|
Life insurance: take cash or continue coverage
10-15-2021, 10:24 AM
|
#1
|
Thinks s/he gets paid by the post
Join Date: Oct 2015
Posts: 2,326
|
Life insurance: take cash or continue coverage
I retired from MC six years ago at age 56. Part of compensation was a 750k life insurance policy. The company continued to pay the premiums (about 20k a year) until age 62. Naturally, I left it in place as long as it didn't cost me anything (I did have to pay taxes on the premium, alas, but I'm now recovering that).
I will be turning 62 shortly and MC will stop paying premiums. The insurance company is providing several options:
1. Cash out (value 140k)
2. Continue coverage and use cash value to pay premiums. Once that cash runs out, the policy terminates. Based on different rates of return, this could be anywhere between age 72 and 100
3. I can pay annual premiums and policy will last longer, of course.
To me, the purpose of life insurance is to provide for those left behind. Because I'm FIREd, I obviously believe DW and I have enough for the rest of our lives, so if I die, she will DEFINITELY have enough (since she doesn't have to maintain ME anymore... ). Therefore, I intend to cash out "on principle". However, does anyone here see a financial reason to maintain the policy or even pay the premiums? Just curious how others think about this.
|
|
|
|
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!
Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!
You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!
|
10-15-2021, 10:34 AM
|
#2
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Feb 2004
Location: Portland, Oregon
Posts: 7,113
|
$20k is a chunk of change so I wouldn't choose 2 or 3.
Option 1 would be my choice.
__________________
Duck bjorn.
|
|
|
10-15-2021, 10:37 AM
|
#3
|
Thinks s/he gets paid by the post
Join Date: Aug 2012
Posts: 1,829
|
Quote:
Originally Posted by euro
I retired from MC six years ago at age 56. Part of compensation was a 750k life insurance policy. The company continued to pay the premiums (about 20k a year) until age 62. Naturally, I left it in place as long as it didn't cost me anything (I did have to pay taxes on the premium, alas, but I'm now recovering that).
I will be turning 62 shortly and MC will stop paying premiums. The insurance company is providing several options:
1. Cash out (value 140k)
2. Continue coverage and use cash value to pay premiums. Once that cash runs out, the policy terminates. Based on different rates of return, this could be anywhere between age 72 and 100
3. I can pay annual premiums and policy will last longer, of course.
To me, the purpose of life insurance is to provide for those left behind. Because I'm FIREd, I obviously believe DW and I have enough for the rest of our lives, so if I die, she will DEFINITELY have enough (since she doesn't have to maintain ME anymore... ). Therefore, I intend to cash out "on principle". However, does anyone here see a financial reason to maintain the policy or even pay the premiums? Just curious how others think about this.
|
Well based on your parameters I would cash out. obviously just my $.02 worth
|
|
|
10-15-2021, 10:41 AM
|
#4
|
Recycles dryer sheets
Join Date: May 2019
Posts: 318
|
Easy - cash out. We stopped buying life insurance as soon as we had enough to retire.
|
|
|
10-15-2021, 10:42 AM
|
#5
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Mar 2016
Posts: 8,968
|
Yes, take the money. Why have insurance if you have nobody to protect. People need life insurance for children. Children grown and employed? Wife protected by assets?
No insurance needed.
|
|
|
10-15-2021, 10:49 AM
|
#6
|
Thinks s/he gets paid by the post
Join Date: Mar 2012
Posts: 3,931
|
Cash out is the right choice. It's $140k on top of your already sufficient nest egg.
If you want to continue with life insurance, you can buy a $750k 10 or 15 year term policy for a 62 year old today for $200-$300/month - significantly less than the $20k.
|
|
|
10-15-2021, 11:05 AM
|
#7
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Mar 2017
Location: City
Posts: 10,351
|
Quote:
Originally Posted by RobbieB
Yes, take the money. Why have insurance if you have nobody to protect. People need life insurance for children. Children grown and employed? Wife protected by assets?
No insurance needed.
|
+1
__________________
Ignoramus et ignorabimus
|
|
|
10-15-2021, 12:25 PM
|
#8
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jul 2014
Location: Spending the Kids Inheritance and living in Chicago
Posts: 17,093
|
I say take the cash out , just don't tell your Wife, or she might do math and realized quick action nets $750K
__________________
Fortune favors the prepared mind. ... Louis Pasteur
|
|
|
10-15-2021, 02:37 PM
|
#9
|
Thinks s/he gets paid by the post
Join Date: Oct 2015
Posts: 2,326
|
|
|
|
10-15-2021, 04:44 PM
|
#10
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Feb 2004
Location: Portland, Oregon
Posts: 7,113
|
Well, that makes the math more interesting. Option 3 may be a viable option.
__________________
Duck bjorn.
|
|
|
10-15-2021, 05:05 PM
|
#11
|
Thinks s/he gets paid by the post
Join Date: Oct 2019
Posts: 3,671
|
Quote:
Originally Posted by Brat
Well, that makes the math more interesting. Option 3 may be a viable option.
|
Yes, I'm thinking, I could pay you the $140k, start making $20k premium payments-- How much time did you say you have left, I missed that part.
|
|
|
10-15-2021, 05:10 PM
|
#12
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Feb 2004
Location: Portland, Oregon
Posts: 7,113
|
Time2, I don't think that is an option. He takes the $140k payout or pays $200k over 10 years (until age 72) for $750k death benefit for a lifetime.
I wonder if the policy has the option of LTC $ draw-down. Time to read a copy of the policy.
In 22 years half of the men currently 62 will have passed.
__________________
Duck bjorn.
|
|
|
10-15-2021, 05:33 PM
|
#13
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jun 2006
Location: Boise
Posts: 7,882
|
The only time I would keep that kind of policy is if my doctors said I only had a few years to live.
Otherwise I'd cash out and either reinvest the money elsewhere, or take the spouse on a nice trip as thanks for not offing me for the dough.
__________________
"At times the world can seem an unfriendly and sinister place, but believe us when we say there is much more good in it than bad. All you have to do is look hard enough, and what might seem to be a series of unfortunate events, may in fact be the first steps of a journey." Violet Baudelaire.
|
|
|
10-15-2021, 09:40 PM
|
#14
|
Thinks s/he gets paid by the post
Join Date: Jul 2011
Posts: 1,288
|
Not trying to hijack this thread but perhaps this might apply to OP as well. I have life insurance and want to find the best approach to give it to DD & DS now. We have received advice to make them the owners of our policies. I assume at that point, DD/DS could cash it in or wait for the final payout. The cash value is not bad.
Has anyone done that? Do you know the up/downside? Thanks
Thanks
|
|
|
10-15-2021, 09:47 PM
|
#15
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Nov 2010
Location: Sarasota, FL & Vermont
Posts: 36,363
|
If you cash out what are the tax implications, if any? If you pay premiums, what would cash value grow to after 20 years of premium payments?
If this is an old contract it might have a very attractive guaranteed minimum interest rate that you can take advantage of as use for part of your fixed iincome portfolio.
I have an old whole life policy that I am still paying premiums on because the cash value is growing at a rate better than I can find in any bonds.
__________________
If something cannot endure laughter.... it cannot endure.
Patience is the art of concealing your impatience.
Slow and steady wins the race.
Retired Jan 2012 at age 56
|
|
|
|
Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
|
|
Thread Tools |
|
Display Modes |
Linear Mode
|
Posting Rules
|
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts
HTML code is Off
|
|
|
|
» Recent Threads
|
|
|
|
|
|
|
|
|
|
|
|
|
» Quick Links
|
|
|