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I should add that your strategy is a GOOD one, just not the right policy to do that with. One note on your strategy though, is there an option for continuing your health insurance through retirement if you take a 75% payout or similar? You might want to consider that option if it's available. Run the numbers to see though.
With a "flexible premium" policy, especially since you are paying the minimum, if costs go up and you don't change your payment, eventually those costs will eat away at the cash value and death benefit and could reduce it to little or nothing---right when you need it. Those cost will increase dramatically when you are in your 60's and beyond. Solvency is an issue and when you are buying life insurance from a property and casualty company the fees tend to be higher because they don't have the book of business to invest those funds as prudently as other companies who are in the business to sell life insurance.
Allstate is an A+ or A rated company, depending on the agency...a company like Northwestern Mutual is A++ or AAA. While it doesn't seem like much, there are probably 100 companies rated better than Allstate and no one better than Northwestern Mutual. It just is what it is. We've had NM for 25 years and our policies are very healthy!. For what you need, you need better. If it was just some term policy that will never pay out, go for cheep but since your wife is counting on these funds to carry her through her life, it's just not worth the chance... at least it wouldn't be for me.
it isn't even a question of if costs go up. oh they go up and the closer you get to your 80's the more expensive the costs become.
they know what they are doing, if you don't inject more money in the policy will self-extinguish as your become more likely to die.
correct. whole life expenses never go up because the whole premium is the cost of insurance ,commissions and fees. you pay to be covered until a pay off. it is priced because they assume a 100% pay off even though in reality most never continue that long but they have to assume you will collect..
Last edited by mathjak107; 08-09-2013 at 05:02 PM..
correct. whole life expenses never go up because the whole premium is the cost of insurance ,commissions and fees. you pay to be covered until a pay off. it is priced because they assume a 100% pay off even though in reality most never continue that long but they have to assume you will collect..
Actually, only about 5% of whole life polices lapse and only about 5% of term policies ever payout....
Fees and expenses in a whole life policy are typically recovered in the first 5-7 years of a policy then after that, the dividends start increasing the case value at a faster rate...
from a wall street journal story they ran .
interesting.
In a study released in December, the Society of Actuaries found that 20% of whole-life policies are terminated in the first three years, and 39% within the first 10years.
One needs to keep a cash-value policy at least 20 years to amortize the acquisition costs and produce a decent investment," says James Hunt, an actuary at the Consumer Federation of America, an advocacy group.
And there isn't an easy way to compare these costs across companies. "Cash-value policies are impossible for laypersons to penetrate," Mr. Hunt says.
I should add that your strategy is a GOOD one, just not the right policy to do that with. One note on your strategy though, is there an option for continuing your health insurance through retirement if you take a 75% payout or similar? You might want to consider that option if it's available. Run the numbers to see though.
The 100% payout choice is a done deal that can not be changed.
Health insurance is separate and if the current structure remains we will be covered at a reasonable rate.
The 100% payout choice is a done deal that can not be changed.
Health insurance is separate and if the current structure remains we will be covered at a reasonable rate.
Ok, just something to look into. Usually it's only an issue for people retiring before they are Medicare eligible. Sounds like you have a great pension plan!
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