Life Insurance - necessary or necessary evil?

[Rich_in_Tampa]

I might add that premiums for LTC insurance are not guaranteed to remain stable (unlike level term life, for example). While the insurers cannot arbitrarily raise a given individual's premiums, they may apply to the home state regulatory agency to raise rates for entire classes of individuals. If granted, your rates go up.

At that time, even if you decide it's not worth it at the new rates, your prior premiums are basically out the window.

[REWahoo]

Originally Posted by Rich_in_Tampa

At that time, even if you decide it's not worth it at the new rates, your prior premiums are basically out the window.

Rich, can't the same be said for auto, homeowner, term life or almost any type of insurance? Even if you drop the policy without using it, you were covered while it was in force.

I'm not arguing the point that LTC premiums could go up dramatically. We have LTC policies with a 10 year premium guarantee and I cringe to think what will happen at the end of the guarantee period...

[uncledrz]

Rich and Martha
Just interested to know how you handled this. Because of the points you made, especially the problem that we're young now, in 20-30 years, if we need it, the premiums may be way too expensive to continue, we've decided to self insure.
How have you handled it?
Uncledrz

[Nords]

Originally Posted by Outtahere

So Nords does that mean since my husband is an Army vet that he can get this LTC insurance? I'm a little confused by this.

I guess the best answer I can offer is "maybe". The eligibility requirements are pretty straightforward but it's along list of boring text. Even if your spouse doesn't qualify as a result of military service there may be something else that he qualifies under. Read the full list because I found some eligibility requirements buried waaaaaaay down the page (as mentioned below).

Originally Posted by brewer12345

That was then and this is now.* Hancock and others may well have been offering a cheaper product when the federal program was introduced, but it is highly unlikely that this is the case now.* The private market offerings are a LOT more expensive now, since most companies realized they were giving away the store.

Good point, Brewer, I'm going to have to talk to my dad again. I'm eligible for the insurance on me but since I'm retired he's no longer eligible for the insurance through me. However the fine print indicates that parents-in-law of Selected Reservists are eligible, so he'll squeak out his eligibility through my spouse... until she retires. Go figure.

[cute fuzzy bunny]

I dug up my envelope calculations. I had a web site give me several quotes (all the companies were ones I had 'heard of', no 'big bobs insurance company'). The total premiums presuming no increases over inflation (a pretty conservative approach IMO) for our prospective lifetimes would be close to $200k. Looking at just a modest investment return of that money, tax implications of withdrawing the funds to pay the premiums, and actual inflation of health care insurance costs...an astronomical cost.

Granted if both of us end up needing 5-7 years of care at the end of our lives, that would be a good thing to have spent money on.

Otherwise this runs too close to the college savings plans...I can probably do as well or better just investing our money and paying for costs out of pocket.

[Rich_in_Tampa]

Originally Posted by REWahoo!

Rich, can't the same be said for auto, homeowner, term life or almost any type of insurance? Even if you drop the policy without using it, you were covered while it was in force.

You are right, REWahoo. I somehow was comparing it to life insurance (for no logical reason).

The ideal solution is to save enough (or wait enough) to retire with sufficient buffer to handle this out of pocket with lifestyle adjustments. So much can change in terms of health care economics over time that I am uneasy about committing to 10s of thousands of dollars in premiums. At a SWR most of us will have lots of extra cash in our late retirement when this scenario is more likely.

Tough call. I am leaning toward either staying the course and saving as much as I can, or maybe biting the bullet and buying some life insurance (but not too much, say 250K to 500K) so I (or more likely my DW) can dig in to our retirement savings with the knowledge that there will be some recovery money when the unfortunate spouse dies. At least with life insurance a) the premiums are level and thus predictable, and b) you know there will be a payback for one of us eventually. But those premiums are high as you age...

[brewer12345]

Originally Posted by Rich_in_Tampa

Tough call. I am leaning toward either staying the course and saving as much as I can, or maybe biting the bullet and buying some life insurance (but not too much, say 250K to 500K) so I (or more likely my DW) can dig in to our retirement savings with the knowledge that there will be some recovery money when the unfortunate spouse dies. At least with life insurance a) the premiums are level and thus predictable, and b) you know there will be a payback for one of us eventually. But those premiums are high as you age...

I personally would not be making the same choice, but if you choose to buy life insurance for this purpose, what you want to buy is known as No-Lapse Guarantee Universal Life from a company rated Aa3/AA- from Moody's/S&P or better. Pick the one with the lowest premiums and ignore cash value. This product is basically level premium term for life, and many companies are putting this product out with VERY aggressive pricing (good for the consumer). If you want an opinion on the creditworthiness of a particular insurer, I will be happy to opine.

[Rich_in_Tampa]

Originally Posted by brewer12345

I personally would not be making the same choice, but if you choose to buy life insurance for this purpose, what you want to buy is known as No-Lapse Guarantee Universal Life from a company rated Aa3/AA- from Moody's/S&P or better.

Thanks. I would have run the other way the second I heard the term "No-Lapse Guarantee Universal Life." How is it different from level term? I was going to just shop it for price among highly rated companies.

[saluki9]

Originally Posted by Rich_in_Tampa

Thanks. I would have run the other way the second I heard the term "No-Lapse Guarantee Universal Life." How is it different from level term? I was going to just shop it for price among highly rated companies.

It's different because as long as you pay the premium the policy will stay in effect. Level term is contractually limited to 10, 20 or 30 years.

It's different from normal universal life in that the purpose is not to accumulate cash value but only to provide death benefit.

[Rich_in_Tampa]

Originally Posted by saluki9

It's different from normal universal life in that the purpose is not to accumulate cash value but only to provide death benefit.

Thanks. If its purpose is only to provide death benefit, are the premiums competitive with level term over, say, 20 years? That is, if I am interested only in buying death benefit, what might be the reason to choose No-Lapse Guarantee Universal Life, if not premium cost?

[brewer12345]

Originally Posted by Rich_in_Tampa

Thanks. If its purpose is only to provide death benefit, are the premiums competitive with level term over, say, 20 years? That is, if I am interested only in buying death benefit, what might be the reason to choose No-Lapse Guarantee Universal Life, if not premium cost?

Depending on your age, the premiums for NLGUL might be higher than 20 year term for a simple reason: if you live 20 years or lapse the policy, the insurer is off the hook with the 20 year term policy. With NLGUL, the policy lasts as long as you do and the insurer knows for sure that they will be paying a claim.

[samclem]

I now realize that the fed program is (comparatively) a pretty good deal. It's still hard to say that spending the $$ each month would be the best thing for my wife and I, but at least I'm fairly sure I won't find a better buy elsewhere.

[Martha]

uncledrz, we are self insuring--the LTC policies are just too expensive and uncertain. The life insurance concept is a new idea though, but I doubt we will go that route.

[haha]

This thread has certainly indicated how far this board has moved upscale. No wonder our pet dumpster diver took off.

Anyone remember "$50 a day, that's for me"?

Ha

[cute fuzzy bunny]

I thought it was $33 a day, thats my story...

[brewer12345]

"possum livin'"...

[Martha]

Ha! 33%, That's my story.


http://early-retirement.org/forums/index.php?topic=83.0

And I thought we were up to $150 a day.

[Rich_in_Tampa]

Originally Posted by Martha

uncledrz, we are self insuring--the LTC policies are just too expensive and uncertain. The life insurance concept is a new idea though, but I doubt we will go that route.

I share your conclusions on this, Martha. The worst case LTC scenario is unlikely and if it did occur could probably be handled with assets on hand, a lifestyle and/or housing adjustment (or reverse mtg?), etc. Just can't see diverting that much savings from the nest egg into insurance premiums at age 57.

Not to sound like I'm in denial about it, but the options for protection are too expensive, too vague, and are incomplete at best. May change my mind, but for now I'm gonna focus on saving as much as I can.