Life Insurance After 60

[oscar1]

DW 64, me 61. My 20-yr $500k term policy expires next month. It served its purpose. Our investments should carry us perpetually as long as we don’t get crazy buying new houses, cars, extravagant life style. Males in our family can make 80’s but 90’s would be a stretch. Our only daughter will inherit a decent legacy of several million. Should I renew for another 20 years term for ~$50k over that time period or just let it go? Seems like a $50k gamble to make $500k might make sense?

 

[OldShooter]

DW 64, me 61. My 20-yr $500k term policy expires next month. It served its purpose. Our investments should carry us perpetually as long as we don’t get crazy buying new houses, cars, extravagant life style. Males in our family can make 80’s but 90’s would be a stretch. Our only daughter will inherit a decent legacy of several million. Should I renew for another 20 years term for ~$50k over that time period or just let it go? Seems like a $50k gamble to make $500k might make sense?

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.

 

[youbet]

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

Actually lots of individuals "win." (If you want to call croaking before your policy's expiration date a "win.") And lots lose. In aggregate, the population will collect less than the insurance company collects in premiums. But statistically, it's not a "they win, you lose" proposition.

But, like you, life insurance wouldn't be a mode of gambling I'd choose.

 

[HarveyS]

Plus you are paying with "today's" dollars , and the insurance company will return "tomorrow's" dollars. Think of what inflation will do and what is the opportunity cost of your premium dollars.

I don't have life insurance. I have seen where life insurance can effectively offset a second to die pension reduction, so it's not always a bad idea. What you suggest, though, sounds like a bad idea.

 

[Alan]

DW 64, me 61. My 20-yr $500k term policy expires next month. It served its purpose. Our investments should carry us perpetually as long as we don’t get crazy buying new houses, cars, extravagant life style. Males in our family can make 80’s but 90’s would be a stretch. Our only daughter will inherit a decent legacy of several million. Should I renew for another 20 years term for ~$50k over that time period or just let it go? Seems like a $50k gamble to make $500k might make sense?

I took out a $500k VUL policy when I was age 48 in order to give my DW some replacement money for my DB pensions when I die. After 12 years and $60k of premiums it had enough funds to sustain it with no additional contributions from me. At age 65 I realized that my wife was not going to need it so with her agreement we switched the beneficiaries to our children. It only pays out if I die before age 100.

Not sure that I would take out a policy as you suggest since your daughter is already set to inherit several million. Maybe do some gifting to her now of what you would pay for a new policy?

 

[DrRoy]

I haven't paid for any life insurance in many years.

 

[mrfeh]

DW 64, me 61. My 20-yr $500k term policy expires next month. It served its purpose. Our investments should carry us perpetually as long as we don’t get crazy buying new houses, cars, extravagant life style. Males in our family can make 80’s but 90’s would be a stretch. Our only daughter will inherit a decent legacy of several million. Should I renew for another 20 years term for ~$50k over that time period or just let it go? Seems like a $50k gamble to make $500k might make sense?

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.

 

[Dtail]

Gave up life and disability insurance upon retirement.

 

[LateToFIRE]

Gave up life and disability insurance upon retirement.

This is pretty much where I've landed on the question. We've somewhat outgrown the need for life and disab., and not concerned about how much we leave behind for heirs.

Unless we go hog wild on lifestyle or something catastrophic happens, retirement calculators have us most likely expiring with far more than we initially retire with. So, intend to cancel life and disab insurance upon retiring.

We do own about $350K of whole life policies we took out decades ago which now pay for themselves due to dividends, so that's a nice to have. No reason to "gamble" any further.

 

[jollystomper]

That is a little over $200/month for the policy, which seems like a bargain at age 64 for that amount. The quotes I have seen - if they are willing to go that high at that age - have been at least twice that amount. Given what you posted it looks like more a Blow That Dough choice than a gamble .

I had insurance while I was working to cover the loss of my salary. I carried enough to make sure that the house could be paid off and DW could have a choice of working if I died then. I had retiree insurance, but dropped it when I turned 65, as the amount was not worth the payment. My pension and SS benefits will provide more than enough for DW, and our heirs will have large inheritances, so no need for life insurance.

 

[pjm-7]

The need for life insurance is while your daughter is growing up. As an adult, unless there is some extenuating circumstances such as a severe disability she would not need the insurance benefits. Life insurance is needed when people are young and have not built an estate to provide for their survivors.

Go ahead and let the policy lapse. If it helps you feel better directly gift the premium you would have paid to the insurance company to your daughter, possibly fund her IRA or Roth IRA for the year.

 

[Midpack]

Life insurance is a very good idea to provide an “estate” for your family just in case, until you can build up an actual $ estate. When you have a $ estate that can provide for your loved ones, you don’t need life insurance on top of that. I quit life insurance when I hit FI a long time ago.

 

[Time2]

Plus you are paying with "today's" dollars , and the insurance company will return "tomorrow's" dollars. Think of what inflation will do and what is the opportunity cost of your premium dollars.

I don't have life insurance. I have seen where life insurance can effectively offset a second to die pension reduction, so it's not always a bad idea. What you suggest, though, sounds like a bad idea.

I just ran it through a calculator, with 3% inflation, $500k would have the buying power of $277k in 20 years. $228k if inflation is 4%.
The gamble is paying $50k so your child will benefit if you die before 81 yrs old. As you stated, it seems a pretty good chance you will make it to 81 yrs old.
Better odds if it the renewal was 5 years from now.


If you invest the premium cost, $2500(?) and it earns 10% and you make it to 86, it will grow to $270k.

 

[pjigar]

I always go back to the basics when comes to a term life insurance. See the following flow chart:

 

[CRLLS]

We ended my LI policies when SS started. Neither of us needed more than we already had. Nor did our adult children. Everyone will be just fine without LI. Isn't that the idea behind FI? As a bonus, we annuitized the whole life policy and now I get a small check every month, fun money.

I was just talking about this the other day with a friend. He is in the FERS program where there is no direct spousal benefit option. One can purchase it if desired. He told me it was better for them to purchase a LI policy instead of purchasing the FERS equivalent. I cannot verify that myself. I don't know, or want to know, his numbers.

 

[MarieIG]

Do you have to pay the money up front or is it a yearly premium with the option to cancel?

After his term rate expired, DH's premiums were much higher for less coverage, but were payable in six-month installments.

 

[pacergal]

Gave up life and disability insurance upon retirement.

Same with us.

 

[OldShooter]

I bought cheap guaranteed renewable term life insurance until about age 40, at which point the kids were gone, our net worth had touched $1M, and DW had a good and secure executive job with a megabank. So we no longer needed the insurance. We both continued to have relatively trivial amounts of life insurance for free from our employers but we never paid much attention to that.

FWIW I found the cheapest insurance by far to be through my professional society, but the internet era may well have changed all that. Worth a check, though.

 

[youbet]

That is a little over $200/month for the policy, which seems like a bargain at age 64 for that amount. The quotes I have seen - if they are willing to go that high at that age - have been at least twice that amount.

My first thought was to suggest OP not renew the insurance. But, I agree, that’s really a bargain. I’ll have to think about it.

 

[brett]

I ended my term life insurance when I retired. We no longer needed it. No regrets. DW was never able to obtain life insurance.

We never viewed life insurance as an investment. Always as a way to offset potential financial risk.

Our financial risk was eliminated over time as we approached FI.

 

[Kings over Queens]

DW 64, me 61. My 20-yr $500k term policy expires next month. It served its purpose. Our investments should carry us perpetually as long as we don’t get crazy buying new houses, cars, extravagant life style. Males in our family can make 80’s but 90’s would be a stretch. Our only daughter will inherit a decent legacy of several million. Should I renew for another 20 years term for ~$50k over that time period or just let it go? Seems like a $50k gamble to make $500k might make sense?

Need first, then want.

Clearly you don't NEED the coverage in terms of income replacement or to cover expenses, so the question becomes do you WANT to leave extra money to your wife and ultimately your daughter.

None of us can answer that question.

 

[rk911]

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...

This ^^^^^

We dropped all of our life insurance (except for that which is provided by our retirement systems) several years ago.

 

[Lewis Clark]

I always go back to the basics when comes to a term life insurance. See the following flow chart:

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.

 

[CaliKid]

I will start by saying I am a life insurance proponent in the right situations. I personally benefited from such policies and thus am an advocate! As others have stated the most common is to provide for spouse, kids, or other person. Life insurance often makes sense in a business situation by creating a key man or buyout money if a key employee (typically an owner) dies. I also like it in some cases for estate planning as high net worth people can pass life insurance estate tax free if it's owned properly (i.e. NOT owned by the insured). It can be a forced savings for your kids by gifting each year but making them invest in whole life. Again, it's of limited application. With the current estate laws not too many people need to worry about estate taxes. Lol. I currently have a modest term policy because it's affordable and would just make my wife totally flush with cash if I die in the next few years. It was a 20 year term so when it ends in a few years I don't intend to renew/convert as the cost jumps up significantly in your 60's. I guess my main point is everybody should consider their circumstances fully before deciding whether to keep/buy insurance. I have never once heard a person complain by having "too much" cash after a loved one dies!

 

[big-papa]

DW 64, me 61. My 20-yr $500k term policy expires next month. It served its purpose. Our investments should carry us perpetually as long as we don’t get crazy buying new houses, cars, extravagant life style. Males in our family can make 80’s but 90’s would be a stretch. Our only daughter will inherit a decent legacy of several million. Should I renew for another 20 years term for ~$50k over that time period or just let it go? Seems like a $50k gamble to make $500k might make sense?

I had a group life plan through a professional organization for my entire career + whatever was free from my various employers. For the plan through the professional organization, on any year in which my age ended with a 0 or 5, there was an automatic rate increase. On each of those years, I reduced my coverage to approximate my previous premium. My thoughts were as my nest egg grew, there was less that needed replacing by insurance.

At age, 60, the rates went up annually. I almost dropped it then, but Covid hit and I knew I was about 2 years away from retirement. So I kept it for 2 more years, continuing the rate reduction. Then I dropped it and retired. There simply was no longer a need as I had no income from work that needed replacing.

Our savings is for our retirement. If there is anything left, our only kid and 1 charity will receive it.

Cheers.