How much for term life insurance? compared to whole life?

Question

im married, age 27 and interested in buying life insurance for me and hubby.

for just myself how much would my monthly be approx? im healthy dont smoke and dont want to pay too much money....

does term life give you an option of continuing on with them after the 20+ years term? would the premium go up?

i only need around 100, 000 i think. since i dont plan on dieing anytime soon but wouldnt want my family with no funeral money if i did. do my kids need any? they are 2 and 4 and i was considering the gerber life for them?

please help!

oh hubby is 27 and healthy non smoker as well

Answer 1

I recommend a DIMES worth of Insurance

D Death ( final expense funds)

I Income Replacement generally 5-10 years

M Mortgage Expense ( enough to pay off mortgage)

E Expenses ( Any other Debts)

S Savings 3-6 months of income so you have time to grieve.

The only permanent need is Death the other can be covered by temporary or term coverage. If you have other financial products they may cover your final expenses and you may not need permanent or whole life or UL policy. My believe that insurance is insurance and investments investments and never try to make money from insurance to cover provide finances for my future. Final expense once again can be covered by your investments if they are self sustaining. IF not you should consider at some point purchasing a final expense plan also. Good Luck and thank for the question.

Answer 2

I'm in almost the same situation as you, so I'll tell you what  my wife and I are doing.

The term rates with our company are the same from ages 25-29. We're 26. At this point we're going with an ART(annual renewable term) policy. I have $250,00  for $20/month and my wife has $100,000 for $9/month. At age 29 we're going to lock it in on a 30 year level term policy. I'm going to get 1/2 mil for $35/month. My wife will be getting $250,000 for $22/month. This will give us life insurance coverage until we're 59. We plan on being financially secure with our investments and have a paid-off home by that time, which will mean we wouldn't need life insurance anymore.

As for the Gerber(or any whole life plan for children), I strongly do NOT recommend them. The purpose of insurance is to replace the financial responsibilities of a person if they die. Since children don't produce any income for you, you don't need to insure their lives. The only thing I would recommend for children is a $10,000 rider on your term policy. It's extremely inexpensive to get, and it will help you cover the burial costs.

Back to the Gerber plans.....let's say you purchase a $25,000 or $50,000 whole life policy. Sure the premium might be low. But in 40-50 years, when your child's family might need to use the insurance, how far is $25k going to go. With the rate of inflation, I doubt if $50k will even buy you a subcompact car in 40-50 years. AND....by that time, you will have paid them almost or more than that in premium. So do yourself a favor and stick with term and get a rider for your kid's burial costs.

Answer 3

Whole life tends to be somewhere between 2/3 to twice as much.

Answer 4

I do not agree with those who say whole life is a waste.  If you get whole life on our children now you will only pay approx 10$ a month whereas if you got it on yourself now at your age it would be about 50$ a month.  I say have it on your children definitely now as it will be cheaper in the long run-and they will thank you later.  I work for Farmers insurance and term is cheaper but you cannot renew it-make it last longer after the term is up, you will simply have to get a new policy and the premium goes up the older you re.  I suggest paying the same small amount for a longer period of time before paying a larger amount for a shorter time period.  Also the older you get the more chance you have of developing something that will prevent you from being able to get life ins.

Answer 5

DON'T BUY WHOLE LIFE!  IT IS A RIP OFF!  

BUY TERM LIFE!

Answer 6

The Term vs. Whole Life is an odd debate.  Most people often recommend term and forget about all the details becuase they've read "Buy Term and invest the rest" so many times.  Sadly, most people that Buy Term, don't invest the rest and when they hit 50 years old they are now paying hundreds of dollars a month for insurance and have nothing for savings or they don't have the disapline and knowledge to invest to 'self-insure' themselves.  Then when they hit age 75 or 80, if they are still paying the $500+ dollars a month (this in not an exaggeration...if you have term insurance check your policy...it will be at least that exprensive when you are older) for their term insurance, they are forced to bet $500 a month that they will die before age 80 or they get nothing.  Buy Term and Invest the Rest is a good strategy in theory, but it's a terrible strategy when you look at it from a practical standpoint.  Most people don't have the time or commitment to invest and get the returns that this strategy requires to make it work.  Keep in mind...Whole Life was created becuase most people got hosed with Term insurance being either too expensive to pay for or it expired when you need it the most.

In reality, Term insurance should be used for a temporary need (making sure the kids will be taken care off, making sure the mortgage is paid off, etc.).  The cost will start out small when you are young and after the term is over it will increase (IE: If you are buying 20 year term, at the end of 20 years you will have the option to renew it and a substantially higher price for another term).  You build no cash value and it will expire ussually around age 80 (Average life expectancies are increases every year with advancements in medicine) if you haven't died by then.  Think of this like renting a house...it's cheaper than buying one (whole life), but when you move out (cancel the insurance), you just hand back the keys and you get nothing in return.

Whole life should be used for the expenses that will not go away whether you die tomorrow or 50 years from now (funeral costs, taxes, legal fees, etc).  While the inital cost is slightly higher than term premiums, Whole Life will never go up as long as you live.  It will also build cash value and will never expire.  Basically, not only will it be there when you need it when you are 85, but it will be very inexpensive ($50 40-50 years from now will be pocket change when you look at inflation rates).  Some companies offer a limited pay option where you only make your payments for a specific time frame then it is completely paid up (similar to a mortgage...you only pay for 20 years and then you keep the house).

If you only plan on covering needs for 20 years or less (IE taking care of the kids, paying out debts, etc), buy term, but if you will have a need of longer than 20 years (IE final expenses, charity or legacy fund) buy whole life to cover than need.

With the right Whole Life insurance you will likely never pay more than 30% of the total benfit amount.  IE:  through the next 20 year I will pay a total of $13,200 into one of my life insurance plans and never a penny more and it will pay out $100,000 at some point.  At the very most I will pay roughly 13% of the total payout amount.

As for the amount, most of the people I work with in your situation (late 20s, 2 young kids) look at $50,000-$100,000 of whole life coverage (the cost of a final expenses...funeral, legal fees, taxes, etc...range anywhere from $20,000-$30,000 where I live right now...factor in inflation and it will be substantially more by the time you are 80) and around $500,000 of joint first to die (pays out once when the first one of you or your hubby dies) 15 year term insurance ($200,000 to pay out the mortgage/debts if you have and $300,000 to make sure the kids have proper child care and living standards, and have their post secondary paid for).  Again, this is ball park on most that I work with.  If you google search "Life Insurance Needs Analysis" you should get a whole pile of different calculators that will help you determine how much you need.

Insurance on kids is more of a planning for their future.  The odds of a child passing away are very slim, but there is a chance.  If you can afford it, buy a limited pay whole life plan and when they are old enough to make the payments they take it over.  If you select the 20 pay option, it will be completely paid up for them by the time they are ever done university and they won't have to do through as much of the questioning as you are.  :D

Sorry for the novel...hope this helps...

Answer 7

Oh there's a lot for you to learn about Life Ins.

I'd suggest you call a couple of agent and/or brokers and ask them some questions.

I used to work for an Ins Comp, so I'll try to help.

Typically you can continue a term policy past its term, BUT you must still be eligible for the insurance, you'll have to pass more stringent tests, and they'll re-rate for your new age (47).

One of the questions to ask would be how much does the ins cost for a 47 and 67 yr old?  If both those rates are more than the Whole life premium for you now, you might want to consider paying more now to save a lot later.

Also, if you develop a medical condition that precludes you from getting an insurance policy you'l be up a short creek with an even shorter paddle.

Now, one option for you would be to get a term now and in small increments over the next 20 years, convert that policy to a whole life policy.

As for cost, for a 20 yr term for 100k for a 27 yr old, maybe as low as 25 a month for you and 30 for him.

Answer 8

Everyone who said that whole life isn't worth it is right. It's primary function is to pay for burial insurance and typically has a limit of 50k.Term insurance is better is cost is a factor . The life insurance industry has changed a lot over the last decade. There are many important factors to think about when purchasing insurance.

Although 100k sounds like a lot of insurance it's not anymore. the proper amount is 8-12 times your annual income. This will enable your spouse to continue your current lifestyle for them and your children for about 20 years. You also have young children. If you should pass prematurely do you want to fund their college education. Do you have a mortgage or debt that would become a liability to your family. These are just a few things to think about when it comes to the amount.

If term insurance is your plan make sure the plan is convert able which means that the policy can be converted into a permanent policy like a universal life policy which will last you the rest of your life without the cost increasing with age. You should also check to see if the term policy has a return of premium provision which returns the money you put into the policy at the end of the term.

Truthfully, this is not a matter that should be taken lightly. Talk to an insurance professional today.