Life Insurance After 60

[kgtest]

Insurance companies don't gamble. They know the odds. They win, you lose.

That said, sometimes Insurance is needed for estate liquidity. But not as a gamble.

You make a good point. My late sister who passed away at 47 with 3 kids and 2 ex husbands who arent trustworthy had a small life insurance policy for her first born son.

That provided him with the immediate need of cash since he was heading off to college, protecting her nest eff for the youngest two children. Had all that been liquidated early and soon after her death, the SORR would have been greatly impacted.

 

[Drake3287]

Without knowing your life style or exact financially situation I'd say that several million is a pretty good safely net and that doesn't include SS at some point for the both of you. Like others I dropped my insurance when I retired and felt that we had enough saved/invested to see either one of us through the rest of our lives.

 

[Badger]

I have a couple of very small whole life policies that my father bought when I was a little boy. They only total about $50k. They were paid up and have been accumulating additional insurance for years now that is paid by the annual dividends. The only other life insurance is term insurance for about $5k from my CU that is free for being a member. If I didn't have these already I wouldn't buy any at my age and nest egg.

 

[LateToFIRE]

You make a good point. My late sister who passed away at 47 with 3 kids and 2 ex husbands who arent trustworthy had a small life insurance policy for her first born son.

That provided him with the immediate need of cash since he was heading off to college, protecting her nest eff for the youngest two children. Had all that been liquidated early and soon after her death, the SORR would have been greatly impacted.

My mom passed away in her 80's and left my siblings and I whole life policies, $10K each. I used mine to pay for funeral expenses. I didn't "need" the cash, but it was greatly appreciated. My siblings needed the cash and had no intention of helping with expenses. lol. When DW and I pass, circumstances should be very different, but as previously noted, we've got over $300K of paid up whole life between us, so that should make for real nice funerals, just in case.

 

[pjigar]

I don't think the decision tree is this simple. For example, a stay at home parent does not earn a paycheck. But if this parent dies, the surviving spouse might then have child care expenses, and insurance might be appropriate to cover those expenses.

I hear you. The individual situation may vary but the bottom line is "Can the surviving spouse live on *new* income with *new* expenses?" If he/she can then there is not need for term life insurance.

 

[Stormy Kromer]

I am nearing 60 and realize that my biggest financial risk now is not dying to soon, it is living too long.

That said, I am FIRED and DW and I have substantial VUL's. We'll keep them since they are very well funded and an efficient way to transfer wealth to the next generations. We don't have LTC insurance, if that need arises we will self insure that expense and use the VUL to reimburse the expenses when we pass.

 

[frayne]

I've always wondered why it isn't called death insurance.

I had a term policy while I was working and before FIRE but dropped at when I got off the hamster wheel at 54 as I saw it as nothing more than an unnecessary expense. Kid was grown and on his own, had no debt and wife was set with savings and portfolio. I can remember in conversations with people and telling them I didn't have life insurance and they were simply aghast ! I think it is something that has been ingrained into our brains that you always need life insurance, even when you don't. YMMV.

 

[GrayHare]

Maybe since death is already assured? I've not studied life insurance. The offers that come in the mail always seem vague, and leave many questions unanswered. Are the premiums fixed or might they change? For term insurance, what happens when the term expires? Do I get my premiums back? With some interest?

 

[Lewis Clark]

I had a term policy while I was working and before FIRE but dropped at when I got off the hamster wheel at 54 as I saw it as nothing more than an unnecessary expense. Kid was grown and on his own, had no debt and wife was set with savings and portfolio. I can remember in conversations with people and telling them I didn't have life insurance and they were simply aghast ! I think it is something that has been ingrained into our brains that you always need life insurance, even when you don't. YMMV.

I agree.

My wife and I gave up all of our life insurance in our 40s, shortly after I left the Navy. We were both working and had no kids or other dependants. If either of us died, the other would have been fine with a combination of the surviving salary and our investments.

 

[LateToFIRE]

I've always wondered why it isn't called death insurance.

I had a term policy while I was working and before FIRE but dropped at when I got off the hamster wheel at 54 as I saw it as nothing more than an unnecessary expense. Kid was grown and on his own, had no debt and wife was set with savings and portfolio. I can remember in conversations with people and telling them I didn't have life insurance and they were simply aghast ! I think it is something that has been ingrained into our brains that you always need life insurance, even when you don't. YMMV.

You're probably over-estimating most people's financial situations. A lot of folks I grew up with had very little to pass on to the next generation other than their debts, and viewed life insurance almost like a savings plan, so at least there will be enough for your family to bury you and maybe a little something leftover when you pass. That's the way it's been marketed to the not so flush segment of the population - just a dollar a day will insure your family wouldn't be bankrupted by funeral expenses.

 

[Stormy Kromer]

For those of you planning on using life insurance to cover funeral expenses I would suggest having a line of credit for the time it takes to collect from the insurer.

DM passed on August 1st. She had a $12,000 policy with Combined Insurance Company that she wanted to pay for her funeral expenses. I wrote the insurer about a week after she passed. They never did respond. I did some research and got a phone number. Turns out they had been bought out and the new company couldn't find any record of her policy. I sent them a copy of their latest premium notice and cancelled check. I filled out all their forms and sent them an original death certificate. Twice. Finally I got hold of an individual in the claims department that helped me out and it still took months.

I paid the funeral home and waited for the claim check to arrive, 3 months later.

 

[Lewis Clark]

For those of you planning on using life insurance to cover funeral expenses I would suggest having a line of credit for the time it takes to collect from the insurer.

Based on a book I read about estate planning, I have one bank account without TOD/POD designations. This will give the executor ready access to funds to cover final expenses. The rest of our accounts do have TOD/POD designations.

 

[LateToFIRE]

^^^

With respect to funeral expenses, my experience has been that what you really need is either a joint-account that whomever is going to manage your affairs will have immediate access to (yes, I know most pundits do not recommend), or a [deleted, recall that a POA ceases to exist upon death]. The issue is that rarely are probate courts timely enough to meet the deadline of granting access to funds to bury someone, and banks want death certificates for POD accounts. The other option I've seen is that funeral homes will often take an assignment of the life insurance policy in lieu of cash - in other words the funeral home collects the insurance proceeds, pays expenses out of that, remits the balance to the beneficiary. I also suspect that funeral homes may offer credit lines, but haven't been offered that before. Few folks can come up with thousands of dollars emergency cash or credit line on a moments notice.

 

[CRLLS]

Just to be sure I understand, how can somebody access the account of another? Now if the account was JOWROS, that's a different situation. My understanding is that the Funeral home/cemetery wants payment before services/internment. Sometimes that is <3days after the deceased becomes such.

 

[Route246]

You are making a bet with someone and you really, really, really hope you lose that bet.

That sounds goofy but what you are really doing is hedging which is laying off risk for a fee in the event that something bad happens. Hedging strategies are common in the investment community, mostly in the form of derivatives which provide relief in the event of a negative outcome in valuation. Techniques like shorting against the box just means you're capping your profits in the event of a price crash, sort of like playing with house money.

In the event of your untimely death is there much to gain from a life insurance policy that you really, really don't need? Probably not worth hedging anymore.

 

[street]

Life Insurance Policies are tax free when paid out in all normal procedures. We have paid up policies that are funded by dividends that will take us into out late 90's. I have no intentions to cash them in because I don't need to cash them. My heirs will be getting a gift of tax-free money to do what they want to do with them. There are worth a small fortune and may help the GD's with the money.

At some time, I will turn over ownership of the policies to an heir and they will own it not me, but I will be the recipient of the benefit.

I'm in the same boat as Stormy Kromer post. I also have seen huge benefits to families that have had LI. They have saved the farm to speak and was a blessing but a bittersweet one.

 

[mystang52]

Life insurance is for when somebody would need $ if you or your spouse were to die. If such a death would not cause hardship, then there is no need for insurance.

Our 20 year term policy is ending next month and we are not renewing.

I agree.....but DW didn't. OP: Regarding this point, however, you should assess why you want to renew. Our kids are grown and doing well, we have no debt, and no need for life insurance. My 20 year $500,000 policy expired in 2016; I could not convince my DW to not renew. Instead, I opted to renew for the same PREMIUM, and now have $29,000 coverage until 2036. We can afford any final expenses, but DW feels better having this life insurance to cover final arrangements.

 

[rayvt]

For term insurance, what happens when the term expires? Do I get my premiums back? With some interest?

Same as car insurance or house insurance. Nothing comes back. You bought pure insurance, not insurance plus a savings account.

 

[Dash man]

I have a 20-year level term $350k policy that ends in 2028 when I’m 72. We don’t need it anymore, but I keep it because DW and I have agreed to give our sons $200k each when the first of us passes. (They are not aware). If it happens sooner than later, this will make it easier, only having to liquidate $50k from another account. Hopefully it will never be collected.

 

[Sunset]

Based on a book I read about estate planning, I have one bank account without TOD/POD designations. This will give the executor ready access to funds to cover final expenses. The rest of our accounts do have TOD/POD designations.

Yes !
That is exactly what we discovered when acting as executor(s)..

 

[Sunset]

^^^

With respect to funeral expenses, my experience has been that what you really need is either a joint-account that whomever is going to manage your affairs will have immediate access to (yes, I know most pundits do not recommend), or a [deleted, recall that a POA ceases to exist upon death]. The issue is that rarely are probate courts timely enough to meet the deadline of granting access to funds to bury someone, and banks want death certificates for POD accounts. The other option I've seen is that funeral homes will often take an assignment of the life insurance policy in lieu of cash - in other words the funeral home collects the insurance proceeds, pays expenses out of that, remits the balance to the beneficiary. I also suspect that funeral homes may offer credit lines, but haven't been offered that before. Few folks can come up with thousands of dollars emergency cash or credit line on a moments notice.

A joint account would work with a trustworthy person

A Small Inheritance estate (available in some States) means no probate, just bring the form and Will (showing executor nomination) to the bank and they grant access to the account.

 

[Ready-4-ER-at-14]

We recently chose to continue a policy on the younger of us. She had been the primary salaried person. We were not as financially fit as we are now with kids at home.

Our reasoning for keeping it now is cost is not that much and would allow us to fly immediate family who wanted to attend at higher last-minute costs and pay for transportation, hotels and costs of hosting while here since we downsized housing.

Some would be international flights.

Since we really don't need it on me either and it would be costlier than continuing a much older continued policy we just have the one.

i like the idea of it replenishing a buffer of money spent on family together.