Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
I know whole life is viewed by many as being a 100% rip off when you can get much better protection at a lot less price but in my case, and for what I want it to do, I think it is the cheapest thing I can get right now.
I've always had 10 year term policies and the family has always been well protected. When the little ones were little I carried a million dollars back in the 1980's when a million dollars was worth a whole lot more than today.
Never before even contemplated whole life because I viewed it as a total rip off and for many I think it still is but let me give you some background on me so you can tell me what you think.
I am 66 years old and the days of purchasing cheap term insurance is over. In good health and a non-smoker you shouldn't even feel a $500k term policy but at 66 I can tell you that you will feel the premium hit.
For a variety of reasons I do not have a whole lot of money socked away in a retirement fund. Some of it is due to stupid decisions on my part, over which I am still kicking my own butt so you don't have to join in, and some for reasons beyond my control. Oh well, life isn't perfect.
For total savings and IRA we barely break the six figure mark and this is only because the accounts have done well lately.
I am married and my wife, being a stay at home mom for most of her life, has little social security so she'll draw 50% of mine but a little less because of WEP and she does have a small state pension. What I really like about her state pension is reimburses her for her Medicare Part B plus provides her with a Medicare Advantage Plan free for the rest of her life. I am really happy about that.
I guess I always earned pretty decent money because if I start drawing social security starting June 1, 2015 we will have a monthly retirement income of $5,476.86/month of which $3,555 will be from social security which represents 65% of our retirement income.
It appears we will enjoy a very low tax rate. Plugging in the numbers here it appears our Taxable Social Security benefit will be $4,865 with the Percent of Social Security benefit subject to taxation 11% with an Estimated taxes due on social security of $1,216.
With $41,444 of our social security "take home" it appears I will enjoy the lowest tax rate I've ever had. Given this so far I wouldn't consider life insurance because for us over $5,000 a month take home is more than adequate to retire. Our home is paid for and we live in south Georgia where the cost of living is very low compared to many other parts of the country.
I am still working, we live on a whole lot less than $5,000 a month and we're not even trying to save money.
Here is the problem and it scares me. If I die first a lot of that retirement money goes away with me. My wife will pick up my social security of and keep her pension which will lower her to about $2,600 a month which is less than half of what we get as a couple.
For this reason I am not touching the retirement savings that is all staying for her should she survive me.
If something happens to her first I am set. Her pension has survivor-ship and the hell of it is if I pick it up as a survivor WEP doesn't happen! Now go figure. If I am a widow I'll still be getting around $4,500 a month, most of it tax free, so I should be just fine.
To boost my wife's survivor income I plan to put off taking social security until I am 70 because at 70 my benefit is estimated to be more than $3,000 and an extra $550 a month to my wife would let me rest a whole lot easier.
My concern is what happens to her if something happens to me before I reach 70?
I have a term policy in effect now for $200k each but it's expiring next year. I have the option of converting it, which I would do if I was told I had a terminal disease, but the rate will knock your socks off.
I have some health issues, one is Type II diabetes that I am able to keep under control with diet, exercise and oral medication so I was wondering what might happen if I applied.
I first applied back in July and after months of letters back and forth to my doctors with two physicals I was approved. Wow, the way things were going it appeared for a while I would have to convert at least part of the term policy I have but the rate was terrible.
A.M. Best gave the company a rating of A++ (Superior) for financial strength.
I have a choice between a $50,000 or $100,000 whole life. Premium for $50,000 is $280/month a double that to $530 if I go with $100,000 policy.
Breaking it down:
Looks to me, over a 10 or 15 year span, with the cash value history it's the cheapest insurance I can purchase.
With both of us alive we'll never feel the premium payments they will just come out on the first of every month. Even if I opt for a $100k policy the premium payment shouldn't impact our standard of living.
If I die next year my wife gets enough to make up for me not being able to work to age 70. If I get sick in six months or just comes a time when I say "screw it, I am done working" I can walk out without worrying about what happens to the lady I've loved my whole life.
Say in 12 years my wife passes first I simply take the cash value of $20,796 ($41,592 if I take the $100k policy) which defrays a large part of the premium payments over the years.
If it was just me I wouldn't do anything.
Why is this so important to me? As part of my job I visit a lot of nursing homes and extended care facilities and I know full well there are good ones and bad ones depending on the price you want to pay. Down here $4,000/month gets you into a real nice place, $3,000 gets you into an OK place and $2,000 will get you into a place where they might wipe the poop off the sofa cushions once a week. Actually saw this once.
If you need to come up with an extra $1,600/month for 10 years you need at least $192,000 which she would have.
Oh, and we checked, we can not purchase extended care insurance for her. Taking care of the future we do on our own.
So question to insurance geeks, and I know some lurk around here, did I crunch my numbers right?
You basically have done the same kind of thing that too few people who knock insurers should -- look not at the "downsides" of alternative investing strategies but instead the WORST CASE pay-outs and when you do that it is a fair deal.
Sadly when do not have the kind of savings to pump up your 'down the road' plans whole actually does make sense for people that otherwise would be facing some tough choices... Yes, there is a bit of "grim gamble" on the part of the insurer that you will NOT need the policy before it grows to be paid off, but IF you (or in your case your spouse...) does not have the income from the policy you are 100% correct that the difference in your later life will be night and day. I too have seen folks in care facilities that swallow up tens of thousands per year for appalling conditions while having just a little more staff that is a little better paid makes for a much more tolerable setting...
The trick is going to be finding a firm that will not pester you with a dozen other products that are probably even worse (specialized 'cancer only' or 'hospice care' or similar overly exclusionary policies) ...
I know whole life is viewed by many as being a 100% rip off when you can get much better protection at a lot less price but in my case, and for what I want it to do, I think it is the cheapest thing I can get right now.
I've always had 10 year term policies and the family has always been well protected. When the little ones were little I carried a million dollars back in the 1980's when a million dollars was worth a whole lot more than today.
Never before even contemplated whole life because I viewed it as a total rip off and for many I think it still is but let me give you some background on me so you can tell me what you think.
I am 66 years old and the days of purchasing cheap term insurance is over. In good health and a non-smoker you shouldn't even feel a $500k term policy but at 66 I can tell you that you will feel the premium hit.
For a variety of reasons I do not have a whole lot of money socked away in a retirement fund. Some of it is due to stupid decisions on my part, over which I am still kicking my own butt so you don't have to join in, and some for reasons beyond my control. Oh well, life isn't perfect.
For total savings and IRA we barely break the six figure mark and this is only because the accounts have done well lately.
I am married and my wife, being a stay at home mom for most of her life, has little social security so she'll draw 50% of mine but a little less because of WEP and she does have a small state pension. What I really like about her state pension is reimburses her for her Medicare Part B plus provides her with a Medicare Advantage Plan free for the rest of her life. I am really happy about that.
I guess I always earned pretty decent money because if I start drawing social security starting June 1, 2015 we will have a monthly retirement income of $5,476.86/month of which $3,555 will be from social security which represents 65% of our retirement income.
It appears we will enjoy a very low tax rate. Plugging in the numbers here it appears our Taxable Social Security benefit will be $4,865 with the Percent of Social Security benefit subject to taxation 11% with an Estimated taxes due on social security of $1,216.
With $41,444 of our social security "take home" it appears I will enjoy the lowest tax rate I've ever had. Given this so far I wouldn't consider life insurance because for us over $5,000 a month take home is more than adequate to retire. Our home is paid for and we live in south Georgia where the cost of living is very low compared to many other parts of the country.
I am still working, we live on a whole lot less than $5,000 a month and we're not even trying to save money.
Here is the problem and it scares me. If I die first a lot of that retirement money goes away with me. My wife will pick up my social security of and keep her pension which will lower her to about $2,600 a month which is less than half of what we get as a couple.
For this reason I am not touching the retirement savings that is all staying for her should she survive me.
If something happens to her first I am set. Her pension has survivor-ship and the hell of it is if I pick it up as a survivor WEP doesn't happen! Now go figure. If I am a widow I'll still be getting around $4,500 a month, most of it tax free, so I should be just fine.
To boost my wife's survivor income I plan to put off taking social security until I am 70 because at 70 my benefit is estimated to be more than $3,000 and an extra $550 a month to my wife would let me rest a whole lot easier.
My concern is what happens to her if something happens to me before I reach 70?
I have a term policy in effect now for $200k each but it's expiring next year. I have the option of converting it, which I would do if I was told I had a terminal disease, but the rate will knock your socks off.
I have some health issues, one is Type II diabetes that I am able to keep under control with diet, exercise and oral medication so I was wondering what might happen if I applied.
I first applied back in July and after months of letters back and forth to my doctors with two physicals I was approved. Wow, the way things were going it appeared for a while I would have to convert at least part of the term policy I have but the rate was terrible.
A.M. Best gave the company a rating of A++ (Superior) for financial strength.
I have a choice between a $50,000 or $100,000 whole life. Premium for $50,000 is $280/month a double that to $530 if I go with $100,000 policy.
Breaking it down:
Looks to me, over a 10 or 15 year span, with the cash value history it's the cheapest insurance I can purchase.
With both of us alive we'll never feel the premium payments they will just come out on the first of every month. Even if I opt for a $100k policy the premium payment shouldn't impact our standard of living.
If I die next year my wife gets enough to make up for me not being able to work to age 70. If I get sick in six months or just comes a time when I say "screw it, I am done working" I can walk out without worrying about what happens to the lady I've loved my whole life.
Say in 12 years my wife passes first I simply take the cash value of $20,796 ($41,592 if I take the $100k policy) which defrays a large part of the premium payments over the years.
If it was just me I wouldn't do anything.
Why is this so important to me? As part of my job I visit a lot of nursing homes and extended care facilities and I know full well there are good ones and bad ones depending on the price you want to pay. Down here $4,000/month gets you into a real nice place, $3,000 gets you into an OK place and $2,000 will get you into a place where they might wipe the poop off the sofa cushions once a week. Actually saw this once.
If you need to come up with an extra $1,600/month for 10 years you need at least $192,000 which she would have.
Oh, and we checked, we can not purchase extended care insurance for her. Taking care of the future we do on our own.
So question to insurance geeks, and I know some lurk around here, did I crunch my numbers right?
No. You subtracted the cash value from the amount paid in to the policy in premiums, but you ignored opportunity cost.
How much would 10-year level term premiums be? How about 20 year? Is the $174 you quote the annual premium?
Also, don't forget that nursing home costs will go up with inflation, which can hurt you if the policy is not indexed.
No. You subtracted the cash value from the amount paid in to the policy in premiums, but you ignored opportunity cost.
How much would 10-year level term premiums be? How about 20 year? Is the $174 you quote the annual premium?
Also, don't forget that nursing home costs will go up with inflation, which can hurt you if the policy is not indexed.
No, that $174 is monthly. That's $2,088 for the year.
I am also dealing with the likelihood of not being able to purchase any insurance at any price in another 5 years due to health issues. I just got the feeling this could easily be the last time I would be accepted. Life insurers love people in their 30's but don't like people in their 70's.
If spending $280 for a $50k, or $560 for a $100k policy, would have an adverse effect on our standard of living I wouldn't do it. I didn't work this hard and long for us to live insurance poor.
I want the policy for what happens if I have a heart attack tomorrow that doesn't kill me but renders me unable to work and I got to collect social security early?
I think your logic is sound. From a death benefit perspective, whole life is a bad deal compared to term. But as you say, there comes a point where term simply isn't an option. If your current savings aren't enough to sustain your wife if you pass prematurely then I agree you probably need something, and whole is probably the only reasonable choice at this point.
I'm not going to comment on the specific policy details you posted, just suggest that you shop around to make sure you get the best deal available. And be sure to work with someone you know and trust if you can, or if not then someone you feel comfortable with that is known to someone you trust. Whole life is a product that typically carries pretty high commissions, and unfortunately there are plenty of agents out there who care about nothing beyond taking their cut and getting out.
No, that $174 is monthly. That's $2,088 for the year.
I am also dealing with the likelihood of not being able to purchase any insurance at any price in another 5 years due to health issues. I just got the feeling this could easily be the last time I would be accepted. Life insurers love people in their 30's but don't like people in their 70's.
If spending $280 for a $50k, or $560 for a $100k policy, would have an adverse effect on our standard of living I wouldn't do it. I didn't work this hard and long for us to live insurance poor.
I want the policy for what happens if I have a heart attack tomorrow that doesn't kill me but renders me unable to work and I got to collect social security early?
Ok, if there's really that small a gap between term life and whole life premiums then it may be worthwhile to take the whole life. Just be sure to read the fine print!
No, that $174 is monthly. That's $2,088 for the year.
I am also dealing with the likelihood of not being able to purchase any insurance at any price in another 5 years due to health issues. I just got the feeling this could easily be the last time I would be accepted. Life insurers love people in their 30's but don't like people in their 70's.
If spending $280 for a $50k, or $560 for a $100k policy, would have an adverse effect on our standard of living I wouldn't do it. I didn't work this hard and long for us to live insurance poor.
I want the policy for what happens if I have a heart attack tomorrow that doesn't kill me but renders me unable to work and I got to collect social security early?
So, you're going to pay over 3k per year for 50k of life insurance?
If you were to pass away first, how much will 50k improve your wife's finances?
If you are unable to work, the life insurance policy is not going to pay out. You can borrow back some of your own money, but so what? If you don't buy the policy, you could simply save that money in the bank or a mutual fund or whatever. It will be available to you anytime you need it.
If you pass away you wife gets/inherits six-figures worth of IRA and savings, right? Plus she'll have her monthly pension and your survivor SS. You said your house is paid for. I take it you have no debt. How much money does she need?...six figures plus the monthy income isn't enough?
I suppose if you can afford it go ahead. But, I don't see the NEED for the insurance. Save/invest that premium. Keep that in your pocket. But if having the insurance is a net plus. I guess there's no harm in it, if there's no technicality that would allow the insurer to try to get out of not paying, NO possibility you wouldn't get the payout.
I think your logic is sound. From a death benefit perspective, whole life is a bad deal compared to term. But as you say, there comes a point where term simply isn't an option. If your current savings aren't enough to sustain your wife if you pass prematurely then I agree you probably need something, and whole is probably the only reasonable choice at this point.
I'm not going to comment on the specific policy details you posted, just suggest that you shop around to make sure you get the best deal available. And be sure to work with someone you know and trust if you can, or if not then someone you feel comfortable with that is known to someone you trust. Whole life is a product that typically carries pretty high commissions, and unfortunately there are plenty of agents out there who care about nothing beyond taking their cut and getting out.
That is taken care of.
The agent I am purchasing this from has been a friend, not just a business friend but a friend, for years.
As much as I had to fight to get this policy, frankly speaking I am surprised they issued it at all, I have a feeling it will be the last policy I will be able to get.
Quote:
Originally Posted by Petunia 100
So, you're going to pay over 3k per year for 50k of life insurance?
Actually $6k per year for $100k. Yes, it is a steep premium but I am 66.
Quote:
If you were to pass away first, how much will 50k improve your wife's finances?
I am pretty sure I am going to go with the $100k policy but to answer your question for the course of the next year, until my term runs out, not a bit. The difference between $200k and $300k isn't that much but that $200k policy expires soon. There is a right to convert but the rates are 50% higher.
High rates of poverty among widows remain a primary con-cern of policies for the elderly. It is important to establish how a relatively low rate of poverty among married couples just before or after retirement leads to such high rates for widows. In this Issue in Brief, we provide an overview of an investigation into the origins of widow poverty in the cohort of Americans represented in the Health and Retirement Survey (HRS). Using the cross-sectional and longitudinal data from the HRS, we examine pat-terns and potential causes of widow poverty. The data reveal two significant and related causes of poverty in widowhood: 1) women who are widowed at a relatively young age, in their 50s, are much more likely to fall into poverty than women widowed after retirement, and 2) it is poorer women who are more likely to be widowed at younger ages. We discuss the implications of these findings for policy and suggest that, in particular, women widowed at younger ages may not be well served by current So-cial Security program policy.
I think my case is a little on the unusual side because so much of our couple retirement fund, over 50% in my case, goes away in the event of my death. If our retirement income went from $5,476.86/month to $4,000/month in the event of my death I would let my current term policies die out and I wouldn't consider the expense of insurance because I know she could live well on the equivalent of $4,000/month take home pay because families all over America are doing just that. What I would tell her if she couldn't make it on $4,000/month is she doesn't have an income problem she has a spending problem.
But if I died this coming summer she'd probably receive $2,500/month total. That's a steep drop and in my opinion a widow living alone in a house that is paid for needs at least $3,500/month to live a comfortable and secure lifestyle. With $100k savings and $100k insurance she'd have $1,000/month to supplement her social security for 20 years. If I can work to age 70 then her social security alone would be a tad over $3,000 bringing her total income to around $3,300 and she wouldn't need anything beyond the savings. With $100k cash $300/month will last forever.
You know what, in four years I might even drop the insurance if everything goes according to plan and 1)I can work to age 70 and 2)not have to draw social security until then.
But for right now what happens if I die tomorrow?
What happens if I have a heart attack tomorrow and I am forced to quit work and collect? In this case we should be able to live comfortably as a couple with what we have now but what happens if I die then at say 72?
Quote:
If you are unable to work, the life insurance policy is not going to pay out. You can borrow back some of your own money, but so what? If you don't buy the policy, you could simply save that money in the bank or a mutual fund or whatever. It will be available to you anytime you need it.
Thinking about it, and trust me I have given this a great deal of thought, I suppose you can look at it more as an insurance to insure I can work to age 70 and beef my social security up. Just three more years means an additional $580 and that is a significant increase for her.
My biggest fear isn't dying it is having something happen where I could no longer work and have to take social security to "make it".
Quote:
Originally Posted by rdflk
Maybe I'm missing something here...
If you pass away you wife gets/inherits six-figures worth of IRA and savings, right? Plus she'll have her monthly pension and your survivor SS. You said your house is paid for. I take it you have no debt. How much money does she need?...six figures plus the monthy income isn't enough?
I suppose if you can afford it go ahead. But, I don't see the NEED for the insurance. Save/invest that premium. Keep that in your pocket. But if having the insurance is a net plus. I guess there's no harm in it, if there's no technicality that would allow the insurer to try to get out of not paying, NO possibility you wouldn't get the payout.
Barely six figures worth of IRA and savings. As in around $110k plus the house that is paid for and it isn't a $300k house in south Georgia either.
The only technicality is suicide and I certainly don't plan on that.
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
