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Old 05-03-2010, 06:55 AM   #21
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Interesting discussion. I always assumed we would drop ours at retirement, as the assets will cover the exepenses for the other if either dies...BUT had not considered a disabling illness or accident that could eat up assets in the event of nursing home costs early on. Will now gove more thought to this.
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Old 05-03-2010, 10:08 AM   #22
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Interesting discussion. I always assumed we would drop ours at retirement, as the assets will cover the exepenses for the other if either dies...BUT had not considered a disabling illness or accident that could eat up assets in the event of nursing home costs early on. Will now gove more thought to this.
Many people also did not factor in the possibly of being unemployed for an extended period of time. One person I know has been out of work for over 18 months and has eaten up much of their savings to continue paying the bills and college expenses for the kids. If you spend down what you thought you were going to save for retirement, is it easier to replace that money with life insurance, or go back to work at age 65 ,70, 75, etc?
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Old 05-03-2010, 10:24 AM   #23
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I just cancelled my $1MM term policy. Once I turned in my pension paper work to Fidelity, my wife gets 100% of my pension even if I die before I retire in August at age 55.

Since I view the primary role of life insurance is to replace income in case of early death (and disability to do the same in case of disability), I no longer need it.

For those worried about dire illnesses, I would suggest insure against those rather than buy or maintain life insurance you don't need. Remember there are many dire illnesses that can deplete your assets without killing you. (e.g. Alzheimer's).
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Old 05-03-2010, 01:21 PM   #24
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For those with life insurance through a group, you are better off buying your own policy if you are reasonably healthy. Group rates go up every 5 years and very sharply rise after age 55 and 60 age bands.
Yes I found the same thing. That must be why they are so cheap earller, because they seldom pay out.
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How about disability?
Old 05-04-2010, 03:57 PM   #25
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How about disability?

I carried a $2 million policy for many years. When it came time for renewal and they wanted to triple premiums, I let it lapse. We were very close to financial independence and, therefore, there was no need to replace my income should I die.

For some strange reason that I can't quite put my finger on, I haven't done the same thing for my disability insurance. It seems like the same logic would apply, wouldn't it? I've told myself that the reason I'm keeping the disability policy is because I am much more likely to become disabled than to die. But, the policy is very expensive, although it has a huge payout if I do become disabled. I'm paid through August and wondering if I should let it go when August arrives. I obtained the policy through my former employer who I left a little over a year ago. Therefore, I can't replace that policy, and I was encouraged by my former employer to keep the policy for that reason.

What I may do is see what a lesser policy would cost. But, I'm not sure why I'm reluctant to part with this insurance given that I feel totally fine about going without life insurance. We have enough now for a 3% withdrawal rate with our current budget.
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Old 05-05-2010, 10:45 PM   #26
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When my kids became independent and capable of making their own way in life, we to canceled my DWs term policy. The policy was provide for home and child care in the event my DW was no longer around to provide that care. When I FIREd, we canceled mine because DW would receive my pension payments and SS in the event I died.

IMHO, one should use insurance as THAT, insurance to provide for catastrophes. If I sold my house and no longer had a reason to buy home insurance wouldn't I cancel that policy too? nuff said.
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Old 05-05-2010, 11:15 PM   #27
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Mega, well sorta. If you don't have a house you don't need ins. but you'll still have a life. You may not feel you need LI but some folks would disagree.

In my case I still hold a Whole Life Policy for 500K. I've had it for 22 years and really don't need it at this point but if I cancel it I'd create a taxable event. At this point it mostly pays for itself and when I die DW or the kids would get 500K tax free. Also at some point I can cash it in and do a SIPA if I needed to. Not that I'm an annuity fan but it's an option. At 61 I'm still not sure what to do with it. No Male in my family has ever lived to the age of 70 so for the family sake I hold it, at least for now.
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Old 05-06-2010, 06:40 AM   #28
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Sdfire, I would let the disability policy go, too. If you have sufficient assets to support you without working, you do not need disability insurance.
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Old 05-06-2010, 06:44 AM   #29
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I view keeping disability insurance once you are FIREd the same as keeping boat insurance after you sell the boat...
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Old 05-06-2010, 11:47 PM   #30
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Mega, well sorta. If you don't have a house you don't need ins. but you'll still have a life. You may not feel you need LI but some folks would disagree.

In my case I still hold a Whole Life Policy for 500K. I've had it for 22 years and really don't need it at this point but if I cancel it I'd create a taxable event. At this point it mostly pays for itself and when I die DW or the kids would get 500K tax free. Also at some point I can cash it in and do a SIPA if I needed to. Not that I'm an annuity fan but it's an option. At 61 I'm still not sure what to do with it. No Male in my family has ever lived to the age of 70 so for the family sake I hold it, at least for now.
Agreed in your case, especially if you are no longer paying the premiums, however the OP was discussing term life ins.
IMO Whole Life policies are in the same class as annuities ... subject to much debate.
... hope you raise the curve on your family history.
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Old 05-06-2010, 11:54 PM   #31
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On Whole life policies if you stuck thru the 70s and 80s with a whole life policy (in particular one of the participating policies of the time) You find that now with the dividends you make money each year. The policies guaranteed cash value increase is about the cost of the premium and the dividends keep growing. In particular if you let it go to additional paid up insurance you could have 3 or 4x the face value in insurance.
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