OT Life Insurance Question

Sorry for posting this question here, as I have not been able to get an
answer anywhere else.
I am young(26) and looking to pick up a 30 yr renewable term life
insurance policy . This would be a 400,000 policy.
I got quotes from sbli in new york state.
question I have, is what happens if after say 10 years, the
insurance company goes belly up. Sbli in new york is handled by mutual life
insurance company, inc.
I know the obvious thing to do, is to ask them, but after repeated
calls, they dont have an answer, other then we have been in business for
fifty years. That is not an answer to my question.
What I am concerned about, is that if you take a 30 yr renewable
term, and then say after a few years you develop a signifigant health
problem, that would make you uninsurable, for a new policy.
If the insurance company goes under, does another company, have to
pick up this policy?
If this is true, is it best to shop around for the lowest price,
when it comes to term life insurance, or does it matter where from?
Thank to all you knowledgable people in advance.

Re: OT Life Insurance Question

Good that you are looking into term insurance, and 30 year (level?) is good
too. I think you will find that if the ins co goes belly up you are out of
luck. Nobody will pick up the liability of your policy. So it is a good
idea to investigate the rating of your ins co through a rating system like
AM Best The service is free but you have to
register. If SBLI is highly rated, you should expect them to still be in
business in 30 years. There are other insurance rating companies, see
for more
information.

There are some benefits in shopping around for insurance, try to get the
best price for highly rated companies. Beware if you are not in excellent
health, you might not qualify for their best rates. Withholding health info
from them might get you a better rate, but might void your policy. Not a
good idea. Also insurance companies go through a medical/health data system
to protect themselves from fraud.



"J.Lef" <> wrote in message
news:2uXZe.15007$
> Sorry for posting this question here, as I have not been able to get an
> answer anywhere else.
> I am young(26) and looking to pick up a 30 yr renewable term life
> insurance policy . This would be a 400,000 policy.
> I got quotes from sbli in new york state.
> question I have, is what happens if after say 10 years, the
> insurance company goes belly up. Sbli in new york is handled by mutual
> life insurance company, inc.
> I know the obvious thing to do, is to ask them, but after
> repeated calls, they dont have an answer, other then we have been in
> business for fifty years. That is not an answer to my question.
> What I am concerned about, is that if you take a 30 yr renewable
> term, and then say after a few years you develop a signifigant health
> problem, that would make you uninsurable, for a new policy.
> If the insurance company goes under, does another company, have to
> pick up this policy?
> If this is true, is it best to shop around for the lowest price,
> when it comes to term life insurance, or does it matter where from?
> Thank to all you knowledgable people in advance.
>

Re: OT Life Insurance Question

J.Lef wrote:
> Sorry for posting this question here, as I have not been able to get an
> answer anywhere else.
> I am young(26) and looking to pick up a 30 yr renewable term life
> insurance policy . This would be a 400,000 policy.

The is absolutely the right sort of policy to own: cheap and
transparent *however* if you have no dependents, your big exposure is
to disability, not being able to work. You might find it a better use
of your money to have a Long Term Disability policy (with an 'own
occupation' definition of disability) from a leading provider. If you
extend the deductible period to, say 26 weeks, you can significantly
reduce the premiums (ie what you are insuring against is a very serious
condition that prevents you from working).

> I got quotes from sbli in new york state.
> question I have, is what happens if after say 10 years, the
> insurance company goes belly up. Sbli in new york is handled by mutual life
> insurance company, inc.

The state insurance commission may have something on its website.

> I know the obvious thing to do, is to ask them, but after repeated
> calls, they dont have an answer, other then we have been in business for
> fifty years. That is not an answer to my question.
> What I am concerned about, is that if you take a 30 yr renewable
> term, and then say after a few years you develop a signifigant health
> problem, that would make you uninsurable, for a new policy.

There is such a thing (called 'guaranteed premium' over here) that
prevents that sort of thing.

Your other big risk to be aware of is inflation. At 2%, in 36 years
the value of that policy is halved. At 3% it is 24 years to halve the
value. Hopefully your savings have built up in the meantime (or you
have paid down any associated debts).


> If the insurance company goes under, does another company, have to
> pick up this policy?
> If this is true, is it best to shop around for the lowest price,
> when it comes to term life insurance, or does it matter where from?

It may be worth checking Consumer Reports or another reputable
publication. Because some insurers have a reputation for paying out
quickly and efficiently, and others are right b-ggers when it comes to
fulfilling their side of the bargain. (this is very true in home and
auto insurance). I don't know if the data is available, but it is
worth checking.


> Thank to all you knowledgable people in advance.

Re: OT Life Insurance Question

">
> The is absolutely the right sort of policy to own: cheap and
> transparent *however* if you have no dependents, your big exposure is
> to disability, not being able to work. You might find it a better use
> of your money to have a Long Term Disability policy
Your other big risk to be aware of is inflation. At 2%, in 36 years
> the value of that policy is halved. At 3% it is 24 years to halve the
> value. Hopefully your savings have built up in the meantime (or you
> have paid down any associated debts).

Thanks to both of you for responding to my post. I
have already picked up disability insurance, so that is already done. . As
far as the inflation factor, I already thought about that. My reasoning is
that this insurance, will be in addition to an optional term insurance I
have picked up at work. For around 10 bucks a month, I actually have eight
times my yearly base salary coverage. The reason I am looking for this
coverage, is that I figured while I am young and healthy, it might be a
good time to pick up a 30 yr level premium policy, to cover any future
family I might have. So I figure between home owners life, this 30 year
term, and if I am still working, eight times my salary, my future dependents
at least will not be in the poor house, if I meet my demise. The premium
would be only about 60 dollars a month, for thirty years, and I figure,
sixty dollars a month wont seem that bad ten or fifteen years down the road,
and my insurance will increase, as my salary increases. I will not be
changing jobs ever, so there is no consideration of losing it, unless I get
disabled and can no longer do the job.


Thanks
>
>
>>

Re: OT Life Insurance Question

J.Lef wrote:
> ">
> > The is absolutely the right sort of policy to own: cheap and
> > transparent *however* if you have no dependents, your big exposure is
> > to disability, not being able to work. You might find it a better use
> > of your money to have a Long Term Disability policy
> Your other big risk to be aware of is inflation. At 2%, in 36 years
> > the value of that policy is halved. At 3% it is 24 years to halve the
> > value. Hopefully your savings have built up in the meantime (or you
> > have paid down any associated debts).
>
> Thanks to both of you for responding to my post. I
> have already picked up disability insurance, so that is already done. . As
> far as the inflation factor, I already thought about that. My reasoning is
> that this insurance, will be in addition to an optional term insurance I
> have picked up at work. For around 10 bucks a month, I actually have eight
> times my yearly base salary coverage.

I must admit if you have 8 times coverage, that seems to me to be more
than enough.

Your big risk is a deterioration in health in future years. Only you
know your genetic history, etc. And life insurance costs have fallen
mightily (the industry overestimated the impact of AIDS when it set
rates in the late 80s). Something like avian flu might put the rates
back through the roof.


The reason I am looking for this
> coverage, is that I figured while I am young and healthy, it might be a
> good time to pick up a 30 yr level premium policy, to cover any future
> family I might have. So I figure between home owners life, this 30 year
> term, and if I am still working, eight times my salary, my future dependents
> at least will not be in the poor house, if I meet my demise. The premium
> would be only about 60 dollars a month, for thirty years,

Which is something over $21k over the life of the coverage. I agree
not a lot of money over that time, but it could go towards paying down
your mortgage early, or boosting your 401k.

The strategy I took was to ignore life insurance until I was in the
position of having dependents, and then having a massive amount,
guaranteed premium, with expiry set at around my projected retirement
date.

and I figure,
> sixty dollars a month wont seem that bad ten or fifteen years down the road,
> and my insurance will increase, as my salary increases. I will not be
> changing jobs ever, so there is no consideration of losing it, unless I get
> disabled and can no longer do the job.


Your prudence is worthy. Where I in your shoes, 8X my salary would be
more than enough.
>

Re: OT Life Insurance Question

> Your prudence is worthy. Where I in your shoes, 8X my salary would be
> more than enough.

Thanks. (But the 8x is tied to me working on the job, which
will always be there, and I will always be there, unless I get hurt.(Its a
government job) So I want to protect myself in case that happens. I am
sort of a carefull guy. I wear a belt and suspenders. LOL

Much regards
>>
>

Re: OT Life Insurance Question

J.Lef wrote:
> > Your prudence is worthy. Where I in your shoes, 8X my salary would be
> > more than enough.
>
> Thanks. (But the 8x is tied to me working on the job, which
> will always be there, and I will always be there, unless I get hurt.(Its a
> government job) So I want to protect myself in case that happens. I am
> sort of a carefull guy. I wear a belt and suspenders. LOL

The correct calculation is what that 60 pcm would buy you in terms of
investment or mortgage paydown ie the 'opportunity cost'.
$60 pcm at a 7% return compounded over 30 years is ? (don't have a
calculator to hand which can do the calculation there must be one
online somewhere?).

Re: OT Life Insurance Question

> Good that you are looking into term insurance, and 30 year (level?) is
> good
> too. I think you will find that if the ins co goes belly up you are out
> of luck. Nobody will pick up the liability of your policy. So it is a
> good idea to investigate the rating of your ins co through a rating system
> like AM Best The service is free but you have to
> register. If SBLI is highly rated, you should expect them to still be in
> business in 30 years. There are other insurance rating companies, see
> for more
> information.
>
> Thanks and I checked the ratings. Would an A- rating be
> bad? It looks like it is down to two insurance companies. mutual life
> insurance, who handles the sbli for the new york area now, with an a-
> rating, and aig which has a higher rating. My parents have had life
> insurance with sbli(mutual life) for many years.
Prices are similar. Dont know much about aig as far as
insurance. I would feel more comfortable with mutual life, but the A- rating
I am worried about. So to repeat myself, would this lower rating be a
serious elimination reason, or is A- not a terrible rating. I would be
counting on this insurance, to stay in effect for thirty years.


Much regards