Life insurance

[leebee]

I'm planning on retiring in the next few years and it dawned on me that my life insurance is through my employer. Should I be looking into buying life insurance for myself? I'm 68, married (DH is 64), planning on retiring when I turn 70, we own a house and 2 cars. We have adequate, though not extensive, retirement funds (the financial guy says I am on target for being able to replace my income with SS and retirement funds). I don't know much about insurance. Is it worth buying for myself, just in case anything happens? Should I purchase now or wait until I retire. How much coverage should I consider? I'd always heard we each should carry enough life insurance to cover our mortgage, should anything "bad" happen to either of us... is this still a good guideline? I'd appreciate any info, experiences you can draw on, etc.

 

[LoveDaisy]

I do not sell insurance but I am in the industry. I work for the leading trade association that does research for the industry.

If you are currently working with a Financial Professional (FP) and it appears you are I would talk to them. They will have a holistic view of your long term finances.

Reason to consider it would be if you still have a mortgage on your house, your spouse or dependents would struggle without your retirement income, you have a lot of outstanding debt, or you have a dependent who will rely on you once you pass, like a child with special needs.

The con will be the cost as it is not a product designed to be purchased later in life. If you think you want to purchase buy now the longer you wait the more expensive it will be.

 

[Judique]

I'm planning on retiring in the next few years and it dawned on me that my life insurance is through my employer. Should I be looking into buying life insurance for myself? I'm 68, married (DH is 64), planning on retiring when I turn 70, we own a house and 2 cars. We have adequate, though not extensive, retirement funds (the financial guy says I am on target for being able to replace my income with SS and retirement funds). I don't know much about insurance. Is it worth buying for myself, just in case anything happens? Should I purchase now or wait until I retire. How much coverage should I consider? I'd always heard we each should carry enough life insurance to cover our mortgage, should anything "bad" happen to either of us... is this still a good guideline? I'd appreciate any info, experiences you can draw on, etc.

Is it possible to have the policy you now carry converted to one you can carry after retirement? I had this option when I retired.

 

[_19disnA]

Everyone's financial situation is different so many of the factors are things specific to your situation. If you have a life insurance policy through your employer, find out how much it would cost to continue on your own once you retire. Often, that cost is prohibitive and probably not worth the premiums they would charge. Make sure you understand the type of policy you are paying into. Some are only good to a certain age and if you live longer than that...........the value drops to ZERO so all of the money you paid into it will be gone. Life insurance companies base their rates on life expectancy, so the cost for someone older will be higher than someone who is younger. They are all for-profit companies running a business where they expect to take in more in premiums than they eventually payout in claims. Part the reason you see constant TV ads for life insurance is they have to keep finding more customers to make their business model work.

I think life insurance is a good thing for perhaps a young married couple first starting out and might have small children. If the wage earner were to die suddenly at a young age, you have some equity you likely otherwise wouldn't have. As you get older, work longer and hopefully build up savings/reserves/investments, the real value of insurance is harder to quantify.

Buying life insurance when you are over 55 wouldn't seem to make much sense in general. Likely you will pay into it about what you eventually get out of it. If you simply break even, not sure what that accomplished. A better choice might be to set aside whatever amount the premium would be and buy something like CD's that will never go down in value and will build more equity over time. You will always have access to that money if you have unexpected expenses. The money you put into most life insurance policies is only available when that person dies.

 

[amcnj]

I always looked at life insurance as a way to guarantee sufficient income and pay off debts like mortgages, fund college expenses, etc should someone in the family pass away. A way to allow surviving family members to continue their lives financially.

The last policy I purchased was 20 year term that is finally up in 2025. Other policies held have already lapsed. At this point in my life I don’t anticipate requiring any additional life insurance.

I would still evaluate the situation similarly in retirement. What would the financial picture be for all survivors should someone pass away? Would any pensions disappear, or be reduced? What would happen with any social security benefits? How do any other assets accumulated figure into it all?

In short, would the survivors have the income/resources necessary to meet all their financial needs? If not, what can be done to help the situation, including looking at delaying retirement and/or social security, trying to increase assets, and also things like downsizing and life insurance.

If you feel life insurance should be part of the mix, ask what does happen with the work policy. Does it disappear, and if not, what would the cost be after you retire. I had a work policy that I dropped at a certain point as it became more expensive than that 20 year term policy I currently still have.

 

[AnnaS]

All good points mentioned.

Do you have a mortgage? Anyone depending on your income to make ends meet/run the house? How much is a policy/how long and what is the payout?

If you are disciplined, you can save what your premium might be. With considerable savings/retirement funds/might not be as necessary as we are older/late in life but only you/and your spouse can make that decision (even with the help of a financial advisor).

 

[neverlandsky]

We had term life insurance when the kids were minors. Once our youngest turned 18, we cancelled. Thought about getting a basic policy for life insurance, however we rather have the funds in liquid savings.

Older relatives who were not self insured with savings had $100K life insurance policies. This did help with funeral costs and medical bills. Took a bit for payouts. Spouse survivors didn’t have immediate access vs. liquid savings. Also if funeral is paid with life insurance funds, that takes a bit too plus fees. Also took a couple of months just to get an appointment with social security. If spouse passes and their social security is still being disbursed, all those funds have to be paid back as well.

Given that we were witnesses to struggling survivors, we made the financial decision that it’s best for us to keep liquid savings over life insurance.

 

[leebee]

I had no idea it was so expensive! I jsut got some quick quotes and for sure, I'd rather keep the money in savings or something than send it to a company every month! I will talk to HR and our TIAA investment guy and see if there is anything available through work, but geez, it's expensive!

 

[focusondisney]

I had no idea it was so expensive! I jsut got some quick quotes and for sure, I'd rather keep the money in savings or something than send it to a company every month! I will talk to HR and our TIAA investment guy and see if there is anything available through work, but geez, it's expensive!

Especially the older you are when you get it. I laugh when I see those commercials for life insurance to help with “final expenses”that say XX amount per unit of coverage. Notice they never tell how much a unit equals. I assume it’s something really small, like $500. You’d probably need to buy many units of coverage to be of any significant help for your family.

 

[barkley]

I think life insurance is a good thing for perhaps a young married couple first starting out and might have small children. If the wage earner were to die suddenly at a young age, you have some equity you likely otherwise wouldn't have. As you get older, work longer and hopefully build up savings/reserves/investments, the real value of insurance is harder to quantify.

I think people overlook the importance of having live insurance on the NON wage earning parent. I recall a situation wherein the young wife (sahm) was killed in an auto accident and the wage earning parent was left to try to figure out how they were going to manage (along with the horrendous grief) childcare and all of the other household tasks their wife had previously taken care of (shopping, cooking, taking kids to doctor/dental appointments...) they were floored to find out how much daycare costs and that it could not just be arranged day of to work around the hours their job demanded except at exhorbidant cost.

with older couples I think you have to balance out the cost when you are alive and paying for it vs. the cost of services the surviving spouse may be unable to take on that the late spouse handled. cost out what your spouse does around the house that would have to be hired out-yard work, weed abatement, pest services, basic car maintainance, car service (if one spouse does not drive or is limited in where they drive to/from), HVAC upkeep, winterizing...and see how that will impact the surviving spouses monthly expenses. another consideration is if existing costs will increase with the death of a particular spouse-i know some seniors who get property tax discounts based on one of their ages/it goes away upon their death unless the other has reached that age, both are covered under an employer/former employer's health insurance-those premiums can skyrocket for the survivor coverage.


gotta run the numbers.

 

[Christine]

Insurance is *very* expensive once you get into your 50s. You have to determine if it's truly worth it.

I would only get life insurance on myself if we had zero retirement plans/savings and a spouse who was going to be left very vulnerable Otherwise, if you have savings/pensions/survivor's benefits on each spouse then I think you're throwing away high premiums at this point.

I had life insurance when my death would have been financially castostrophic for my family (two kids in school/daycare and probably eventually going to college, a mortgage, car payments, etc). My husband would not have survived without my income for XX number of years. It was also very affordable at those younger ages.

Now, sure, it'd be great to get a cash windfall if he died but I don't think paying $70 a month (or more) is worth that, and that's for one of us.

 

[mjkacmom]

I had no idea it was so expensive! I jsut got some quick quotes and for sure, I'd rather keep the money in savings or something than send it to a company every month! I will talk to HR and our TIAA investment guy and see if there is anything available through work, but geez, it's expensive!

My husband is a TIAA investment guy (or he was, he’s been a CFP with them for 35 years and no longer deals with clients), we had term for 20 years (million on him, $500,000 on me, SAHM), nos we just have what his work offers. We still have a small amount left on our mortgage (interest rate 4%) but are set with retirement (healthcare is our only concern). We will be mortgage free in a few years, but still paying $1000+ in taxes.

 

[Travel60]

If you decide to go with life insurance , check with any professional associations you are a member of. It may have more reasonable life insurance options.

 

[MillauFr]

I would consider dropping the life insurance. Too expensive. Save the money instead.

 

[barkley]

If you decide to go with life insurance , check with any professional associations you are a member of. It may have more reasonable life insurance options.

also check with your existing insurance provider (home/renters/auto) to see what products they offer and inquire if adding life results in any kind of a discount to your existing coverage-we get a nice multi policy discount by virtue of doing this (which can offset a portion of the cost of your new coverage).