Debating a New Offer - Questioning what Insurance I Really Need / Want

[jmv]

So I (35 year old, minorly over weight male) have bipolar disorder and had all but given up on getting anything other than employer-sponsored default life insurance until I wrote a sob story about how it doesn't affect me at all (I don't suffer from depression and have stable jobs / relationships blah blah), and I got an offer a few months ago I pretty much took without questioning. I'm paying $150/month for 30 year term for 500k of coverage.

So I recently try to warn off the agent trying to sell my wife some insurance that I have a huge uninsurable red flag, but she still insists on taking a shot at me with a sob story etc, and comes back to me with an offer. $90/month for 20 year term for 1 million coverage! I asked if she can do a 30 year but she said their agency does not do 30 year term. She did say she could shop around for a 30 year perhaps, but I'm always hesitant to potentially reopen health information for obvious reasons. She of course also pushed very heavily on some sort of whole plan, but without understandng them more, I'm kind of a "term and invest the rest" type.

From what I could find on typical comparisons between costs of 20 and 30 year plans, the new offer is much better value for the dollar; I just have to be willing to go from 30 year to 20. I have an 8 month old, and we will probably have another child or two. I am the breadwinner by far. But we also have some substantial inheritence, including the big gun, a 401k worth like 600k. So I wonder, do I really need 30 years, and is it worth paying that much for an extra decade of coverage? Do I really even need 20 years of coverage with that kind of rainy day fund?

Sorry for the novel but any advice is appreciated.

 

[STIBROKER]

I'm paying $150/month for 30 year term for 500k of coverage.

Who is the company and what rating did you get

and comes back to me with an offer. $90/month for 20 year term for 1 million coverage! I asked if she can do a 30 year but she said their agency does not do 30 year term.

Sounds like a green agent low balling you...
you can check rates here.....
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[LGilmore]

You can always run it through underwriting but I doubt it is a serious offer. Hang onto what you have until you find something that has gone through underwriting.

 

[rcduggan]

The question is what do you want? I'd tell you you're wasting your time with another term policy but hey whatever floats your boat.
By the way, if you didn't know already, life insurance isn't for you, it's for the ones you love the most

 

[pfg1]

You can always run it through underwriting but I doubt it is a serious offer. Hang onto what you have until you find something that has gone through underwriting.

I was thinking the same thing. Bi-polar is a big red flag to alot of carriers.
If it is an actual real offer... great - it would probably be smart to take it.

I would ask is what conversion options (to permanent products) do you have with that company/product? Then at least you know what you can potentially do in the future. Some have great options, others suck. If you can post up what company/product it is, maybe someone can give you solid advice.

 

[jmv]

options (to permanent products) do you have with that company/product? Then at least you know what you can potentially do in the future. Some have great options, others suck. If you can post up what company/product it is, maybe someone can give you solid advice.

Well the plan is called Term L20 from Northwester Mutual. It does say amongst the charts and legalese:

"Points to Consider
1. Term i in force for 20 years as long as premiums are paid.
2. Convertible for 10 years without evidence of insurability.
3. All premiums are fully guaranteed"

I don't know the specifics of my more expensive 30 year term plan with American Family, but I do remember that it had a similar convertibility for 10 years as well.

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The question is what do you want? I'd tell you you're wasting your time with another term policy but hey whatever floats your boat.
By the way, if you didn't know already, life insurance isn't for you, it's for the ones you love the most

Well, what I want is, if I kick the bucket, my wife to be able to raise our kids to adulthood without working at all, and maybe give them some money for college and something to make my wife's retirement a little easier if I'm gone (although I hope she eventually would find another dude). Yes we have the nice rainy day fund that we can hopefully even conservatively turn into a nicer number by 20 years from now. Which is why even a million seems like a lot. But I don't really know how you determine how much you need.

And I am sort of just jumping for it while I'm younger and I can get a policy, with the bipolar, that isn't astronomical. I feel like I'm getting lucky even being offered the numbers I am.

 

[LGilmore]

Do a preliminary underwriting screen. Fill out a health questionnaire in detail and they can present it to underwriting and then you'll find out what offer you would get, without going through formal underwriting where you could get a decline and ruin any chances elsewhere for reasonably priced coverage.

That way you'll know.

 

[rcduggan]

Well the plan is called Term L20 from Northwester Mutual. It does say amongst the charts and legalese:

"Points to Consider
1. Term i in force for 20 years as long as premiums are paid.
2. Convertible for 10 years without evidence of insurability.
3. All premiums are fully guaranteed"

I don't know the specifics of my more expensive 30 year term plan with American Family, but I do remember that it had a similar convertibility for 10 years as well.

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Well, what I want is, if I kick the bucket, my wife to be able to raise our kids to adulthood without working at all, and maybe give them some money for college and something to make my wife's retirement a little easier if I'm gone (although I hope she eventually would find another dude). Yes we have the nice rainy day fund that we can hopefully even conservatively turn into a nicer number by 20 years from now. Which is why even a million seems like a lot. But I don't really know how you determine how much you need.

And I am sort of just jumping for it while I'm younger and I can get a policy, with the bipolar, that isn't astronomical. I feel like I'm getting lucky even being offered the numbers I am.

here's my professional opinion; buy as much insurance as you can afford. preferably permanent and if you like guarantees buy a whole life policy from a mutual insurance company.

occasionally, i 'll hit even a client in between the eyes with this one, "why do you think term is so inexpensive?". the reality is term is long-shot for the policy to trigger and the insurance companies know this. since the late 1800's early 1900s they have well established stats on when one passes. no one has a crystal ball, but if you want something bullet-proof don't waste your time with an additional term policy, one is enough. convert it later fine (if you can), not getting into all the possibilities on the conversion but it would more than likely behoove you to do so. buy a permanent policy in addition to your term, that actually means something to you and understand the sacrifice you've made for your family. is another couple hundred bucks for a term policy really a sacrifice?
lastly, buy a life insurance policy like it's the last opportunity you will have to do so. don't rush, think about your options and make an appropriate decision. the ones that matter most to you are the ones you're making the commitment to.

 

[pfg1]

Well the plan is called Term L20 from Northwester Mutual. It does say amongst the charts and legalese:

"Points to Consider
1. Term i in force for 20 years as long as premiums are paid.
2. Convertible for 10 years without evidence of insurability.
3. All premiums are fully guaranteed"

I don't know the specifics of my more expensive 30 year term plan with American Family, but I do remember that it had a similar convertibility for 10 years as well.

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Well, what I want is, if I kick the bucket, my wife to be able to raise our kids to adulthood without working at all, and maybe give them some money for college and something to make my wife's retirement a little easier if I'm gone (although I hope she eventually would find another dude). Yes we have the nice rainy day fund that we can hopefully even conservatively turn into a nicer number by 20 years from now. Which is why even a million seems like a lot. But I don't really know how you determine how much you need.

And I am sort of just jumping for it while I'm younger and I can get a policy, with the bipolar, that isn't astronomical. I feel like I'm getting lucky even being offered the numbers I am.

Have you actually been through underwriting and approved?
10yr convertibility is weak, but at least you have it. Would be nice if you could do it out to 20. Find out WHAT products you can convert to. Hopefully its to ANY product they have, not just a specific product.

My suggestion... get the term in place if you can, and plan to work on converting as much or all of it to permanent by the 10yr mark. Which leads to another question to ask... if you have $1m, and want to convert $250k to perm, is the other $750k still in force and convertible? Some carriers its an all or nothing when it comes to conversion. $1m of perm is not going to be cheap.
I don't think they have a GUL... (guaranteed universal life) but I'm not sure.
If death benefit is your focus, that is the cheapest perm route to go.

Needs are one thing, Wants is another. In reality, $1m seems like alot - and while it is... in many cases its not. A family with a household income of $100k+... $1m doesn't go too far, even without factoring in inflation. I focus with my clients on helping them figure out what they WANT, and designing a plan to have it happen.