Author Topic: life insurance for single woman?  (Read 3645 times)

vivophoenix

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life insurance for single woman?
« on: November 22, 2016, 09:41:20 AM »
I am in the process of buying a house

I was wondering should i get life insurance to cover the mortgage in case i pass?

I want to leave the house to my mother/siblings as an asset. or should i leave it and assume they would just take the mortgage and rent it out or something?

also, what type of insurance?
I am 31 and healthy.

HipGnosis

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Re: life insurance for single woman?
« Reply #1 on: November 22, 2016, 11:52:41 AM »
The Garn-St. Germain Depository Institutions Act of 1982 allows relatives to assume inherited mortgages. A relative assuming a mortgage on an inherited home must live in the home and also make all required payments, including property taxes owed, liens attached and even estate taxes due.

Term insurance - almost always.

Dicey

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Re: life insurance for single woman?
« Reply #2 on: November 22, 2016, 12:11:52 PM »
As a single homeowner until I was 54, my answer is hell, no, you don't need it.

However, I once did a real estate deal with a partner who insisted I buy insurance to protect him in case I bought the farm.

Internet research turned up an un-heard of company called WAEPA that sold dirt-cheap Term Life Insurance, which is the only mustachian way to go. It's for the benefit of Veterans and their families. A couple of hoops (Thanks, dad.) and I was good to go. IIRC, it was only a couple hundred bucks a year and there may have been an annual rebate involved.

I kept the insurance for about six or seven years. Then my business partner (just on this one deal) died. In his will, he forgave the remaining balance that was owed (Wow!) and I promptly cancelled the insurance.

One more thing: I felt the same way you did about protecting my family and made them my beneficiaries. Fast forward twenty years. I'm finally married, wealthy beyond my wildest expectation (thanks to Pete, Jacob, J.D, et al) and there is a shit storm surrounding my parent's modest estate. I'm the bad guy for insisting that my parent's will and trust be enforced as written, without creative interpretation. As a result, I am simply going to leave them much less of my estate and my husband, friends and favorite charities will get more. I'm aware this might sound bitter, but it's not really, because I (luckily) don't need the benefit of this bequest the way some other siblings do.

Tl:Dr - Over time, things will change. Do not lock yourself into expensive insurance. At most, buy a small, cheap, term life insurance policy.

CowboyAndIndian

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Re: life insurance for single woman?
« Reply #3 on: November 22, 2016, 12:21:55 PM »
I am in the process of buying a house

I was wondering should i get life insurance to cover the mortgage in case i pass?
Insurance is not an investment. The only purpose for insurance is to provide an income stream to your survivors, since your income would no longer be available. So, if you were married or had kids, I would have definitely suggested insurance. In this case there is no need for insurance.

Quote
I want to leave the house to my mother/siblings as an asset. or should i leave it and assume they would just take the mortgage and rent it out or something?

Are you sure the house will be an asset? Do they live in the area and need a house? Will this inheritance cause problems between your siblings/mother?


darknight

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Re: life insurance for single woman?
« Reply #4 on: November 22, 2016, 12:51:59 PM »
I'm a life insurance agent myself, it's seriously cheap for a couple hundo grand policy. For less than $20/month (usually) you could protect the house/payoff in the event you did die. Term is the way to go. 20 year

seattlecyclone

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Re: life insurance for single woman?
« Reply #5 on: November 22, 2016, 01:04:00 PM »
I wouldn't buy life insurance without family members I'm providing financial support to today. Your relatives are doing fine right now without owning the house you live in free and clear; if you die without insurance they'll inherit whatever equity you've built up. That's better than nothing, right?

Dicey

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Re: life insurance for single woman?
« Reply #6 on: November 22, 2016, 01:04:17 PM »
This just occurred to me: If you name them as your life insurance beneficiaries, they can do whatever they want with the money, including letting your house go and blowing all the dough. Just saying it's another reason to buy cheap Term LI, if anything.

marty998

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Re: life insurance for single woman?
« Reply #7 on: November 22, 2016, 01:12:39 PM »
I actually think that insuring to pay off the mortgage on the house might invite trouble.

Having the debt still in place might mean the house goes to someone who wants it, rather than the paid off property being seen as a cash pot to be fought over. Everyone wants an asset, but it could eliminate relatives from the fight who will be scared off by the debts.

MsPeacock

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Re: life insurance for single woman?
« Reply #8 on: November 22, 2016, 01:20:34 PM »
Would they want or need the house specifically? Otherwise the house could just be sold and the proceeds would go to whoever you indicate in your will, along with your other assets. As others have noted, if they receive life insurance funds they won't necessarily pay off the mortgage.  I think the house/mortgage issue might be considered separately from wanting to leave funds for your family. If it is important to you to have a policy in order to leave them money (e.g. you want to provide money to a niece's college fund), consider what the financial needs would be and get a term policy for that amount for 15 or 20 years or something.

ETA: I really don't think you need life insurance and agree w/ other posters that it makes more sense to invest the money or put it towards principal on your home.

« Last Edit: November 23, 2016, 07:56:45 AM by MsPeacock »

boarder42

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Re: life insurance for single woman?
« Reply #9 on: November 22, 2016, 01:22:47 PM »
thats a waste if you die who the hell cares what happens to the house.

vivophoenix

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Re: life insurance for single woman?
« Reply #10 on: November 22, 2016, 01:25:07 PM »
great responses:

I am no t looking at this house just as a: oh they need it

I am really interested in providing/creating generation wealth. that is why i would be interested in provided a paid off asset in case of death. even if they sell the house and keep the money i feel like that will have been my contribution to the next generation.  my siblings are all younger than me, and i want to either leave money or a paid off house. either way i want to leave this as an opportunity.

if they decide to fight after my death, not my problem: i'm dead

Paul der Krake

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Re: life insurance for single woman?
« Reply #11 on: November 22, 2016, 01:29:57 PM »
Do you have clear instructions to be handed to the beneficiaries along with the house, in order to create this "generational wealth"?

vivophoenix

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Re: life insurance for single woman?
« Reply #12 on: November 22, 2016, 01:32:26 PM »
Do you have clear instructions to be handed to the beneficiaries along with the house, in order to create this "generational wealth"?

that would be stage two:

i assume will or trust?

boarder42

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Re: life insurance for single woman?
« Reply #13 on: November 22, 2016, 01:55:28 PM »
using insurance isnt the way to create generational wealth unless you plan to start an insurance company.  that could do it. otherwise keep your money and invest it betting on death is a bad bet.

Goldielocks

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Re: life insurance for single woman?
« Reply #14 on: November 22, 2016, 02:33:27 PM »
Another option --

just get a small term life insurance policy, to pay out enough to handle your immediate funeral expenses and pay the mortgage for 6-12 months, to allow them time to figure out what to do / sell it, etc without having any incidental costs immediately out of pocket.   

When you have saved up that amount in your other savings, then you no longer need the life insurance and can cancel.

hops

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Re: life insurance for single woman?
« Reply #15 on: November 22, 2016, 04:44:04 PM »
I know people who wish they'd locked up life insurance in their twenties or thirties, while they were young and healthy and the policies were quite inexpensive, because they were later diagnosed with illnesses that made them unattractive to insurers. If you're currently healthy and think you might marry and/or have kids in the future, I could understand considering a policy for that reason. Doing it as a possible legacy for siblings would be more unusual.

GetItRight

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Re: life insurance for single woman?
« Reply #16 on: November 22, 2016, 06:39:00 PM »
Definitely a waste. The money you would spend on life insurance would be better put towards paying off the mortgage so there is more equity or possibly owned outright. This would leave relatives in the best possible position without you taking on expenses that don't make sense, so they could either sell and have more money left over after the government taxes the estate, or pay off the taxes and mortgage and live in the house if they wanted.

boarder42

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Re: life insurance for single woman?
« Reply #17 on: November 23, 2016, 12:28:47 PM »
I know people who wish they'd locked up life insurance in their twenties or thirties, while they were young and healthy and the policies were quite inexpensive, because they were later diagnosed with illnesses that made them unattractive to insurers. If you're currently healthy and think you might marry and/or have kids in the future, I could understand considering a policy for that reason. Doing it as a possible legacy for siblings would be more unusual.

this is a bad reason to do something.

Gimesalot

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Re: life insurance for single woman?
« Reply #18 on: November 23, 2016, 12:46:26 PM »
This internet stranger thinks that if you should get a policy and make your mother a partial beneficiary and maybe your siblings too.  I wouldn't worry about the house.

While my parents were still working, I had them as 50% beneficiaries on a policy I got for free through work.  My husband was the other 50%.  It wasn't a lot of money in the grand scheme of things, about $50k total for both.  The way I could justify it was that if I died, people would probably be very sad, and would not want to work.  Getting some money would let them take some time off if needed without financial repercussions.  Once my parents retired, they were removed from the life insurance and now DH gets all of it.

hops

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Re: life insurance for single woman?
« Reply #19 on: November 23, 2016, 02:54:47 PM »
I know people who wish they'd locked up life insurance in their twenties or thirties, while they were young and healthy and the policies were quite inexpensive, because they were later diagnosed with illnesses that made them unattractive to insurers. If you're currently healthy and think you might marry and/or have kids in the future, I could understand considering a policy for that reason. Doing it as a possible legacy for siblings would be more unusual.

this is a bad reason to do something.

I can think of worse decisions than paying a pittance for a small term life policy you can cancel if your priorities change. My cousin had just entered a new relationship at the age of 26 that he was hopeful would lead to marriage, and it did, but not before he was diagnosed with cancer at 27. Now his insurance options are a lot more limited. It's something he never gave a second thought to when he was healthy but he worries about it now. I know others with similar stories. It's just one consideration among many to make when evaluating whether to purchase insurance.