momto4kiddos
Drama Llama
Posts: 5,156
Jun 26, 2014 11:45:15 GMT
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Post by momto4kiddos on Mar 22, 2019 12:59:14 GMT
I welcome all thoughts of course, but i'm particularly interested in info on more of the we're 50 now and our kids are grown life insurance needs.
Our life insurance policies are starting to expire. It's making me feel old and is also raising a lot of questions between us. We each have 2 policies that we've purchased ourselves. No work policies. Long story short we bought small policies when we had our first kid, then larger policies were purchased as our family/expenses grew.
What factors did you consider when/if you needed new policies at this stage of your life? Kids are grown, college expenses winding down within the next couple years. Still have mortgage balance, but it's small. We have some retirement but not enough at this stage imo. We were thinking along those lines and the fact that I've mostly been a stay at home mom. But financial advisor also threw in a new thought with some people use policies to pay off debt incurred from medical or living expenses as they age.
So what were the factors you considered?
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moodyblue
Drama Llama
Posts: 6,381 
Location: Western Illinois
Site Supporter
Jun 26, 2014 21:07:23 GMT
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Post by moodyblue on Mar 22, 2019 13:17:37 GMT
Is there a need to leave any money for someone else?
What is the cost of continuing to pay for the insurance - especially if it is not really needed to cover expenses after a death or for another specific need?
Would your money be better spent in another way? You might find greater benefit in having that money while you are alive (adding to retirement savings, for example), even if it is used to benefit the person who would have inherited it.
What kind of insurance do you have - term? Whole life? How much? To sell a policy or surrender it will give you cash, but that depends on how much insurance you have.
The situation could change when one of you dies - e.g., if you use proceeds to pay off the house and don’t need to leave money to someone other than a spouse, you might cancel/surrender a policy on the surviving spouse at that time.
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Post by allison1954 on Mar 22, 2019 13:27:54 GMT
I assume when she said expire, that meant term insurance
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Post by utmr on Mar 22, 2019 13:32:28 GMT
Interesting timing. I just dropped the cancellation in the mail. We still have coverage through my work, but we also had an old policy that we have had since the kids were born.
The price keeps going up with age, and now that the two oldest kids are halfway through college it was just time. We ran the numbers and decided that we could make it through a worst case scenario (death, plus job loss so no life insurance coverage, plus having to have Cobra). We can divert the insurance premium each month into retirement it savings.
You need to consider kids still at home, disabled kids who will need resources, debt, bills, mortgage, and balance the cost against your risk tolerance.
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Post by warrior1991 on Mar 22, 2019 13:42:36 GMT
I am 45, no husband, no kids. But my parents live with me. I have a life insurance policy to cover the mortgage and my car payment/balance if something ever happened to me. They said they didn't think they would stay in the house with all the upkeep, but I said this way it is paid off and you can take your time deciding what to do.
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Post by mikklynn on Mar 22, 2019 13:44:11 GMT
Will you or your spouse be able to manage financially if the other one dies without insurance? If the answer is yes, you don't need it.
Life insurance is NOT an investment, no matter what people tell you.
As an aside, if you and your DH aren't fully funding your retirement, you need to rethink how much help you are giving your college age kids. You can take loans for an education. You can't take loans for retirement income.
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Post by busy on Mar 22, 2019 13:47:32 GMT
First of all, term only, not whole life. Premiums are FAR less expensive and the “investment” part of whole life has terrible rates of return.
Calculate how much additional income each of you would need to live comfortably if the other passed away and don’t forget to include any additional services you might need to pay for if the other spouse were gone. Also take into account any increased costs you may have in retirement (healthcare is a common one). 10-12x the annual number you come up with is a reasonable guideline. Then add in any lump sums you might need (to pay off mortgage, funeral expenses, moving expenses, etc.). I would not worry about including extra to leave inheritance for your kids, unless there is a specific need to do so.
You’ll want to get term policies that are as long as you think you’ll need them. Premiums will be much higher for you in 10 years or so, due to age, so look at these as your last policies.
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Post by Crack-a-lackin on Mar 22, 2019 13:52:03 GMT
Essentially you need to replace your income if someone is dependent on it so with a mortgage I would still have some level of term insurance so the spouse isn’t left with that burden on one income. If you have a lot in retirement then there’s less of a need, but being at that age where you are just about self-insured but not quite, and also not old enough to withdraw from retirement savings if necessary, I feel more comfortable with still having term insurance.
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janeinbama
Pearl Clutcher
Posts: 3,257
Location: Alabama
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Post by janeinbama on Mar 22, 2019 13:52:30 GMT
Now is the time for you and DH to set down with an advisor and review your financial picture. Funding your retirement is a priority and much easier to do when kids are off the "payroll". Some life insurance may be needed to cover funeral costs.
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Post by internetmama on Mar 22, 2019 14:03:19 GMT
Decide now while you are both healthy. If you wait and get a disqualifying illness, it will no longer be a decision you can make.
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basketdiva
Pearl Clutcher
Posts: 3,699
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Post by basketdiva on Mar 22, 2019 15:14:27 GMT
Something to keep in mind when you cash out there can be tax consequences on the money. With the help of our financial advisor we were able to make a tax free exchange into another product. Also be prepared for a big sales pitch from your insurance company ( one company told us our financial advisor was wrong, etc,etc) and the other didn't care that we dropped the policy.
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Post by librarylady on Mar 22, 2019 15:19:41 GMT
IMO, the function of life insurance is to make sure those who depend upon you for income can enjoy life after you are gone.
If no one is dependent upon you for income to get basic necessities, then no insurance is needed.
In our case, we are both retired, home/cars are paid for...so we carry no insurance, except a small policy that the retirement system has for me.
We plan on cremation so we should not have a large funeral bill to pay.
My parents bought burial spaces (12) before I was even 10 years of age.
Don't get sold the idea that it is an investment of money.
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lurkyloo
Full Member
Posts: 284
Dec 5, 2018 6:53:08 GMT
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Post by lurkyloo on Mar 22, 2019 15:31:59 GMT
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momto4kiddos
Drama Llama
Posts: 5,156
Jun 26, 2014 11:45:15 GMT
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Post by momto4kiddos on Mar 22, 2019 15:44:51 GMT
We currently have term and will get term again likely (although I do want to explore the link lurkyloo supplied.)
It's such a different mindset now than it was before. Obviously we're looking at it for different reasons than ensuring we could raise the kids with a roof over their head. Then it was cheap to buy, now not so much. And yes we realize the costs will just go up from here and they're already so much more expensive than when we were in our 20's or early 30's.
My big fear is that IF dh were to pass suddenly in next few years (prior to adding more to our retirement funds) then i'd be under-prepared for the rest of my life. He balks at the expense of what they're quoting...yet wants me to get a new policy also and i'm not working. It's one thing trying to anticipate the future, but then financial advisor mentioned possible leftover medical bills if one were sick and my head just spins!
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Post by mikklynn on Mar 22, 2019 15:50:31 GMT
Ask your financial adviser what his/her commission is on this product. These polices do NOT pay what they promise. Life insurance is to protect your survivors, NOT an investment. |
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Post by roxley on Mar 22, 2019 15:56:27 GMT
Almost any financial planner that is NOT an insurance agent will tell you that is not the best option. You are better off buying less expensive term insurance and investing for retirement in your own accounts that you control. When you research, Try to look for resources not from insurance companies. They make tons off of those policies. |
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Post by busy on Mar 22, 2019 16:13:00 GMT
Something to keep in mind when you cash out there can be tax consequences on the money. With the help of our financial advisor we were able to make a tax free exchange into another product. Also be prepared for a big sales pitch from your insurance company ( one company told us our financial advisor was wrong, etc,etc) and the other didn't care that we dropped the policy. There's no tax on life insurance proceeds. |
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basketdiva
Pearl Clutcher
Posts: 3,699
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Post by basketdiva on Mar 22, 2019 16:13:17 GMT
Ask your financial adviser what his/her commission is on this product. These polices do NOT pay what they promise. Life insurance is to protect your survivors, NOT an investment. My husband and I got hooked on these policies years ago and they turned out not to be what we thought. Our financial advisor had suggested we get rid of them and invest in something better. Due to a variety of reasons, we kept putting it off. Last year we finally listened to him. |
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Post by busy on Mar 22, 2019 16:13:22 GMT
It's a rebranding of whole life. Stay away. |
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basketdiva
Pearl Clutcher
Posts: 3,699
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Post by basketdiva on Mar 22, 2019 16:17:13 GMT
Something to keep in mind when you cash out there can be tax consequences on the money. With the help of our financial advisor we were able to make a tax free exchange into another product. Also be prepared for a big sales pitch from your insurance company ( one company told us our financial advisor was wrong, etc,etc) and the other didn't care that we dropped the policy. There's no tax on life insurance proceeds. There are when you cash out a policy before death. For example- you have paid $10k in premiums but the cash is now $15K due to paid up dividends ( at least in our case), therefore the $5k increase is taxable. |
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Post by busy on Mar 22, 2019 16:19:18 GMT
There's no tax on life insurance proceeds. There are when you cash out a policy before death. For example- you have paid $10k in premiums but the cash is now $15K due to paid up dividends ( at least in our case), therefore the $5k increase is taxable. True. The OP has term policies now and most of us are recommending sticking with that, so that's what I was talking about. Term policies can't be cashed out. |
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caangel
Drama Llama
Posts: 6,025
Location: So Cal
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Post by caangel on Mar 22, 2019 16:42:07 GMT
RUN and find a new financial planner! |
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scrappington
Pearl Clutcher
in Canada
Posts: 3,157
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Post by scrappington on Mar 22, 2019 17:00:40 GMT
Remember the spouse when planning. Kids maybe grown and gone , but your spouse is still around.
Ideally it would be nice to go together but we all know that is not the case.
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Post by MichyM on Mar 22, 2019 17:11:57 GMT
It sounds like you are bringing in no, or little of the family's income. If you're not in a position to cancel both life insurance po!icies, you may consider dropping the insurance on your life and keeping the policy on your husband.
When our son graduated high school and we were 1000% sure that his college education was fully funded we let our policies go.
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kelly8875
Pearl Clutcher
Posts: 4,448
Location: Lost in my supplies...
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Post by kelly8875 on Mar 22, 2019 19:50:45 GMT
If you’re mostly a stay at home, you should at least have some coverage on your DH. If he dies, would you have enough to support how you want to live after?
I have both whole and term policies, with long term care add ons. I also invest in my retirement as much as I can. I have term policies on my 17 & 19 year olds as well. I also have a policy at my job that I don’t have to pay for.
To say that one insurance is better than another is only up to the policy holder. You need to talk to your financial planner, an insurance agent, and do your research. Everyone has different reasons for having life insurance, so whatever is most important to you is what you need to do.
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Post by busy on Mar 22, 2019 20:27:00 GMT
If you’re mostly a stay at home, you should at least have some coverage on your DH. If he dies, would you have enough to support how you want to live after? I have both whole and term policies, with long term care add ons. I also invest in my retirement as much as I can. I have term policies on my 17 & 19 year olds as well. I also have a policy at my job that I don’t have to pay for. To say that one insurance is better than another is only up to the policy holder. You need to talk to your financial planner, an insurance agent, and do your research. Everyone has different reasons for having life insurance, so whatever is most important to you is what you need to do. An insurance agent is the last person you should take life insurance advice from. They get significant payouts for selling whole life policies. A fee-based financial planner who does not sell any insurance products should give good advice re: the (lack of) value in whole/universal life policies. |
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JustTricia
Pearl Clutcher
Posts: 2,894
Location: Indianapolis
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Post by JustTricia on Mar 22, 2019 21:12:45 GMT
I agree with talk to a financial planner and an insurance rep. As you can see from this thread, people have varying opinions. And they are opinions.
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Post by tommygirl on Mar 22, 2019 23:06:42 GMT
Focus on paying off that mortgage, making sure you have an emergency fund, and funding your retirement. Then you might be in a position to drop the life insurance and maybe look at long term care insurance. I hear it is cheaper if you get it at age 60 vs age 70.
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Post by Basket1lady on Mar 22, 2019 23:22:38 GMT
Check your policy. DH’s parents had a policy that they took out when he was born. When we got married, they put it in his name to take over the payments. We didn’t need it, so we turned the dividends back into the policy. It’s still growing and it pays for itself now.
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