Do I need life insurance?

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kflem20
Posts: 10
Joined: Wed Jun 14, 2017 7:25 am

Do I need life insurance?

Post by kflem20 »

Hi all,

I recently talked with a new advisor and it was recommended that I purchase term 80 life insurance for $88 a month
  • I am 31. Healthy. non smoker.
  • Income 185k/yr
  • Roth 60k
  • 401k 200k
  • emergency fund established
I do not have children. I live with my girlfriend in a rental. Neither of us have any debt

This recommendation by the advisor does not seem to be in my best interest.
  • Do I (currently) need life insurance?
  • If so, what type?
  • It was also recommended that I purchase whole life to diversify myself from the market. I would rather take the premiums from a whole policy and place monthly into a vanguard index.
Help please!
Thanks!
tashnewbie
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Re: Do I need life insurance?

Post by tashnewbie »

Sounds like the advisor is a salesperson that's making self-motivated recommendations.

If no one depends on your income, why would you need life insurance?
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JoMoney
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Re: Do I need life insurance?

Post by JoMoney »

No wife or children? Is there anyone who is relying on your income and would need the life insurance if you were gone?
If the answer is "no", I don't see why you would need life insurance.
"To achieve satisfactory investment results is easier than most people realize; to achieve superior results is harder than it looks." - Benjamin Graham
sailaway
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Re: Do I need life insurance?

Post by sailaway »

Is your girlfriend the beneficiary of your existing accounts?

Does she have her own savings?

If you live, would you expect to have financial obligations, like supporting your parents?

Do you have any life insurance at work?


Personally, with the just the details you gave us, no, I wouldn't get life insurance. However, I would take some time to verify that all the account beneficiaries are set and do up proper estate documents, even if via software.
adamthesmythe
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Re: Do I need life insurance?

Post by adamthesmythe »

You don't need life insurance unless (1) you believe an enduring relationship with girlfriend is likely AND (2) you believe she would be incapable of supporting herself without your income.

On the other hand, if you are healthy term insurance at your age is very cheap. Probably can be cheaper than your quotation.
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TinyElvis
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Re: Do I need life insurance?

Post by TinyElvis »

No, you do not need life insurance. I would recommend disability insurance though.
"Give a cat a fish and it will eat for a day. Teach a cat to fish and it will just sit there waiting for you to give it a fish."
daheld
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Location: Midwest US

Re: Do I need life insurance?

Post by daheld »

Do you financially support someone who will need that support once you're gone? If the answer is no, then you don't need life insurance. If you marry and have kids, then I'd say you need it.

You can absolutely beat that monthly premium. I pay about 1/3 that for a 20 year, $750,000 policy.
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LadyGeek
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Re: Do I need life insurance?

Post by LadyGeek »

This thread is now in the Personal Finance (Not Investing) forum (insurance).
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mega317
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Re: Do I need life insurance?

Post by mega317 »

1. We need the information that others have already requested but it sounds like you don't really need life insurance at all.
2. Term 80 is an annually renewable policy with rates that can continue to increase until you are 80 years old. I doubt you want to pay increasing premiums nor that you need life insurance until you're 80. I'm older than you and recently got a 20 year term policy at 1M for less than that. And the premiums will be the same in 19 years.
3. Whole life is garbage. What does "diversify from the market" even mean?

Who is this advisor? Sounds like s/he needs to be replaced.
https://www.bogleheads.org/forum/viewtopic.php?t=6212
brad.clarkston
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Location: Kansas City, MO

Re: Do I need life insurance?

Post by brad.clarkston »

Nothing wrong with getting term life insurance in your situation but don't get term 80 that's just a slick willy trying to make max profit off of you.
Pay a little more and get a fixed rate.
GuyInFL
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Re: Do I need life insurance?

Post by GuyInFL »

daheld wrote: Thu Sep 03, 2020 2:40 pm You can absolutely beat that monthly premium. I pay about 1/3 that for a 20 year, $750,000 policy.
Check Zander Insurance or other aggregators if you decide to buy. You can beat your quote by a significant amount. Also consider a 30 year flat rate policy and premiums won’t go up.
sport
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Re: Do I need life insurance?

Post by sport »

You don't have an advisor. You have a salesman. Would you ask a used car salesman which car on the lot you should buy?
mega317
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Re: Do I need life insurance?

Post by mega317 »

sport wrote: Thu Sep 03, 2020 3:33 pm You don't have an advisor. You have a salesman. Would you ask a used car salesman which car on the lot you should buy?
LOL +1. And this guy recommended two cars.
https://www.bogleheads.org/forum/viewtopic.php?t=6212
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Stinky
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Re: Do I need life insurance?

Post by Stinky »

kflem20 wrote: Thu Sep 03, 2020 2:16 pm Hi all,

I recently talked with a new advisor and it was recommended that I purchase term 80 life insurance for $88 a month
  • I am 31. Healthy. non smoker.
  • Income 185k/yr
  • Roth 60k
  • 401k 200k
  • emergency fund established
I do not have children. I live with my girlfriend in a rental. Neither of us have any debt

This recommendation by the advisor does not seem to be in my best interest.
  • Do I (currently) need life insurance?
  • If so, what type?
  • It was also recommended that I purchase whole life to diversify myself from the market. I would rather take the premiums from a whole policy and place monthly into a vanguard index.
Help please!
Thanks!
You did not talk to an “advisor”. You talked to a salesman.

I’m guessing that this salesman worked for a mutual company, since whole life was pitched to you. Was this a Northwestern Mutual salesman?

I strongly suspect that this agent does not have your best interests at heart. I would not buy anything from him, nor would I talk to him again.
It's a GREAT day to be alive - Travis Tritt
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galving
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Location: US Gulf Coast

Re: Do I need life insurance?

Post by galving »

kflem20 wrote: Thu Sep 03, 2020 2:16 pm Hi all,

I recently talked with a new advisor and it was recommended that I purchase term 80 life insurance for $88 a month
  • I am 31. Healthy. non smoker.
  • Income 185k/yr
  • Roth 60k
  • 401k 200k
  • emergency fund established
I do not have children. I live with my girlfriend in a rental. Neither of us have any debt

This recommendation by the advisor does not seem to be in my best interest.
  • Do I (currently) need life insurance?
  • If so, what type?
  • It was also recommended that I purchase whole life to diversify myself from the market. I would rather take the premiums from a whole policy and place monthly into a vanguard index.
Help please!
Thanks!
No - You don't need Life Insurance.
No - don't buy Whole Life Insurance. Insurance and Investments are separate.

Term Life Insurance can protect your loved ones in case you die. Insurance can payoff a mortgage, bills (which you don't have), or secure an education for the kids you don't yet have.

Get Life Insurance when you get married and begin a family, otherwise follow your Investment Policy Statement.
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willthrill81
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Re: Do I need life insurance?

Post by willthrill81 »

The only reason I can think of for why you might want to buy life insurance now, despite not needing it now, would be if BOTH (1) you expect that someone else will become financially dependent on your income in the foreseeable future, beyond the assets that you are accumulating, AND (2) your family history or other factors suggest that it might be very pricey or impossible for you to buy life insurance in the future due to pre-existing conditions. There is probably only a tiny chance of both of those conditions being true.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings
Topic Author
kflem20
Posts: 10
Joined: Wed Jun 14, 2017 7:25 am

Re: Do I need life insurance?

Post by kflem20 »

Stinky wrote: Thu Sep 03, 2020 3:40 pm
kflem20 wrote: Thu Sep 03, 2020 2:16 pm Hi all,

I recently talked with a new advisor and it was recommended that I purchase term 80 life insurance for $88 a month
  • I am 31. Healthy. non smoker.
  • Income 185k/yr
  • Roth 60k
  • 401k 200k
  • emergency fund established
I do not have children. I live with my girlfriend in a rental. Neither of us have any debt

This recommendation by the advisor does not seem to be in my best interest.
  • Do I (currently) need life insurance?
  • If so, what type?
  • It was also recommended that I purchase whole life to diversify myself from the market. I would rather take the premiums from a whole policy and place monthly into a vanguard index.
Help please!
Thanks!
You did not talk to an “advisor”. You talked to a salesman.

I’m guessing that this salesman worked for a mutual company, since whole life was pitched to you. Was this a Northwestern Mutual salesman?

I strongly suspect that this agent does not have your best interests at heart. I would not buy anything from him, nor would I talk to him again.
Yes this was Northwestern Mutual
Swansea
Posts: 965
Joined: Sat Feb 13, 2016 5:16 am

Re: Do I need life insurance?

Post by Swansea »

My situation was once very similar, except no live in GF. My insurance agent called to sell me a life insurance policy. After I told him my situation, he said I did not need it.
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Stinky
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Location: Sweet Home Alabama

Re: Do I need life insurance?

Post by Stinky »

kflem20 wrote: Fri Sep 04, 2020 7:10 am Yes this was Northwestern Mutual
I am so glad that you posted on this Forum before you entered into a relationship with a Northwestern Mutual agent!

You're a relatively young, relatively high-income person - just the kind of person that Northwestern Mutual likes to form a relationship with take advantage of. Your agent would like to form a life-long relationship with you where money could be extracted from you over your lifetime.

The first, entry-level product is the Term 80 product that you have been pitched. You're correct - you do not need life insurance at this stage of your life. You only need life insurance when someone will be financially hurt by your death. So, not only is the NWML guy trying to sell you life insurance you don't need, he's trying to sell you a crummy term life product, because NWML's term products are not competitively priced. (When you do need insurance, go to zander.com for quotes on level term life insurance from very competitive companies.)

Once the agent has you "hooked" on NWML, he'll try to upsell you. Maybe, a few years down the road, he'll say that you "need" to get a whole life policy, or convert your term policy to whole life. Or maybe he'll say that you "need" to put your mutual fund investments in NWML-sponsored mutual funds. Or maybe he'll try to sell you an annuity. Each of these product moves will be trying to extract more money from your pocket, and transfer it to your agent's pocket.

Once again, your spidey-sense was right. You don't need life insurance at this time in your life. And you sure as heck don't need to build a relationship with Northwestern Mutual.
It's a GREAT day to be alive - Travis Tritt
afan
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Re: Do I need life insurance?

Post by afan »

Have no more contact with this salesperson.

If you need financial advice, you can come here. We will not try to make a commission by selling you things you don't need. The advice here is free.

If you want someone to prepare a full financial plan for you, you can hire an hourly fee planner who will not try to sell you anything other than advice. Note: with a little study you may be able to create a plan yourself for free.

If you do need life insurance, then do not deal with this salesperson. He has already shown that his recommendations are terrible. You can compare the illustration he gave you to those you get when you shop.

If you do need insurance, shop the captive companies as well as those that sell through independent agents. Pick the best policy. It will not matter to you whether that comes from a company that sells only through its own agents or one that sells through independent agents.

You MIGHT need insurance if you are supporting someone else or plan to do so in the future. You would need insurance eventually if you end up having children. Since you are healthy, you could wait on the insurance until efforts to start a family are under way.
We don't know how to beat the market on a risk-adjusted basis, and we don't know anyone that does know either | --Swedroe | We assume that markets are efficient, that prices are right | --Fama
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Brianmcg321
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Re: Do I need life insurance?

Post by Brianmcg321 »

Term 80 is garbage. Don’t do it.

If and when you need insurance just get a regular 20 year term policy. Whole life is pure garbage.

You need to run away from this salesman as fast as possible. He’s trying to rob you. [OT comment removed by admin LadyGeek]
Rules to investing: | 1. Don't lose money. | 2. Don't forget rule number 1.
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