Life Insurance

[golfnut]

I see an issue with this plan.

In early 60s, how many of us have 20 years left? SWAG - half.

In my case, mentioned above, it's sort of a Las Vegas type mental calculation. My chances of living to a (really) ripe old age are not good. Keeping up my policy - even if I don't officially "need" it to protect DW is a "good bet." I'm guessing OP has some of the same issues (at least age) which would prevent obtaining a similar policy now.

So roughly a $1000/year against $80K might be a good "bet." YMMV

Thanks, this is along the lines of what I was thinking. Fyi, in my mid 60s and a cancer survivor.

 

[Retiredmajor]

I have a $250K term policy on me that expires at age 70 unless I renew it then, and I'm likely to. While we are financially OK, I want my wife to have no worries if I pass away before her.

 

[Montecfo]

I have cancelled most of my life insurance. But I do keep a $400k group term policy in force, against higher tax rates if I pass. If DW passes, I think I can figure things out. Just don't want her to have to.

As a retired educator, DW has a small policy that remains in effect and that we do not pay on. It may be $70k or so.

Life insurance can be more efficient way to fund LTC in my opinion.

Even in FIRE, I find that life insurance has some value, even if we don't "need" it.

 

[Koolau]

Life insurance can be more efficient way to fund LTC in my opinion.

Sorry if I've missed a previous explanation of this. How does LI replace or enhance LTC? Thanks. (Heh, heh, just got a notification that my LTC policy will be increasing premiums by 10% next year.)

 

[travelover]

........... How does LI replace or enhance LTC? .........

If you have enough life insurance, your family will make sure you don't live too long once you hit the LTC facility.

 

[RetiredHappy]

The question is how much is the $80K in the grand scheme of things, i.e. your other investments. If you have enough investments to provide income to the surviving spouse and the $80K is not needed, then that is the answer.

 

[Dash man]

I have a $350k level term policy that expires in seven years. The premium is low and my health at 65 isn’t looking great for longevity. I’m hanging on to it not for my wife, since we don’t need it, but for the kids. Funeral expenses are all paid for and planned, so their shouldn’t be any surprises for anyone.

 

[pb4uski]

We have had a met life insurance policy since 1986. Its called a Flexible Premium Life policy. Face value $80,000. My wife is the beneficiary. We are both in our 60s and retired. For years, we paid the min. premium $250 to keep the policy in force. Well, the policy will expire in May next year unless we up our payment to $1,050. Of course, the required premium increases year by year as we get older.


Just wondering if we should keep this policy in force. Of course, I discussed this with my wife and she really had no strong opinion one way or the other.


She did bring up looking into burial policies. I did a quick check on these products and for $10,000 policy , it was about $600 a year.


Financially, we are doing ok but lets face it $80,000 is $80,000.


Any opinions or thoughts would be appreciated.

This sounds like a traditional universal life policy that was underfunded so the current balance isn't sufficient to fund the cost of insurance charges which increase with age. What is the cash surrender value? I presume that it is negligible.

If you decide you need life insurance then you could price out a 25 year term life policy, but if you are in a position to be retired, then you probably don't need life insurance.

 

[Sue J]

We had 20 year term policies from age 45 to 65. DH had $250,000 for $53/mo and mine was for $100,000 for $15/mo. Along the way the kids grew up and were no longer dependent on us. We kept them the full 20 years because it was so inexpensive.

At the end of the 20 year term the renewal costs were huge, something like $1100/mo for DH and $300/mo for mine. We did not renew.

DH's pension is 100% if I survive him. No one else is supported by our income.

 

[Koolau]

If you have enough life insurance, your family will make sure you don't live too long once you hit the LTC facility.

Heh, heh. Ask a silly question...

Just watched a Law and Order re-run last night called "The Tax Man Cometh." SPOILER ALERT: The gist was that, due to the one-year expiration of ALL Federal inheritance tax in the year 2010, potential inheritors "induced" their very sick relatives to seek cancer treatments in a non-traditional treatment clinic. Of course, the patients all died in 2010, assuring maximum inheritance to the relatives.

Fortunately, even the current Federal limits make no difference to me, so...

 

[teej1985]

I wouldn't pay $1k for $80k of life insurance. I'm assuming that the premiums will keep going up, too. I'm assuming your cash value has all been drained at this point if it's near lapse.

 

[bigriver]

I bought back into life insurance after I got divorced in my 30s. The point was in case I got remarried and I still had a house to pay off. I let the policy lapse about 20 years later after I paid the house off and had enough savings. I didn’t need insurance then….nonpoint

 

[isisdave]

DW and I are just over 70 and both had Universal Life $250k policies that flipped from the cheap term rate to much higher last year (me) and next fall (her). The original plan was to drop them, but then ... Covid. I found and could still qualify for a cheaper policy ($150k for the price of the old one) and got that, planning to drop the original, but instead reduced it to $125 and paying half the new high rate for a year or two. I know this is really betting against myself, and although my statistical expected life is still 13 years, I thought ... who knows, why not roll the dice.

Since then we've moved to a LCOL state, so the plan now is to let it go at the end of the policy year, and not to extend DWs in October. Still, Covid variant pi-rho-sigma-tau could change our minds again.

 

[marion10]

In many states, whole life counts against your assets in qualifying for Medicaid. My father took out whole life policies when he was 80 and again at 84! They come to about $20,000 and his state only allows $2500- so they had to be cashed in to keep his eligibility for Medicaid.

 

[JeKa]

My "retirement plan" will/should provide for DW and I, or if one of us passes, up to ages 93 for me and 95 for DW. As such, I no longer pay for life insurance. I do have one retiree life policy from MegaCorp which is free.

X2

 

[WWDog]

I purchased a whole life policy several years ago. Premiums are high but it gains in value significantly more than I pay in and has done so even from the start. The gains are well above my yearly premiums and are projected to do the same until my late nineties which I don't think I will last that long. My brother had a whole life policy with the same company because he was forced to due to a very large business loan. He still keeps the policy for his grand kids because it supports itself.

 

[RobbieB]

Ah yes, projections.

 

[Musica40]

Going To Let It Go

Life insurance is security in the event that either you or your significant other outlast each other. If you play your cards right and can self insure yourselves, I see no reason for life insurance. My current term expires when I turn 69 and I will not consider renewing it nor will my wife. Our current assets dictate that either one of us will be fine in the event the other one passes. We are lucky.

 

[Montecfo]

Sorry if I've missed a previous explanation of this. How does LI replace or enhance LTC? Thanks. (Heh, heh, just got a notification that my LTC policy will be increasing premiums by 10% next year.)

Hi Koolau,

Life insurance can be used for LTC in a couple of ways.

If it is paid up life insurance you can borrow against it, and use the funds for LTC, for example.

But even term can replenish assets used for LTC once the insured passes. So there is money for the second to die, if needed.

You can also buy a "first to die" insurance policy with your spouse which would do the same thing.

Another twist is to have a life policy on each spouse. That way if either goes into LTC funds are replenished upon passing.

Of course, a term policy gets expensive over time. But guess what, so does LTC. But unlike LTC, life insurance is certain to pay off.

On the other hand, LTC policies are more likely to lapse, go unused (unneeded) or be minimally used (small claim after elimination period).

Life insurance can be useful, even if unneeded at the moment to fund living expenses. I view it as a better deal than LTC because it is certain to pay off.

 

[Koolau]

I wouldn't pay $1k for $80k of life insurance. I'm assuming that the premiums will keep going up, too. I'm assuming your cash value has all been drained at this point if it's near lapse.

You are correct that premiums increase due to age - but, of course, so does the chance of croaking. In my case, there is still considerable cash in the policy that keeps premiums manageable into my 80s. Yes, I could take that cash out (I think it's about $17K presently).

Ask yourself this "thought question" (since it couldn't actually happen). Say you meet some geezer on the street. Some Las Vegas casino offers you a bet. You pay the casino a $1K and if the geezer dies within a year, they give you $80K. AND the deal is you get to keep betting each new year (yes, the bet you place goes up each year.) If the geezer looked healthy and fit, you might not want the bet, but if he was grizzled and obviously "sick" wouldn't you take that bet?

Stated another way. If I went to the insurance company now and wanted THAT policy, would they give it to me after underwriting? Nope! Not a chance! The odds have shifted in my favor. (Darn it!) (By the way, I don't necessarily recommend life insurance - other than term - but this policy was purchased by my small business to fund a buy sell agreement. I bought the policy after 30 years in force when the small business was sold.)

In my case, I know my health so I think it's a good bet (for DW's sake). A $grand vs $80K? Sounds good to me. At some point, it may not be a good bet - but I'm hoping that's the way it turns out. It's a bet I hope to lose. YMMV

 

[MarkiePippo]

I am a widower with two college age daughters. I keep a group policy for 450,000 from my old employer. It is not as much as it should be. I keep it to offset that I was not able to take a lump sum for my pension. When I die, I can not pass it to them. The only one who can still get it would have been my late wife. If I meet someone and get married again I will have to rethink everything.

 

[Out of Steam]

I look at life insurance as necessary if the loss of income when you die will adversely effect your surviving household. So when we were both working and had kids - we had enough to pay off the house - that was enough that the survivor could support the kids on one salary.

My wife and I both have term life insurance policies in force in our early 60s. We removed the inflation rider from hers several years ago, and went back to the original (1990s) face amount. We will probably drop this policy after the pandemic, or sooner if the price increases substantially. I would expect to be OK without it.

I have a level premium term policy with about six years to run, It is now in force to keep my wife from having to make large draws from retirement savings early due to the survivor reduction in my pension if I die. It would also pay to get her out of a single-family house that she would not try to maintain alone.

 

[Koolau]

Hi Koolau,

Life insurance can be used for LTC in a couple of ways.

If it is paid up life insurance you can borrow against it, and use the funds for LTC, for example.

But even term can replenish assets used for LTC once the insured passes. So there is money for the second to die, if needed.

You can also buy a "first to die" insurance policy with your spouse which would do the same thing.

Another twist is to have a life policy on each spouse. That way if either goes into LTC funds are replenished upon passing.

Of course, a term policy gets expensive over time. But guess what, so does LTC. But unlike LTC, life insurance is certain to pay off.

On the other hand, LTC policies are more likely to lapse, go unused (unneeded) or be minimally used (small claim after elimination period).

Life insurance can be useful, even if unneeded at the moment to fund living expenses. I view it as a better deal than LTC because it is certain to pay off.

Thanks for the explanation. I can see how it might work, but LTC insurance is more direct (but with its many problems mentioned.) It's not for everyone. I think we took it because we saw 3 of our 4 parents pass in nursing homes. Mom did have LTC insurance and it was a God Send. YMMV

 

[Koolau]

My wife and I both have term life insurance policies in force in our early 60s. We removed the inflation rider from hers several years ago, and went back to the original (1990s) face amount. We will probably drop this policy after the pandemic, or sooner if the price increases substantially. I would expect to be OK without it.

When we had the kids, I carried all the term life (company group policy) that was allowed. It was relatively inexpensive but could have been obtained even cheaper on the open market IF I had been more "insurable." Having kids late in life has lots of issues - being eligible for insurance you never thought you would need is just one of them. YMMV

 

[youbet]

Mom did have LTC insurance and it was a God Send. YMMV

You can probably say the same thing about any kind of insurance that you need to collect on. Homeowner's if your house burns down. Auto if you are involved in an accident. Umbrella if you are sued. Etc. Sorry that your mom had to pass in a NH, but glad to hear the cost was covered.