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Myra

Let's talk life insurance

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Okay - now that he has turned 65 (how did that happen?) my husband's 20 term life insurance has just expired.  SO any advice and/or recommendations on getting longer term or life insurance?  Would like to have something to leave my kids when we pass....  something in the long haul since my inlaws lived until late 90s and my parents in their mid-90s. 

 

Thanks!

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8 minutes ago, Myra said:

Okay - now that he has turned 65 (how did that happen?) my husband's 20 term life insurance has just expired.  SO any advice and/or recommendations on getting longer term or life insurance?  Would like to have something to leave my kids when we pass....  something in the long haul since my inlaws lived until late 90s and my parents in their mid-90s. 

 

Thanks!

I would re think that.  How old are your children?

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8 minutes ago, Myra said:

Okay - now that he has turned 65 (how did that happen?) my husband's 20 term life insurance has just expired.  SO any advice and/or recommendations on getting longer term or life insurance?  Would like to have something to leave my kids when we pass....  something in the long haul since my inlaws lived until late 90s and my parents in their mid-90s. 

 

Thanks!

 

Life insurance is to cover obligations and make sure someone isn't left in the lurch. Do you still have kids at home/a home to pay off/college to pay for? Those are obligations I'd make sure I had insurance to cover. I'd put away money into savings if you want to leave an inheritance for your kids. That isn't really what life insurance is for.

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Agreeing with the others.  If you want to leave something behind for your kids, start taking the money you would have paid in premiums and invest it in an account for them.  Vanguard is super easy for this and your returns will likely be much higher than they would by paying the extremely high premiums for life insurance at this age.  The money is also more liquid if you or dh was to need it for an emergency, etc. before death.

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Unfortunately, you may have missed an opportunity to do something. According to our investment adviser some term life policies can be converted to whole life policies before they expire, and some of those conversions are some sort of hybrid vehicle than can be used to cover long term care. We're still a few years out from dealing with it so I didn't pay a tremendous amount of attention to what he was saying other than to make a mental note that it's something we'll want to look into before ours expires.

As the others have said, buying more life insurance now would truly be a poor way of attempting to leave an inheritance. It kind of boggles my mind to even think of what the premium would be. Best to put that money into some sort of investment.

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1 hour ago, vonfirmath said:

 

Life insurance is to cover obligations and make sure someone isn't left in the lurch. Do you still have kids at home/a home to pay off/college to pay for? Those are obligations I'd make sure I had insurance to cover. I'd put away money into savings if you want to leave an inheritance for your kids. That isn't really what life insurance is for.

Agreed.  Our 20-year term policies are going to end next year.  According to the premium schedule, we could keep them going year by year, but the premium payments are astronomical, and I was told that one reason for that is to keep people from using life insurance as a way to leave an inheritance.  

(We also have smaller 10-year policies which we can renew when they are close to ending, assuming the health screening is good. At 63 I renewed mine so I will  have coverage at least till I'm 73, at which point I will probably drop it.)

Edited by marbel
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Any insurance company will give you quotes.  You could compare AARP rates with your current insurance company's rates.  Also check out rates through your husband's employer.  But, agreeing with others, life insurance is not a good investment vehicle.  Look at your family finances, do you have enough in savings including SS and projected pension payments to live on without him?  He would get a better return on investment with a small life insurance policy (enough to cover funeral expenses) and putting extra into his retirement fund.  Most retirement funds require that the spouse be beneficiary for at least 1/2 the account value but the other 1/2 can be left to someone else.  This has the added benefit of avoiding probate.

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Good - this is what I was thinking that we should just invest the money instead of paying for high cost insurance.  However, a couple of my friends are going the insurance route and I am getting nervous. We are fine, I think, retirement and savings wise - plus all college debt is paid off for our kiddos - who are really starting out as young adults now either looking for that first job or in grad school.  But since my kids don't have any extended family to rely on - ever - it is just their dad and myself,  I worry that we won't be able to leave them an inheritance.  I see some of their friends with parents setting up trust funds or having vacation homes, etc. - an wish I could do more for them.  Oh well.....

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Sounds like you have done a lot for them if they have no college debt. 

They will be fine 

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59 minutes ago, Myra said:

Good - this is what I was thinking that we should just invest the money instead of paying for high cost insurance.  However, a couple of my friends are going the insurance route and I am getting nervous. We are fine, I think, retirement and savings wise - plus all college debt is paid off for our kiddos - who are really starting out as young adults now either looking for that first job or in grad school.  But since my kids don't have any extended family to rely on - ever - it is just their dad and myself,  I worry that we won't be able to leave them an inheritance.  I see some of their friends with parents setting up trust funds or having vacation homes, etc. - an wish I could do more for them.  Oh well.....

Yes the investment will be good.  One of the best things you can do for your adult children is to be able to provide for your own retirement/funeral expenses.  Anything beyond that is a bonus.  The advantage of you putting the money away now (maybe a ROTH if you don't have one) is that it can be used for retirement or if you get a general investment plan you could use the money for ANY need that arises.  

I am younger but have my home paid off, a healthy emergency fund (so I shouldn't have to go into debt for most home repairs, car repairs, health insurance copays, etc.),  I am also saving money ahead for my next vehicle so I should be able to come close to paying cash for that.  The rest goes into savings.....some into an IRA, some into a ROTH IRA, some into CDs at the bank, etc. depending on when I think I might need the money.

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Paid off college debt is a big head start for a young person.  If you want to help more, front the money for your children to open ROTH accounts.  You could agree to match their contributions up to a certain point for a set number of years or simply contribute an equal amount to each child's nest egg.   

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ITA about the benefit of paid off college debt!!!  That is huge!!  

I also agree that the best gift you can give your kids now is being as prepared as possible for your own retirement.  If there happens to be anything left for your kids after you pass, great, but that's not the most important thing at all.

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I think it's really hard for anyone but the very wealthiest to plan on an inheritance.  If you need long term care/help as you age, it's nice to have access to those funds.  With no college debt and parents who actually planned for retirement, your kids are already well ahead of many.  We're shooting for the same!  Congrats!

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The idea of helping your kids with their own ROTH IRA is a great one.  Even $25 each a month (or more if/when you can) will really add up over the next 40+ years for them.   Look at a vanguard Target account (age of expected retirement for them).

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16 hours ago, Myra said:

Good - this is what I was thinking that we should just invest the money instead of paying for high cost insurance.  However, a couple of my friends are going the insurance route and I am getting nervous. We are fine, I think, retirement and savings wise - plus all college debt is paid off for our kiddos - who are really starting out as young adults now either looking for that first job or in grad school.  But since my kids don't have any extended family to rely on - ever - it is just their dad and myself,  I worry that we won't be able to leave them an inheritance.  I see some of their friends with parents setting up trust funds or having vacation homes, etc. - an wish I could do more for them.  Oh well.....


My parents just upped their life insurance with all adult children.  They had very specific reasons.  I think it's okay if you realize you are going to pay a lot more for the luxury of doing so....

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15 hours ago, Anne said:

ITA about the benefit of paid off college debt!!!  That is huge!!  

I also agree that the best gift you can give your kids now is being as prepared as possible for your own retirement.  If there happens to be anything left for your kids after you pass, great, but that's not the most important thing at all.

These!  A thousand times!

Also agree with starting a ROTH for them now, with maybe an initial investment of $3000 (with Vanguard, anyway).  Then you can add funds now and then when you can, or, even better, they can add small amounts themselves, without having to come up with the huge (for young people just starting out) initial chunk of money to start.

 

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16 hours ago, Myra said:

Good - this is what I was thinking that we should just invest the money instead of paying for high cost insurance.  However, a couple of my friends are going the insurance route and I am getting nervous. We are fine, I think, retirement and savings wise - plus all college debt is paid off for our kiddos - who are really starting out as young adults now either looking for that first job or in grad school.  But since my kids don't have any extended family to rely on - ever - it is just their dad and myself,  I worry that we won't be able to leave them an inheritance.  I see some of their friends with parents setting up trust funds or having vacation homes, etc. - an wish I could do more for them.  Oh well.....

Remember that there will always be people who have more, and who can give more material things to their children.  I understand where you are coming from -- we happen to have quite a few friends who have lots of money.  But truly, you have done a lot for your children already, and they are fortunate to have parents who are thinking ahead for them!

My parents raised me and sent me to college.  They have given me a rich spiritual heritage.  I count myself blessed to have such an inheritance! 

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3 hours ago, DoraBora said:

These!  A thousand times!

Also agree with starting a ROTH for them now, with maybe an initial investment of $3000 (with Vanguard, anyway).  Then you can add funds now and then when you can, or, even better, they can add small amounts themselves, without having to come up with the huge (for young people just starting out) initial chunk of money to start.

 

This.  And if you start with a Target retirement account the initial amount is only $1000 which might be more doable.

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