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lgtiger
LSU Fan
LA
Member since May 2005
680 posts

Term of term life expiring
Got a message offering a conversion to whole life. Late 50s still need some insurance, what are options?


Weekend Warrior79
LSU Fan
Member since Aug 2014
6009 posts
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re: Term of term life expiring
IMO, reassess your needs and get another term policy.


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120
Belly
LSU Fan
Member since Dec 2016
235 posts

re: Term of term life expiring
If you're still insurable and/or reasonably healthy, look at quotes for new term policies. If you can't get another policy but truly need coverage, go with permanent conversion if affordable.


PotatoChip
LSU Fan
Member since May 2014
1877 posts

re: Term of term life expiring
Just find another term policy, that’s always the best bet.


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50
lgtiger
LSU Fan
LA
Member since May 2005
680 posts

re: Term of term life expiring
3 yrs clear of cancer, so may be an issue getting anything reasonable


Lsupimp
Colorado Fan
Colorado Fan My Ass.
Member since Nov 2003
67714 posts

re: Term of term life expiring
Most insurance companies will require you to be 7-10 years free of cancer. The conversion is probably your best bet now IF you still feel you need coverage. Then in a few years get another term policy if you feel you need it.

Also- there may be companies that have shorter periods- like maybe five years.Im not aware of any but I’m sure there are some. Viewing the conversion as a short term stop gap until you can apply for a term policy in another few years may be your best option.

Your options imho-
Cancel policy
Renew same policy ( super expensive)
Convert policy into whole life
Get new term policy later when able to qualify


lgtiger
LSU Fan
LA
Member since May 2005
680 posts

re: Term of term life expiring
I will see how much conversion is and take more out term later. Thanks


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TDsngumbo
LSU Fan
Member since Oct 2011
25603 posts
 Online 

re: Term of term life expiring
This is what I do for a living.

You're in your late 50s now -- do you even have a need for that much coverage now? Probably not. Most people, by the time they are in their late 50's and older, don't need nearly as much life insurance as they needed when they were younger. If you're in that boat, I would highly advise you just let the term expire and get a much cheaper, lower face amount whole life policy to take care of your final expenses when you die. You don't want to go without any life insurance in force. Since you are over 50, you qualify for what's called a final expense whole life policy -- these are usually $35,000 or less of coverage. It is permanent and, although will likely seem very expensive compared to your term policy cost, will never expire.

The reason you don't want to get a new term policy at your age is because you will likely have to go through full underwriting and that will catch any and every little thing you've been diagnosed with, prescribed medication for, and advised about by a member of the medical profession. The insurance company will use that info to rate the shite out of your term policy. So you'll likely be paying a lot more for way more coverage than you really need at this stage of your life.

If you convert the term to whole life, you may have to go through full underwriting or you may not have to - depends on what company it is. But you'll likely have a minimum amount that you can convert to whole life, which will still make it MUCH more expensive than you really want to pay at this point in your life.

My best advice is, if you don't have a need for a large amount of coverage anymore, to get a final expense whole life policy so that your family will have tax-free funds to bury you with and won't have to wait for your estate to be settled before being able to access funds in your accounts to pay for it.


Personally, my wife and I each have almost $1 million in term coverage until we're 60. We also have $100,000 of whole life coverage that we purchased when we were younger. When our term runs out, we're going to let it go because we won't need that by then anyway (kids will be grown, house paid off, etc.) and we will each have our whole life policy to pay for our final expenses and still have a little left for the other to invest/save/spoil grandkids with.


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TDsngumbo
LSU Fan
Member since Oct 2011
25603 posts
 Online 

re: Term of term life expiring
quote:

3 yrs clear of cancer, so may be an issue getting anything reasonable

Not with a final expense policy. As long as your medical records indicate that you are cancer free, you would qualify for immediate coverage without a waiting period. Unless you have other health problems.

If you have questions, <---@gmail.com.
This post was edited on 10/13 at 9:48 am


lgtiger
LSU Fan
LA
Member since May 2005
680 posts

re: Term of term life expiring
Have $ 200,000 whole life already, so I don't guess anything additional will be necessary. Thanks for the advice


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TDsngumbo
LSU Fan
Member since Oct 2011
25603 posts
 Online 

re: Term of term life expiring
If that's the case, let the term expire.


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wasteland
USA Fan
Member since Apr 2011
4230 posts

re: Term of term life expiring
Another term


SaintNation
New Orleans Saints Fan
Member since Dec 2008
1428 posts

re: Term of term life expiring
Whole life is not useful for people who are responsible and can manage money. If you take the savings from a whole life policy to a term and invest it yourself you will make more money in the long run. If you need someone to make you save money then buy the whole life policy.


TDsngumbo
LSU Fan
Member since Oct 2011
25603 posts
 Online 

re: Term of term life expiring
quote:

Whole life is not useful for people who are responsible and can manage money.

Unless you're like me and bought it before becoming completely uninsurable.
quote:

If you take the savings from a whole life policy to a term and invest it yourself you will make more money in the long run.

If anyone buys a whole life insurance policy because of the cash value component then they're wrong from day one. You don't buy a whole life policy because of the cash value aspect. You buy a whole life policy so that you have permanent coverage no matter what. Whole life policies often come with Guaranteed Insurability Options -- meaning you are able to purchase additional life insurance at certain times without proving insurability. Again, that is priceless to people like myself who are uninsurable due to a condition that came up after buying the whole life policy.
quote:

If you need someone to make you save money then buy the whole life policy.

Again -- don't buy a whole life policy because of the cash value component. You will lose 99% of the time if that's your reason for buying a whole life insurance policy.
This post was edited on 10/14 at 9:34 am


meansonny
Georgia Fan
ATL
Member since Sep 2012
12891 posts

re: Term of term life expiring
quote:

You don't buy a whole life policy because of the cash value aspect
quote:

Again -- don't buy a whole life policy because of the cash value component. You will lose 99% of the time if that's your reason for buying a whole life insurance policy.


This cant be stated enough.
Unfortunately, too many sales agents use the cash value component as a selling feature.

The original purpose of cash value in a whole life policy is that it makes the cost of insurance lower.

You buy a $100k whole life policy at 35 years old , the insurance company has $100,000 at risk for a young person.

At age 60, the whole life policy may have a $50,000 cash value. The net amount at risk for the insurance company is only $50,000 on the $100,000 benefit. This keeps the cost of the policy down as the mortality rate of a 60 year old is very different than a 35 year old.

At age 80, the cash value may be $75,000. The net amount of insurance at risk for the company is $25,000 on a $100,000 benefit. The mortality rate for an 80 year old is extremely high.

The entire original purpose of whole life was to make a permanent protection affordable.


TDsngumbo
LSU Fan
Member since Oct 2011
25603 posts
 Online 

re: Term of term life expiring
I may be misunderstanding what you’re saying here but when you die, you do not get the death benefit and the cash value. You get the death benefit minus any outstanding loan balance you may have against the cash value (if you ever borrowed from it). So the cost to the insurance company is still the death benefit at the time of death.

The best thing anyone can do is buy a $100k or more whole life policy for their children when they are born. It’s as cheap as it ever will be and it won’t ever cancel unless you stop paying for it. Sure, cash value is nice to have if they have an emergency but it sets them up for life insurance for life at the most affordable rate possible.
This post was edited on 10/14 at 11:39 am


meansonny
Georgia Fan
ATL
Member since Sep 2012
12891 posts

re: Term of term life expiring
quote:

what you’re saying here but when you die, you do not get the death benefit and the cash value.

Correct. There are different types if permanent policies (death benefits can increase on a whole life policy). But the insurance company pays the death benefit upon receipt of a death certificate.
The amount at risk to the insurance company is the death benefit minus the cash in the policy (whole life policies are expensive. But they would be more expensive without this component reducing the insurance risk at the highest mortality rates).

quote:

The best thing anyone can do is buy a $100k or more whole life policy for their children when they are born.


I dont like blanket statements like this. You could invest the premiums of a $100,000 into an index fund and come out way better 80 years down the road.
Or you can buy $100,000 of permanent insurance on yourself for each child and let them invest in themselves when you die (start a business or payoff commercial debt if they already have started a business).
Life insurance helps the beneficiaries. Buying a sizeable policy for a kid is more likely going to benefit the kid's grandchildren if they live to average life expectancy.


TDsngumbo
LSU Fan
Member since Oct 2011
25603 posts
 Online 

re: Term of term life expiring
quote:

Correct. There are different types if permanent policies (death benefits can increase on a whole life policy)

Right, if it pays dividends and you elect to have those dividends purchase additional insurance (PUA).
quote:

The amount at risk to the insurance company is the death benefit minus the cash in the policy (whole life policies are expensive. But they would be more expensive without this component reducing the insurance risk at the highest mortality rates).

Not necessarily. Let's say you have a whole life policy worth $100k on day one. You live 85 years and (to make it simple, assume no dividends purchasing additional PUA's) when you die it had a cash value of $70,000 but you never touched that. The death benefit is still $100k. The cash value is not paid in addition to the death benefit. Of course, if it paid dividends and you elected to have PUA, then the death benefit would be much larger BUT the cash value in the policy still is not paid. Now, if you had borrowed that $70,000 cash value before dying, then yes, the company only pays out $30,000 at the time of your death so it would lower their cost that way but don't think for one minute that their actuaries haven't already priced that $70,000 cash value into their premium from day one. The company will make money off the policy no matter what. Actuarial science allows for the insurer to know exactly how much they need to charge for the policy in order to be profitable and pay out both the cash value loans and claim in any scenario.
quote:

You could invest the premiums of a $100,000 into an index fund and come out way better 80 years down the road.

If the insured doesn't die at 10 years old after running into the street.
quote:

Life insurance helps the beneficiaries. Buying a sizeable policy for a kid is more likely going to benefit the kid's grandchildren if they live to average life expectancy.


And what's wrong with that? By purchasing a large whole life policy on your child at birth, you are doing them a huge favor by saving them a tremendous amount of money over their lifetime on their life insurance. And, depending on the company, you could also have a Guaranteed Insurability rider on it that would allow them to purchase additional insurance down the road if they choose, and they are then uninsurable due to a condition they develop in their teens or early adulthood.

Buying a large whole life policy on your child at birth is a great idea. Everyone needs life insurance. May as well help your children out and set them up when they're born so they don't have to pay any more than they need to later. It's what I've done for my children. That's just my personal and professional philosophy. Many will disagree.
This post was edited on 10/14 at 12:37 pm


meansonny
Georgia Fan
ATL
Member since Sep 2012
12891 posts

re: Term of term life expiring
If you sell life insurance, I question your ability to understand the product and how actuarials/pricing works.

If you have read up on life insurance, you are completely missing the point.

If a life insurance company has a $100,000 death benefit with a $50,000 cash value, the benefit paid to the beneficiary is $100,000 (this is funded by the $50,000 cash value and an additional $50,000 net insurance at risk).
What type of policy has more cost to a life insurance company?
A $100,000 payout with $50,000 cash value or a $100,000 payout with $0 cash value.

102 level question:
What type of policy has more cost to a life insurance company?
A $100,000 payout with $25,000 cash value or a $100,000 payout with $50,000 cash value?

Net insurance is the actual amount of insurance being supplied to the customer. Net insurance is the actual amount of insurance which needs to be calculated by the actuarial.


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meansonny
Georgia Fan
ATL
Member since Sep 2012
12891 posts

re: Term of term life expiring
quote:

quote:
You could invest the premiums of a $100,000 into an index fund and come out way better 80 years down the road.

If the insured doesn't die at 10 years old after running into the street.


What percentage of the population has a need to collect $100,000 when a 10 year old runs out into the street?

You explicitly state that it is a no-brainer to buy $100,000 of whole life insurance on a child because it is so cheap. What parent has a need to collect $100k on a child? Why does cost necessitate a no-brainer decision to buy (you sound like a wife who spent $10,000 on the credit card this month but everything was 80% off).

quote:

quote:
Life insurance helps the beneficiaries. Buying a sizeable policy for a kid is more likely going to benefit the kid's grandchildren if they live to average life expectancy.

And what's wrong with that?

Who sells someone a life insurance policy on a child and features the most probable benefit for that great grandchild 80 years later?
quote:

you are doing them a huge favor by saving them a tremendous amount of money over their lifetime on their life insurance.

You dont think funding a business for the child is a better than not paying life insurance premiums?
You dont think funding a first downpayment on a home for a child is better than not paying life insurance premiums?
There are opportunity costs to everything. I'd much rather make my children an owner of something (home, business, rental property) than owner of a life insurance policy designed to pay out 80 years later.

I can agree to disagree.
You sound like you got sold some advice and dont want to admit plausible alternatives (blanket statements are rarely a good idea).
This post was edited on 10/14 at 1:47 pm


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