have no need of life insurance.

This happened to me at age 58, I dropped my final term policy. It was a low-cost level term policy but I try not to pay for things I don't need.
+1. Agree. Get a 20-30 year policy (assuming you are in your 30s with kids still in the house). It should not be attached to a job, it should be portable.

A 40k policy is nothing, that might pay for a funeral. If you have kids, you need a policy that replaces your income for as long as your kids are not working, and ideally that will pay for their schooling (since you'll be dead an unable to pay). Assuming a family member is going to care for them, the life insurance will make sure the kids don't become a financial burden. That is its purpose.

If you have chronic health issues that will absolutely affect your rate, and you must be truthful on the forms, and be evaluated medically. Still, it's always cheaper the younger you are so I would look into it.

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Toons
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Re: Life insurance question

Post by Toons » Tue Feb 20, 2018 1:43 pm

Term insurance Over the years.
Save and invest enough along the way so that you might have the option to ,
"Self Insure" in your later years,
If you so choose.








:idea: :idea:
"One does not accumulate but eliminate. It is not daily increase but daily decrease. The height of cultivation always runs to simplicity" –Bruce Lee

afan
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Re: Life insurance question

Post by afan » Tue Feb 20, 2018 3:29 pm

You should not need life insurance once you retire. If you still needed that earned income then presumably you would not retire.

The problem is what happens if you change jobs. Your new employer might not have as good a deal.or.you might have to undergo medical underwriting. If you can get good rates now and anticipate needing insurance for a while, then getting.your own policy, not tied to your work, could be a good idea.

You would have to shop to see what a private policy would cost with your current health.

Of course do not drop your coverage at work unless/until the.new.pilicy is in force.
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