View Full Version : Life Insurance...Rip-Off or Investment?

22nd Oct 2004, 23:12
Got married for the 2nd time about 2 months ago and she insisted upon Life Insurance. I tried to explain that this is literally betting on myself to "kick the bucket".

I win the Life Insurance and die....Conversely, I continue living and keep paying for something I hope I never have to use because when I do have to use it, I'll be outta here....so to speak



22nd Oct 2004, 23:33
Life Insurance is not for you, it's for the people you leave behind. So, basically, you figure out what you would have earned if you hadn't kicked the bucket over a time span you define (e.g. until the second wife finds the nth hubby, until the kids leave home, or until you would have retired, etc) and that's how much lost income (ie life insurance) you might consider leaving to the bereaved family. Of course you could always say, "**** it, yer on yer own". If you don't have kids that are minors, I say you don't need life insurance.


Onan the Clumsy
23rd Oct 2004, 00:53
you figure out what you would have earned if you hadn't kicked the bucket over a time span you define In that case the return should DECREASE as you get older.


What about Term Life Insurance? I think that's the same thing, but you have the option of cashing it in and taking the whole wedge to Vegas :ok:

23rd Oct 2004, 02:03
Life insurance is only worth bothering about if you have young children and it is necessary for both spouses to have the insurance, not just one of you. That way, if anything happens to either of you, the remaining partner will be able to care for the children without having to go through the job/home/kids juggling act.

Once the children are old enough, say high school age, the remaining partner's career can be resumed if they wish or they can continue to be a stay-at-home parent.

If you have no children to consider then I do not see any point at all in having life insurance.

23rd Oct 2004, 11:50
Life insurance as an investment ?

Not really. That's how the jolly old endowment system was presented, but a simple look at the maths tells you it can't really work. Insurance premiums pay for the pool of money that gets paid out when policy holders die (plus fees). If you don't die then you might feel that you've lost out. Life insurance investments simply increase the premiums which are then invested in long term stuff like property. Poor performance and high fees mean that you'd be better off with simple insurance and your own investments.

If you have dependendents and are likely to leave stuff that needs to get paid off if you die (e.g mortgage) then life cover is appropriate. Basic cover is not all that expensive assuming that you are fairly young and quite healthy.

You might consider disability insurance in case you come get injured or are ill so that you can't work again. State provisions are far from generous.

Feeton Terrafirma
23rd Oct 2004, 12:02
I have coverage (but I'm not worth knocking off). One of the main points to the cover I have is the disability cover. If I do somewhat stupid and wind up not being able to produce income, then I still have something to live off, if not live for.

23rd Oct 2004, 13:52
Feeton's got the right idea.
My accountant advised "income insurance" rather than life insurance. The chances of dying young aren't "that" high but losing a medical etc is much higher. Therefore, get insurance to protect your income.

23rd Oct 2004, 14:58
Some company pension schemes provide an income if, during the time that you are paying into the scheme, you are medically retired. I looked into income protection insurance, in the UK it isn't cheap (like all insurances; until you need them), yet seemed to cost MORE if income was stepped. No doubt there will be get-out clauses for the insurance company, but judging by the number of final salary schemes no longer open to new employees, being retired medically looks a better option, if it can be 'helped'...