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Old 01-04-2012, 04:37 PM   #21
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DH and I both got 20 year term policies in 2000 at age 45. They are small policies (mine is for $100,000 for $14/mo and DHs for $250,000 at $53/mo) and inexpensive so for now we are keeping them.

DH retired in 2010 with a COLAed pension that covers all our monthly expenses with a little savings leftover and I have a minimal part-time job. We may not NEED the life insurance (we are debt free including the house, 2 kids completed college and are self sufficient) but for the low cost we are keeping the term life insurance policies. If he died I'd still get the pension at 100% survivor rate but I'd like to have the additional money for security. If I died his pension increases to the single amount but it would be nice for him to have an extra $100K. He may want to make a move to be closer to his family.

At age 65 the renewal will be very expensive and we will drop the coverage then.
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Old 01-04-2012, 04:48 PM   #22
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I kept a little term on DW and about 3x more on me. We did not elect to pay into the Survivor Benefit Program when we retired from Military Service. Guess we are hedging a bit. Funds are meant to pay off mortgages and help adjust to life with reduced income coming in. Since we rely on pension income only at this point.
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Old 01-04-2012, 06:18 PM   #23
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If you are FI and can ER you do not need term life insurance? That make you worth more dead than alive.
I might be worth more dead than alive now

Thanks for the feedback.
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Old 01-04-2012, 06:52 PM   #24
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We have insurance on my life as DW will only get 50% of my pensions.

That'll pretty much be our situation. DW sill get 55% of both of my pensions...federal & military. Haven't yet decided how much insurance I'll keep once I retire around this time next year. Once she reaches age 62, she will also get her own small SS benefit. House will be paid off and we're planning to stay out of debt. We'll both have health insurance, that will continue for her if I die first.
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Old 01-04-2012, 07:15 PM   #25
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Thanks for all the replies.

When I bought the policies, I wasn't sure what $$ shape we were in. I was just working it. Now, I've crunched a bunch of numbers.

I probably overprotected myself due to my dad passing away at age 48 and wanting to avoid the same mistake of not leaving a cent to a younger family. Also, DW's family has a history of cancer, so I wanted an emergency blanket. It's not super popular here, but I'm willing to passing a nice chunk of change to my kids if I passed prior to 60. That's just me.

It's funny that I use age 95 for the retirement calculators and not think twice about it, but betting on not living pass 60 or 70 via term life insurance.

I'll have to think long and hard when the next renewal notice comes in. Thanks for the feedback.
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Old 01-04-2012, 10:07 PM   #26
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I just retired a few months ago and I plan to cancel my term life this month.
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Old 01-05-2012, 12:19 AM   #27
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When my net worth grew large enough to provide for my dependents, pay their college and give them a good start as adults I dropped the term coverage. As it is, their inheritances will be enough to make them FI at a young age even if they do no additional savings themselves. That seemed more than sufficient. If my estate grows enough to become a tax burden, then I'll consider insuring again, but that's a long way off.
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Old 01-05-2012, 09:32 AM   #28
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I was looking at the Social Security Actuarial Life Table here--

Actuarial Life Table

It's pretty interesting. Say that an average male is 40 years old when they buy a 20-year term policy. Their yearly risk of death in the first year is 0.002323, and in the last it is 0.010584. So in the last year of the policy, they are 4 times more likely to die than in the first year of the policy.

If the policy was $100k, it would make sense to keep it if the premium was less than about $1000/year. I think that is fairly likely to be the case for a lot of people in this situation.

For people who buy term life relatively late in life, it may make sense to keep it the last few years, regardless of the insurance need.

I think it says something about me that I think I would feel better about dying early if I knew it was costing an insurance company a lot of money

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If there is no need for insurance and keeping the coverage is being viewed as an "investment", then the probability of death in any given year of the remaining term would need to be greater than the annual premium divided by the face amount. I think in most cases the insured would need to be in pretty poor health for it to be a wise investment.
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Old 01-05-2012, 03:17 PM   #29
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I have ten more years on my term policy. Because the house is not paid for I plan to keep the insurance. DW could live fine without it, and DD is launched successfully I hope, but the extra insurance would help a lot if I go early. I'm not planning on that, but that's why you buy insurance.
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Old 01-06-2012, 04:08 PM   #30
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Quote:
Originally Posted by Hamlet
I was looking at the Social Security Actuarial Life Table here--

Actuarial Life Table

It's pretty interesting. Say that an average male is 40 years old when they buy a 20-year term policy. Their yearly risk of death in the first year is 0.002323, and in the last it is 0.010584. So in the last year of the policy, they are 4 times more likely to die than in the first year of the policy.

If the policy was $100k, it would make sense to keep it if the premium was less than about $1000/year. I think that is fairly likely to be the case for a lot of people in this situation.

For people who buy term life relatively late in life, it may make sense to keep it the last few years, regardless of the insurance need.

I think it says something about me that I think I would feel better about dying early if I knew it was costing an insurance company a lot of money
That actuarial table is very sobering isnt it? Getting to 80 is a 50/50 shot for the newborn, but escaping the 80's alive is very problematic. Less than 1% make it to 100, and I wonder how many of them even know what age they are. Although, that reminds me a lady in the local paper had a headline for celebrating her 106th birthday. They asked her what her birthday wish was and she said "not to be around for the 107th birthday".
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Old 01-06-2012, 06:13 PM   #31
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Quote ... I was looking at the Social Security Actuarial Life Table here--

Actuarial Life Table .... Quote


Hmmmmmm I'm 42 and the table gives me only 36 more years. Should I use that with FireCalc and ORP, etc calculators??

I could pull the plug sooner. FireCALC saids I have 100% success today
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Old 01-08-2012, 03:57 PM   #32
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I got a 20 year term life policy in effect. I think it expires when my daughter is around 20.
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Old 01-09-2012, 10:02 AM   #33
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Only 3% of term life contracts are ever paid out on. YMMV..........
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Old 01-09-2012, 10:06 AM   #34
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Only 3% of term life contracts are ever paid out on. YMMV..........
Come to mention it, I've never had one pay out on me. Yes, I realize that's purely anecdotal, but still...
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Old 01-09-2012, 10:27 AM   #35
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As noted by mustang52 and rescueme, there are some situations that could come about where your survivor(s) may need some imediate cash. I have been building a cash account of laddered CDs that can be cashed with minimal penalty to provide for this. However, I plan to keep one policy when I RE so that if I need it at some point I would have it. I understand it can be difficult to get insurance when you get older. I still work, and have a small $200K policy that costs $83/month along with company provided policy. DW should be in good shape with our estate and her retirements so this would just be to provide an extra buffer. I don't think we need the $200K policy, but keeping it through the term (something like 68) as an extra buffer. My mom (who has retired 15 yrs) is FI but still worried about her being able to care for herself if she has another 20 years. She needed worry, she is doing great financialy, but she does. I expect if it is a concern for her, it may be for me/us as I approach her age. Sorry for the ramble. If your FI you don't need it but you may want it.
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Old 01-09-2012, 11:01 AM   #36
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Some level term policies offer a feature which lets you keep the premium levels fixed but with a decreasing amount of coverage over time once the contract expires. If you find yourself still needing *some* insurance but your needs are decreasing over time, this could be an option in some cases. That's especially true if you were originally underwritten in a "desirable risk" category and you are less insurable today.
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Old 01-10-2012, 12:22 AM   #37
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Only 3% of term life contracts are ever paid out on. YMMV..........
Life.... YMMV

It would be interesting to know of those paid out, if they kept the policy to end of their term.... say age 65 or so. I can see a majority of the policies are not paid out as people forget to pay the annual premium or want to reduce expenses, allowing the policy to elapse.

My current thinking, regardless of FI, semi-ER, or ER, I would keep the policy until my mid-50s for various personal reasons. I believe after age 45 for me, the policy I have is cheaper to maintain than to purchase via megacorp. I just would feel better knowing that my family would have a few extra bucks to add to their safety, but that's just me. This is probably a result of history...my dad passing at a young age (48) and uncle (65). In both cases no insurance when the families could of greatly benefited. I might reconsider if the market has a bull run vs being flat.
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