AAA Term Life Insurance

[catherine]

I am thinking about getting Group Term Life Insurance through my AAA membership. It just seems like a great deal, but since I'm skeptical of great deals, I'm asking your opinion.

I currently have NO life insurance at all. I make a good salary, and DH has no income. I am not a smoker and am healthy, DH is a smoker and has some chronic medical conditions. This is one of those applications that requires no medical exam, which again, makes it sound a little too easy.

The reason I would want to purchase this would be to cover "final expenses" should either one of us die, and for DH, if I should die I'd want to purchase either 100k just because at that point, he could sell our home, move in with his brother, and that 100k wouldn't go very far, I admit, but he'd be eligible for my SS. And it's better than nothing.

Given my debt load at the moment, I don't know if adding another bill to monthly expenses is wise or foolish.

I'm never been interested in life insurance as a self-employed person. I always got it as an employee because it was so cheap, but I've just never gotten around to getting it since I left corporate life. Foolish, but then again, that seems to define my money habits in general.

Do you simple livers have life insurance? Do you think I should purchase this AAA? It would be $63 for me (100,000) and $83 for DH (50,000). Of course it will go up in about 2-3 years when we both hit 65.

[herbgeek]

No life insurance for us usually, as we have enough in assets to pay for a funeral, and the other spouse would have an option of not working if they lived frugally.

Someone once pointed out to me- ever notice the biggest buildings in any city are insurance companies? ie they make a lot of money. Insurance is great for someone with a young family, or where a spouse can't work, but if you both have skills and have a nest egg, I don't see that it is necessary.

[jp1]

My thought would be that you should take out the insurance on yourself but not on DH. If he dies first you can just keep working. If you die first then the insurance can help to support him since he doesn't work. Gambling on the possibility that he will die first is just that. Gambling.

I've always had life insurance provided by my employer, so I can't speak to whether the pricing is reasonable.

[rosarugosa]

I agree with JP1's recommendation. If you happen to die first, it sounds like DH will be in a fairly tough spot financially, but if he dies first, the financial impact to you would be minimal.

[iris lilies]

I agree with others that you should not take out life insurance on your DH for any reason.

I'm not sure that you should take insurance out on yourself. Is your estate responsible for your daughter's college loans, and would your DH have to pay out that money? Does the debt fall to your daughter if you don't pay it? Who is responsible for all of the other loans? You don't have to answer, I am just throwing out a few issues.

Anyway, if you died today leaving him with assets in the red (i.e. he owes money) I would take life insurance out on you to help him out of that situation.

But if upon your death today his net assets are positive, even if only a little, I would not do take out the insurance for you, I would put those monthly payments toward debt. The question to me is: what do you owe him? Since he has equal responsibility for the debt of your household, I don't see it as your problem to set him up in a net 0 worth or positive net worth situation. For instance, you are willing to sell your large, expensively taxed house--he is not. Let him live with that decision and experience the consequences.

It is likely he WILL die first. Take care of yourself first.

[lessisbest]

iris lilies-

A person CANNOT inherit their parents debt - unless they have also signed the loan papers saying they are responsible for the debt. What a person owns (home, vehicles, other property) stand good for what they owe when they die. One persons debt doesn't follow subsequent generations. If there isn't enough property to satisfy the debt/s, the debt is written off as a "bad" loan they are unable to collect.

[jp1]

The rules, however, are different for spouses. The OP should look into the laws in her state for the answer to that question, based on the particulars of her situation. The answer will potentially impact if, and how much, life insurance she might want to purchase.

[iris lilies]

iris lilies-

A person CANNOT inherit their parents debt - unless they have also signed the loan papers saying they are responsible for the debt. What a person owns (home, vehicles, other property) stand good for what they owe when they die. One persons debt doesn't follow subsequent generations. If there isn't enough property to satisfy the debt/s, the debt is written off as a "bad" loan they are unable to collect.

Oh, I know. I just don't know if the company who holds the paper on the student loan has claim on the OPs estate.

i also don't know if the OP's daughter signed the loan papers as well. I would think that all student loans have the student As debtor on the contract, but I really do not know. if yes, I would, as a mom, want to pay my daughter's debt if that's what I told her I would do and it was possible. and I would want my DH to,take that amount out of my estate.

[catherine]

Thanks, everyone.

iris lilies, I think your advice is great--just do the bare minimum in terms of what I'm responsible for. To your point about the student loans, I have paid off the ones that are in my name, and I have a couple still that are in my DD's name--I guess the decision would be, would she have to pick up the debt, or would I cover that with the estate, and as long as I'm planning on wiping the slate clean, I would include it.

[Tammy]

Is that a monthly cost you quoted?

I pay $269 a year for a 20 year policy for $100,000. My husbands is just over $300 a year. The 20 year time will be up in our early 60s and we won't renew it. We bought this to get us through in the event of early death. Once we retire we won't need this as no one will rely on us for anything (kids grew up and left home during this 20 years).

I think those are typical prices if you buy younger and lock in a term policy.

[catherine]

Is that a monthly cost you quoted?

I pay $269 a year for a 20 year policy for $100,000. My husbands is just over $300 a year. The 20 year time will be up in our early 60s and we won't renew it. We bought this to get us through in the event of early death. Once we retire we won't need this as no one will rely on us for anything (kids grew up and left home during this 20 years).

I think those are typical prices if you buy younger and lock in a term policy.

Yes, those are monthly costs, but I'm 63.

[sweetana3]

If you want specific things to happen after you die, remember to have a specific will with alternatives given. It was critical when my Mom and then Dad died that they ensured their wishes were known. Otherwise, the stepmother and all three kids would have not had a clue.

[RoseFI]

In thinking about life (death) insurance, I would just caution people to really think about the impact of a spouse's death, even after official "retirement." I've witnessed too many wives outlive their husbands (it happens the other way around, just not with anyone I know personally), with no special allowance made for 1) end-of-life costs, whether that be ambulance services, funeral home, supporting kids who want to travel to the memorial service, etc. 2) the spouses relative incapacity due to grief or inexperience with certain tasks, e.g. need to hire tax preparer, yard maintenance crew, etc. because the dead spouse always did it, haulers to get rid of the junk, etc. 3) alternative/co-insurance health care costs if death was due to accident suffered by both but survived only by one, 4) much more travel, to be with family during holidays especially in that first year, etc, etc... A lump sum chunk of money could really make the difference in terms of not having additional financial worries on top of everything else. Just make sure your policy is known by others! Twice now, I've helped survivors find various small life insurance policies that they didn't even know their loved ones had taken out.

I don't currently have life insurance, but have thought about it seriously, not because the loss of my income would be such a hit (and I'm nowhere near retiring), but because the transition period of grieving/adapting would have a financial cost to it. I would like my otherwise-higher-earning spouse to be able to take a few years off/change careers or whatever else would be a support during a challenging time. I suspect if I'm the survivor, I'll want to go sit in a cave and be catatonic for awhile... My delimma has been whether to invest in "Term" or in traditional life insurance, since all the above apply regardless of how old we may be, or employment status. Safer to gamble that I will die, as opposed to gambling I will die young...:devil:

[iris lilies]

In thinking about life (death) insurance, I would just caution people to really think about the impact of a spouse's death, even after official "retirement." I've witnessed too many wives outlive their husbands (it happens the other way around, just not with anyone I know personally), with no special allowance made for 1) end-of-life costs, whether that be ambulance services, funeral home, supporting kids who want to travel to the memorial service, etc. 2) the spouses relative incapacity due to grief or inexperience with certain tasks, e.g. need to hire tax preparer, yard maintenance crew, etc. because the dead spouse always did it, haulers to get rid of the junk, etc. 3) alternative/co-insurance health care costs if death was due to accident suffered by both but survived only by one, 4) much more travel, to be with family during holidays especially in that first year, etc, etc... A lump sum chunk of money could really make the difference in terms of not having additional financial worries on top of everything else. Just make sure your policy is known by others! Twice now, I've helped survivors find various small life insurance policies that they didn't even know their loved ones had taken out.

I don't currently have life insurance, but have thought about it seriously, not because the loss of my income would be such a hit (and I'm nowhere near retiring), but because the transition period of grieving/adapting would have a financial cost to it. I would like my otherwise-higher-earning spouse to be able to take a few years off/change careers or whatever else would be a support during a challenging time. I suspect if I'm the survivor, I'll want to go sit in a cave and be catatonic for awhile... My delimma has been whether to invest in "Term" or in traditional life insurance, since all the above apply regardless of how old we may be, or employment status. Safer to gamble that I will die, as opposed to gambling I will die young...:devil:

These are very practical considerations for end of life expenses. But for us, we just have money to be used however necessary. We don't put money into pots such as "6 months of living expenses" or "new expenses tied to my death" or even "vacation money."

I guess that that if someone really cannot lay their hands on $5000 - $10000 then they do need to pay for burial insurance and life insurance and pay the attendant costs.