term life insurance expiring

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1year23
Posts: 28
Joined: Fri Apr 01, 2016 8:31 am

term life insurance expiring

Post by 1year23 » Tue Feb 14, 2017 12:33 pm

My 20 year term life insurance is expiring in a few months. The death benefit is 1.6 million which is not really needed by my family but of course would be a nice inheritance. The premium to continue this for another 10 years has gone up by a factor of 9 (from $2,000/yr to $18,000/yr) and then the policy expires on my 70th birthday. My feeling is to let it expire now, be happy that I made it to my 60th birthday, relatively healthy. Am I missing anything? Is there a reason I should consider keeping this? Thank you bogleheads!!

BruDude
Posts: 2732
Joined: Thu Dec 30, 2010 12:28 am
Location: Las Vegas

Re: term life insurance expiring

Post by BruDude » Tue Feb 14, 2017 12:38 pm

Depends whether you want to provide a legacy or not, assuming you don't need it for other purposes. $18k/year sounds extremely high for 10 years of $1.6M coverage at age 60. A new policy would cost ~$7300/year for a Standard health rating, a Preferred/Preferred Plus rating would cost ~$3800-5000/year, assuming you're a non-smoker.

flyingbison
Posts: 1363
Joined: Wed Mar 12, 2014 8:52 am

Re: term life insurance expiring

Post by flyingbison » Tue Feb 14, 2017 12:40 pm

If you don't need it, drop it. You are unlikely to die in the next 10 years, and will be wasting a lot of money on premiums.

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jhfenton
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Location: Ohio

Re: term life insurance expiring

Post by jhfenton » Tue Feb 14, 2017 1:01 pm

If you're healthy, you can always do better than the guaranteed-renewable rates you get at the expiration of term policies. My wife and I are 10 1/2 years into our 20-year term policies ($900,000 each). We will probably not need either at their expiration, as our younger child should be in her last year of college, and we will be within zero to five years of retirement at that point.

But if we did decide to extend them at that point to address an unforeseen need, I bet I could still do better than the guaranteed renewal rates, and I had kidney cancer in March 2014--that's assuming I remain cancer free in the summer of 2026.

The adverse selection is enormous on those guaranteed-renewable rates at the expiration of term policies, and they price them accordingly.

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JPH
Posts: 785
Joined: Mon Jun 27, 2011 8:56 pm

Re: term life insurance expiring

Post by JPH » Tue Feb 14, 2017 1:57 pm

If you are healthy and your family would not need the money to live on I would drop it. It's an expensive way to leave a legacy.
While the moments do summersaults into eternity | Cling to their coattails and beg them to stay - Townes Van Zandt

Cruise
Posts: 612
Joined: Mon Nov 21, 2016 7:17 pm

Re: term life insurance expiring

Post by Cruise » Tue Feb 14, 2017 6:07 pm

1year23 wrote:My 20 year term life insurance is expiring in a few months. The death benefit is 1.6 million which is not really needed by my family but of course would be a nice inheritance. The premium to continue this for another 10 years has gone up by a factor of 9 (from $2,000/yr to $18,000/yr) and then the policy expires on my 70th birthday. My feeling is to let it expire now, be happy that I made it to my 60th birthday, relatively healthy. Am I missing anything? Is there a reason I should consider keeping this? Thank you bogleheads!!
Same enormous increase seen for policies held by my wife and I. We decided to drop them, as we are FI.

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