Right so Ive been blathering about getting a life insurance policy for ages. I had one with my old job and whilst I have every other form of insurance here in Germany, I do not have a life insurance policy and this bugs me. Bugs me in the sense that I think about it every few months, pretty much when I get other insurance statements.
I've had debates with people as to whether or not they are necessary. BTW: I could easily cover my own funeral expenses (hello you get matches for free in some places) and leave a little extra behind. I don't have kids but do have other people that I would list as a beneficiary in the event I get capped in the back of the head tonite or whatever.
anyhoo, your thoughts TT?
ps: yeah I know there are obvious flaws in the poll but its not exactly scientific research...
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Opinions on life insurance policies
Good, bad or indifferent?
You're holding something back jml, have you shown disrespect to Mr. Fujinara ?
when there are no kids and any spouse is also an earner then I don't see the point particularly, although I'd be more than happy for someone to put me right on this issue, as I don't have a clue really
Please tell me that you are also thinking about making a will/testament too though. Your family and friends may not thank you for the cash when it is in dispute.
My insurance is via my employer btw.
My insurance is via my employer btw.
Be better off sticking the money into long term investments like the stock market. Insurance is usually for things that might not happen but you get it just in case, thats how it works out. Death always happens though so all the insurance companys do is just invest it on your behalf (taking a cut of course) anyway.
Hubbie has such a policy, as I'm not working here in Germany and we have a child. Think it gives him peace of mind so that in case anything happens to him, I've got time to sort myself out and not have to worry about immediate costs (obviously the last thing on anyone's mind in such a situation).
However, if both partners are working and childless, I don't think it is as relevant. Although could be helpful to cover funeral costs etc. rather than lumbering some family member with the expenditure.
However, if both partners are working and childless, I don't think it is as relevant. Although could be helpful to cover funeral costs etc. rather than lumbering some family member with the expenditure.
The payouts from some policies are OK though, never stellar but relatively low risk. What I did is take out 3 small policies spread across different companies with totally different investment strategies. The old eggs and baskets rule.
Yeah KZA but what if you bit it on the way home this evening and had a pregnant wife* at home, a minor sibling or any other non-standard (i.e. other than wife and kids) dependants for that matter.
What happens to your LT investments? How are those left behind/ converted ... I guess probably varies by person and it really depends on if you're comfortable that what you've got stashed about is enough to take care of whoever, whenever.
good point K about the will, both living and financial. gotta put those on the list, along with the box of matches.
ps: just to be clear I do not have a pregnant wife at home, Im just really paranoid.
What happens to your LT investments? How are those left behind/ converted ... I guess probably varies by person and it really depends on if you're comfortable that what you've got stashed about is enough to take care of whoever, whenever.
good point K about the will, both living and financial. gotta put those on the list, along with the box of matches.
ps: just to be clear I do not have a pregnant wife at home, Im just really paranoid.
My mom purchased my life insurance policy after I was born.. apparently the premiums are super cheap when you do it that way. Given I am at the ripe age of 23, I still think it is a good idea to have some sort of a policy. You don't have kids now, but you never know what the future will bring. And not that you are old (because you are not!) but policies definitely get more expensive the longer you wait.
Oh, and definitely what Katrina said. When my friend's dad died unexpectedly he had no will and her family was completely screwed over by the government. I don't know about your assets, but if you can, see an estate lawyer to help you draft the papers to fend off Uncle Sam. And while you are at it, a la Terry Schiavo, do a living will. You can download one from the internet.
Oh, and definitely what Katrina said. When my friend's dad died unexpectedly he had no will and her family was completely screwed over by the government. I don't know about your assets, but if you can, see an estate lawyer to help you draft the papers to fend off Uncle Sam. And while you are at it, a la Terry Schiavo, do a living will. You can download one from the internet.
Personally I think if you have enough money to cover your expenses and can continue to support your dependants as long as they require it, your money is better invested elsewhere. I guess it just depends how much you've got.
i answered the poll as if i have "life" insurance" but my policy is more like an annuity with an extra payout if i die. I get a lump sum payout if i make it to 60 years old, if i die beforehand my benficiary gets the money.
I think a pure life insurance with no payout if you live is a waste of money. An annuity with payout for death is better. If you have committments like a mortgage which doesn't have a life insurance already in the policy and don't wish to burden your dependants after your demise, it is worth while thinking about. Otherwise other investments are probably more worthwhile for most people.
I think a pure life insurance with no payout if you live is a waste of money. An annuity with payout for death is better. If you have committments like a mortgage which doesn't have a life insurance already in the policy and don't wish to burden your dependants after your demise, it is worth while thinking about. Otherwise other investments are probably more worthwhile for most people.
I agree with most of the above. The death only policies are a bit depressing when you think that every month you "survive" is another $50 down the drain!
I think you need to do a quick calculation on your dependents, and decide from there - if you popped your clogs tomorrow would they be OKish or in the total cack.
But certainly no point in having one of these things just because your "advisor" says you should!
I think you need to do a quick calculation on your dependents, and decide from there - if you popped your clogs tomorrow would they be OKish or in the total cack.
But certainly no point in having one of these things just because your "advisor" says you should!
well, I have made certain that any dependants are not in deep ship because of my unpaid mortgage and could just about aford to keep the flat if they wanted but I am certainly not going to make anyone rich by my dying. Don't want to add any more incentive now do we?
in germany you can get insurance for everything! but this got me to thinking.
i have a disability insurance which only covers me if something happens and i cannot work, but if continue to work, that money is gone, gone, gone. i don't get anything out of it. nor would my dependents. it seems there wasn't much choice to the matter and i asked.
i am putting away for my retirement, that cash would go to any dependents upon my demise, so i doubt i would get life insurance, unless it is a fund-savings-life-insurance plan.
i have a disability insurance which only covers me if something happens and i cannot work, but if continue to work, that money is gone, gone, gone. i don't get anything out of it. nor would my dependents. it seems there wasn't much choice to the matter and i asked.
i am putting away for my retirement, that cash would go to any dependents upon my demise, so i doubt i would get life insurance, unless it is a fund-savings-life-insurance plan.
If you are going to get life insurance get it before you develop any unpleasant but not life threatening illnesses. Once something like Diabetes etc. has been diagnosed the insurance companies will slug you really hard for premiums regardless of how well your illness is maintained.
If you are buying life insurance buy it early and as much you can afford for as long as you can. Trying to get insurance in later years gets expensive.
Don't put your eggs all in one basket. Insurance policies as a form of investment (capital Life insurance) seem to be a poor investment. Better to buy Riskio Life Insurance and put the rest of your money in a reputable investment fond.
If you are buying life insurance buy it early and as much you can afford for as long as you can. Trying to get insurance in later years gets expensive.
Don't put your eggs all in one basket. Insurance policies as a form of investment (capital Life insurance) seem to be a poor investment. Better to buy Riskio Life Insurance and put the rest of your money in a reputable investment fond.
How many of you seriously have wills? Should I have one?
I'm probably insured through my company, in fact I think they call it 'death insurance'. How cheery.
I just like ignorning all those kinds of things though. Too complicated, especially in German. I mean, I don't even have a pension plan or anything set up.
I'm probably insured through my company, in fact I think they call it 'death insurance'. How cheery.
I just like ignorning all those kinds of things though. Too complicated, especially in German. I mean, I don't even have a pension plan or anything set up.
I hereby declare as my last will and testament, that all my debts shall be spread evenly amongst all Toytowners.
Nope no will cos I have nothing to dish out.
Nope no will cos I have nothing to dish out.
When you are young you should have life insurance if you have dependents that you are worried about. As you become older you should shift your investment into stocks.
Insurance is about laying off risk which you couldn't or wouldn't want to cover yourself.
Some insurances cover risks which any solvent person could probably cover himself. Everyone should figure where this boundary lies for him and not bother insuring smaller risks. Sure, you might eventually end up paying one of these smaller losses out of your own pocket, but in the long run, you'll be better off for the premiums you didn't pay. I haven't ever bought full CDW (i.e. no deductable) on a rental car, and despite having had to fork out once for an anonymously crunched rear bumper, I'm still way ahead.
Other insurances cover risks which will ruin you (or your dependents), and these risks need to be covered. If you have dependents who couldn't make it without your income, then loss of earning power (death or disability) needs to be insured against. That's what term life (Risiko) or disability (Berufsunfaehigkeit) insurance is for, and the premiums for periods in which you didn't die or become disabled (and circumstances dictated that you needed the risk cover) is _NOT_ wasted money. Taking a ruinous risk off your (dependents') shoulders is a valuable good which deserves to be paid for. Just make sure you don't pay for too much coverage or before or longer than you need it; that is wasteful and the money would better be saved.
The other kind of life insurance, whole (Kapital), is really a combination of two financial products, a term life insurance and a savings plan. The only reason these two products would need to be combined at all is for the tax advantage, which (I believe) no longer exists in Germany. [You can count on all developed-country tax systems eliminating this advantage over the next 10 to 15 years.] On top of that, the savings plan component is almost always a bad deal -- it is essentially a super-conservative government-bond-based fund minus the insurance companys' cut. You'd be a lot better off putting the premium difference between whole and term insurance into a good investment mutual fund.
The argument that you should start your insurance before you really need to cover any risks just to get a low monthly premium doesn't add up, unless you plan on worsening your health beyond normal wear and tear in the near future. Instead you should start saving that premium to a good mutual fund as early as possible and don't buy insurance until you need it. Sure, the premium will be higher, but you'll have the (significantly appreciated) savings in the fund to pay the increased premium from. At the end of the day (three decades), you'll have money left in the fund when the insurance term ends.
You see, the way an insurance company gives you a constant premium over the whole term of an insurance is that they collect too much from you in the beginning, save up the excess money you paid, and use it to top up your premium at the end, when you're paying too little for each year's insurance risk. So if you find, halfway through the term, that you don't need the insurance any more and terminate it, then you give the insurance company a gift of having paid too much for your coverage in the beginning.
When insuring the re-payment of a mortgage against the death of the earner, make sure you choose a term insurance with a decreasing insurance amount which matches the decreasing remaining principal on the mortgage. If you use a straight-line insurance amount over the whole term, then you'll be over-insured after the first few years, which is wasteful.
The best configuration is a term life insurance which amount is perfectly matched to the remaining principal (or remaining need) and which premium payment is adjusted each year to reflect the insurance amount for the year and the insured person's risk factor. The decreasing insurance amount will conveniently offset the increasing risk factor as you get older, making the premium payments more even over the term, without "saving up" excessive premiums in the beginning to cover the term end (which may end up being unnecessary). I've seen online insurance calculators which offer just this from several direct insurers.
Some insurances cover risks which any solvent person could probably cover himself. Everyone should figure where this boundary lies for him and not bother insuring smaller risks. Sure, you might eventually end up paying one of these smaller losses out of your own pocket, but in the long run, you'll be better off for the premiums you didn't pay. I haven't ever bought full CDW (i.e. no deductable) on a rental car, and despite having had to fork out once for an anonymously crunched rear bumper, I'm still way ahead.
Other insurances cover risks which will ruin you (or your dependents), and these risks need to be covered. If you have dependents who couldn't make it without your income, then loss of earning power (death or disability) needs to be insured against. That's what term life (Risiko) or disability (Berufsunfaehigkeit) insurance is for, and the premiums for periods in which you didn't die or become disabled (and circumstances dictated that you needed the risk cover) is _NOT_ wasted money. Taking a ruinous risk off your (dependents') shoulders is a valuable good which deserves to be paid for. Just make sure you don't pay for too much coverage or before or longer than you need it; that is wasteful and the money would better be saved.
The other kind of life insurance, whole (Kapital), is really a combination of two financial products, a term life insurance and a savings plan. The only reason these two products would need to be combined at all is for the tax advantage, which (I believe) no longer exists in Germany. [You can count on all developed-country tax systems eliminating this advantage over the next 10 to 15 years.] On top of that, the savings plan component is almost always a bad deal -- it is essentially a super-conservative government-bond-based fund minus the insurance companys' cut. You'd be a lot better off putting the premium difference between whole and term insurance into a good investment mutual fund.
The argument that you should start your insurance before you really need to cover any risks just to get a low monthly premium doesn't add up, unless you plan on worsening your health beyond normal wear and tear in the near future. Instead you should start saving that premium to a good mutual fund as early as possible and don't buy insurance until you need it. Sure, the premium will be higher, but you'll have the (significantly appreciated) savings in the fund to pay the increased premium from. At the end of the day (three decades), you'll have money left in the fund when the insurance term ends.
You see, the way an insurance company gives you a constant premium over the whole term of an insurance is that they collect too much from you in the beginning, save up the excess money you paid, and use it to top up your premium at the end, when you're paying too little for each year's insurance risk. So if you find, halfway through the term, that you don't need the insurance any more and terminate it, then you give the insurance company a gift of having paid too much for your coverage in the beginning.
When insuring the re-payment of a mortgage against the death of the earner, make sure you choose a term insurance with a decreasing insurance amount which matches the decreasing remaining principal on the mortgage. If you use a straight-line insurance amount over the whole term, then you'll be over-insured after the first few years, which is wasteful.
The best configuration is a term life insurance which amount is perfectly matched to the remaining principal (or remaining need) and which premium payment is adjusted each year to reflect the insurance amount for the year and the insured person's risk factor. The decreasing insurance amount will conveniently offset the increasing risk factor as you get older, making the premium payments more even over the term, without "saving up" excessive premiums in the beginning to cover the term end (which may end up being unnecessary). I've seen online insurance calculators which offer just this from several direct insurers.
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