Life and Disability Insurance after age 65?

[meleana]

Here is our situation. I was forced out of my job at age 62. Not collecting SS. Hubby is working full time and will continue to do so until age 67 (hopefully to provide health insurance for me until I turn 65). He is going to be 65 in April. he will not be taking SS yet either.

I have no pension and his pension we will probably take a lump sum but it was cut off at the knees. Right now that value is $188,000.

We also have about $1,500,000.00 in our IRA's and his 401k and in cash and brokerage accounts (including an inherited IRA that I own).

Our household budget has just a little leeway of $100 extra per month after expenses and hubby's max contributions to his Roth IRA and 401k (just puts 5% in that).

1) His life insurance policy expires soon. Should we bother with getting another term life policy on him? It would cost us at least $121 per month for a 10 year $250,000 policy.Or $94 per month for like a $150,000 one. He was also given quotes for 15, 20 and 25 year policies. My thought was that, although we are hoping to not collect SS until age 70, and live off our money for a few years, if he was to die I would be down to only one SS check- his which will be a little bigger than mine now that I stopped working prematurely.

(Of course, I am not even sure if maybe we should start collecting SS at our FRA's.)

2) His Disability policy is $1569 per year. The indemnity is until age 65. If something were to happen to him- heaven forbid- he would collect on it- after a 90 day waiting period- $2000 per month for 2 years up until age 75. His policy states to be disabled he must not be able to work any job. Well- his job now is a desk job so it he couldn't do that he pretty much would not be able to do anything.

So my question is: Should we get a term life policy in my husband and should be continue with the disability policy while he is still working? Without these 2 policies we would have an extra $300 per month breathing room in our household budget.

My head hurts from thinking about it. My husband and I have gone round and round with this and are confused.

Thanks is advance for your help.

 

[Dtail]

If the disability policy is only good through 65, isn't it useful for only 3 more months?

 

[meleana]

If the disability policy is only good through 65, isn't it useful for only 3 more months?

No. I checked today. I was surprised also.

The agent told me it just continues on and on as long as you continue paying the premiums. But the payout changes.

From 64- 65, if he were to become disabled he would receive benefits for 2.5 years.

From 65- 75 - he would receive them for 2 years.

From 75 years old on- he would receive them for 12 years.


Of course, no one at age 75 keeps their disability policy.

 

[flintnational]

Typically you would purchase life or disability insurance if there is a "financial need". IWO, can you live comfortably on your savings and one SS? If so, you likely do not need the insurance. On the other hand, if your savings and SS will not cover a reasonable budget, then you might need the insurance.

The classic case of need is a young family with children and little or no savings. However, as most of us age and the kids leave the house and our savings grow, the need for life and disability insurance lessens.

 

[Dtail]

No. I checked today. I was surprised also.

The agent told me it just continues on and on as long as you continue paying the premiums. But the payout changes.

From 64- 65, if he were to become disabled he would receive benefits for 2.5 years.

From 65- 75 - he would receive them for 2 years.

From 75 years old on- he would receive them for 12 years.


Of course, no one at age 75 keeps their disability policy.

Okay.
Personally, I am not a big fan of life insurance policies unless there are smaller children.
As to disability, I did keep my policy until retirement at 57.

 

[meleana]

Typically you would purchase life or disability insurance if there is a "financial need". IWO, can you live comfortably on your savings and one SS? If so, you likely do not need the insurance. On the other hand, if your savings and SS will not cover a reasonable budget, then you might need the insurance.

The classic case of need is a young family with children and little or no savings. However, as most of us age and the kids leave the house and our savings grow, the need for life and disability insurance lessens.

Well, I get that but that is why I included the specifics of our situation in my post. I am not sure if we can live comfortably on our savings and one SS check. Our expenses right now are about $5000 per month.


We don't have a financial planner yet. I have just started the process of interviewing some- might even end up with just a CPA firm. But- we won't be done with that process in time for when these renewals come up next month.

 

[flintnational]

Well, I get that but that is why I included the specifics of our situation in my post. I am not sure if we can live comfortably on our savings and one SS check. Our expenses right now are about $5000 per month.


We don't have a financial planner yet. I have just started the process of interviewing some- might even end up with just a CPA firm. But- we won't be done with that process in time for when these renewals come up next month.

So, your budget for 2 is about $60k annually. You have $1,688,00 in savings and pension lump sum benefits. A 3.5% WR gives you $59k per year. You would also have 1 or 2 SS checks in the future. I don't see a need for either the life or disability. And, as you pointed out, the downside of keeping the policies is they decrease your spending today and going forward. *

*The above assumes your DH is in good shape. If he is in poor health and these policies can be renewed/continued without underwriting, then it might make sense to keep them.

 

[meleana]

So, your budget for 2 is about $60k annually. You have $1,688,00 in savings and pension lump sum benefits. A 3.5% WR gives you $59k per year. You would also have 1 or 2 SS checks in the future. I don't see a need for either the life or disability. And, as you pointed out, the downside of keeping the policies is they decrease your spending today and going forward. *

*The above assumes your DH is in good shape. If he is in poor health and these policies can be renewed/continued without underwriting, then it might make sense to keep them.

Thanks for your input. Yes- he is thankfully in good health except for high blood pressure which he has had forever and has been under control with meds. He has gained some weight though, so he has to work on that.


We were considering keeping the disability policy for just another 2 years until he stops working, but maybe as you said we might not need to.

 

[Teacher Terry]

I wouldn’t keep either.

 

[pjm-7]

I probably would not keep either policy. However, since he is still working is there any additional group life insurance that he can pick up? The small cost for some additional coverage may alleviate some of your fears.

 

[meleana]

I probably would not keep either policy. However, since he is still working is there any additional group life insurance that he can pick up? The small cost for some additional coverage may alleviate some of your fears.

Oh- good point! He does have a small life insurance and AD&D policy at work that we pay for! I forgot about that!



Funny- because this is the first year we had to pay for it, where as in the past the company picked it up. But it is very reasonable so we decided to do so during open enrollment since he has always had the coverage during his 22 years working there. If he is able to work for 2 more years that would cover that period!


Thanks! That was very helpful!

 

[Bir48die]

So, your budget for 2 is about $60k annually. You have $1,688,00 in savings and pension lump sum benefits. A 3.5% WR gives you $59k per year. You would also have 1 or 2 SS checks in the future. I don't see a need for either the life or disability. And, as you pointed out, the downside of keeping the policies is they decrease your spending today and going forward. *

*The above assumes your DH is in good shape. If he is in poor health and these policies can be renewed/continued without underwriting, then it might make sense to keep them.

+1

You are at the self insuring stage. Plenty of savings. I still have a whole life policy only because I took the cash value and it's running out the premiums. Not much of a payout.