Author Topic: Life Insurance worth it ?  (Read 3836 times)

wward6

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Life Insurance worth it ?
« on: August 17, 2016, 03:31:54 PM »
Hello MMM & gang,

I'm a 36 yr old husband w/ 2 small kiddos so I do the responsible thing and have life insurance, for $320 /yr I have a comfortable amount of coverage for the family.  I think this just makes sense.
My real question is - do I spend money to insure my parents?  Some background, they're getting older (65 yrs) and don't have any estate to leave behind, but they've decided to have their remains donated to medical school for science.  So, despite your feelings on that, when they pass on I won't have any funeral bill.  They suggested I take out an insurance policy just to help out our family expenses when they're gone.  For about $800 /yr the policy would pay $200k.

The whole thought of benefiting from my parents passing is extremely uncomfortable but I wonder if it makes sense to do this for my family, and if so, does it make financial sense ?

Thanks all.

plog

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Re: Life Insurance worth it ?
« Reply #1 on: August 17, 2016, 03:47:02 PM »
Quote
For about $800 /yr the policy would pay $200k.

What type of policy? That sounds super way low for a 65 year old.  This site (http://www.valuepenguin.com/average-cost-life-insurance) says a non-smoking 65 year old pays on average $4000/year for a $250k 20-year Term Life policy.   

While I have no problem wagering on morbid and personal subjects, I would never gamble against professionals and let them set the terms.  Insurance companies spend millions on actuaries to ensure they make a profit on their policies--you're not going to beat the house on this.  If you don't need the insurance then there's no reason to place a wager that has a negative expected return on investment.

BTDretire

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Re: Life Insurance worth it ?
« Reply #2 on: August 17, 2016, 03:53:08 PM »
I question whether any insurance company will offer you life insurance for $800 a year
on a 65 yr old for the the next 20 years. That's only $16,000 in premiums for a $200,000 return.
I think the cost of the premium may rise exponentially, or they will deny coverage at some age.

retiringearly

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Re: Life Insurance worth it ?
« Reply #3 on: August 17, 2016, 03:56:15 PM »
That premium sounds really low.

Personally, the only reason I would ever buy life insurance is if I had people that were financially dependent on my income.  I am single with no kids so I don't buy life insurance.  It sounds like you have already covered your wife/children so I don't see a need to buy more.

LeRainDrop

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Re: Life Insurance worth it ?
« Reply #4 on: August 17, 2016, 03:58:06 PM »
Personally, the only reason I would ever buy life insurance is if I had people that were financially dependent on my income.  I am single with no kids so I don't buy life insurance.  It sounds like you have already covered your wife/children so I don't see a need to buy more.

Exact same.

Goldielocks

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Re: Life Insurance worth it ?
« Reply #5 on: August 17, 2016, 05:47:47 PM »
If you would inherit property  that you would need to instantly pay taxes on, (or have to buy out business partners, lenders) AND you don't have enough ready cash from the estate to do so, then life insurance on your parents could be worth it.  But you need a policy to age 100, not one that ends at a low age.

Otherwise -- what is the point?   Wouldn't it be better to put $300 per year into an "emergency savings" account?

tonysemail

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Re: Life Insurance worth it ?
« Reply #6 on: August 17, 2016, 05:53:40 PM »
yeah, it's not worth it for you.

i'm sure your parents mean well, but they have no estate to leave behind.
sorry, i wouldn't take their financial advice.
not trying to be rude...just trust your instincts and keep things simple.

wward6

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Re: Life Insurance worth it ?
« Reply #7 on: August 17, 2016, 06:31:42 PM »
Thanks everyone, what you're saying makes sense.  I appreciate all the feedback!  I think I'll avoid the extra policy and just put money away (invest/save).  :)