Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Old 04-17-2015, 10:33 AM   #21
Thinks s/he gets paid by the post
Big_Hitter's Avatar
 
Join Date: May 2013
Location: In the fairway
Posts: 4,099
Quote:
Originally Posted by pb4uski View Post
Why?
I just want to make sure DW is well cared for in case I predecease her.


I bought a large, whole LI policy about 15 years ago. It has a pretty nice CV now.

Hey, I suffer from a large heart.
__________________

__________________
Swing hard, look up
Big_Hitter is online now   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 04-17-2015, 10:40 AM   #22
Recycles dryer sheets
Taxman59's Avatar
 
Join Date: Sep 2014
Posts: 484
I am guessing the 2% figure is a combination of the mortality and likelihood that a typical insured will drop the policy. Term rarely pays off. If you drop the policy (and save those ugly premiums!!), the insurance company gets to reclaim reserves as income. Under the XXX regulations, the reserves are high for term policies relative to the actual claims. Thus the incentive for getting people to drop the policies.
__________________

__________________
Taxman59 is online now   Reply With Quote
Old 04-17-2015, 10:55 AM   #23
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Chuckanut's Avatar
 
Join Date: Aug 2011
Location: West of the Mississippi
Posts: 6,337
Quote:
Originally Posted by Taxman59 View Post
Term rarely pays off.
Something that makes me very grateful!!
__________________
The worst decisions are usually made in times of anger and impatience.
Chuckanut is offline   Reply With Quote
Old 04-17-2015, 10:57 AM   #24
Recycles dryer sheets
 
Join Date: Jul 2013
Posts: 389
Quote:
Originally Posted by Big_Hitter View Post
Even if you're "FI", I still think having some LI is a good thing.
We are about 13 years into a 20 year term policy. We are FI (gonna retire next year).

When the 20 years is up, we won't be buying a new policy. I'm also not gonna cancel the current policy, even though we don't "need" it.
__________________
mrfeh is offline   Reply With Quote
Old 04-17-2015, 10:59 AM   #25
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
harley's Avatar
 
Join Date: May 2008
Location: Following the nice weather
Posts: 6,440
I have a level term policy, payments stay the same for all 30 years.

I already knew what the advice here would be, which is why I put in the explanation of why I'm keeping it. It's such a tiny amount of our annual budget it's not painful to keep it and would be a nice perk for DW if I were to drop dead. Maybe she could buy a parrot and teach it to say "quit buying stuff!"

As far as the ethics of the caller, if they were calling everyone and saying "if you are FI you should drop your insurance" I'd buy it. But targeting me because my odds of collecting are higher than some seems unethical, even if sound from a business practice POV.
__________________
"Good judgment comes from experience. Experience comes from bad judgement." - Will Rogers, or maybe Sam Clemens
DW and I - FIREd at 50 (7/06), living off assets
harley is online now   Reply With Quote
Old 04-17-2015, 11:06 AM   #26
Thinks s/he gets paid by the post
Big_Hitter's Avatar
 
Join Date: May 2013
Location: In the fairway
Posts: 4,099
I looked at my policy and did some calcs.


It's basically a 20 year pay whole life policy so I've got 5 more years before dividends will cover the premium. Looks like they used 94GAR male and 4.5% interest to calculate the premium.
__________________
Swing hard, look up
Big_Hitter is online now   Reply With Quote
Old 04-17-2015, 11:39 AM   #27
Recycles dryer sheets
 
Join Date: Mar 2011
Location: Dallas
Posts: 457
I was just talking to a buddy who was in the financial biz. He said there's a type of biz who buys the policies and holds them as an investment...interesting concept.
__________________
Surewhitey is offline   Reply With Quote
Old 04-17-2015, 11:51 AM   #28
Thinks s/he gets paid by the post
Big_Hitter's Avatar
 
Join Date: May 2013
Location: In the fairway
Posts: 4,099
Quote:
Originally Posted by Surewhitey View Post
I was just talking to a buddy who was in the financial biz. He said there's a type of biz who buys the policies and holds them as an investment...interesting concept.
it's called reinsurance
__________________
Swing hard, look up
Big_Hitter is online now   Reply With Quote
Old 04-17-2015, 11:54 AM   #29
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
brewer12345's Avatar
 
Join Date: Mar 2003
Posts: 16,391
Quote:
Originally Posted by Big_Hitter View Post
it's called reinsurance
Nope. Life settlements or viatical is what this is called.
__________________
"There are three kinds of men. The one that learns by reading. The few who learn by observation. The rest have to pee on the electric fence for themselves."



- Will Rogers
brewer12345 is offline   Reply With Quote
Old 04-17-2015, 11:56 AM   #30
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
pb4uski's Avatar
 
Join Date: Nov 2010
Location: Vermont & Sarasota, FL
Posts: 16,468
Yes, its called life settlement (or viatical settlements way back when). These investors buy your policy, continue to pay the premiums and benefit when you die. Unlike conventional policies, the death benefit commonly is not tax-free since the investor doesn't have an insurable interest in your life.

I hate them and wish they would be outlawed. IMO you shouldn't be able to buy or own insurance on the life of someone unless you have a insurable interest in the insured's survival, like a spouse, child, or other family member or a business partner or estate.

There is a good description of them in this Kiplinger article:

Quote:
If you need money and don’t need to preserve the death benefit, you may be able to sell your policy to an investor. These transactions, known as life settlements, have an unsavory past, but in recent years they’ve moved further into the financial mainstream.

Life-settlement companies buy life insurance policies for cash. They continue to pay the premiums, and they collect the death benefit when the insured individual dies. Life-settlement investors
image: http://images.intellitxt.com/ast/adTypes/icon1.png

are primarily interested in buying cash-value policies or term policies that can be converted to cash-value policies. The size of the settlement varies, depending on the size of the premiums and the policyholder’s life expectancy, says Bryan Freeman, founder of Habersham Funding, a life-settlement company. The settlement amount is typically 12% to 25% of the death benefit, although someone with a terminal illness and low premiums may receive up to 60% of the death benefit, says Freeman.

Here’s an example, based on a recent settlement by the Lifeline Program, one of the largest life-settlement companies. A 73-year-old man had a universal life policy he purchased in 2003. The policy had a $2 million death benefit and cost him nearly $40,000 in annual premiums. He sold the policy to Lifeline for $515,000 -- more than twice its cash value of $250,000.

If you’re in your fifties and feeling fine, this isn’t an option for you. Brokers are primarily interested in policyholders who are in their seventies, or younger if they have a serious illness, says Darwin Bayston, executive director of the Life Insurance Settlement Association.


Read more at Cash From Your Life Insurance-Kiplinger
__________________
If something cannot endure laughter.... it cannot endure.
Patience is the art of concealing your impatience.
Slow and steady wins the race.
pb4uski is online now   Reply With Quote
Old 04-17-2015, 12:13 PM   #31
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
harley's Avatar
 
Join Date: May 2008
Location: Following the nice weather
Posts: 6,440
Quote:
Originally Posted by pb4uski View Post
Yes, its called life settlement (or viatical settlements way back when). These investors buy your policy, continue to pay the premiums and benefit when you die. Unlike conventional policies, the death benefit commonly is not tax-free since the investor doesn't have an insurable interest in your life.

I hate them and wish they would be outlawed. IMO you shouldn't be able to buy or own insurance on the life of someone unless you have a insurable interest in the insured's survival, like a spouse, child, or other family member or a business partner or estate.

There is a good description of them in this Kiplinger article:
That's all I need. It's hard enough keeping DW from "accidentally" running over me with the car. Having a group if investors gunning for me would be a real PITA.
__________________
"Good judgment comes from experience. Experience comes from bad judgement." - Will Rogers, or maybe Sam Clemens
DW and I - FIREd at 50 (7/06), living off assets
harley is online now   Reply With Quote
Old 04-17-2015, 12:14 PM   #32
Thinks s/he gets paid by the post
 
Join Date: May 2014
Posts: 3,006
I ran this by an actuarial discussion board and one person agreed that it would be sleazy if they're only soliciting people with health issues. It may be, as Taxman says, that their books look better if ANY policy lapses and they can take down the reserve. (Reserves are dictated by formula and are based on average mortality statistics.)


I haven't carried any life insurance beyond what my employer provided for years; with the job I had through late 2012 it was 5X my salary and we had a lot of savings. It was only 2X salary for the place where I worked from then till a year ago but DH is 15 years older than I am, and the savings that I believe are sufficient for the 2 of us should be enough to keep DH in good shape. I'd already decided that I was going to drop employer-provided life insurance at the next Open Enrollment to save taxes on the imputed income, but quit before that could happen.
__________________
athena53 is offline   Reply With Quote
Old 04-17-2015, 12:58 PM   #33
Thinks s/he gets paid by the post
Big_Hitter's Avatar
 
Join Date: May 2013
Location: In the fairway
Posts: 4,099
Quote:
Originally Posted by brewer12345 View Post
Nope. Life settlements or viatical is what this is called.
oops ur right - I always loved how an entity with no insurable interest whatsoever in a person could carry LI on them
__________________
Swing hard, look up
Big_Hitter is online now   Reply With Quote
Old 04-17-2015, 01:47 PM   #34
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
pb4uski's Avatar
 
Join Date: Nov 2010
Location: Vermont & Sarasota, FL
Posts: 16,468
Quote:
Originally Posted by Big_Hitter View Post
oops ur right - I always loved how an entity with no insurable interest whatsoever in a person could carry LI on them
At least the death benefit is not tax-free in those circumstances.
__________________
If something cannot endure laughter.... it cannot endure.
Patience is the art of concealing your impatience.
Slow and steady wins the race.
pb4uski is online now   Reply With Quote
Old 04-17-2015, 02:15 PM   #35
Moderator
Walt34's Avatar
 
Join Date: Dec 2007
Location: Eastern WV Panhandle
Posts: 16,571
Quote:
Originally Posted by pb4uski View Post
Yes, its called life settlement (or viatical settlements way back when). These investors buy your policy, continue to pay the premiums and benefit when you die. Unlike conventional policies, the death benefit commonly is not tax-free since the investor doesn't have an insurable interest in your life.

I hate them and wish they would be outlawed.
While I agree it smacks of vultureism (or something like that) I can envision scenarios where it benefits the policyholder.

A long while back some AIDS patients with life expectancies measured in single digits sold policies to pay for the treatments to keep them alive during that time, which they otherwise would not have been able to afford. Grisly, yes, but sometimes so is the gritty reality of the world we live in.

Or someone who bought a policy benefiting a spouse who is now deceased and the policyholder now comes down with a condition greatly reducing his/her life expectancy and they want the funds to tick off the remaining items on their bucket list.

There are legitimate reasons for them.
__________________
I heard the call to do nothing. So I answered it.
Walt34 is offline   Reply With Quote
Old 04-17-2015, 03:05 PM   #36
Thinks s/he gets paid by the post
 
Join Date: May 2014
Posts: 3,006
OK, here's an answer from a life actuary (not my area of expertise).


Quote:
If this letter was received by someone in the US, the 30 year term they bought in 1999 was before reg XXX was effective. <snip>

I suspect the company is just simply trying to lighten the amount of people that have <10 years left on a 30 year term to 'reduce risk" or something. <snip>

I agree it seems suspicious.. Maybe they hit the MIB or some other Script data base with the SSn numbers of their policyowners and are sifting through and trying to get poor health people to terminate? Thats a verrrrrry dirty thing to do and if true I suspect MASSIVE fines to be paid that company in addition to restitution to all who accept.

I have to admit that's the most underhanded thing I've heard in a long, long time.

I would advise the letter writer to complain to their DOI.

DOI is Department of Insurance for your state.
__________________
athena53 is offline   Reply With Quote
Old 04-17-2015, 03:49 PM   #37
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
pb4uski's Avatar
 
Join Date: Nov 2010
Location: Vermont & Sarasota, FL
Posts: 16,468
Quote:
Originally Posted by Walt34 View Post
....There are legitimate reasons for them.
Probably not so much anymore. The industry responded positively to those difficult situations by offering "living" or "accelerated" benefits on most polices at no additional cost.

Quote:
Some insurers add accelerated benefits to life insurance policies for a small additional premium, usually computed as a percentage of the base premium. A growing number of companies, however, offer these benefits at no additional premium, but charge the policyholder for the option only if and when it is used. In most cases, the company will reduce the benefits advanced to the policyholder before death to compensate it for the interest it will lose on its early payout. In addition, there may also be a nominal service charge.
Quote:
The situations vary, but they usually fall into one or more of these categories:
  • Terminal illness, with death expected within a specified period, usually six months to one year.
  • The occurrence of a specified catastrophic illness or the need for extraordinary medical intervention, such as an organ transplant, or the need for continuous life support.
  • The need for long-term care due to an inability to perform a number of "activities of daily living," such as bathing, dressing, eating etc.
  • Permanent nursing home confinement.
ALDOI - Questions and Answers on Accelerated Benefits
__________________
If something cannot endure laughter.... it cannot endure.
Patience is the art of concealing your impatience.
Slow and steady wins the race.
pb4uski is online now   Reply With Quote
Old 04-17-2015, 03:55 PM   #38
Thinks s/he gets paid by the post
Big_Hitter's Avatar
 
Join Date: May 2013
Location: In the fairway
Posts: 4,099
I wonder if I can get my death benefit early
__________________
Swing hard, look up
Big_Hitter is online now   Reply With Quote
Old 04-17-2015, 04:46 PM   #39
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
harley's Avatar
 
Join Date: May 2008
Location: Following the nice weather
Posts: 6,440
Quote:
Originally Posted by athena53 View Post
OK, here's an answer from a life actuary (not my area of expertise).
.
.
.
DOI is Department of Insurance for your state.
Wow! Great information. Thanks. Maybe I will notify them.
__________________
"Good judgment comes from experience. Experience comes from bad judgement." - Will Rogers, or maybe Sam Clemens
DW and I - FIREd at 50 (7/06), living off assets
harley is online now   Reply With Quote
Old 04-17-2015, 05:33 PM   #40
Thinks s/he gets paid by the post
imoldernu's Avatar
 
Join Date: Jul 2012
Location: Peru
Posts: 4,616
My dumb experience.

In the army 1959 a 30 payment life for $10K... checked the cash value around 1989, and it was about $3000. Left it where it was... No idea about anything to do with that value.. forgot about it 'til 2 years ago, and checked... Seems as if there was some kind of clause that renewed the policy, with premiums taken from the cash value. Nothing left.
Nothing ventured, nothing gained... still have no idea what happened. 10K doesn't sound like much today, but at the time, my 2nd Lt pay was exactly $220/mo. Four years salary as insurance for wife and child.
__________________

__________________
imoldernu is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
A Phone Call...From Mystery to Happy easysurfer Other topics 8 10-12-2014 01:08 PM
Firecalc and a phone call Lisa99 Life after FIRE 6 03-13-2012 10:31 PM
Not a house call, a bar call... REWahoo Other topics 5 11-18-2010 02:28 PM
Strange phone call REWahoo Other topics 32 03-28-2010 11:04 AM
No Call List? What No Call List? mickeyd Other topics 5 10-04-2006 10:50 AM

 

 
All times are GMT -6. The time now is 10:15 AM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.