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I'm pretty sure I know the answer, but I just wanted to double check:
At the age of 60, is 20 year term life insurance (which ends at 20 years) better than Universal Life (which will cover him until his death)?
The Universal Life will cost $2,000 more per year. I know it has lots of fees and that I won't build any real value in the policy. The policy would pay the face amount only. However, it would not expire after 20 years.
whoa, universal may not cover until death unless a lifetime of payments support it. it is nothing like whole life.
term you buy for a needed period of time and then it ends. the idea is your heavy expenses are gone and basically you can self insure.
whole life you sign a contract to pay them by a certain date the full value of the policy through premiums,decades of reinvested interest and dividends.
if you cancel the cash value is actually an agreed upon refund amount since you paid for future insurance you will not collect.
the insurer covers you until you die . you basically accumulte enough in whole life over decades to self insure as once the policy endows you get a check for the policy value if you are alive.
universal life has everything varying. nothing is written in stone. the problem is a universal policy has internal insurance costs that go up every year.
as you go through the older ages the cost of insurance takes bigger jumps. if you are letting the policy support itself off the cash value by your 80's it is really designed to self destruct and burn through what value you have that is supporting it. usually if you don't add money later in life it terminates before you do.
i still have a small universal policy. i had about a 20k cash value eventually which has been paying the policy for 30 years now.
at 61 the cost of insurance has started taking big jumps. it looks like at 82 or so unless i start paying premiums again the policy will burn itself out.
save yourself alot of trouble and go either 30 year level term or whole life.
That a 60 year old shouldn't have anything they need to insure their life against.
At 40... kids still at home and in school, mortgage balances and other debts
and so forth... sure, you don't want to risk dumping that on a spouse/kids.
That a 60 year old shouldn't have anything they need to insure their life against.
At 40... kids still at home and in school, mortgage balances and other debts
and so forth... sure, you don't want to risk dumping that on a spouse/kids.
not true at all. many spouses have pensions or income that does not carry over to the surviving spouse.
estate plaining is a big use of life insurance .
turning taxable ira and 401k money into non taxable money for a spouse is done with life insurance.
2nd marriages are great places to use life insurnance. if you leave everything to each other like marilyn and i life insurance is used so our own kids at least get something befor the surviving spouse dies.
escaping state taxes is a use of a life insurance trust.
i can go on and on but the point is there are lots of uses for life insurance from 60 on and it is alot more than a mortgage and kids.
I'm pretty sure I know the answer, but I just wanted to double check:
At the age of 60, is 20 year term life insurance (which ends at 20 years) better than Universal Life (which will cover him until his death)?
The Universal Life will cost $2,000 more per year. I know it has lots of fees and that I won't build any real value in the policy. The policy would pay the face amount only. However, it would not expire after 20 years.
What are your thoughts? Thank you.
This seems strange
I would think the premiums for a UL would be less than term
age 60 is old for term esp 20 year
How are the premiums calculated on the UL policy? To compare apples to apples on premium alone look at either
1. Premiums to fund the policy 20 years or
2. ART premium funding, meaning the minimum premiums to fund the policy each year. Obviously this will increase but it should start out lower than term
at 61 the cost of insurance has started taking big jumps. it looks like at 82 or so unless i start paying premiums again the policy will burn itself out.
save yourself alot of trouble and go either 30 year level term or whole life.
Horrible advice
If you are concerned about the COI rates increasing keep 2 things in mind
#1. Insurers rarely raise cost of insurance rates & the piece that changes is the credited interest rate
$2. If you are concerned about the guarantees just buy a universal life policy with a guarantee. Compare these premium rates to term
Whole life is usually a bad idea unless you are in a very high tax bracket. Whole life is an investment but for regular folks that investment doesn't make sense.
Thank you everyone. The term life which ends at age 80 is $4,199 per year. The guaranteed Universal Life which ends at age 95 is $$7,117 per year. I need to stop avoiding the reams of documents and get busy reading. Thank you for your thoughts.
Last edited by LookingatFL; 11-10-2013 at 12:37 PM..
If you are concerned about the COI rates increasing keep 2 things in mind
#1. Insurers rarely raise cost of insurance rates & the piece that changes is the credited interest rate
$2. If you are concerned about the guarantees just buy a universal life policy with a guarantee. Compare these premium rates to term
Whole life is usually a bad idea unless you are in a very high tax bracket. Whole life is an investment but for regular folks that investment doesn't make sense.
Nice to see you still know as little as always about the subjects you argue about..
Whole life is not an investment. Whole life is a contract for insurance until death,period.
The cash value is only a refund if you cancel the contract. It is no different than paying towards a life time gym membership and cancelling . They have an agreed amount they will refund you with interest in this case.
The cash value is not even in your name. It just comes out of the companys money like any other refund.
If you think insurers hardley raise the cost of insurance i suggest you look at the internal cost structure of a universal life policy.
Cost of insurance changes year to year in many universal plans or they increase you at certain age milestones.
Why bother with a universal policy if you want guarantees. Buy the right product if you want guarantees which is whole life.
Last edited by mathjak107; 11-10-2013 at 02:00 PM..
Ok, so reading through these documents, I still think that Term is the better option. The guaranteed Universal Life has a lot of fees including policy charges (which are unspecified) and surrender charges (which are unspecified). I'm wrong about the $7,117 annual fee. That will cover him until age 120 not age 90. To cover him to age 90 will be $6,688. With the Universal Guaranteed Life they will guarantee me 2% interest over the term of the policy but that accrued interest will be applied to the fees of this plan. It just looks like I pay a lot more fees to get the same $300,000 if he dies.
I was leaning toward the term insurance and I think I am still leaning toward the term. I will ask to see if I can change it from a 20-year term policy to a 30 year-term policy. I think the guaranteed Universal policy may only make sense because it will cover my husband for 30 years. I would be very surprised and happy if he does live to be 90. It is my hope to die first but I don't think that will happen.
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