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Yes, you insure the person most who receives the most SS and pension. In our case my DH was a much higher earner than I, so we have a much larger policy on him. We have a much smaller policy on me, because the loss of my SS and pension would not affect his living as much as vice versa.
You don't have life insurance for paying off the mortgage exactly. You have it to preserve your estate. You can't possibly know what things might happen in the last years of life. In the event we spend our assets before death, the insurance will go to our heirs.
Initially DH bought a large policy when he received a pension settlement due to a successful lawsuit brought against a former employer. He felt he needed the policy in case he were not to live to receive benefits, or at least receive them for very many years. He said he had the option of buying some sort of annuity, but thought insurance was more cost effective. Lucky for us, he had medical problems a few years later that would have precluded him buying the same policy later.
He modified our policies when we retired. I believe we reduced both of them somewhat.
Nevertheless we are insured, and I am thankful he planned so well for us in this. Should I live longest, I will have to live on a far smaller income than we have together. Should we die together the kids will receive the benefit. Should I predecease, he will be able to live comfortably.
I was surprised when we visited he local attorney who redid our trust. They figure the insurance benefit value in your net worth. That was news to me.
Yes, you insure the person most who receives the most SS and pension. In our case my DH was a much higher earner than I, so we have a much larger policy on him. We have a much smaller policy on me, because the loss of my SS and pension would not affect his living as much as vice versa.
You don't have life insurance for paying off the mortgage exactly. You have it to preserve your estate. You can't possibly know what things might happen in the last years of life. In the event we spend our assets before death, the insurance will go to our heirs.
Initially DH bought a large policy when he received a pension settlement due to a successful lawsuit brought against a former employer. He felt he needed the policy in case he were not to live to receive benefits, or at least receive them for very many years. He said he had the option of buying some sort of annuity, but thought insurance was more cost effective. Lucky for us, he had medical problems a few years later that would have precluded him buying the same policy later.
He modified our policies when we retired. I believe we reduced both of them somewhat.
Nevertheless we are insured, and I am thankful he planned so well for us in this. Should I live longest, I will have to live on a far smaller income than we have together. Should we die together the kids will receive the benefit. Should I predecease, he will be able to live comfortably.
I was surprised when we visited he local attorney who redid our trust. They figure the insurance benefit value in your net worth. That was news to me.
It's an individual thing.
Ten years ago we moved 800 miles south for the better weather, neither of us could take the snow, ice and cloudy gloom of Great Lakes winters anymore so together we moved south. We love it here but all we have here is each other and our church family and some local friends.
That said I know if something happens to me the first thing my wife will do is move back north to be with family and to be honest I will probably do the same thing if something happens to her first. Selling a house, moving 800 miles and buying a new house takes money because at 74 years old you're not going to be able to make the move on your own. Won't be like the days when you and a friend manhandled a couch out the front door and what about that refrigerator? Nope, you're going to hire it ALL done for you and that takes money.
Like many we have some retirement savings but it isn't a million dollars like some advisers think you should have. To sell a house, buy a new one and make an 800 mile move would take some of it especially when you consider to sell our current house and buy a comparable house up north will cost 50% more. I figure the house selling, house buying and move will cost $50k to $60k and I bought the insurance to make sure she can do it. I can imagine no greater sadness and loneliness than to lose one you love and be unable to move next to family.
In our case I don't need her to have insurance because I have money coming in, right at $915/month, that I fell into that will last the rest of my life but die with me. I do not use this money for any planning because it doesn't transfer to the wife. It's extra money can be saved for later, spent on extras or can be used for emergencies. This is why I carry a lot of life insurance on me but very little on my wife; she needs it and I don't.
My husband and I both have term insurance and will be renewing it in the next few years. It's more for peace of mind. Yes, our plan is to have the mortgage paid off before we are due to retire, and we are comfortable that we'll have enough to live on post-retirement. But it's the security of KNOWING that the spouse of the deceased will have options thanks to the life insurance that has us continuing the policy.
Much like nicet4, I know that if I die first my husband will hotfoot it back to NYC to live out his remaining days - cost be damned. Knowing my insurance policy can help offset that expense is comforting. We've joked that the life insurance payout will cover his rent for 10-15 years and after that he will have to go back to work.
Likewise, if he were to die first, it's nice to know that I can stay where I am, or move closer to our kids. But one thing I WOULDN'T have to worry about is whether my salary (if I'm still working upon his passing) or retirement benefits cannot cover expenses all on my own.
I could see situations were term insurance could work to the advantage of the buyer, but stay away from whole life. Whole life is a complete rip off. Its not uncommon that the first two years premiums go to pay the agents commission. That's one reason there is almost no accumulation of cash value the first few years. Payouts are also much less for the amount paid.
The other thing you have to add into your planning is the rate of inflation and how it will affect the survivor's economic wellbeing. Here is a great article about inflation and retirement/estate planning: How retirement plans vastly underestimate inflation - MarketWatch Life insurance will be a great help to the survivor if plans go awry.
I could see situations were term insurance could work to the advantage of the buyer, but stay away from whole life. Whole life is a complete rip off. Its not uncommon that the first two years premiums go to pay the agents commission. That's one reason there is almost no accumulation of cash value the first few years. Payouts are also much less for the amount paid.
We had whole life for about ten years before deciding to liquidate when I got laid off in 2009. Those funds were a huge help when combined with unemployment and at-home transcription work since it took me almost a year to find a job!
Very helpful info here and much appreciated. The peace of mind might be worth it alone since I can't stop thinking about the "what if" situations that might come up.
Quote:
Originally Posted by augiedogie I could see situations were term insurance could work to the advantage of the buyer, but stay away from whole life. Whole life is a complete rip off. Its not uncommon that the first two years premiums go to pay the agents commission. That's one reason there is almost no accumulation of cash value the first few years. Payouts are also much less for the amount paid.
Quote:
Originally Posted by Girl
We had whole life for about ten years before deciding to liquidate when I got laid off in 2009. Those funds were a huge help when combined with unemployment and at-home transcription work since it took me almost a year to find a job!
Take a look at whole life over a 20 or 30 year period and you will find that the return is not bad at all, particularly considering the low interest environment we are in.
Going back to the OPs question, I would keep it. I wouldn't get rid of a life insurance policy unless I had won the big lottery. In this day and age, the surviving spouse could use all the financial help they can get.
I am 62 and have minimal life insurance on myself, I do have a 300,000 policy on my husband which I own and have had for at least 20 years, he will be 65 in March and I will continue to fund the policy as long as I can.
right now he also has a large policy through work, but when he retires that stops, so I have always tried to keep the other policy.
We have no savings and a small 401K and will have SS and thats about it. Also he has Parkinson's and diabetes, but then I have diabetes and heart disease plus a few other unpleasant things.So who knows which will go first. If I go first my children can keep the policy on their dad in force if they so choose.
You buy life insurance to replace income on someone for support.
Some people buy life insurance as a sort of lottery ticket for the beneficiary.
Each couple should look at their situation persoanlly.
If the husband passes, what income ends? what life ins is there that is paid and how much income can that become?
What expenses are left? Can the wife pay those expenses with available income or out of bank acct.
If the wife passes, what income ends, same questions
That boat the husband loves, the wife will sell it and pocket the sale money, save expenses
That spouse's car, should it be sold? save insurance , need the sale money
Everyone touts Term life insurance, but remember, it costs much more in higher age brackets
Nice to have and afford in 60's, but if husband passes at 80, maybe pension ends, SS ends, Can wife afford the $500/month cost. But does she need it? maybe for a child. Or the reasoning, "I've paid for the life insurance for 40-50 years, didn't die so haven't collected, suppose I stop and I die next week, all for nothing."
It's very hard to walk away from a Term policy you have paid for, for 40 years, with death (and a payout to your heirs) looking closer and closer.
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