Thoughts on Life Insurance...?

Tworotor7

Tworotor7

Well-Known Member
I have thought about getting life insurance every now and then but never put much thought into it...
With the recent tragic lose of one of our members here, it really hit home for me and I'm sure for others. I have done a little research but am finding all different company's and rates. To be honest not to sure what to be looking for. Seeing if I cant get some insight.

Never know if it will happen...but if it does I just want to make sure my family isn't stuck with my bills.

Thanks
Nick
 
Call an agent locally. Call twenty agents locally. Have them come out and talk to you. It's free and they can explain it over and over until you decide what you want/need and who you want to go with.

-mini
 
I think it all depends, but for me, 30-year level term fit the best.

Personally, I wanted insurance and not an investment instrument.
 
I tried in vain last week to get life insurance. They were happy to so long as they could provide me with an "aviation rider".

The long and short of it was that if I were to die in anything not wearing airline tiles I wouldn't be covered.


Pretty much a scam.
 
I got a plan a few months ago. I am 23 years old so at my age it is very cheap. I have no wife or kids but if you do i highly reccommend it, if for nothing else; salary replacement.
 
Just make sure your wife or kids "own" the policy on your life. That way the benefit goes to them and not your estate. Yeah, death benefits are income tax free...but if you own it, someone's going to pay an estate tax on it.

-mini
 
Tworotor7 said:
I have thought about getting life insurance every now and then but never put much thought into it...
With the recent tragic lose of one of our members here, it really hit home for me and I'm sure for others. I have done a little research but am finding all different company's and rates. To be honest not to sure what to be looking for. Seeing if I cant get some insight.

Never know if it will happen...but if it does I just want to make sure my family isn't stuck with my bills.

Thanks
Nick
Click to expand...

There was an active discussion yesterday in the "Family Life" section.
 
minitour said:
Just make sure your wife or kids "own" the policy on your life. That way the benefit goes to them and not your estate. Yeah, death benefits are income tax free...but if you own it, someone's going to pay an estate tax on it.

-mini
Click to expand...

Spouses have to pay death taxes? Is this true for financial assets? I am relatively new to owning anything of value, but I thought as far as ownership of anything and everything goes it's 50/50 with the spouse, whether explicitly stated or not.
 
Realms09 said:
Spouses have to pay death taxes? Is this true for financial assets? I am relatively new to owning anything of value, but I thought as far as ownership of anything and everything goes it's 50/50 with the spouse, whether explicitly stated or not.
Click to expand...

Life insurance, if owned personally, is included in the estate for estate tax purposes. If you own a $400k house outright, and have a $2 million death benefit for a policy that you own, your estate is $2.4 million. The key is not who gets the death benefit of the policy - the key is who OWNS the policy. If you have a $2 million death benefit in a policy that YOU personally own, but your business partner is the beneficiary of the policy, your estate would still have the $2 million included in it, even though your business partner gets the death benefit. The key is "ownership" of the policy, not who or what entity gets the death benefits.
 
I understand what you are saying, but I don't think it addresses my question. Under my impression of the legal framework of marriage a married man does not personally own anything. He owns it jointly with his domestic partner. If a married couple had a $2 million dollar estate and one person died, why would the other domestic partner pay taxes on something he/she already owns? Or would they pay taxes on 50% of it?
 
Realms09 said:
I understand what you are saying, but I don't think it addresses my question. Under my impression of the legal framework of marriage a married man does not personally own anything. He owns it jointly with his domestic partner.
Click to expand...
Hah! Nope. My wife owns her car. I own my car. I own her insurance policy. She owns mine. Nothing joint about it. We jointly own the house...er...the bank owns the house, but when we pay if off we'll own it jointly.

-mini
 
Although my passion is aviation my day job is running an insurance brokerage company and we specialize in providing different insurance products to my clients employees. I will give you my $.02 and personal opinion on Life Insuranace:

1) If you are looking to cover a mortgage get a term policy equal to the amount and duration of the loan. IE... you owe the bank $300K + 9% over 25 years get a term policy equal to that amount. It is a cheap affordable way to get coverage. Be careful about the aviation rider and expect to pay more for your coverage because of the fact that you are a pilot.

2) If you are young and in relatively good health and are looking to build a financial portfolio I would recommend purchasing a large value whole life policy. Whole life is permanent life insurance that has a cash growth component and premiums will not increase. (Term rates will increase as you get older) Again make sure there is an aviation rider in the policy.

I would stay away from Universal Life or a Return of Premium UL or WL.

That is my quick take on Life Insurance. What MINITOUR said is good advice. Call local agents and meet with them. Put questions together and keep forming them as you meet with each one. After you feel like you have a good grasp on what you want pick the agent you felt the most comfortable with. DONT MAKE A QUICK DECISION ON THIS.

You can always go to your bank and they will have a financial advisor who could meet with you.

PM me if you have any questions.

Hope that helped.
 
CBpilot said:
I would stay away from Universal Life or a Return of Premium UL or WL.
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We'll have to disagree on this. ULs are, IMO, superior to whole life products in most cases. ...if you over-fund it. If you're going to barely scrape by, you might as well get a whole.

I agree with your thoughts on a term policy. They have a time and a place...and it's covering an expense. Other than the UL thing, I'd agree with you 100%.

I'm sure others who have already made up their mind, even though they have probably not sold or worked with insurance, will be in here quickly to give you great advice. With that said, I'll just sit back and enjoy the commentary.

-mini
 
Realms09 said:
I understand what you are saying, but I don't think it addresses my question. Under my impression of the legal framework of marriage a married man does not personally own anything. He owns it jointly with his domestic partner. If a married couple had a $2 million dollar estate and one person died, why would the other domestic partner pay taxes on something he/she already owns? Or would they pay taxes on 50% of it?
Click to expand...

Taxes are not an issue with estates under $7 million with very, very basic planning.

That said - there is an unlimited marital exemption - you can pass things between spouses while alive or dead without gift or estate tax. Many people own things seperately to try and have $3.5 million in each spouses name rather than own everything jointly - this is how you can take advantage of the full $7 million exemption on estate taxes.
 
minitour said:
Hah! Nope. My wife owns her car. I own my car. I own her insurance policy. She owns mine. Nothing joint about it. We jointly own the house...er...the bank owns the house, but when we pay if off we'll own it jointly.

-mini
Click to expand...

Very interesting. However, for things that are jointly owned and stated as such death taxes would be avoided?
 
Realms09 said:
Very interesting. However, for things that are jointly owned and stated as such death taxes would be avoided?
Click to expand...

Estate taxes are avoided at the first death. No taxes would be assesed if you leave the estate to your spouse. On your spouses death, estate taxes are then assesed on the entire amount. Each individual has a unified credit of $1.455 million, which is an applicable exemption of $3.5 million of estate.

So...if you and your wife jointly own an estate of $7 million, there will be no taxes assesed at the first death. At the second death, the $7 million is taxed, after your wifes unified credit is applied (basically exempting $3.5 million of the estate) and the heirs would owe taxes on a net estate of $3.5 million at 45% or so.

Now...same couple and scenario - except instead of jointly owning the $7 million estate, they each have an estate worth $3.5 million. At the first death, your $3.5 million goes to a Credit Shelter Trust. Because the estate was $3.5 million, and that is the exemption amount, the there are no estate taxes. The surviving spouse can live off income from the trust, and for certain situations can access principal from the trust. When the spouse dies, her estate goes to her own Credit Shelter Trust and since the estate is $3.5 million, her exemption amount, there are no taxes due.

With both people dead, both credit shelter trusts are then distributed to the kids (generally) and that is how you pass a $7 million estate free of tax to your next generation, saving $2 million or so in estate taxes. The cost for saving that $2 million in taxation is around $10k in legal fees (max).
 
Thanks for all the advice! Sorry didn't realize something was posted about this(haven't been in the family life section much).

Think I will look up some agents like Mini said...
CBpilot- From what you wrote Whole life would seem to make more sense to me. Im 25, CFI, and small corporate flying. No house...really just few things I own but am trying to save to change that. Ill probably pm you at some point.

Thanks again
Nick
 
Tworotor7 said:
Thanks for all the advice! Sorry didn't realize something was posted about this(haven't been in the family life section much).

Think I will look up some agents like Mini said...
CBpilot- From what you wrote Whole life would seem to make more sense to me. Im 25, no house...really just few things I own but am trying to save to change that. Ill probably pm you at some point.

Thanks again
Nick
Click to expand...

http://forums.jetcareers.com/family-life/97017-life-insurance.html
 
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