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Old 10-23-2013, 09:15 AM   #21
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We have only ever purchased term insurance and we did it through a very attractive employer group plan. We bought lots when our children were small and we reduced it as time passed and the requirement for financial protection decreased.

How much insurance really depends on your financial circumstance. I no longer carry any insurance other than $10K provided by my pension plan. DW has none. But, if we were in a situation where one of would be exposed if the other passed away, we would definitely look at term insurance.

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Old 02-03-2014, 01:43 PM   #22
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This seems very, very simple. Unless there is a health issue, buy a term policy and be done with it. At the OP and spouses ages it should be very inexpensive.

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Old 02-04-2014, 10:39 AM   #23
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Originally Posted by jollystomper View Post
I agree with going with enough term insurance to cover the mortgage. Since I am by far the higher wage earner, when we still had kids at home I had enough insurance to cover paying off the house plus some years of my salary so that DW wouldn't be forced to sell and had some breathing room to find better employment, if needed. Now that the nest is empty and the house almost paid off we are reducing coverage.
+1 to this.

We bought term on each of us when our kids were small and we had a mortgage. Smaller amount on DW to basically pay for the childcare I would have to buy if she were to pass unexpectedly. More on me to cover mortgage/college/etc. if the same happened to me, as DW was (and mostly still is a SAHM).

Now our kids are teens, college is funded and no more mortgage. I figure we will keep the term insurance we have (its cheap and would provide a cushion/cash near term to survivors w/o having to deal with any of our investment portfolio) until DD and DS are into or nearly done with college, and stop after that. Dropping the term, a small whole policy I have and my disability insurance will save us ~ $7k per year!
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Old 02-05-2014, 05:33 PM   #24
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Is anyone here using life insurance as part of a wealth transfer strategy? I watched the PBS show with Ed Slott and have read some of his materials and using the tax free benefit of insurance benefit to get money to heirs.
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Old 02-05-2014, 08:35 PM   #25
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Originally Posted by Rothman View Post
Is anyone here using life insurance as part of a wealth transfer strategy? I watched the PBS show with Ed Slott and have read some of his materials and using the tax free benefit of insurance benefit to get money to heirs.
No, but I've seen these explained and they always seem very circular to me, and they always seem to lack full disclosure. I suppose they could be useful where liquidity is needed at death. This could be the case if Estate taxes are due, but there isn't enough liquid cash to pay the bill - you might not be in a position to sell things off. But I wonder if there are cheaper ways to gain liquidity?

Here's where it falls apart for me - they usually present this as taking money that is gifted annually from the estate (below the threshold where it needs to be reported/accounted for something like $13,000 these days), and the giftee uses it to pay for life insurance on the estate holder. So then they make this big point that the money buying the insurance escapes estate taxes, and you'll get his big insurance payout.

OK, but I never see them do a comparison to investing the money instead of buying insurance. The gifted money still escapes estate taxes. If, on average insurance would be a better deal, then why don't we all invest in insurance? Again, if the estate needs a guaranteed amount of money at death, even if that happens sooner rather than later, insurance might make sense. But then it is actually insurance, not so much an investment.

So did this Ed Slott show a table where the money is invested, and the break-even points compared to insurance? I'm guessing not. I'll also guess he has some friends who sell insurance.

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Old 02-10-2014, 02:20 PM   #26
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Funny this thread popped up; I finally have some actual figures from the insurance company today.

Allstate said term life insurance of 14 years and $200,000 had better premiums than if I went for a decreasing life insurance plan (the kind that would shrink as the mortgage shrank).

He quoted us $14.50/month for $200,000 on my spouse for 14 years (14 = # of years left on the mortgage). It would be a lump pay out.

Does this sound like a good thing?

To summarize, should I find myself widowed, I would not be able to afford to keep living in our current house after one year on my salary alone. I can afford a house, just a smaller house. Well come to think of it, we are paying extra on the mortgage, so I could probably swing the actual mortgage payment.
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Old 02-12-2014, 06:35 PM   #27
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That sounds like an inexpensive premium for a $200k policy. Does the premium stay level throughout the 14 year term, even as you get older?

It's up to you whether you feel you need the extra protection. With $600k in retirement accounts, I think the worst case financial scenario is that you might have to w*rk longer to pay off the mortgage.

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