Life insurance change

[ferco]

I've recently encountered a couple in their seventies with the following life insurance dilemma:

They currently have a term life insurance policy (husband's face amount $25,000, wife's 15,000) on which the premiums are $155.00 monthly total.  Since the husband reached age 70 the premiums which started out in 1990 at $72.00 have been increasing annually by about $20.00.  Recently they were discussing final arrangements with their funeral director who when learning of the situation with their policy asked them if they had considered the possibility of at some point not being able to afford the constantly increasing premiums and suggested they might want to think about a pre-need policy which would cover most of the expenses of the funeral except cemetery, etc.  Looking for any opinions/suggestions from any of the posters. 

 

[JPatrick]

You really haven't provided much info.  Term insurance most definately does get expensive with age which is why self insurance at that age is nice.
I suppose some of the prepaid funeral plans make sense, but I know their are plenty of scams out there as well.  I'd be very careful here.
It really depends on the couples other needs and finances.  There may be other options as well, such as dropping the insurance and investing the money with an earmark for final expenses.  Also possible that dropping only one policy would be wise.
Lots of options--not enough info.

 

[grumpy]

My parents both had prepaid funeral arrangements and cemetary plots. I was very thankful for those arrangements when they each passed away. They made sure I was aware of the arrangements and where to find the paperwork when the time came. My FIL also has prepaid funeral arrangements. I think this makes very good sense.

Grumpy

 

[ferco]

The question is, at what point is it reasonable/ prudent to waive the term policies which at 25/15k certainly cover the funeral expenses (est 8-9k) and have a little left over or drop the term policies and pick up the preneed policies which cover some, but not all of the funeral expenses BUT have a reduced monthly premium cost today.

 

[JPatrick]

The question is, at what point is it reasonable/ prudent to waive the term policies which at 25/15k certainly cover the funeral expenses (est 8-9k) and have a little left over or drop the term policies and pick up the preneed policies which cover some, but not all of the funeral expenses BUT have a reduced monthly premium cost today.

Still not enough info.  Are they both in good health?  Do they have other assets to include cash?
If the husband passed today, how important would the excess insurance money be to the widow?
You imply that they would pay for the funeral plan monthly.  What is the interest rate?
I've seem some with credit card like rates.
All these issues are important.

 

[fermilhank]

One of the major concerns of the husband is the potential loss of the premiums paid into the life insurance policy over the last 15 years if the policy was dropped in order to pick up a pre-need policy as they are not financially able to afford payments on both.  What are your thoughts?

 

[REWahoo]

One of the major concerns of the husband is the potential loss of the premiums paid into the life insurance policy over the last 15 years if the policy was dropped...

The OP said it was term insurance, which means the policy has no cash value. There is nothing to lose by dropping other than the death benefit.