Which Life Insurance company to go with? And other questions

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Iluvatar
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Which Life Insurance company to go with? And other questions

Post by Iluvatar » Sun Nov 17, 2019 8:31 am

My wife and I have a baby on the way, so we are getting 30 year ($1.5 million) term life insurance for me now and a policy for my wife after the delivery

I used term4sale and spoke to an independent broker I found through that.

I just need to know if there are any companies to definitely avoid or definitely go with. The concern is whether a company is known for denying payment of benefits/being a hassle to work with. The other concern is the long-term solvency/stability of the company for the next 30 years

The agent said that all these companies are pretty similar with either A+ or A++ ratings so go with one of the cheapest policies. Old posts seem to hold Banner in high regard, so I was leaning towards that but open to any suggestions - I did see one poster say banner caused a hassle in payment for one of their clients though

My options for a 34M with no significant medical history (haven’t done physical yet) for $1.5 million (30 years):

1.) Lincoln Financial - $1054 - A+
2.) Banner Life - $1057 - A+
3.) Thrivent - $1065 - A++
4.) Protective - $1073 - A+
5.) Pacific Life - $1079 - A+
6.) AIG - $1082 - A
7.) PennMutual - $1084 - A+
8.) Cincinnati - $1095 - A
9.) Principal - $1099 - A+

The differences of the cheapest are fairly negligible so I’m open to any with good reputation.

Second question - am I getting too much? It seems like every individual’s situation is different and it also depends if you want to just cover basic expenses or if you want to cover mortgage/tuition/replace total income. My wife is an attorney, so she does have the ability to earn decent income and benefits if I’m gone, but she earns about 1/3 of our total income, so it’d be a significant reduction in total income if I pass. The other factor is time since 30 years will get my new kid to age 29 and probably another kid to 26/27. Obviously that is pretty deep into their adulthood but if they’re doing med/law/dental school, I’d like to help them out. My other option would be a 25 year option

Thank you sincerely for any and all advice
Last edited by Iluvatar on Sun Nov 17, 2019 8:41 am, edited 3 times in total.

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RickBoglehead
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Re: Which Life Insurance company to go with? And other questions

Post by RickBoglehead » Sun Nov 17, 2019 8:37 am

You can lookup insurance company ratings. Our son just went with Lincoln Financial after doing his investigating.
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BogleMelon
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Re: Which Life Insurance company to go with? And other questions

Post by BogleMelon » Sun Nov 17, 2019 8:47 am

I didn't like Protective customer service. They had bad communication even before I sign up, so I ditched them and never signed up. I had a very great experience with Lincoln and have a policy there now.
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Stinky
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Re: Which Life Insurance company to go with? And other questions

Post by Stinky » Sun Nov 17, 2019 9:59 am

As to the insurance company to choose, I'd feel comfortable going with any company on the list. The prices are remarkably close together. I don't have any familiarity with Cincinnati, but I know something about all the rest of the companies on the list. DW and I have had policies with Banner, AIG, and Protective, and they were all fine.

As to the amount of insurance - OP, you need to give more information to allow us to give you our thoughts. If you make $50k per year, then $1.5 million of insurance on you is likely too much - but if you make $500k per year, $1.5 million is likely too low. Let us know more about your financial situation for better feedback.
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Topic Author
Iluvatar
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Re: Which Life Insurance company to go with? And other questions

Post by Iluvatar » Sun Nov 17, 2019 10:08 am

For 2019, my income will be ~$150,000. My income will increase over time as I become a partner/co-owner in my practice. It is very difficult to project what it would be in the future. Somewhere in the $200,000-300,000 would be a reasonable expectation, but honestly it’s difficult to know a more accurate number as some owner dentists I know make 200k and others 500k.

Plano
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Re: Which Life Insurance company to go with? And other questions

Post by Plano » Sun Nov 17, 2019 11:06 am

When evaluating an insurance product, I look at two things: first, whether the company is likely to deny claims wrongfully; and second, whether it will have the assets to pay the claim when time comes.

None of those carriers have a bad reputation for individual life claims. (But disability and other products are a different matter, and don’t even get me started on group coverage governed by ERISA.) Most individual life claims are paid if the policy was issued more than two years prior, even under ERISA, unless there is an applicable exclusion. So ask for an exemplar policy before you sign and read it carefully. Make sure the suicide exclusion falls off after a max of two years, because you would be surprised how many things an insurance company will argue is “suicide.” Check for substance abuse / alcohol exclusions, too. And do your very best not to die within the first two years, or however long the contestability period is in the policy. (I kid, but not really...)

They will all scrutinize the heck out of AD&D rider claims and disability waiver of premium claims, but get those riders anyway if the cost is reasonable. I highly recommend both, even though your annual premium is low enough that you can probably pay it even if disabled.

As for the strength of the company, individual term life is a profitable line, so even if a company goes out of business, someone will acquire their book. On that list, just pick the one with the best quote for your complete policy with riders.

With respect to your second question, $1.5M is not too much even though your wife is an attorney. Double in case of accidental death is also reasonable. Do not underestimate the negative effect on a female professional’s earning capacity when she has children, even if she doesn’t take more than typical maternity leave, and even if she isn’t a single mother widow. It’s getting better, but the legal field is not there yet. I am in it, so I would know. Let’s hope the world is different by the time our daughters and granddaughters are adults.

Congratulations on the birth of your first child, Iluvatar! Don’t forget to get a will and set up a trust for this child (funded in part by the insurance proceeds) and any future issue. The best advice I ever got was to make sure the person designated as our children’s guardian, if we both pass while they are minors, is not the same as the trustee of their funds. Why? Because (quoting our hilarious trust lawyer) “that’s how your kids end up living in a cupboard under stairs while the Dursleys live large.” Edited to explain this is a Harry Potter reference. I needed it explained to me, too.

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Stinky
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Re: Which Life Insurance company to go with? And other questions

Post by Stinky » Sun Nov 17, 2019 11:21 am

Iluvatar wrote:
Sun Nov 17, 2019 10:08 am
For 2019, my income will be ~$150,000. My income will increase over time as I become a partner/co-owner in my practice. It is very difficult to project what it would be in the future. Somewhere in the $200,000-300,000 would be a reasonable expectation, but honestly it’s difficult to know a more accurate number as some owner dentists I know make 200k and others 500k.
As to the amount of life insurance -

If you're making $150k now and applying for $1.5m of life insurance, you're right at the "10x income" rule of thumb that some folks use to determine needed life insurance.

There are a number of online calculators that can help you out. There's also the information in the Wiki: https://www.bogleheads.org/wiki/Life_insurance

If your income will be going up in the future, it might make sense to buy one "base" policy right now, like your $1.5 million 30-year term policy, and then plan to layer in additional amounts of life insurance, for shorter terms, as income rises.
It's a GREAT day to be alive - Travis Tritt

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fortfun
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Re: Which Life Insurance company to go with? And other questions

Post by fortfun » Sun Nov 17, 2019 11:36 am

I think all are safe. Listen to what Stinky says. Also, know that most states have their own guarantees/requirements with life insurance. i.e. if the company goes bankrupt, the state will at least pay a partial payout. If you are nervous, you could split the coverage between two companies.

BruDude
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Re: Which Life Insurance company to go with? And other questions

Post by BruDude » Sun Nov 17, 2019 4:33 pm

I'd just go with Lincoln. Fast underwriting if you're in good health. I just had a client approved in less than two weeks, normal underwriting with most companies is 6-8 weeks.

Just so you're aware, if you apply with Thrivent (since they're the only A++ rated company on your list) you have to sign an attestation that you are Christian/Lutheran which is a pretty weird thing to require for a life insurance policy, but it's how they operate. I've never sold their policies because i don't think that is something that should be brought up with a client, so can't say I have any actual experience with them.

Any company on your list is fine. Life insurance is simple - you die, they pay a claim. There's no gray area there.

virginiabirdie
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Re: Which Life Insurance company to go with? And other questions

Post by virginiabirdie » Sun Nov 17, 2019 8:23 pm

Did you try USAA? They're AA++, highest rating. They also gave us the very lowest rates.

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Stinky
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Re: Which Life Insurance company to go with? And other questions

Post by Stinky » Sun Nov 17, 2019 8:36 pm

virginiabirdie wrote:
Sun Nov 17, 2019 8:23 pm
Did you try USAA? They're AA++, highest rating. They also gave us the very lowest rates.
USAA is a fine company.

But they don’t sell through brokers. I believe that you need to be military-connected to buy from them.
It's a GREAT day to be alive - Travis Tritt

hale2
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Re: Which Life Insurance company to go with? And other questions

Post by hale2 » Mon Nov 18, 2019 5:17 pm

You should consider getting insurance on your wife now. There are companies that will be okay with her being pregnant. Trust me, it's worth considering.

Topic Author
Iluvatar
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Re: Which Life Insurance company to go with? And other questions

Post by Iluvatar » Mon Nov 18, 2019 6:03 pm

Thanks for all the advice!

bling
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Re: Which Life Insurance company to go with? And other questions

Post by bling » Mon Nov 18, 2019 6:06 pm

Not to complicate your decision, but you should also consider whether laddering works for you. So instead of a 30yr 1.5m, you would have a 30yr 500k, 20yr 500k, and 10yr 500k.

The idea is that as you get older, you would have saved more money and so would also need less insurance.

You can save quite a bit in premiums this way. The downside or course is that if you didn't save as much as you thought, well tough luck.

Rheuminator
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Re: Which Life Insurance company to go with? And other questions

Post by Rheuminator » Mon Nov 18, 2019 8:56 pm

The main thing to consider for question #2 is not your income, but rather your annual expenses. If you make $150k/year but you are putting $50k to retirement, then that makes a big difference in how much you need.

Laddering policies, as aforementioned, is also a great idea. Chances are that you passing away in the next 10 years would be a much more significant financial catastrophe than if you died in year 25 — you’ll pay a fair amount less in premiums by laddering, say, a 20 year 1 million policy and a 30 year 500k policy. For example, if you didn’t die in 30 years and paid the premiums every year, you’d pay $10k less in premium by laddering the two policies I mentioned rather than a 30 year 1.5 million policy. You’d be paying $180 less per year for the first 20 years, and $540 less in the final 10 years.

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Re: Which Life Insurance company to go with? And other questions

Post by Grt2bOutdoors » Mon Nov 18, 2019 9:04 pm

BruDude wrote:
Sun Nov 17, 2019 4:33 pm
I'd just go with Lincoln. Fast underwriting if you're in good health. I just had a client approved in less than two weeks, normal underwriting with most companies is 6-8 weeks.

Just so you're aware, if you apply with Thrivent (since they're the only A++ rated company on your list) you have to sign an attestation that you are Christian/Lutheran which is a pretty weird thing to require for a life insurance policy, but it's how they operate. I've never sold their policies because i don't think that is something that should be brought up with a client, so can't say I have any actual experience with them.

Any company on your list is fine. Life insurance is simple - you die, they pay a claim. There's no gray area there.
That's because Thrivent is the marketing name for what used to be known collectively as the Aid Association for Lutherans and Lutheran Brotherhood. Their merger resulted in the name of Thrivent Financial. Essentially, Lutherans are insuring you.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions

Grt2bOutdoors
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Re: Which Life Insurance company to go with? And other questions

Post by Grt2bOutdoors » Mon Nov 18, 2019 9:13 pm

Iluvatar wrote:
Sun Nov 17, 2019 10:08 am
For 2019, my income will be ~$150,000. My income will increase over time as I become a partner/co-owner in my practice. It is very difficult to project what it would be in the future. Somewhere in the $200,000-300,000 would be a reasonable expectation, but honestly it’s difficult to know a more accurate number as some owner dentists I know make 200k and others 500k.
If you pass today, your spouse and child are entitled to annual benefits from Social Security (assuming you pay into it). Go to SSA.GOV to find out what those benefits would be worth annually. You should purchase enough life insurance to ensure your spouse and children maintain the same standard of living as currently doing. A death in an immediate family is a noticeable impact, having an insufficient amount of funds would only increase the stress.
The idea is not to provide until retirement for the surviving family members but to provide a bridge to self sufficiency. You might think of what may be needed; mortgage payoff, funds for college, funds for living expenses less Social Security benefits, health and welfare of family. As your income grows you can consider adding additional policies with appropriate terms, you may also consider as your assets grow and liabilities decline you may not need any additional policies. Your wife should also have term policies with you as beneficiary. Investigate getting the policy in place for wife before the birth. Childcare is expensive.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions

BruDude
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Re: Which Life Insurance company to go with? And other questions

Post by BruDude » Mon Nov 18, 2019 9:56 pm

Grt2bOutdoors wrote:
Mon Nov 18, 2019 9:04 pm
BruDude wrote:
Sun Nov 17, 2019 4:33 pm
I'd just go with Lincoln. Fast underwriting if you're in good health. I just had a client approved in less than two weeks, normal underwriting with most companies is 6-8 weeks.

Just so you're aware, if you apply with Thrivent (since they're the only A++ rated company on your list) you have to sign an attestation that you are Christian/Lutheran which is a pretty weird thing to require for a life insurance policy, but it's how they operate. I've never sold their policies because i don't think that is something that should be brought up with a client, so can't say I have any actual experience with them.

Any company on your list is fine. Life insurance is simple - you die, they pay a claim. There's no gray area there.
That's because Thrivent is the marketing name for what used to be known collectively as the Aid Association for Lutherans and Lutheran Brotherhood. Their merger resulted in the name of Thrivent Financial. Essentially, Lutherans are insuring you.
Yeah I understand, it’s just a very awkward conversation to inject religion into a life insurance purchase, so I avoid it altogether as to not offend people. I see no reason to use them over other similarly priced companies. Competitive rates, bad way to do business but that’s their choice.

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Stinky
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Re: Which Life Insurance company to go with? And other questions

Post by Stinky » Mon Nov 18, 2019 10:09 pm

BruDude wrote:
Mon Nov 18, 2019 9:56 pm
Grt2bOutdoors wrote:
Mon Nov 18, 2019 9:04 pm
BruDude wrote:
Sun Nov 17, 2019 4:33 pm
I'd just go with Lincoln. Fast underwriting if you're in good health. I just had a client approved in less than two weeks, normal underwriting with most companies is 6-8 weeks.

Just so you're aware, if you apply with Thrivent (since they're the only A++ rated company on your list) you have to sign an attestation that you are Christian/Lutheran which is a pretty weird thing to require for a life insurance policy, but it's how they operate. I've never sold their policies because i don't think that is something that should be brought up with a client, so can't say I have any actual experience with them.

Any company on your list is fine. Life insurance is simple - you die, they pay a claim. There's no gray area there.
That's because Thrivent is the marketing name for what used to be known collectively as the Aid Association for Lutherans and Lutheran Brotherhood. Their merger resulted in the name of Thrivent Financial. Essentially, Lutherans are insuring you.
Yeah I understand, it’s just a very awkward conversation to inject religion into a life insurance purchase, so I avoid it altogether as to not offend people. I see no reason to use them over other similarly priced companies. Competitive rates, bad way to do business but that’s their choice.
I believe that Thrivent is organized as a fraternal, rather than as a regular life insurance company. As such, I believe that they’re exempt from federal income tax; however, they must provide “charitable” benefits in lieu of taxes.

I’m a little surprised that a fraternal organized to serve Lutherans chooses to operate in the brokerage life insurance market. I’m not surprised that BruDude (and probably many other agents) don’t feel comfortable in selling their products.
It's a GREAT day to be alive - Travis Tritt

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