Wow, quite a diversity of experiences reported here. This makes sense to me: no conventional appraisal required because "the value of what's going up is constantly changing," but then I wonder how the insurance company decides how much insurance to sell you and what to charge for it. The value of what is on site changes with every wood delivery, and every day the plumber shows up and puts in another day of work. So even though I sort of understand what goes into a conventional appraisal, this still seems different to me. We have the final construction amount the architect estimated to go along with the permit application, and then at any point, we know how much we've spent on labor and materials, but I don't know how the insurance company would use that info. It seems that the cost for "replacement" of a destroyed or damaged structure would be different from "market value" which is what a bank would want to know for lending purposes. But perhaps I over-think! For what it's worth, the house is in a remote, but not inexpensive area (a ferry-served island). Comps are always hard to do there since inventory is always low and prices range from sort-of-low (200Ks for a lot with a shack) to insanely expensive (many millions) with no two alike. The two extremes may not be far apart in terms of distance, but the high end will be waterfront. So "neighborhood" is hard to pin down. The population is small and most people do not lock their cars or houses routinely (not sure I'll get to that point after so many years of urban life, though). We are doing every thing with permits and qualified subs and GC, no DIY other than simple stuff. (I don't know if any of that matters for my question on the insurance process, but some readers seemed to assume we were doing something funky, owner-builder, long time-frame, and in a rural area that might be inexpensive and/or crime-prone.) We'll see what response we can get out of State Farm on Monday-- even Mr Overly Patient has had enough of the "no response" routine. Will let you know how it turns out.

First off, you need to decide what you want insurance for. Some of the reasons could be: - Income replacement for surviving spouse - Mortgage payoff - Children (education, etc.) - Retirement Level term is usually the least expensive method of obtaining insurance. Term periods are usually 10, 15, 20, 25, or 30 years. Companies that specialize in this market include Metropolitan, Transamerica, USAA Life, and West Coast Life; there are many others. Use a company with a sound financial rating, of which there are certainly fewer than there used to be, LOL. Income replacement: up to you to decide how much would be adequate recompense for a spouse's death. Generally it's recommended to have 5-10x gross annual salary, but your needs may be different. Mortgage payoff: self explanatory. Get a level term policy for each employed person on the title, for the 15 or 30-yr term of the mortgage. Children (education, etc.): again, self-explanatory Retirement: In our case, I have insurance as a retirement backstop. My DH has the old-fashioned Defined Benefit Pension that is assignable to the spouse, along with a good-sized 401k/457 account. I, OTOH, have only some small annuities that kick in when I'm 65, and a very tiny IRA. I use life insurance to mitigate the risk to him that if I die before I start collecting (he would get nothing, in that case) this offsets the loss of that monthly income for a number of years. Be aware that you need to be careful if the reason for purchase is estate planning. As most estates fall under the Federal Tax Limits, the majority of folks do not need an insurance policy for estate tax planning. These limits, of course, are changeable but general consensus is Congress will settle for the current $3.5M limit after 2010. Although life insurance does not incur income tax, being a POD (Payable On Death) financial product, and thus bypasses probate, I believe that it IS counted in your overall estate total and therefore, can trigger the federal estate tax when added to your other assets. To avoid this, there are two alternatives: - Have the policy owned by someone other than the insured; e.g., a spouse. - Set up an ILIT: Irrevocable Life Insurance Trust. You will need an attorney to do this, and sufficient cash flow to pay a considerable annual premium. This is usually a VUL (Variable Universal Life) policy, and is designed to move assets out of a taxable estate over time by purchasing an insurance policy which will eventually benefit the heirs by providing the cash necessary to pay any federal/state estate taxes (and providing liquidity with any remainder). Life Insurance can help with estate liquidity, but it is not in itself an immediate solution. Whoever you name as Executor of your will or Trustee of your Trust, will not actually be able to access cash funds unless they are a co-trustee of a jointly owned trust account. Anyone else will have to wait until they have a certified copy of the death certificate to present. If there are no problems and the county is efficient you might have this in a week or two. If there are any suspicious circumstances necessitating police or coroner investigations, the Executor or Trustee might have to wait a while. In either case, each has a fiduciary duty to keep the estate intact as much as possible before dispersing the assets. IOW, you can get life insurance proceeds fairly quickly - usually 2-3 weeks after they receive a copy of the death certificate. But your estate Executor or Trustee needs to start paying bills of the estate IMMEDIATELY upon death. This is something most folks never think about - there are legal and financial costs to death, and whoever's responsible for the estate had better have sufficient cash/credit up-front for at least one month, maybe two or three. They will get reimbursed from the estate, but it may take a little while. Just something to keep in mind!

Hi orangecat, I am sorry that you've lost your loved one. That really hurts. And - how much more stressful it is when there are a bunch of money problems to deal with all at the same time. As for the (modest) insurance policy. Who is the named beneficiary of the policy? In almost all cases that person gets the proceeds of the insurance. If the designated beneficiary has died, quite likely the proceeds of the insurance will go to pay outstanding bills of that person's estate, or to one or other of his/her beneficiaries. It's important to find out whether the person dying has made arrangements for the funeral. Has s/he planned to donate organs to persons needing them? Or his/her body to a medical school? If arrangements haven't been made, it's the responsibility of the executor named in the will to make those arrangements and see to their implementation. Almost certainly the funeral home will want assurance of how they are to be paid before they'll agree to officiate. Do you have a Memorial Society in your area (look in the Yellow Pages, likely under Funeral Directors/Homes)? Or ask a local church, especially one (or a few) in a low-income area. They offer modest funeral services at a much reduced price. If the beneficiary of the insurance policy is a good-hearted person, perhaps s/he will allow at least part of the benefit to be used to pay for part of the funeral. If so, does that person or the deceased have a fairly strong connection with a religious congregation? If so, perhaps the congregation's ruling body would be willing to pass a contributon through to the funeral home. If so, when the beneficiary of the deceased's insurance makes the contribution to the church, s/he'll get a receipt, which in most jurisdictions is mostly tax-deductible. The congregation would agree to pass that money on to the funeral director concerned. That would mean that the donation would be tax-deductible rather than just a gift with no compensating material benefit to the donor. If you can't afford a funeral, most municipal governments can make arrangements to provide one. Does the deceased person have a will? One of the major provisions is to name an executor, whose responsibility it will be to collect whatever assets there may be, pay whatever bills s/he can, including income tax, of course, and if there are assets left, to distribute them according to the provisions of the will. The latter not a big problem in your situation, as you say. Most of us need one, but if there are no assets it isn't so necessary. Is there likely to be argument over the person's furniture, car, personal assets? If the person is still alive, it's important the s/he make a will. If there isn't one, dealing with the estate is delayed, gets quite complicated - and expensive, if there are assets. It would be helpful if they can let several persons (to forestall arguments later) close to him/her know whom s/he'd like to have which of her/his possessions - if it wouldn't be too traumatic to raise such a subject now/soon. Make a list - and have several persons have a copy (or know about the specific provisions, at least), if you anticipate having arguments. WHile these suggestions are generally true in many jurisdictions, I'd suggest that you check some people locally who are knowlesgeable in this area. Often religious congregations' leaders have some experience in it. My good wishes go out to you and your family through this trying time. ole joyful

I have a bias against some of the things that the life insurance people have done. I believe that we need it when young - when our assets are few and potential need is great: we have little ones who depend on us financially, a mortgage, etc. Financial planners say that we should use insurance to provide for our loved ones during the time that they can't manage on their own. Perhaps also to provide for a spouse who might not be able to maintain herself, while children are young or later. I currently get a spam message regularly that says, "What would your loved ones do if you died?", to which I say to myself, "About the same as they are doing now", since the youngest just turned 40 a couple of months ago. If they both, being capable in mind and body, can't manage on their own by this time - when are they ever going to be able to do so? The idea is to build your asset base - one of the major ones being a home, until the mortgage is paid off, so that, as you get older, when there is a larger likelihood in any given year of you dying, so the premiums on term insurance increase, you are developing an increasing asset base, looking to the day that you don't need insurance any more. There is a case to be made for people to buy insurance, which usually is paid tax-free, enough to cover the tax load that would be assessed at death, in order to preserve their estate intact for their offspring. Some feel that the insured person is betting that s/he is going to die and the insurance company is betting that s/he will live and keep paying premiums for an extended period - and that the insurance company has the actuaries. Such people decide that they will save and continue to invest the premiums, which may mean that their estate will have a lower after-tax residue to pass on if they die within the next few years, but if they survive for an extended period, they may come out better in the end. Some suggest to their offspring that, since it would be the offspring who would benefit, that the offspring pay the premiums. Not a good idea should one harbour even a minimal suspicion that the offspring might poison one. Have a great year, all. joyful guy