life insurance questions

[wdcbooks]

Most life insurance does not go up when you have health problems, so I am not sure what kind your father has. The simple truth though is that even if you are in great health life insurance dramatically increases in cost as you hit your sixties. Generally insurance is there to protect you when you don't have assets and have a family to protect. As people enter retirement it becomes cost prohibitive.

My inclination would be to do without the insurance and pray they apply the premiums to savings or paying down the mortgage.

ps. Generally term life insurance is not a bad deal. Prices have declined significantly over the past couple of decades and it serves an important purpose.

[CletusVanDamme]

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Life insurance is super super -EV and the classic sucker scam; it really exploded in America after WW2 when life insurance salesmen traveled the country and sold it to lots of working stiffs as an "investment".


In the modern age the only reason you should have any life insurance at all is as part of your tax planning for estate transfer.

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Pretty much wrong on all points. Firstly, you should HOPE life insurance is -EV. That means you didn't die prematurely.

Its no more of a "sucker scam" than automobile or home insurance. If you ever need it, you are thrilled you had it. If not, you wonder why you pay for it.

Permanent forms of insurance may be pitched as an "investment.". Maybe they are, maybe they aren't, but its my understanding you don't buy life insurance as an investment. I bought mine to know that if I do die early, my wife and daughter will still have the benefit of me providing for them.

As for only using life insurance for estate planning...geez. First of all, in "the modern age", 99.9% of "estates" are exempt from taxation. Maybe the tax will come back in a few years, but who knows. Second, estate planning was about the last thing on my mind when I bought what I have.

[/ QUOTE ]I wouldn't lump homeowner's insurance and car insurance under the same bracket. Most people pay too much for their car insurance by over-insuring their car. In your case life insurance probably makes sense. When you are retired and have no dependents and live in a 1.2million dollar house, life insurance doesn't make as much sense.

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How in the world can most people over insure their cars? Auto insurance is composed of liability insurance, uninsured drivers insurance, and physical damage. You don't get to pick how much your car is worth, and thereby pick your premiums. Your cars value is determined by an adjusted at the time of a claim.

As for life insurance being used by the OPs parents: If, in the event of his dad's death, his mother is going to be missing, and in need of her husbands income, I think life insurance makes perfect sense. I just don't think a 61 year old with heart problems is going to get a cheap policy.

[captZEEbo]

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Life insurance is super super -EV and the classic sucker scam; it really exploded in America after WW2 when life insurance salesmen traveled the country and sold it to lots of working stiffs as an "investment".


In the modern age the only reason you should have any life insurance at all is as part of your tax planning for estate transfer.

[/ QUOTE ]

Pretty much wrong on all points. Firstly, you should HOPE life insurance is -EV. That means you didn't die prematurely.

Its no more of a "sucker scam" than automobile or home insurance. If you ever need it, you are thrilled you had it. If not, you wonder why you pay for it.

Permanent forms of insurance may be pitched as an "investment.". Maybe they are, maybe they aren't, but its my understanding you don't buy life insurance as an investment. I bought mine to know that if I do die early, my wife and daughter will still have the benefit of me providing for them.

As for only using life insurance for estate planning...geez. First of all, in "the modern age", 99.9% of "estates" are exempt from taxation. Maybe the tax will come back in a few years, but who knows. Second, estate planning was about the last thing on my mind when I bought what I have.

[/ QUOTE ]I wouldn't lump homeowner's insurance and car insurance under the same bracket. Most people pay too much for their car insurance by over-insuring their car. In your case life insurance probably makes sense. When you are retired and have no dependents and live in a 1.2million dollar house, life insurance doesn't make as much sense.

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How in the world can most people over insure their cars? Auto insurance is composed of liability insurance, uninsured drivers insurance, and physical damage. You don't get to pick how much your car is worth, and thereby pick your premiums. Your cars value is determined by an adjusted at the time of a claim.

As for life insurance being used by the OPs parents: If, in the event of his dad's death, his mother is going to be missing, and in need of her husbands income, I think life insurance makes perfect sense. I just don't think a 61 year old with heart problems is going to get a cheap policy.

[/ QUOTE ]they can over insure it by getting fire, theft, having a really low deductible. You can also get towing and labor insurance, rental reimbursement and a few others. I know when I lowered everything to the minimum required by law, I saved about $4-500/yr.

[cbloom]

The most +EV car insurance is generally the absolute minimum insurance.

Re: life insurance, the only way I can see it being a good move is if you have no savings/equity and not enough retirement savings and the husband is still working and the wife can't work. Then it provides security from really going broke. Barring that, if the worst happens, presumably you have savings/equity instead which you can live on which is a much better move.

I hate seeing elderly people blow all their savings on expensive insurance and other "security" measures; there are so many of these companies set up to absolutely destroy the elderly who would almost always be better off just paying for things themselves and tapping their savings/equity if necessary.

One thing that's often a good move is for the older people in the family to sell their houses to their children, perhaps in some form of trust, and then put the money into an HSA type of account.

[jjshabado]

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How in the world can most people over insure their cars? Auto insurance is composed of liability insurance, uninsured drivers insurance, and physical damage. You don't get to pick how much your car is worth, and thereby pick your premiums. Your cars value is determined by an adjusted at the time of a claim.


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I just got car insurance and there's tons of options that you pick. Deductible, maximum coverage on property, liability, health, and a couple of others. I filled out a 6 page form picking different options and the cost/month was different by a couple of hundred of dollars.

[cschumer]

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zeebo,

basically, she told me their premiums are going up, she doesn't really want to pay the extra $230 a month, and then asked what she should do. i am just looking for general advice with regards to life insurance for people close to retirement.

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Ask them to look in the phone book for a CFP or a CHFC
in their area, both are planners or possibly a life insurance broker.

General info- it certainly is not -ev given what little
you have said about their cash poor postion. That has traditionally been the primary use for life insurance(cash to the surviving spouse, when there is not enough on hand).

2760 a year for 400k sounds like a good deal to me( certainly given your fathers health condition), but remember i have not seen your fathers policy. Typically the only type today that have increasing premiums are universal life policys and they can be tricky. Like i first suggested, i would talk with a planner.

[cschumer]

[ QUOTE ]
[ QUOTE ]
Life insurance is super super -EV and the classic sucker scam; it really exploded in America after WW2 when life insurance salesmen traveled the country and sold it to lots of working stiffs as an "investment".


In the modern age the only reason you should have any life insurance at all is as part of your tax planning for estate transfer.

[/ QUOTE ]

Pretty much wrong on all points. Firstly, you should HOPE life insurance is -EV. That means you didn't die prematurely.

Its no more of a "sucker scam" than automobile or home insurance. If you ever need it, you are thrilled you had it. If not, you wonder why you pay for it.

Permanent forms of insurance may be pitched as an "investment.". Maybe they are, maybe they aren't, but its my understanding you don't buy life insurance as an investment. I bought mine to know that if I do die early, my wife and daughter will still have the benefit of me providing for them.

As for only using life insurance for estate planning...geez. First of all, in "the modern age", 99.9% of "estates" are exempt from taxation. Maybe the tax will come back in a few years, but who knows. Second, estate planning was about the last thing on my mind when I bought what I have.

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could not have said better

[CletusVanDamme]

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[ QUOTE ]
[ QUOTE ]
Life insurance is super super -EV and the classic sucker scam; it really exploded in America after WW2 when life insurance salesmen traveled the country and sold it to lots of working stiffs as an "investment".


In the modern age the only reason you should have any life insurance at all is as part of your tax planning for estate transfer.

[/ QUOTE ]

Pretty much wrong on all points. Firstly, you should HOPE life insurance is -EV. That means you didn't die prematurely.

Its no more of a "sucker scam" than automobile or home insurance. If you ever need it, you are thrilled you had it. If not, you wonder why you pay for it.

Permanent forms of insurance may be pitched as an "investment.". Maybe they are, maybe they aren't, but its my understanding you don't buy life insurance as an investment. I bought mine to know that if I do die early, my wife and daughter will still have the benefit of me providing for them.

As for only using life insurance for estate planning...geez. First of all, in "the modern age", 99.9% of "estates" are exempt from taxation. Maybe the tax will come back in a few years, but who knows. Second, estate planning was about the last thing on my mind when I bought what I have.

[/ QUOTE ]I wouldn't lump homeowner's insurance and car insurance under the same bracket. Most people pay too much for their car insurance by over-insuring their car. In your case life insurance probably makes sense. When you are retired and have no dependents and live in a 1.2million dollar house, life insurance doesn't make as much sense.

[/ QUOTE ]

How in the world can most people over insure their cars? Auto insurance is composed of liability insurance, uninsured drivers insurance, and physical damage. You don't get to pick how much your car is worth, and thereby pick your premiums. Your cars value is determined by an adjusted at the time of a claim.

As for life insurance being used by the OPs parents: If, in the event of his dad's death, his mother is going to be missing, and in need of her husbands income, I think life insurance makes perfect sense. I just don't think a 61 year old with heart problems is going to get a cheap policy.

[/ QUOTE ]they can over insure it by getting fire, theft, having a really low deductible. You can also get towing and labor insurance, rental reimbursement and a few others. I know when I lowered everything to the minimum required by law, I saved about $4-500/yr.

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Looks like you are misinformed on most of your points...

Fire: Automatically covered by comprehensive insurance.

Theft: See; Fire

Towing: See; above.

As for your other points. It looks like most of these coverages are a choice, and from my experience, its a choice most insurance agents have told me NOT to get. They seem to prefer I get a higher deductable, and could care less if I choose rental reimbursement.

But, none of these things have to do with overinsuring my car, they DO deal with overinsuring myself.

[Los Feliz Slim]

RE: The payments going up, I think that's typical on some term policies. My life insurance has a 30 year term, but I can continue the policy after that point by paying really super high premiums.

I have and feel like I need life insurance because my wife is a stay-at-home mom and if I kick I want her to be able to stay in the house, take care of our daughter, etc. Also, my business has a policy on me to automatically purchase my share of my company in the event of my death, and also as a sort of extra key-man policy.

I like my life insurance, it makes me feel warm inside.