Life insurance after retirement?

[retiredunder50]

When we bought the house and started having children, DW and I each got term coverage. The house has been paid over a decade now, but the children were still young. I retired just before my oldest started college. We terminated my wife's policy upon my retirement and I just lowered my coverage as my middle son graduates in the spring. 2 down; 1 to go. We still have a 9th grader at home. When he finishes schooling, we will terminate the policy. He is thinking about med school as he is in a high school that specializes in health and sciences. For that reason alone, we are holding on to it.

 

[jimnjana]

We have 30 year term policies, and I have a couple of while life policies. We bought the term from the same mutual aid association we had our ins when on active duty. We decided on this rather than doing survivor benefits on our pensions. Whole life policies were "paid up"...

 

[RE2Boys]

When my second son was born, I obtained a 20 level term policy to insure that my wife had additional resources to have in the raising of my two sons. Less than two years later I accepted an early retirement do to organizational downsizing. If I pass, my wife would have only received 55% of my full pension so I was glad to have obtained the policy.
I've kept the policy in force even though our investments are 3X the value of 19 years ago. Since it a level premium, I rationalized keeping it the last few years as, on a per 1,000 benefit, it is now dirt cheap for this 68 year old Dad. But only facing one more decision point, then it will get dropped as any continuation would be very expensive and it is no longer needed.....the heavy lifting of raising the boys is coming to an end, they are now 19 and 21.

 

[Sunset]

As part of my final divorce settlement, I agreed to buy a 10 year term life policy payable to the Xwife. Cost me about $7,500 per year. It expires next month and the premium went up to about $56,000 per year. Needless to say, I will not be continuing with this policy.
......

I hope to see you still here at the end of next month..... just be careful...

 

[Just_Steve]

I have a small life insurance thats enough to pay off my mortgage if I kick, just a to make sure DW has no problems even though she will get 75% of my pension.

 

[Alan]

This post has made me think about life insurance. We don't have kids and neither of us has life insurance now. I have a pension I haven't started taking yet. I have options of single life, or 50%, 75% or 100% survivor benefits. I've never thought about taking the single life option and replacing the pension differential with a life insurance policy. Interesting idea. What is the easiest way to figure out the best option, recognizing that insurance premiums will increase over time?

While planning for retirement about 15 years ago I looked into this, without the benefit of the advice from this site. The estimated difference between 100% and 50% survivor on my pension was a lot more than buying a life insurance policy as I was age 47 and in good health.

I chose a VUL policy with a payout on my death of $500k to my wife. I noticed after 11 years paying into it (just over $55k) that the cash value, which I have invested in a Fidelity Freedom fund, kicks out more than enough dividends to pay the policy costs so I cancelled the premiums and it has been self funding since then and should never need any additional payments into it.

Knowing what I know now I would never recommend a VUL to anyone, I think I have just been lucky. I would probably have still opted for the 50% survivor pension and gone with a term policy to cover the gap until as such Time my DW would not be relying on the payout on my death.

 

[traineeinvestor]

I cancelled mine when I reached FI - shortly before I retired.

By definition, if there is enough money to support myself + family then there has to be enough money to support the family without me around. It helps that there is no estate duty where we live.

 

[CRLLS]

Instead of cancelling a term life policy or any life insurance policy for that matter, has anyone looked into selling the policy? I recently learned this is "a thing". I know nothing about it. Maybe it is a shady business like I think selling your structured settlement is. Just curious.....

 

[Alan]

I cancelled mine when I reached FI - shortly before I retired.

By definition, if there is enough money to support myself + family then there has to be enough money to support the family without me around. It helps that there is no estate duty where we live.

It is really for those cases where pensions and annuities provide a significant portion of the income and a spouse stands to lose a large portion of that income on the death of the owner.

I expect there are other examples where the death of a spouse can result in significant financial hardship to the survivor. (In Louisiana when we lived there the law was that 50% of the assets of a spouse went to the children).

 

[Sue J]

In 1999, at age 44, we bought 20 year term life policies, 250K on DH and 100K on me, a SAHM. The kids were 12 and 15.

DH retired in 2010 and we very easily live off of his COLAed pension. If he dies first it continues to me as the survivor at 100%. I will have a small monthly SS. If I die first his pension bumps up a few hundred a month to the amount it would have been without the survivor reduction.

We really don't need the life insurance policies. We decided to keep them because they are CHEAP. Mine is $15/mo and DHs is $53/mo. We keep them because the cost is small and because our assets are not huge. If one of us dies between now and Dec 2019 (end of 20 year policy) it would be nice for the one left behind to have some additional assets, whether it would be for investing or passing on to the sons.

If our expenses need to be adjusted the life insurance costs would be one of the first things to go. But so far, so good.

 

[mistermike40]

Thanks again for everyone's input. DW and I agreed to cancel the policy. However it plays out, we'll be fine and our children will be fine. Insurance made sense (to me) for over twenty years, but not at this stage of our lives.

 

[Travelfreek]

I learned a lot about company provided term life insurance vs open market policies when I turned 46 (I'm 62 now). My husband and I went to a financial planner -fee based to plan a budget for college savings for our kids (in junior high at that time). He wanted to
know our life ins info and the premiums we paid at that time. I had a company -provided term life ins for 5x my income. It was dirt cheap when I first got it (about age 29) but it kept escalating each 5 years based on my age without me realizing it -payroll deduction-no notice in mail! By the time I was 46, I was paying $750 a year for $200k
Payout. My financial advisor suggested I go to a web site and apply on the open market! I got a policy for $230 a year for 15 year flat rate term for same $200k payout!. My employer (us post office) offered a no blood test type
FEGLI ins. Problem with that is all employees are grouped together (high risk with low risk). I was low risk paying the average rate I then dropped my fed policy other than the free one and saved $500+ a year. Once I turned 54, my open market policy was set to expire in 7 years so I went out again to insure.com or other site and found a 20 year flat term $500k policy to cover me to age 74 for just $1200 a year.

As for why I do it? I'm a fed retiree w no survivor benefit for my husband (50% survivor cost 10% of yearly annuity or about $3500 a year). So we would have given up $3500 a year for my hubby to get half my fed pension. I've been retired from Feds since March 31 09 (8 years 9 mos). If I die tomorrow, my husband gets no fed pension (now worth $41k a year after a few COLAs). So instead, he will get
$500 k tax free money to divvy up for the next 20-30 years (he's almost 60). With the 50% annuity fed option, had we opted for that, he would have rec'd 20 k a year for his life (at a cost of $3500 for each year of my retirement prior to my death - 9 years and counting now (whenever that may be).

In addition, we bought Him a 20 year term policy (till he's 75 at the low rate of $1300 a year flat rate). We got this since I will Not receive his SSA as a fed pensioner (which will be at least $28k a year even if he applies at age 62 (2 years from now).

We have 2 late 20's kids both financially independent - hallelujah!) and a granddaughter from DD and her hubby.

The cost of keeping these term policies are so cheap in the scheme of things so we will definitely keep them!

They will help surviving spouse with Income loss if one of us dies by age 74 or 75 and if not,(they expire before we do, no biggie!) We will be really set either way by that time !

I hope this makes sense. 2 things I learned: open market term life is way to go. Get a 30 year policy if it makes sense. It's always higher to get a policy when you're older. Also, Whole life ins is a BIG waste of money.

We are set to pay off house in a few years and have healthy IRAs and pensions. Life ins will be cheap icing on the cake if one of us dies before 74/75 (I sure hope not).