I want a very specific life insurance product. It is a policy that covers me for life but without any savings or investment part to it. I don’t need a cash value component. My goal is that when I die, my granddaughter will get a payout (say $25K) that will go into a trust that she can use to pay for college or put a down payment on a house or cash out when she’s 40 for early retirement
Note: please do not get bogged down in the trust part. I’m still working on this. Let’s stick to life insurance payout.
The first thing the sales person tries to sell me is indexed universal life. I said I don’t need the savings part.
Oh, but you and she could borrow against it.
Why would I borrow against my own money?
Rather than answering that question, she talked about the benefits of overfunding the account and how things are tax free.
When she realized I wasn’t biting, she suggested I buy a life insurance policy on my granddaughter so I can guaranty her insurability when she is 20. My replies:
That in no way even remotely serves my goals that I told you.
I’ll let her parent worry about that.
The whole “insurability” is BS that it is extremely rare that it makes a difference.
Needless to say I didn’t buy any products from her yesterday.
Term life insurance is a type of life insurance policy that provides coverage for a certain period of time, or a specified “term” of years. If the insured dies during the time period specified and the policy is active, or “in force,” then a death benefit will be paid.
Check Colonial Penn Life Insurance. Their commercials sound a little scammy but they’re actually a legitimate low entry cost life insurance company. It is a whole life policy, not term, but I think the costs are comparable. You can do the whole thing online without sales people. The rates are low enough I think the $25,000 amount is easily affordable if that’s the real number you are looking for. It’s probably not the best possible plan available but the ease of applying, , their minimal qualifications, and the low interest costs may make it worth while for you. You can get that insurance immediately for a few bucks a month and continue searching for another plan.
Full disclosure, over 50 years ago I worked for Colonial Penn. And over 50 years ago I stopped working for them too, so I have no warm feelings for the company, but they are legitimate.
Yes and no.
Like I said, I do not want it to be limited in term like 20 years. I want the life protection through the remainder of my life. And I even told the saleswoman that. I said can you give me term life that lasts my lifetime. That led her to universal life.
Just in case I haven’t made it clear.
I DO NOT WANT INSURANCE THAT EXPIRES OR HAS A SET TERM. I WANT IT TO LAST MY ENTIRE LIFE.
If someone knows of a product (not term insurance) that is life insurance for life without cash value and is in effect for life I’d love to hear it, but this thread is more about insurance sales people trying to sell you what you don’t want or need.
I don’t think that what you want exists- you can get a 30 year term policy, but you don’t want term. Universal, whole and variable have an savings/investment component. Burial/final expense insurance might fit - but I don’t know if you can get that in the amount you want and it’s technically a small whole life policy so there is a sort of investment component.
About salespeople, insurance and others - if it’s a one time thing, they will almost always try to sell you what makes them the most money. There’s no reason not to if you won’t be a repeat customer.
That is whole life insurance - it will always have a cash/savings component to it. You can renew a term policy past its “term”, but it is the single most expensive way to insure yourself through your lifetime. (It’s cheap for 10-20 years at a time, but once you start renewing it annually, it spikes exponentially.)
Also, the minimum term policy is usually $100k, so that’s a tough needle to thread.
As a former insurance salesman, I commiserate. I didn’t enjoy it, and many of the products out there seem predatory. Depending on your age, you may just want to get a small 10-20 year term policy, and invest a small amount annually into the trust account, and then drop the term policy when you’re done.
I led the conversation by saying, “I don’t think this exists but let me know if it does.” It seems like a middle ground no one except me thinks needs filled.
Grrrrr. No middle ground
I called Farmers since they do my home and car insurance.
I got friends of mine who live and die by the actuarial tables and I say, ‘Hey! It’s all one big crapshoot anyhoo’. Tell me, have you ever heard of single premium life? Because I think that really could be the ticket for you.
A Farmers agent will be limited to Farmers products. You might call an insurance broker who can sell multiple “brands” of insurance.
A universal life (UL) policy really is a sort of middle ground. I really disliked them when I was in the business because I saw too many of them come across my desk that had “blown up” (the cost of insurance exceeded the premiums, and the policy would lapse). I believe there are now protections against that, and companies are required to provide a guaranteed minimum premium amount for you to pay that will last your lifetime.
A perfectly balanced UL will not have any long term cash component, as it will be used to pay future premiums. But there’s no “perfectly balanced” plan - there’s likely always going to be cash in a functioning UL.
Some UL policies will increase the death benefit if there’s cash in the policy when you die. Most don’t - the insurance company gets it.
I don’t know if it’s that no one thinks it’s needed as much as it’s really not possible. Something that’s pure insurance like term is always going to have an end date - it might be one year , it might be ten years, it might be thirty years, but there will always be an end date. Because they don’t know how long you will live and they can’t raise the rates until the term is over . Anything else is going to have a savings/investment component. Maybe just a small one like the one my MIL bought for my husband when he was 18. The premiums were under $200/yr for 20 years. That’s $4000 tops - it pays $10K if he dies (or if he wants to cash out at 65, I think) but that $6K has to come from somewhere.
