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RE may be thrust upon me by Megacorp a bit early - GUL death benefit for surviving sp
Old 08-22-2017, 12:21 PM   #1
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RE may be thrust upon me by Megacorp a bit early - GUL death benefit for surviving sp

My plan, including debt-burndown and ER revenue choices, have been built around at least a 50% survivor benefit for DW after I move on to the next plain. A level income option is available with no survivor benefit, and while I have looked at it for familiarity, I decided to push out ER until the pension with survivor benefit reaches my target.

Well I may have to reconsider, and if I have to accelerate the ER timeline, level income + GUL, only for its death benefit, are on the table.

I have enough health issues that I will be unable to get Term Life to meet this strategy, but Megacorp offers portable GUL that keeps the same premium whether we are active or retired. Currently I have ~$550k at $2150 per year at age 57. I can increase to about $700k for a higher premium without POI, and I get one chance to reduce it at ER at a proportionately lower premium. I do not participate in the cash accumulation part of the policy.....death benefit only.

The compelling thing near term is a level income pension to either 62 or 65 will provide about $76000 per year with my target revenue at $80000. So my port WR will be very low. But counting on a GUL death benefit + my SoSec + our remaining modest nest egg for her revenue gives me pause.

I know GUL as part of a late retirement funding strategy is not popular here, but numbers seem to say it will work. My wife is not worried about, but with these kinds of decisions I worry about it for her.

Does anyone here have experienced perhaps thru parents or friends who had to or chose to go this route? How did it work when the primary breadwinner passed? Most of our RE revenue will be covered by non-cola pension and SoSec. Our modest portfolio will be for keeping up with inflation and discretionary stuff if we go the level income route. If I go with a lower pension with survivor benefit then the portfolio will have to bridge us to SoSec age.

Sorry for the wall of text. I will reply with what is accelerating the decision.

Also, sorry for the typos. Posting lengthy queries from my phone is always challenging.
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Old 08-22-2017, 12:25 PM   #2
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Megacorp is significantly degrading health coverage for active employees and retirees who are under 65 starting with Jan 1, 2018. Basically we are going to HDHP's like you would find on the ACA exchange about 3 years ago before most insurers pulled out. However, employees under the age of 65 who retire between now and Dec 31, 2017 will be able to sign up for the 2017 retiree family plan which is $1100/mo with $2000 deductible per person and $4000 out of pocket max, no deductible for pharmaceuticals.

With this legacy plan I have budgeted $23k per year assuming the need to consume high levels of healthcare each year until Medicare age.

Megacorp isn't ready to communicate the particulars of premium cost, deductible and OOPM on the 2018 version of early retiree healthcare until October. But it is doubtful that it will less expensive for my family.

Add to that published staff reduction targets for us high salary grade folks and the VLP rumors are sounding more legit. I have to prepare for an earlier exit than planned, and if I go out Dec 31, 2017 level income may be the best option if I can be assured DW will be OK if I pass first.
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Old 08-22-2017, 04:27 PM   #3
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What keeps Megacorp from changing that plan to the high deductible plan a few years down the road? Doing this makes no sense for them if the only people in the group are people that retired in 2017 or before. That's a very expensive group to insure with a comprehensive policy and it gets more expensive every year.
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Old 08-22-2017, 04:34 PM   #4
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I don't know what would stop them. And I expect premiums will increase in this legacy group perhaps more than it already does. But by drawing a line in the sand at Dec 31, 2017 every early retiree will have rolled off when the last one reaches age 65 and they are no longer eligible for the pre-65 retiree plan. Since an employee isn't eligible for early retirement until age 55, they know that this legacy coverage will cease to exist by 2027.
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Old 08-22-2017, 05:27 PM   #5
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My last employer was a local government. When I left, my years of service bought me a 50 percent subsidy for the same group policy the employees had. Cost to me was well under $300 a month. A couple of years later, the local government dumped the pre-Medicare retirees on the retirement system and now my share of the premium is over $700 a month. No age rating for the policy, just all the pre-Medicare retirees that opted out of the witch doctors of Kaiser. So be careful about relying on the promise of subsidized health care as an enticement to take early retirement.
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Old 08-22-2017, 06:22 PM   #6
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Thanks for sharing that experience.
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Old 08-23-2017, 08:00 AM   #7
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Originally Posted by Ed B View Post

The compelling thing near term is a level income pension to either 62 or 65 will provide about $76000 per year with my target revenue at $80000. So my port WR will be very low. But counting on a GUL death benefit + my SoSec + our remaining modest nest egg for her revenue gives me pause.

I know GUL as part of a late retirement funding strategy is not popular here, but numbers seem to say it will work. My wife is not worried about, but with these kinds of decisions I worry about it for her.

Does anyone here have experienced perhaps thru parents or friends who had to or chose to go this route? How did it work when the primary breadwinner passed? Most of our RE revenue will be covered by non-cola pension and SoSec. Our modest portfolio will be for keeping up with inflation and discretionary stuff if we go the level income route. If I go with a lower pension with survivor benefit then the portfolio will have to bridge us to SoSec age.
I see that you aren't getting responses for the key question "Does anyone have experience?"

I'm not certain what you are looking for. In some cases, the spouse died first and the surviving insured retiree dropped the policy at that point. In other cases, the insured retiree died first, and the policy paid the face amount to the survivor.

Are you thinking there are complications beyond that?

People might have opinions on the numbers, but you seem to be comfortable with them.
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Old 08-23-2017, 08:23 AM   #8
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Thanks for the response.

This topic is one I have no experience with. My late father and my grandparents had no significant life insurance when they passed. And I can't think of anyone in my close circle of extended family or friends who were beneficiaries of death benefits. So I can read about it, but unlike pensions, SoSec and nest eggs, I have no real experience with life insurance death benefits.

I guess I was spooked somewhat by a 60 minutes/20-20 program that exposed some life insurance companies finding loopholes and not paying death benefits. Things like once the covered person died, if a single payment was missed during the grieving process the policy was cancelled and no benefit was paid out. I should be able to mitigate that as long as I am of sound mind leading up to my death OR have someone I trust who can help my wife when that time comes
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Old 08-23-2017, 11:25 AM   #9
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I guess I was spooked somewhat by a 60 minutes/20-20 program that exposed some life insurance companies finding loopholes and not paying death benefits. Things like once the covered person died, if a single payment was missed during the grieving process the policy was cancelled and no benefit was paid out. I should be able to mitigate that as long as I am of sound mind leading up to my death OR have someone I trust who can help my wife when that time comes
I didn't see that program, but this is an article about one: Insurance Forums | 60 Minutes: Life insurers systematically don't pay unless beneficiary comes forward

That issue seems to be beneficiaries who don't know there is an insurance policy in force. Certainly, in your case, you'd tell your wife.

Many posters here have mentioned that they do some sort of asset statement periodically for the benefit of their survivor. I do a quarterly report for my wife that lists all our financial assets and the current balances. I include a very small individual life policy and I have a note regarding a group retiree life policy from my former employer.

I'm pretty confident one of our kids would find it in the case where I died suddenly and my wife wasn't mentally sharp enough to be handling her own finances.
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Old 08-23-2017, 11:59 AM   #10
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I didn't see that program, but this is an article about one: Insurance Forums | 60 Minutes: Life insurers systematically don't pay unless beneficiary comes forward

That issue seems to be beneficiaries who don't know there is an insurance policy in force. Certainly, in your case, you'd tell your wife.

Many posters here have mentioned that they do some sort of asset statement periodically for the benefit of their survivor. I do a quarterly report for my wife that lists all our financial assets and the current balances. I include a very small individual life policy and I have a note regarding a group retiree life policy from my former employer.

I'm pretty confident one of our kids would find it in the case where I died suddenly and my wife wasn't mentally sharp enough to be handling her own finances.
I am pretty sure this is the report I was thinking of. You are right. I will have records for my wife so she or someone acting on her behalf can help her file for benefits.

Thanks again.
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Old 09-05-2017, 03:35 PM   #11
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As a follow up, we finally got real numbers from my megacorp on what retiree healthcare will look like starting in 2018. It will be better over time than what is currently available.

We will have access to the same three high deductible plans with HSAs that will be available to active employees from 2018 forward (or until they change it again). The premiums will be more that what is paid by active employees, which is expected, but the premium cost will be within what I am budgeting. So the good news for me and DW is no disruption to my planned 2018 exit strategy.
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