Life insurance questions. What do you have/pay?

I used to do financial counselling, and insurance was always one of the worst subjects. Canadians have more insurance than any other country in the world, per capita, and WAY TOO MUCH of it is the wrong type. Sorry for the long discourse below, but it's something I think people don't think about enough.

You must assess your needs - you need to wind up your estate, cover your debt and funeral expenses, and make sure that your spouse/children can continue to live with a reasonable standard of living. That varies with everyone. Before you buy insurance, figure out what you need. Then, and only then, go to an agent and tell them you want to buy that amount of non-participating, renewable, convertible, term life insurance. Nothing more or less. They will try to sell you more attractive products with cash values that you can borrow against or get as a lump sum at a future date. This is not a good idea. The assumed interest rate on these higher priced products is extremely low. You will do much better to invest the difference in a retirement savings product.

If you are single, you need only enough to cover your debts and funeral expenses. If you don't care about being buried/cremated, you don't even need that, but it's a bad idea because your family will probably want some sort of service.

Do not fall for the line that it will never be cheaper than if you buy it now... that's true, but it's also true it will always cost you less if you start later, other than if something happens to make you uninsurable. Do not insure your children for more than funeral costs... they are a financial liability (albeit the best things you will ever have). You don't insure liabilities, you insure assets.

Although it is very dated now, The Wealthy Barber by David Chilton (available in both US and Canadian versions) is still a great basic financial self-help starter. Plus, it has THE VERY BEST explanation of insurance I've ever read, written in easy to understand terms.

I still have coverage at 4x my pension... not because I'm not self-insured, but because I'm carrying a lot more debt than most retirees and I do not want my family to have to convert any of my investments to cover the debt should I die. To a certain extent, it's a luxury in that sense, but because it's a group policy with my former company, it's at a very good rate, so I've taken advantage of it.

 

There are other considerations that may enter into your assessment. If you are both salaried employees, then probably it's an easy calculation. If you are self-employed, or have a partner, or are just a large investor in a small business (silent partner sort of thing), then you have more considerations to make (what happens if your partner dies or wants to sell out; what if the business goes bad; that sort of thing). But certainly by mid-60's most people should be self-insured, and only an odd situation (like mine) should govern your insurance needs.

 

I don't know the exact amount but it's more or less $200 through Allstate. They said it's the cheapest in the area so I indulged in getting one recently.

 

Really? They have Allstate in the Phillipines?

 

My father does insurance and investments through Prudential. Life insurance is his thing, though. I pay $60 a month for $100,000 pay out, which I can draw against without penalty or need for repay once I've paid into it for three months. It's basically my house down payment, ripening on the vine. I think I have one year left.

Borla, or whoever, message me if you want me to introduce you to my dad so you can talk life insurance options, he's good. He'll also tell you if he thinks you're getting a bad offer from his company or any other company.

 

Long term disability insurance, yep got it. Not cheap. If your employer offers some form disability, study it. I'll bet it is minimal, at best. You can always supplement.