Life Insurance Question

don't believe life insurance is taxable. in any event, you would be well below the minimum threshold for estate tax. probably a solid investment for you to pay his premiums, assuming he won't age out of the policy (if it's term).

Do you have a good relationship with your siblings, and if so, do you want to continue having a good relationship with your siblings after your dad passes. If the answer is yes, have your dad name all of you equal beneficiaries, and split the premiums equally.

Is it whole life? Is your dad a cheap arse?

I would not do it honestly.

There's a reason this isn't done more often and why the insurance companies make money. The biggest way they make money, is once you get over 65-70 the premiums really take a steep jump. We are talking like $10k- 30,000 a year.

The biggest way insurance companies make money is most people stop paying once they reach a certain age. Are you really going to continue paying $12k a year when your dad is 68 and in very good health? Cause that's not chump change.

I have a family member that works for UBS and he does some insurance work for his clients, he makes something like 75% of the first year premium on whole life policies. He only works with high net worth individuals so they do them as estate planning. But he was telling me about a guy that was like 74 and signed up for a $1 mil policy that was like $30k a year, so my family member made like $22k on a couple hours of paperwork.

So sure that guy lives to be 94 and he pays something like $600k for $1 mil of tax free income for his family? Really it's only $400k of income though right, he paid $600k. Plus, if he invested that $600k it would be likely worth well over $1 mil right?

So, if your dad is healthy I would simply take the premiums and put them into a 401k, Roth, etc if you don't max those out.

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But he was telling me about a guy that was like 74 and signed up for a $1 mil policy that was like $30k a year, so my family member made like $22k on a couple hours of paperwork. So sure that guy lives to be 94 and he pays something like $600k for $1 mil of tax free income for his family? Really it's only $400k of income though right, he paid $600k. Plus, if he invested that $600k it would be likely worth well over $1 mil right?

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He’s lying to you. Also, I can tell you don’t know how insurance works. If it’s whole life. A 1 million dollar policy would be worth over 2 million IF you don’t access the cash value and let the dividends accumulate or pay up additional benefits. Hell, he could probably pay out the policy solely of the dividends.

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And no, I may not know insurance great but I know damn well that a $1 mil policy is exactly that: $1 mil. The cash value goes up, but the insurance value does not. You don't get both, you get either that cash value or the $1 mil at death. Again, not a good product.

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You're absolutely incorrect. 1 million is the face value of the policy.

For reference, see this 250k whole life illustration. 30 yr old male by age 65 would have a death benefit of 329,001. notice how if dividends aren't touched, they accumulate at 3.6% interest. the interest on this illustration is extremely conservative btw. Also note that the premium NEVER changes.

Also to note that this same 250k policy, if left untouched, would have a death benefit of 505,316 at age 85.

Now tell me oh wise one, where else can you have tax deferred growth and have instant access to the money. tell me where you can take out a loan and NEVER have to pay it back? By all means though, continue being uneducated about the importance and value of whole life

Sorry for the late response guys.

Apparently my Dad has an Annual Renewable Term Policy. He’s had it for the last 20 years.

It’s through the ADA, so he said his premiums are pretty low. He pays every 6 months. His last payment at age 55 was $750 (so $125/month).

It pays out $1 million until he hits age 82. The day he hits 82, the plan is canceled.

Knowing all this, would it be a good idea to start forking up the money for the policy?

I’d rather not start betting on my Dad to die...

If it can not be converted to a whole life policy without going back into underwriting then no I wouldn’t pick up the tab for it, it’s gonna get expensive soon.

Holy hell man. You’re wrong Again. I just fricking posted a whole life illustration from a policy. Please stop talking out of your arse.

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You may receive dividends. The insurer may pay dividends to whole life policy owners, depending on the company's financial performance.2 Although dividends are not guaranteed, the possibility of earning dividends is an attractive feature of whole life policies.

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Most life insurance companies have never missed a dividend payment on whole life.