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Old 07-16-2011, 11:58 AM   #21
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One point that needs to be made.... Life insurance is not a direct replacement for LTC insurance. In certain LTC scenarios, assuming one has adequate funding to pay for LTC out of pocket, it might be an effective way to replenish funds that were spent on LTC. However, a life insurance policy typically only pays at death. If one recovers and lives... those life funds would not be available until death.

We have LTCi and intend to keep it.

We do not have life insurance (other than that provided by my employer's group plan). When I stop working, I am no longer covered.

Since DW and I have adequate assets (portfolio, pension, SSx2)... I have not been considering buying a policy.

I have spent some time thinking about it and could not come up with an obvious reason to buy a policy. But I should probably think about it a little more. DW and I are both healthy, mid 50's and insurable. If our health status changes, we probably could not buy a policy for a reasonable premium.


The problem with term insurance, is the limited term. Some companies sell 30 year policies... but if one lives longer than 30 years from purchase, it is not going to work for estate planning.

Permanent insurance seems more expensive. Some of the convertible term policies might work ok. But it would be important to get one that would be cost effective (i.e., the premium for the converted policy does not cost a fortune) and not require one to go through underwriting again and possibly be rated. Knowing how insurance companies are about their risk, this type of policy might not be available.
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Old 07-16-2011, 12:01 PM   #22
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Originally Posted by chinaco View Post
but if one lives longer than 30 years from purchase, it is not going to work for estate planning.
Sure it does. You don't have to be old to have a substantial estate. It stil is part of estate planning if you die earlier (and that's the primary role of insurance, is it not?)...
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Old 07-16-2011, 12:14 PM   #23
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Chinaco, with Whole Life one could still cancel the LI and take the benefit if one lives after a stay in LTC. So, in our case we would be able to cancel the policy and take the cash or use a SPIA.

This would all be easy if I knew what the future held and how it would play out.
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Old 07-16-2011, 02:16 PM   #24
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Originally Posted by ERD50 View Post
I understand that some (many?) people drop the policy early, and this benefits the ins co. In turn, the ins co can charge less and still make a profit.

But does it hold that ins is a good investment for those who hold it to the end (well, good for their estate)? Seems that whenever I looked into this, it didn't look very good. I think it would be discussed more here if it was a viable option.

-ERD50
insurance is never a good investment. but its a wonderful wealth passing technique . in this case your not doing it as an investment. you already did your investing and made your money.

now you need a way to try to make money thats forever taxable and trade it for money thats never taxable.

we do that by using a spl policy...
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Old 07-16-2011, 02:54 PM   #25
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I no longer have any LI on myself as the kids are out of the nest and our savings total more than any LI that we may need.

DW still has a couple of old WL policies that we plan on cashing in eventually. We use the annual dividends to pay the premium on both policies so they just continue to grow.

Since the cash value is now more than she has paid, we will have to pay income tax on the difference eventually so I'm not in a hurry to take action yet.
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Old 07-16-2011, 03:31 PM   #26
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insurance is never a good investment. but its a wonderful wealth passing technique . in this case your not doing it as an investment. you already did your investing and made your money.

now you need a way to try to make money thats forever taxable and trade it for money thats never taxable.

we do that by using a spl policy...
One might say on a participating whole life policy for the first 10 years its a terrrible investment, after that when 95% of premiums go to cash value its not two bad, particularly with the participating part where dividends are paid. However its the first 10 years when you pay the salesman that are expensive. I have a couple of policies that are now 30 years old and they have like a $10 per year cost on based upon guaranteed cash value and a negative cost if you include the dividends (which I use to buy more paid up insurance which also earns dividends).
However today its likely harder to find participating policies due to the need for the execs of the insurance companies to make the big bucks.
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Old 07-16-2011, 05:41 PM   #27
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Sure it does. You don't have to be old to have a substantial estate. It stil is part of estate planning if you die earlier (and that's the primary role of insurance, is it not?)...
I think you missed my point. Most term policies stop coverage at the end of the stated term in the contract. If one outlives the term of the policy it is no longer in force.

There are convertible term policies that can be converted to permanent insurance at the end of the term.

In other words, one might need permanent insurance like whole life or UL to ensure they do not out live the policy.


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Originally Posted by 73ss454 View Post
Chinaco, with Whole Life one could still cancel the LI and take the benefit if one lives after a stay in LTC. So, in our case we would be able to cancel the policy and take the cash or use a SPIA.

This would all be easy if I knew what the future held and how it would play out.
Yes, permanent insurance can build a cash value (I assume that is what you mean)... that is yours. But that is money you accumulated. I was talking about the death benefit.


There are some hybrid products being discussed. Does your Life Insurance policy have an LTC provision?
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Old 07-16-2011, 11:06 PM   #28
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, permanent insurance can build a cash value (I assume that is what you mean)... that is yours. But that is money you accumulated. I was talking about the death benefit.


There are some hybrid products being discussed. Does your Life Insurance policy have an LTC provision?


No, just a regular Whole Life Policy. When I bought it I had no idea what I was doing, just wanted to protect my family.
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Old 07-17-2011, 05:22 AM   #29
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the cash value in permanent life is really a bad deal.

the premiums on permanent insurance can run 5 to 20x the equal coverage in term depending on age when your younger. . a tiny part of that whopping payment makes it into the cash value bucket over time .

the premium part is very high early on for many years compared to term because they are anticipating you will keep that insurance until death in old age. a guaranteed pay out on their end..

the premium later on as you age is cheaper than term but thats because you paid it up front all those years early on.

the fact is according to the society of actuaries .......26% of all permanent life policies are cancelled or cashed in the first 3 years, 45% in the first 10 years and 58% in the first 20 years, 90% of policies are cashed before retirement age . huge amounts of money were over paid for insurance that is never utilized.

now heres the real scam. if you keep the insurance in effect until old age death they pay you the death benefit but keep the entire savings bucket which in effect you forfeit for dying.... all that money you sent them is confiscated at death. bet most dont even know that.

of course you can add a rider which really amounts to buying more insurance and higher premiums so it appears they are giving you some of that savings bucket but in reality your just buying more death benefit.

what a deal.. its the insurance company version of the payday loan.

life insurance is a product which is betting you will die... annuities are a bet you will live. dont confuse the usage of each of them.

you dont buy life insurance to bet you will live and utilize that cash value.
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