Re: What Type of Insurance for This PersonGo to Top
Labman
I don't see enough info to really specify. The tem policy would be least expensive and potentially viable especially if quoted with conversion privileges. The whole life could be a good part of her developing portfolio especially at her age and the permanent premium or as some companies offer a combined policy. Make sure you include waiver of premium and an additional disability policy might also make sense.
WLang
Re: What Type of Insurance for This PersonGo to Top
I would find out what she thinks she can afford and sell her an affordable amount of annual renewable term (ART) with whole life conversion option and a PPO rider. A Policy Purchase Option (PPO) rider guarantees the right to purchase more life insurance periodically, without providing evidence of insurability. This guarantee, which can be exercised on scheduled "Option Dates," gives her the ability to add coverage if desired at later dates regardless of her health or occupation. I would make sure it is with a top tier company. Of course as most people on here know I would go with a mutual company.
Re: What Type of Insurance for This PersonGo to Top
The disability is an option,but not sure she needs it at the moment as her husband is the chief breadwinner by far.
I'm thinking the ART with conversion may be the way to go. Right now her only reason for life insurance would be to help with funeral expenses etc. I still need to talk with her in depth to see what her situation is. We just had a very brief conversation this morning, so I do need to explore things more thoroughly.
Re: What Type of Insurance for This PersonGo to Top
I'll check with her and see if he already has disability. From the limited conversation I had with her this morning, it seems he has almost everything.
Re: What Type of Insurance for This PersonGo to Top
Originally Posted by Labman
Pretty simple case, but I'm new and want to do the best thing for her.
22 year old female, recently married with no substantial obligations or children at this time.
How much would you recommend and would it be term, permanent or a blend?
Thanks!
Insurance is meant to transfer economic/financial risk. Start with the risk that has the highest probability and the highest potential economic/financial impact.
On the face of it, based just on the info in your posting, I don't see much of any looming economic/financial risk from her passing away (other than by accident) during the near or intermediate future (nor the likelihood of that happening). That would place any substantial amount of death (aka "term life") insurance on the back burner in terms of order of priority [a small amount, however, may have some merit].
On the other hand, there is a real and potentially serious financial/economic risk involved with critical illness. Aside from uninsured medical/healthcare expenses, a critical illness (while usually disabling the victim) often endows a measure of economic/financial disability on the spouse. This may involve loss of time from work to care for the victim, psychological impact (lesser focus and concentration on income producing activities). One of the most efficient treatments for any critical illness is to remove stress (there's a growing body of evidence to indicate that stress is a major cause and catalyst to various serious illnesses). Stress caused by financial issues is not something that any medical practitioner, IMO, would consider other than very harmful in the course of treatment. Moreover, there are other expenses (some of which can be quite substantial) to the family unit when one of the spouses is afflicted with a critical illness.
Since the probability of a critical illness during income earning and family raising years is quite significantly higher than the probability of death, underwriting for CI insurance is much more strict and selective. A person will become uninsurable for CI insurance much earlier than for death insurance.
For example, underwriting for CI insurance takes into consideration CI events suffered by immediate members of the prospective insured's family, and one can be deemed uninsurable due to the occurrence or frequency of occurrence of CI events by members of the immediate family. For a 22 year old, the probability of immediate family members having suffered a CI event is likely to be lower than for a 45 year old.
She may or may not be a contributor to the family finances, and even if she is, the husband likely didn't marry her to be his wallet. If she is not an income earner, there isn't much that DI (normally an indemnity contract) would indemnify for. This, at least on the surface, appears to also suggest exploration of the need for CI coverage first.
Note: The above is general only and is not meant to nor should be interpreted as advice or recommendation for the specific case.
Last edited by Ami : 07-01-2009 at 12:25 PM.
Reason: spelling
Re: What Type of Insurance for This PersonGo to Top
Originally Posted by GreenSky
Why does she need life insurance?
Rick
The best reason I can think of is if in the future she has the need for life insurance she will already have it if something happens that would otherwise make her uninsurable.
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Re: What Type of Insurance for This PersonGo to Top
I don't know, I bought my first whole life at 19 as a single guy. (nope, nobody in the business prior) Just had some diposable income. (and yes, I also aquired other investments too. Had a little extra money, had a little extra sense.)
You know some people buy a piece of property and build the house later. Some people wait and buy the house and yard at the same time. Which is the better way? depends doesn't it?
The advantage to an early WL purchase is cost to benefit. Now at 50, I see that every statement and with every EOB I get because of my severely changed health in the last 30 years.
Insurance is a to "each his/her own" situation. You either see the value or you don't.
I won't even try to defend or argue the merits. Wasted effort with no changing of opinion on either side.
Show em, your stuff, if it makes "sense" to them they'll buy, if it doesn't they'll wait.
Re: What Type of Insurance for This PersonGo to Top
If she just wants it to cover funeral cost and she is 22, why not just get a 20-pay life....she could probably get $25k in coverage for $22, being fully paid at 44 and never have to worry about it again.
Re: What Type of Insurance for This PersonGo to Top
Whether she is a good prospect or not is not the point. She is a friends daughter. I specialize in group health and just needed some guidance on what type of life insurance, if any, would be suitable.
You guys have definately given me some things to think about. I'll find out more about her status and update this post. Thanks for the guidance.
Re: What Type of Insurance for This PersonGo to Top
A $100,000 guaranteed paid up at Age 65 No Lapse UL from Aviva would be very inexpensive ($23 Monthly if in good health) at her age and be so much cheaper than Whole Life or 20 Pay W.L.
Re: What Type of Insurance for This PersonGo to Top
Originally Posted by SydRogers
A $100,000 guaranteed paid up at Age 65 No Lapse UL from Aviva would be very inexpensive ($23 Monthly if in good health) at her age and be so much cheaper than Whole Life or 20 Pay W.L.
Syd, when you say "cheaper", have you calculated the net cost after say...20 or 30 years...calculating dividends and cash value?
Re: What Type of Insurance for This PersonGo to Top
Here is another thought. Since she is recently married there is likelihood that she will have children in the next few years. Once children arrive the husband needs the coverage to provide for the children if something happens to her.
Last edited by xrac : 07-01-2009 at 09:23 PM.
Reason: Posts merged
Re: What Type of Insurance for This PersonGo to Top
Originally Posted by moonlightandmargaritas
"CI coverage" is a very poor substitute for proper DI coverage.
What heppens to her if she is disabled - and it's not a "critical illness"?
Are you saying that she would qualify for DI coverage if she has no earned income to insure?
AFAIK, DI is normally an indemnity contract. In other words, to satisfy a claim submission:
-the event/condition must be covered by the contract
-the insured must prove the event/condition within the context of the contract wording.
AND
-the insured must quantitatively prove the pecuniary loss caused by the event/condition.
Keep that third requirement in mind...
On the other hand, AFAIK, CI is normally a compensation contract, meaning that the third requirement in DI is not a requirement in CI compensation contracts.
AFAIK, and in a practical sense with DI, if she is not earning an income immediately prior to the onset of the disability, there is no income lost due to the disability, and therefore there is nothing to indemnify.
Under the same circumstances, with a covered CI, the amount of compensation (coverage amount) would be claimable.
This is not to say that DI cover is better or worse than CI cover as such. These are two different types of contracts and intended to cover different financial/economic risks. Neither is a substitute for the other. It's not an "or" but an "and".
Naturally, each case deserves to be analyzed and approached on the basis of its own unique merits.
What Type of Insurance for This Person
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