Juvenile life insurance

How much life insurance can I buy?

DaveGragg Insurance agent, Juvenile life insurance, Life insurance , , , , ,

A 71-year-old client called me a couple of days ago to talk about life insurance.

He and his wife are refinancing their house and he wasn’t sure they’d make it to see the end of the 30 years.

He and his wife are the second and third 65+ clients who wanted to talk about life insurance in the past month.

Life insurance is almost always a great idea, but we would have had a lot more options if we’d had these conversations 20 or even 10 years ago.

Let’s take a look at what would happen if you had $250 a month to spend on life insurance — it seems like a lot of money, but let’s see how much coverage you get for that money.

Similar to For the best value, get life insurance when you’re young, I’m just using premium estimates for Farmers life insurance and a non-smoker in average health, but the numbers are going to be similar regardless of where you look. And age isn’t the only consideration, but it is a large factor in answering our question, “how much life insurance can I buy?”

For a 21-year-old, $250 a month buys a crazy amount of insurance. He’d be able to get almost $4.3 million with a 10-year term (blue line). Why? Because most people live past their 31st birthday. (Even it’s a 10-year term, get life insurance when you’re young — your older self will thank you for it.

If he pays $250 for a 20-year term (red line), he’s going to get $2.1 million. With a 30-year term (orange line) he’s going to get almost $1.9 million. Again, most people live past their 51st birthday.

The green line is the line for whole life insurance. It’s dwarfed by the term policies, but $420,000 is still a whole lot of money to leave your family.

It’s not really fair to compare a whole life policy to a term policy in a chart like this — permanent policies have a lot more benefits than this chart shows — but I want to show how options dwindle as people get older.

Our hypothetical wage-earner doesn’t get as much when he’s 40, but he’s still getting a whole lot of bang for his buck. Almost $2.4 million for a 10-year term and $193,000 in whole life.

He can still get a 30-year-term life insurance when he’s 50. But he can’t at age 51 — from an insurance company’s point of view, there’s too much risk that he’s going to die before he turns 81.

The 20-year term is still an option at age 60, but not at 61.

At 70, a 10-year term is still an option, just not for the $250 a month we said we wanted to spend. A $150,000 10-year term on a 70-year-old is just under $400 a month.

That green line is still hanging around, though. Our hypothetical man can still get life insurance up to age 80, but by this time we’ve moved out of the realm of taking care of his family and into having enough money for burial expenses.

Questions? Let me know, I’m always happy to help.

You can email dgragg@farmersagent.com or call my office at 417 708 9583.

Life insurance for young adults

DaveGragg Life insurance , ,

My telemarketer was coughing last night.

(First of all, yes, I have telemarketers. Yes, I know it can be annoying, but I’ve been able to help a lot of people with telemarketers. So please be nice if we happen to give you a call, OK?)

In any case, she was coughing, so I asked if she was going to die on me. She said she thought she might.

“Well, at least talk to me about life insurance first,” I told her.

“No, I’m not old enough for life insurance,” she said.

OK, hold up. We were joking around, but now we have to have a conversation. In about two minutes I threw together a proposal and made her come sit in the office.

If there is a possibility that someone, at some point in your life, will be financially devastated by your death, you need life insurance.

At 18, she’s footloose and fancy free, she’s not supporting anyone other than herself.

However, life insurance for her will never get cheaper than it is right now. That’s why I have life insurance on my kids.

Plus, there are life insurance options that build up a cash value. That cash value can make the policy pay for itself or even build up enough to pay for other stuff, like a down payment on a home, or to supplement a retirement. The longer the time frame (the younger you are when you buy it), the bigger and quicker the return possibilities. That’s also why I have life insurance on my kids.

And it’s a whole lot easier to get life insurance before the years start falling behind you, the cholesterol starts collecting in your arteries and the fat starts collecting everywhere. (Technical term here is “protecting your insurability,” just in case you’re keeping track of buzzwords.) That’s another reason I have life insurance on my kids.

So, if she ever thinks she may need a chunk of cash at some point in her life, life insurance is a good way of building that up.

If she ever plans to have kids, she’s going to need life insurance. Yes, even for stay-at-home moms. (Do you have any idea how much day care is? That’s why my wife stays at home. It’s also why I have life insurance on her).

It’s kind of like the old joke about trees. The best time to plant a tree is 20 years ago. The second best time is now.

The best time to get life insurance is 20 years ago. The second best time is now.

Life insurance for kids

DaveGragg Life insurance ,

This has been on my mind a lot in the past day or so: Life insurance for children.

It’s not something that anyone wants to think about, much less talk about, but let me explain why I have policies on my two young sons.

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1) In the best of all possible worlds, my sons will live long, happy lives and have kids of their own who rely on them. If that’s the case — and statistically, it probably will be — I’ve already started protecting the grandchildren who are 20 or 30 years in the future.

Plus, these are cash-value accounts, so I’ve started a nest egg for them.

2) It protects their insurability. So we don’t have to worry about whether my boys will be able to get life insurance, even if one finds out he has asthma, or diabetes, or any number of things that could make it harder for a person to get life insurance in the future.

3) This is the one that no one wants to think about, but it’s the one that has everyone in the Ozarks holding their kids a little tighter this week.

If something happens to my boys, I will no longer be a functioning human being.

Even the thought of something — anything — happening to one of those two makes me want to curl up into the fetal position, preferably wrapped around both of them.

Life insurance wouldn’t bring them back.

But it would allow me to pay the bills while my family tries to figure out how to put our lives back together. It would allow me to pay for a funeral. It would allow me put the world on hold with one less thing to worry about.

www.farmersagent.com/dgragg