What is your take on life insurance at this age and moving forward?
Posted by 2boredtocare@reddit | GenX | View on Reddit | 68 comments
Husband pays for his policy through employer. He's 50, probably working until 62. I honestly don't know a lot of the particulars of what happens when he stops working.
For myself, I have 2 policies: one I started when I was 37 and expires when I'm 57 (I'm 52 now) and another that I got per the contract I signed when I bought my business from the previous owner. Basically that one covers the cost of the business if I kick it before the 6 years is up. I'm 1.5 years in, and also in the contract it states that after the remaining balance is paid to the prev owner, the remainder goes to my spouse. In another 4.5 years, the beneficiary will officially change to my spouse, and THAT policy won't expire til I'm 70.
I was talked into converting some of my first policy into whole life by my agent. I FELT like I was doing pretty well being covered until I'm 70, but then again, many people in my family lived into their 90s, so ??? I don't love that my life insurance costs have now increased monthly by $100. :/ Sure, that's guaranteed money for some day, but how the hell does one gauge this shit?
Does a person even NEED life insurance after 70? Our kids are 19 and 22. They would get whatever assets we have at the time of our death, and I'd sure like to think we'd have enough to cover being cremated & spread to the winds.
Did I get bamboozled by paying $100/mo more for whole life, even though I have a generous amount of term life? I love the idea of giving my kids a leg up when I die, but if we're talking post 70, they're already welllll into adulthood. IDK man.
What's the best way to gauge this shit? Or do I adopt the attitude of "fuck it, I'm dead anyway."?
What life factors should I be thinking about? The plan is to have our house paid off in 12 years (we pay extra monthly) and our 401Ks are meh. They're OK, but not fabulous (ok, I just used a calculator that said we'd need like 3 million and uh, we're gonna be shy of that for sure)
ADULTING IS STUPID.
hapster85@reddit
We bought universal/whole life policies in our 20s, shortly after getting married. At the time, they seemed bigger than they do now. But the payout will be beneficial to whichever one of us survives the other. Or our kids if we go together. At least the premiums are cheap.
Norse_By_North_West@reddit
I'm Canadian and read the wealthy barber long ago. Life insurance is mainly for either your spouse to be able to afford the house, or for your kids to get a trust fund. I'm single and have no spouse, so I'm just gonna stick with the 100k I get through my work plan.
dbrmn73@reddit
Don't have it dont need it.
Weird-Girl-675@reddit
I don’t have any family other than my mom who has plenty of money so i definitely don’t need it.
Conscious_Border3019@reddit
We have none (younger end of Gen X). Our savings and home equity are enough to care for our almost-adult kid if something happens to us. Mortgage balance is something like 10% of the house value. We don’t need life insurance.
Junior-Reflection-43@reddit
Whole life is never a good option, except for the salesperson who gets the commission. Term is ok but usually the purpose of insurance is to replace income, or maybe to reimburse for the of a funeral/burial.
FionaTheFierce@reddit
I don’t see the point. I am “self insured “ in the sense that I have enough money to take care of my young-adult children if I die suddenly. If I get ill I will work on shifting everything over to them via a trust.
Life insurance absolutely makes sense if you leave people behind who would be vulnerable to economic loss if you were to die. Otherwise, 🤷♀️
kittycat_34@reddit
Hubby and I have whatever our jobs provide. When we are retired, and if one of us dies, the other one will be fine. We will have zero debt, paid off house, and either of us would get by fine with social security and our individual pension. Probably won't even have to touch our investments. Our kids will probably end up with a nice inheritance. We see no need to buy insurance policies.
AZPeakBagger@reddit
By the time you are 60-65 or so you have little to no need for a high worth policy. After 65 it’s smart to have maybe a $25-$50,000 policy to cover funeral expenses and legal fees to settle your estate. Life insurance is not your children’s inheritance. Nobody should profit off your death.
However if you are a business owner it’s a smart idea to have key man insurance to protect your business. But for personal life insurance after 60 most of us don’t need it.
2boredtocare@reddit (OP)
Gotcha. It made the most sense to get a 20 year policy when I bought the business, and I like that I'm at least covered until 70 but it seems the whole policy is just stupid. I'm a real sucker when sitting face-to-face with my agent.
BabyGotTrack@reddit
you're not stupid. insurance agents push whole life policies hard. but they benefit the agent more than you. as others have said, get a term policy and invest the difference. you'll come out way ahead.
fallcreekprepper@reddit
I changed jobs a few years ago and lost my life insurance. I went through some health issues last year, and during all of that I tried to get some more life insurance but was unable to do so due to being diagnosed with congestive heart failure. I'm no longer in congestive heart failure and have since had OHS to replace my aortic valve. I'm now in good shape but still get turned down for life insurance due to my medical history. Even those companies that claim that you can't be turned down, disqualify me due to my medical history.
NightGod@reddit
Whole life is a terrible choice. Any financial consultant who suggests it should immediately be fired and replaced with someone who isn't trying to fleece your wallet
Responsible-Low-4613@reddit
Whole life is a great choice.. it's called building generational wealth.. I don't have kids but when I kick I leaving my nephew my house (currently with 450k) and a life policy of 200k to him for his kids to get them started in life
NightGod@reddit
Yeah, that's the lie they use to sell it. As the other reply said, an S&P Index fund is going to give far better returns on that money
soggytoothpic@reddit
You are getting screwed. Drop the whole life and get term. With the difference of cost, invest it in an S&P index fund. You will come out miles ahead. You are currently building wealth, but it’s your insurance salesman who is getting rich.
Catnip_75@reddit
We have always had policies through work and private. We had a million each until this year. Our kids are now 21 and 19 so we lowered our benefits. Once the kids are finished university and have established jobs we will likely lower it more as they will have our assets when we die. But we won’t ever not have life insurance. I don’t want to be burden to our kids and make them have to deal with costs associated to use dying. Even if we don’t have a funeral and a burial, it still costs money to deal with.
BitterPillPusher2@reddit
Whole life is a scam. Don't do it. Google it, and you'll find a ton of information as to why. If you've already done it, cancel it and cut your losses. Lots of info about this on the r/personalfinance sub too.
If someone is dependent on you and your contributions, then you should have life insurance. It's designed to replace your income, if you should pass. You should have a term policy that takes you to about retirement age, because at that point, you would not have any income to replace anyway. You'd be living off retirement accounts, savings, etc., which your spouse would get upon your death.
Also, make sure you have a will. I can not stress this enough. Set up powers of attorney and medical directives as well. Since you have a business, I would meet with an estate planner/attorney to get that all set up, since it will be a little more complicated.
2boredtocare@reddit (OP)
Thanks for the will reminder. I had it on my To Do things for this year, but honestly had already forgotten.
BitterPillPusher2@reddit
Definitely do it sooner rather than later. I know someone who's dealing with the sudden death of a spouse (who happens to have also owned a business), and it's been a nightmare. A will would have eliminated that.
Also, when you do it, make sure you tell people that you have a will and where it is. You'd be amazed at how many people forget that part. So they die, but people either don't know they had a will or don't know where it is and never find it.
handsomeape95@reddit
I like to use tax season as a reminder to review my will, beneficiaries, and transfer on death forms. I usually have to dig around for tax forms in those accounts anyway so it's just a convenient time to take care of that.
Bravo-Buster@reddit
On e my kids are grown up and all debts are paid off, I don't see the point in life insurance. I want to make sure my wife doesn't have to worry if she has to sell the house if I die, but once it's all paid off, who cares. Plus, I don't want to give her any incentive for holding a pillow over my face to stop the snoring. 😉
Mededitor@reddit
Now in my early 60s, I’ve never had life insurance. To reach retirement and finally stop working was a decades-long process but it worked out. Life insurance is a bet you make with the insurer. They adjust their actuarial tables to ensure that they win the bet, statistically.
Instead, any money I’d be spending on insurance goes into a stock portfolio. In the event of my untimely demise, funeral expenses are no problem. Other people in different circumstances might want a policy to offset risk.
FrankParkerNSA@reddit
Life (or any) insurance should only be used as a hedge against a potential loss. This means term policies are used a hedge only.
For example: - 25 year term when your child is born to cover costs raising them & college if a spouse should pass. Each spouse should have a policy to cover the expenses thier death would cause (breadwinner vs. childrearing) - 30 year term on buying a home. - 10/20 year term on your child if you take out school loans in your name or cosign. If they die, you could still be on the hook for payment. - Small 3-5k policies at 10 year intervals to cover funeral costs if you don't want to burden loved ones.
Anyone who tries selling insurance as an 'investment' is a scam artist. Nobody should ever have so much insurance they are worth more dead than alive.
WimpyZombie@reddit
"Worth more dead than alive"
That's me exactly. I have a policy for 2X my annual salary from my employer. I am definitely worth more dead. Good thing I don't have any family to support.
WimpyZombie@reddit
I'm 60 and have no kids. My employer gives me a pretty decent size policy that I don't really need. I don't really care one way or the other. Will be nice to give my nieces and nephews a little something, but I have told them that if I have nothing when I die, they can just leave me to the State and get the government to dispose of my body.
Secret-Function-2972@reddit
Good question...I feel a bit lost about it.
I think we're in good shape right now - I have a $500k term policy, my wife has a $350k term policy both with \~5 years remaining when I'll be 58 and she'll be 56. No current debt other than a car loan. Oldest is in grad school, fully funded with a 529. Youngest will be a HS Senior in the fall, her undergrad will be partially funded with her 529. Some retirement savings, hopefully enough to retire on in a dozen years or so.
The plan was that we wouldn't need life insurance other than the small policies with our employers that are just enough to put us in the ground. But I don't know.
Celtic159@reddit
Do not rely on life insurance to pay for your funeral. Get a prepaid funeral contract from your funeral home. The funds are irrevocable, so they can't be taken by either bankruptcy or a spend down.
C638@reddit
No reason to have funeral insurance. I'd just prepay for cremation if that's what you want. Your family member calls and they pick you up. No hassle.
When my FIL died we bought a casket at Costco which was delivered to the funeral home. It was 1/3rd of the price. We still rented a room at the funeral home for a memorial, and my FIL pre-purchased a plot. Uncle Sam provided the plaque (veteran).
I'd get all of that planned out so your loved ones don't have the hassle.
My wife had a joint account with him and there was plenty to cover it.
Total cost was < $5K, plus the plot.
Celtic159@reddit
Prepaying is insurance, that's how it works.
2boredtocare@reddit (OP)
I'm not spending money on a funeral. Honestly, have a party at the house and throw my ashes in the trash. Pretty cheap! lol
Guilty-Reindeer6693@reddit
Parties still cost money that your survivors will have to foot the bill for, and even without a fancy box and expensive hole, cremations aren't cheap. I will forever be grateful to my father for having this stuff taken care of prior to his passing.
handsomeape95@reddit
Thankfully, my dad had a decent amount of whole life coverage. Cleaning out the house and getting it on the market was a big, upfront expesne for me. We had state inheritance taxes to deal with as well. Obviously we got reimbursed afterwards but it was nice to have that cash on hand up front.
2boredtocare@reddit (OP)
My SIL paid for her own cremation a few years back (terminal cancer). It was around $600. I don't think we'd end up so destitute no one could feed people for a party, but see, that's the "what if" that led me toward getting that small whole life portion (really need to check the $ amount on that)
Celtic159@reddit
Someone's still paying for it, cremation's not free. You can take care of it for your kids, or you can leave them on the hook. Your choice.
I'm a mortician, and I've seen too many families screwed by this sort of cavalier attitude.
2boredtocare@reddit (OP)
I think I'm not explaining well here. I am covered with life insurance until 70. Should I die prior, there's a nice payout. The big question is AFTER I turn 70. I did buy a whole policy thinking of that "past 70" time frame where who knows what my financial situation will be? We've got pension, SS (if it's still around), 401K, Roth IRA, and As I mentioned, the house should be paid off well before then. So I most assuredly am not being "cavalier" about the Big Picture, but am 100% going out (cremation, spreading of ashes) in the cheapest way possible. Even if I stop that whole policy, we should have assets aplenty to pay for immediate needs
handsomeape95@reddit
I know there's a lot of pushback against whole life policies, but there are some other besides just surrenduring it. You may be able to get a long term care rider on the policy. I did that. Or you can just borrow against the cash value (assuming you've had it for a while) and not pay it back. The downside is that it comes at an opportunity cost of investing that premium in something like an S&P index fund for a much better return.
RonSwanson714@reddit
Same, take me from hospital directly to crematorium, no embalming, no viewing. I picked out an urn on Amazon and then have a memorial at a local pub or the house. The cost of burying someone is obscene.
Kryceks-Revenge@reddit
But it still will cost whomever is left behind a few thousand to manage the remains and the cremation. That’s not free. That’s without the funeral.
TripMaster478@reddit
I mean I don't want to end up in the trash, but nor do I want to be sitting on a mantel for x years. Dump me in a body of water somewhere I'll be good.
DidAnyoneFeedTheDog@reddit
Mine current term policy expires next year and will be replaced with a smaller term policy to cover the remaining mortgage balance.
Rockatansky77@reddit
My wife and I have a $100,000 death or disability insurance (TruStage) suggested through our Credit Union for $22 a month. My wife has a policy through work and I have one through the Carpenters Union. I wanted to make sure if something happens to me. She will get approximately one year of my income + my pension and other assets.
SigmaSeal66@reddit
Once you don't have an income that someone else (kids, spouse, etc.) is depending on, you don't need life insurance.
RainbowDarter@reddit
My 86 year old mother is so satisfied that she has $40K whole life that she has been paying for since the 1970s.
She would have had so much more if she had invested the premiums and bought some term insurance while she needed it.
But she regularly brings up the princely sum of $40k my brother and I will share when she dies.
We just nod and agree
Run the numbers for yourself and see what makes sense.
PitoChueco@reddit
I was in the same boat as your husband, using my employer’s life insurance add-on for years. Admittedly I did not look at the rates until recently, and boy, did they go up!
I shopped around and got a term policy with more coverage for half the price.
My spouse makes less than me, so in my mind, my term insurance would be a bridge to maintain her lifestyle until retirement if I kick.
PepsiOfWrath@reddit
I’m 50 with $1mil, I figure I’ll drop it to 500k at 55 and kill at 60 when we can grab retirement funds penalty free. If I die before that, can wife get at 401k without penalty? She’s seven years younger so I don’t actually know
labretirementhome@reddit
What really made the light bulb click was the idea that insurance is essentially about transferring risk.
What's the risk of owning a home? A fire.
What's the risk of driving a car? A crash.
What's the risk of dying? Leaving behind a spouse and children who cannot earn at the level to which they have become accustomed.
That's why term life is often 20 years end and inexpensive. The chances of you dying are low. Once the term is up, presumably, your children have grown and you have saved enough to retire without worry.
Whole life is essentially a gravy train for the insurance salesperson.
The insurance company invests your premiums. It keeps the lion's share of the gains. You build some value in the policy, but you would do much better investing on your own. You could a simple stock mutual fund and enjoy all of the gains. Insurance companies are not magic and they cannot invest in a way that exceeds the broad stock market return. And generally they don't.
The other problem is as you get older the premiums get much, much higher.
So why does anyone buy these? For some people it's because of investing is too hard.
For others, it's the somewhat complicated strategy of borrowing against your life insurance to fund retirement. Kind of like a reverse mortgage.
There are some good cases for lifelong insurance. Say you have a special needs child who has become an adult and will never be able to care for themselves.
Of course if you had simply invested the money you would have done better but as I say for some people disciplined investing is just too high a bar.
2boredtocare@reddit (OP)
Sometimes I have a hard time honing in on the big picture. I'd probably be better off taking that $100/month and putting it into a Roth IRA. The Future is just so scary! lol. I think we'll have plenty in assets when I'm 70 to cover any debt that remains + give my kids a little boost, but ? What if???!??!????!??
handsomeape95@reddit
If you plan on leaving something for your kids, anything Roth is the way to go.
AZJHawk@reddit
The only life insurance that I ever felt I have needed was term life when my kids were growing up. One policy expires next year when I’m 52. The bigger policy expires in 2033 when I’m 58. My youngest will be 22 by then and my wife should be fine with our savings if something happens to me after that.
LayerNo3634@reddit
Husband and I had one that expires next month. Premiums to go from $45/month to over $400/month! We are not renewing. It was smart and made sense when the kids were young, but not needed at this stage in life.
newwriter365@reddit
Ditched it after the divorce. I have three kids and do an annual financial review with them, telling them my financial situation and reminding them that there’s a will, and offering an estimate of how much they will inherit if I shuffle off the mortal coil.
AppropriateAmoeba406@reddit
Just cancelled my policy since my kids are grown. My husband and I have sufficient assets to retire, so he doesn’t need it. It was purely for the care of minor children, should I pass.
2boredtocare@reddit (OP)
Yeah, that's what I was thinking too? I initially got it to cover the house and other expenses if I croaked when the kids were young, but they're adults now. I need to stop that stupid whole life policy.
1971stTimeLucky@reddit
The policy may be in a position to pay for itself, do not cancel it without talking to someone at the company that holds it.
mustardmadman@reddit
Have enough insurance to leave no burden on your loved ones
It’s really that simple
2boredtocare@reddit (OP)
So being logical here, my goodness, at 70 there should be NO burden left on anyone. The whole "what if" just kinda freaks me out. I think we'll be just peachy by 70, but ? Maybe things will go to shit before then
ONROSREPUS@reddit
I was going to say something very similar. Going over board seem silly to me.
If your house/cars ect... anything that isn't a home bill (gas, light, water) is paid off having a 2 mil policy seems way over kill. Not saying you can't do it but you are paying for something that really isn't needed.
mustardmadman@reddit
Exactly. When I die all will be okay financially. I have basic policies to cover any financials and I’m getting cremated and ashes spread so that in itself decreases the financial burden
PegShop@reddit
My husband is 55 and no longer has life insurance because it was through his work and he left. I am 56 and have a term policy that expires when I am 63. We have enough that neither one of us really needs it but my term policy is only $200 a year for a 200,000 policy, so it’s worth keeping.
We may consider burial, Insurance or something along those lines, but otherwise no more life insurance.
sidewaysbynine@reddit
My wife and I each have a 50k term life policy. We also have prepaid cremation services as well as prepaid body recovery. We have cards in our wallets so that in the event of our death our bodies will be returned to our home county at no cost. We can't prepare for everything, but by the time the term life expires, our house will be paid off, so we feel like we have made a decent effort to mitigate the immediate financial issues for the remaining spouse. It sucks to think in terms of finances after the death of a partner, but based on my observations of my inlaws, it sucks even more to not think about it.
2boredtocare@reddit (OP)
Ooh, that's cheap! Mine is about $50/month for $225,000.
1971stTimeLucky@reddit
It should be part of a plan.
I have a paid up policy that will create a scholarship at my university.
I have a second property which in Canada will trigger a capital gain tax, I have a whole life policy to ensure my kids can keep the property and not liquidate to cover those taxes.
If you have a substantial estate, get yourself an estate plan and anyone who says all or nothing in either direction is full of shit.
kOobleck@reddit
Typically, work insurance is term and one is only covered while that person is still working. Above and beyond having enough to cover funeral expenses, travel for funeral etc., life insurance would help pay for any accrued debt like a mortgage, car payment, loans, credit cards. Generally, beneficiaries don’t pay tax on life insurance payment which is nice for beneficiaries if there is anything left after paying for funeral expenses and bill. As for paying for your whole life, one consideration is how long do you have to pay before it’s considered paid up? If it is a policy you have to pay on until you’re 75 will your payments be bigger than the payout? Also, I think most states will allow an individual to keep a certain amount of life insurance, like $10K, when spending down to be eligible for a Medicaid nursing home.
LeighofMar@reddit
My SO is older than me so the business pays a premium for his term policy up until he's 77 I think. It's not life-changing money but enough for me to restructure the business and figure out what I want to do going forward. There's none on me due to my illness but he'll be ok with my IRA and savings.
dirtygreysocks@reddit
We had 2 policies for sahm and working husband. They expired around 50. Reupped for 10 more years for working husband just in case, and to make sure retirement would stay intact, let the sahm policy expire cause kids are adults. If the unthinkable happens, the rest of the mortgage would be paid, the kids would still have college paid, funeral covered, a few years of salary covered, etc. Depends on your health when reapplying though for cost. He has no major health issues, runs, not very overweight, etc.
dirtygreysocks@reddit
Oh and only term, never whole life. I can invest separately.
TemperReformanda@reddit
Personally I do not ever use whole life. Get term life and spend the difference on a better investment somewhere else. Term is cheaper.
You need to make sure your family has the money to handle your burial/cremation plans, take time off from work to grieve, travel, and have a funeral. That needs to be quick, easy money. Inheriting a million dollar property or a bunch of classic cars doesn't pay the immediate bills that will come due.
At 70, if you have all that covered, it's documented in a proper will, stable/safe, and easy for your loved ones to access (but, ONLY the designated loved ones, ONLY after your death) then a life insurance policy sounds unnecessary.