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Old 01-06-2016, 08:49 AM   #21
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Originally Posted by jarts98 View Post
We are keeping our policy for the remaining few years of the original 20 year term. We are FI and the surviving spouse wouldn't "need" the death benefit, but the premium is so low relative to the death benefit, we'll just let it run it's course.

When the low premium period ends, we'll let it lapse.
+1
We are in a similar situation, the monthly cost is only $24
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Old 01-06-2016, 09:15 AM   #22
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I'm in the last four years of a 20 year level term policy. It has largely done its job as it was to help my wife raise the boys in my absence, and corresponding cut in pension by half. But I've decided to keep it as I still must get the boys through college, and as with most level terms, its a relative bargain now for a 66 year old. If the boys were on their own, the term policy would have been gone.
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Old 01-06-2016, 10:06 AM   #23
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I have never really had dependents, so I never had life insurance other than what work provides, for free.

Get rid of it as soon as you can. You do not want to be worth more dead than alive anyway.
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Old 01-06-2016, 10:41 AM   #24
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I am right in the middle of the process of converting the only life insurance policy we have to a reduced paid up policy. I don't want to take the tax hit in one year, so converting it to a RPU eliminates the premium, keeps the policy intact for as long as I want, and also still keeps the funds in the market. We reached a point a while back where a life insurance policy just isn't necessary for us, in that DW would have plenty of immediate funds available if I were to go. With a RPU, I'm going to take small portions out over the next 5 years, and in the meantime the funds (approx 90K cash out value) will still be in the market.
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Old 01-06-2016, 11:28 AM   #25
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As a single, I never paid for life insurance, but I most certainly had disability insurance. Of course, I cancelled that at ER.
+1 though someone was always trying to sell me one.
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Old 01-06-2016, 11:39 AM   #26
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I dropped mine.

Did our pre retirement financial planning. My spouse did not need the money in the event of my demise and there were no tax reasons to keep the policy.

Three years on we are glad that we dropped it. It was not a large policy. A large component of my former coverage came from inexpensive optional term life from my employer prior to retirement. Never did buy whole life or any of the other hybrid policies.
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Old 01-06-2016, 02:11 PM   #27
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+1 Same here. No great reason other than the fact that it is still so cheap I'll keep it. It will help her afford the pool boy if I have an early demise.
We sincerely appreciate you looking out for our pool boy needs, here in wife-land.

We are doing the same, with our very inexpensive and modest amount of 20 year level term that will run out in about 5 years.
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Old 01-06-2016, 02:56 PM   #28
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Longevity may be hurting pension plans (more years of payout) but it is definitely helping life insurers.

Living longer means that paid up whole life policies take longer to pay out. Increased investment income and time value of money mean more income and less real outlay for the insurers.

Term life policies get paid for a longer term.

Wonder if there has been any decrease in policy costs to reflect this?
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Old 01-06-2016, 03:22 PM   #29
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Longevity may be hurting pension plans (more years of payout) but it is definitely helping life insurers.

<snip>

Wonder if there has been any decrease in policy costs to reflect this?

Yes. Mortality tables take a long time to update- maybe every 5 years? I'm a casualty actuary so not that familiar with the life side. They do include a provision for anticipated improved mortality over what's implied by the latest table. One actuary told me, though, that with increasing obesity, diabetes, etc. those improvements may be leveling out.
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Old 01-06-2016, 03:35 PM   #30
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I just got a 10 year term. We plan to retire in 10 years at 57. I won't renew it - just want to give DH the money to replace my income if I should go first.
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Old 01-06-2016, 03:39 PM   #31
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Dropped the term but upped the umbrella coverage.
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Old 01-06-2016, 03:43 PM   #32
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I agree that if you are FI you should drop it as an expense you no longer need. I did it years ago even before fully FI.
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Old 01-06-2016, 11:41 PM   #33
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I still keep mine. It's part of my budget. Who knows, I might drop when I turn 60.


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Old 01-07-2016, 04:09 AM   #34
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Each case is unique.

In my early 40's I decided to buy a 30 year term policy as I transitioned to a contractor/self employment situation. The cost is low and built into my budget for retirement. I will probably retire or semi-retire when I'm 50.

I'll probably keep it for the duration depending on my health status in my 50's and 60's. Perhaps, I'm just betting I won't live into my mid-70's and the pay-off would benefit my kids. YMMV and i might change my mind.
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Old 01-07-2016, 05:43 AM   #35
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Generally, it's okay to drop the term insurance when you've got enough saved so that the surviving spouse won't have a financial hardship. The insurance has done its art at that point. But be sure you're really there--that any reduction in SS, pensions, medical insurance, etc won't lave the survivor in a financially tough spot.
And make sure that when the surviving spouse has to file as single and kicks into a higher tax bracket, has more of their SS taxed, et cetera, that this is also accounted for.

I've said it here a few times before but I'll say it again because IMO it's important: My dad died in 2005. In 2006 my mom's income declined by about $9K (she inherited my dad's larger SS check but lost her own) and her income taxes *doubled* because of filing single -- moving her from the 15% bracket to 25% -- and because now 85% of her SS was taxable (at 25%) instead of 50% of it at 15%. These are huge hits.
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Old 01-09-2016, 06:26 PM   #36
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About 13 years ago we bought a 15 year term policy for DW. We don't need it anymore, but, just kept paying since it is so cheap. At 15 years, there is an option to renew, but the premium goes up dramatically. Will definitely drop it then.
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Old 01-13-2016, 07:02 PM   #37
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+1

We are in a similar situation, the monthly cost is only $24

Only $24 per month? That's not LBYM tyoe of language!


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Old 01-13-2016, 10:45 PM   #38
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How much term can you get for $24 per month? If you are eight to ten years from retirement, what multiple of your income would you want to have in insurance to protect your spouse?

Or if you are closing in on FI, would you consider backing out taxes and current savings and just have enough term to cover the desired multiple of expenses?


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Old 02-20-2016, 08:59 AM   #39
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Thanks for everyone's input. We decided to renew this year, but may drop the policy when next year's renewal rolls around since we will be one year closer to FIRE. Interesting to see the wide range of views on this subject.


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Old 02-20-2016, 11:25 AM   #40
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We have no more term LI coverage.

We still have a couple of small WL policies that are 40+ years old that provide a cash value increase of 3% and the annual dividends are sufficient enough to pay for the annual premium. If we surrendered to contracts for cash, the cash would be sitting in our Ally account getting an APY of 1%.

Dividends pay all premiums. 3% vs 1% return rate. Very small actual life insurance coverage. We will keep it for a while, but consider it as part of our cash reserves actually.
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