By: Revanche

Estate Planning (ICE): Life insurance

May 27, 2015

It used to be that life insurance was a standard part of any benefits package from my employer. I took that a little bit for granted once I stopped working retail. Now I have to scout out my own because I haven’t had a policy in force in ages. With Little Bean in the picture, that has to change pronto!

Life would be tough enough for PiC not having me around to take care of the stuff I manage (and I’m sure he’d miss me). Having to do without my income for a period of time with a kid, a dog, mortgages and all would be the pits, to say the least.

We have the bulk of our insurance with State Farm these days. Previously my car insurance for myself and Dad were with GEICO but the claim process was too bare bones. I don’t think it was worth the minimal savings anymore. We’re at that point where we really have to pay a little bit more for decent service rather than wasting massive gobs of time getting assessments, chasing down guilty parties, etc.

Flashback

I used to have Mercury Insurance which was another cheapish outfit, about ten years or so ago, but they weren’t so chintzy that they didn’t follow up on accident claims themselves. Some reckless jerk rammed my car on the freeway because he was in too much of a hurry to change four lanes one at a time and had to cut across all four in one go.
Mercury wanted to take the easy way out and have me split responsibility for the accident. A 50-50 split would cost half my $1000 deductible and I’d take 50% responsibility on my record without being assessed points, the rep explained.
My answer was a polite HELL. NO. The only fault I bore in that accident was existing on the same roads as the goon who failed the looking out his windshield exam so I held my ground and insisted that they pursue a no fault to me resolution.
Three months later that guy and his insurance caved and admitted that it was entirely his fault.
I refuse to eat the cost of other people’s poor judgment but I now don’t have time to personally pursue it when stuff happens.

I requested quotes from State Farm and Allstate for 30 year term policies ranging from 200-400k.

State Farm noodled around for weeks refusing to email quotes but also failing to get them in the mail for six weeks. After a few followups they sent me a stack of quotes along with some other poor sod’s paperwork but the quotes were useless. The policies were for both me and PiC when I’d requested policies just for me (in writing, by email so there was a record of the request), and listed me as a 30 year old male. The agent’s response when I pointed out the basic errors? “I forgot what you wanted.”

Oh, you forgot I was female and that you have my birthday on file? That’s cute. Nope, wait, that’s not competent.¬† So that’s three strikes for State Farm: inconvenient, AND failed customer service twice.

Allstate actually approached me at the time I was doing price/plan comps so I gave them a shot. Unlike State Farm, Allstate provided quotes for ME within a day. Apart from the super cheesy “it pays to be young and healthy!” rah rah comment from the agent, that quote process was painless.

I used a Bankrate calculator to figure out how much insurance I’d need considering factors like:
My age;
The ages of spouse and child(ren);
My income;
My mortgage and other debts (none);
College expenses for child(ren) and/or spouse;
My funeral expenses.

Bankrate seems to think I need a policy for 1.7M. That’s a hell of a lot more than I was expecting and seems wildly out of proportion to my previous expectations. Maybe I need to play with the variables a bit more and do more research into how each one affects the recommendation. I doubt I’ll go for anything over $1M at this point, though.

13 Responses to “Estate Planning (ICE): Life insurance”

  1. We chose Liberty Mutual because that’s what my parents use. They sent out an agent and a nurse to our house. We each have a 500K 25 year term policy and DH’s costs $530/year and mine is $560/year.
    nicoleandmaggie recently posted…How misogyny keeps women downMy Profile

  2. I always see these posts that remind me that I really should get life insurance but then my cheapness is like “No it’s a waste of money” and the rest of my brain is like “Don’t think about your mortality it’ll just make you saaad.”

    I’d be interested to hear how much they quoted you for.
    Taylor Lee @ Engineer Cents recently posted…How Much I Spent Buying A HouseMy Profile

    • Leigh says:

      Why would you get life insurance though if you have no dependents? My employer offers some as a benefit and I elected for the minimum amount possible. Unless your boyfriend is on the mortgage of your condo, but couldn’t make mortgage payments without your income, you don’t need any yet. I would probably look into it when you get married, but you shouldn’t need it before then.
      Leigh recently posted…Operation Bayes: RevealedMy Profile

      • Well in part because I’m expected to financially take care of my mother when she gets older and currently am helping to finance little brother’s education. Plus even though partner and I aren’t married, I’d rather him not get kicked out of our home if I died. Even though I don’t have dependents which I can claim on my taxes, I do have people who depend on me.
        Taylor Lee @ Engineer Cents recently posted…How Much I Spent Buying A HouseMy Profile

    • Revanche says:

      I asked for 30 year policies and I got the following quotes:
      $700 for 500K
      $1000 for 750K
      $1300 for 1M

      Maybe think of it more like: taking care of your whole financial picture, rather than mortality? And it’s not a bad thing to consider whether you really need it. Maybe you’ll have enough assets that you don’t need a policy.

  3. Leigh says:

    I would also take into account your assets when debating how much life insurance you need. If your spouse would be set for life with only needing to support one person on your joint assets, then life insurance seems less important.

    I’m starting to think I may never buy life insurance, that I might be perfectly fine self insuring and then donating my estate in the event of my untimely death. My boyfriend seems to have no interest in inheriting my money even if we were married.
    Leigh recently posted…Operation Bayes: RevealedMy Profile

    • Revanche says:

      We’re still a ways off from the surviving spouse being able to live off our joint assets for any prolonged period of time, even with income. We have 3 dependents that we pay for, in addition to the senior Seamus. And even if 1 spouse were deceased, the survivor would still want to be able to help care of the other parent if needed so that’s a 4th drain.

      Ideally, we’d be able to reach that point of self insuring in the next decade.

    • The cost of taking care of a child and a home can be a great deal more than most people expect. Replacing the services of a SAHM can run around 30 grand a year. The cost of keeping one child in day-care can consume half of a middle-income working mother’s salary; more than that when the kid moves on into private school. In San Francisco you may be able to find an adequate public school — not so much in some other states.

      If you have a mortgage, at the very least you should carry enough insurance on each partner to pay that off, thereby freeing up funds for the surviving spouse to pay for the breath-taking costs of bringing up children in our culture. Then there’s the exorbitant price of college tuition, which certainly isn’t going to go down; carry enough for each kid to at least get a bachelor’s degree, and arrange for the proceeds to go into a trust, so the brat can’t diddle it away on a Mazerati.
      Funny about Money recently posted…Skateboarding through Impulse-Buy Hell toward Financial ArmageddonMy Profile

  4. State Farm leaves a lot to be desired. You might be much better served if you can find a broker: a person whose business is to keep tabs on a wide variety of insurers and to find you the best deal. A good one is worth his weight in gold. My guy saved me $500 on Hartford’s home and car insurance and got me better coverage. And when you need to make a claim, the broker runs interference for you…you don’t have to deal with the claims adjusters at all.

    I met him by serendipity at a business networking group. Don’t know how you track down a good one; the ex- and I had a great broker until she retired…I assume he found her by word of mouth through his lawyer pals. If you like, I could ask my broker if he knows of anyone in your parts.
    Funny about Money recently posted…Skateboarding through Impulse-Buy Hell toward Financial ArmageddonMy Profile

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