Grandpa's 88 and has term life insurance

Non-investing personal finance issues including insurance, credit, real estate, taxes, employment and legal issues such as trusts and wills
Post Reply
bigtex
Posts: 83
Joined: Fri Jan 26, 2018 10:34 am

Grandpa's 88 and has term life insurance

Post by bigtex » Thu Jul 12, 2018 12:23 pm

Hello, I will keep this short. My grandpa is 88 and has a $100k life insurance policy that he pays $900 a month for. I believe if he were to cancel the policy today, he would not get any of the $100k. What is a better financial decision, to continuing paying the $900 a month, or just cancel it because $900 a month is way too much to be paying for life insurance? His health is also excellent for 88. He still drives daily, sound mind, normal health issues for someone that age. He is fine financially as he has a couple million in liquid assets plus a pension.

Rupert
Posts: 3738
Joined: Fri Aug 17, 2012 12:01 pm

Re: Grandpa's 88 and has term life insurance

Post by Rupert » Thu Jul 12, 2018 12:27 pm

Cancel it, and I wouldn't be so sure about the "sound mind" if he's paying $900/month for a $100K term life insurance policy.

User avatar
mhc
Posts: 3774
Joined: Mon Apr 04, 2011 10:18 pm
Location: NoCo

Re: Grandpa's 88 and has term life insurance

Post by mhc » Thu Jul 12, 2018 12:28 pm

Sounds like it would be better to cancel the policy since he has a couple million in liquid assets.

User avatar
Smorgasbord
Posts: 371
Joined: Fri Jun 10, 2016 8:12 pm

Re: Grandpa's 88 and has term life insurance

Post by Smorgasbord » Thu Jul 12, 2018 12:31 pm

So he's paying $11k a year for $100k insurance. That doesn't sound like a terrible deal for an 88 year old man, and if it makes him happy to have it then I'd say keep it.

hicabob
Posts: 2716
Joined: Fri May 27, 2011 5:35 pm
Location: cruz

Re: Grandpa's 88 and has term life insurance

Post by hicabob » Thu Jul 12, 2018 12:33 pm

He certainly doesn't need it but it might be a good bet actuarially if he likes that sort of thing. At 88 he has a life expectancy of a little under 5 years aka social security table.
https://www.ssa.gov/oact/STATS/table4c6.html

JoeRetire
Posts: 1648
Joined: Tue Jan 16, 2018 2:44 pm

Re: Grandpa's 88 and has term life insurance

Post by JoeRetire » Thu Jul 12, 2018 12:34 pm

bigtex wrote:
Thu Jul 12, 2018 12:23 pm
My grandpa is 88 and has a $100k life insurance policy that he pays $900 a month for.
When did he purchase this policy?
Why? What was his goal?
Who is the beneficiary?

Some folks purchase life insurance to "even out" the beneficiaries of a will. Knowing what the thinking was behind the purchase may prove instructive.

Rather than cancel it, he may be able to sell it to one of the companies offering life settlement products.

bigtex
Posts: 83
Joined: Fri Jan 26, 2018 10:34 am

Re: Grandpa's 88 and has term life insurance

Post by bigtex » Thu Jul 12, 2018 12:43 pm

JoeRetire wrote:
Thu Jul 12, 2018 12:34 pm
bigtex wrote:
Thu Jul 12, 2018 12:23 pm
My grandpa is 88 and has a $100k life insurance policy that he pays $900 a month for.
When did he purchase this policy?
Why? What was his goal?
Who is the beneficiary?

Some folks purchase life insurance to "even out" the beneficiaries of a will. Knowing what the thinking was behind the purchase may prove instructive.

Rather than cancel it, he may be able to sell it to one of the companies offering life settlement products.
I don't know when he purchased it or what his goal was. His beneficiaries would be his two kids because Grandma has already passed. I think maybe his plans for it were that it would cover funeral expenses, end of life expenses, etc.

MittensMoney
Posts: 109
Joined: Mon Dec 07, 2015 10:59 pm

Re: Grandpa's 88 and has term life insurance

Post by MittensMoney » Thu Jul 12, 2018 12:48 pm

At this point it sounds like he should just keep it. Not to sound morbid, but what're the chances he'll live past 97 years old and thus come out negative?

User avatar
goingup
Posts: 3260
Joined: Tue Jan 26, 2010 1:02 pm

Re: Grandpa's 88 and has term life insurance

Post by goingup » Thu Jul 12, 2018 12:50 pm

When I buy a SPIA in 10 years or so, I plan to outlive the actuarial estimates and have the "last laugh". But if I had to spend $900 per month on a small insurance policy I might be tempted to underperform the estimates and check out early. Be careful what you incentivize.

JoeRetire
Posts: 1648
Joined: Tue Jan 16, 2018 2:44 pm

Re: Grandpa's 88 and has term life insurance

Post by JoeRetire » Thu Jul 12, 2018 12:50 pm

bigtex wrote:
Thu Jul 12, 2018 12:43 pm
I don't know when he purchased it or what his goal was.
Goals matter.
His beneficiaries would be his two kids because Grandma has already passed.
I suspect that's just a guess?
I think maybe his plans for it were that it would cover funeral expenses, end of life expenses, etc.
Again, that's probably just a guess.
If that were the sole reason, it was probably a poor choice.

There are however perfectly valid reasons for purchasing an expensive life insurance policy.
Last edited by JoeRetire on Thu Jul 12, 2018 12:51 pm, edited 1 time in total.

Boglegrappler
Posts: 1094
Joined: Wed Aug 01, 2012 9:24 am

Re: Grandpa's 88 and has term life insurance

Post by Boglegrappler » Thu Jul 12, 2018 12:51 pm

Looks like a male probability of death at age 89 is about .15 or so. So a premium of about 15,000 for a 100k policy would leave the insurance company about breaking even (that ignores their costs of being in business like sales, administration, etc.). The 900/mo x 12 is 10,800 annually, so if anything, it looks like a decent deal for the moment.

But if no one is dependent on your continued living for their income, then it doesn't make a lot of sense. Life insurance really is income insurance, in a practical sense. Once you stop working, it doesn't make a lot of sense unless you're doing something for someone for free that they would have to pay someone to do if you died. Maybe babysitting or home repairs and maintenance.

IF he drives and has that asset level, he'd better have an umbrella policy. That would be a better use of insurance dollars than his life insurance.

JoeRetire
Posts: 1648
Joined: Tue Jan 16, 2018 2:44 pm

Re: Grandpa's 88 and has term life insurance

Post by JoeRetire » Thu Jul 12, 2018 12:57 pm

Boglegrappler wrote:
Thu Jul 12, 2018 12:51 pm
But if no one is dependent on your continued living for their income, then it doesn't make a lot of sense. Life insurance really is income insurance, in a practical sense. Once you stop working, it doesn't make a lot of sense unless you're doing something for someone for free that they would have to pay someone to do if you died.
Some folks use life insurance for other things.

One guy I know purchased life insurance with his only daughter as the beneficiary. He was worried that his second wife (the daughter's step-mother) would disinherit the daughter after he passed, but was afraid to amend the will to account for it.

Nate79
Posts: 3592
Joined: Thu Aug 11, 2016 6:24 pm
Location: Delaware

Re: Grandpa's 88 and has term life insurance

Post by Nate79 » Thu Jul 12, 2018 1:04 pm

Cancel it and enjoy the extra money. Or perhaps gift some to family.

soccerrules
Posts: 803
Joined: Mon Nov 14, 2016 4:01 pm

Re: Grandpa's 88 and has term life insurance

Post by soccerrules » Thu Jul 12, 2018 1:12 pm

bigtex wrote:
Thu Jul 12, 2018 12:23 pm
What is a better financial decision, to continuing paying the $900 a month, or just cancel it because $900 a month is way too much to be paying for life insurance?
I would think the best financial decision might have been made 15-25 years ago by dropping life insurance if it was not needed to replace his income due to untimely death.
Are there other reasons he is wanting to keep the policy ?
If he has several million and a pension -- $100K is not a big impact to the estate (5% or less)
Have you asked him why he still has it ?
Don't let your outflow exceed your income or your upkeep will be your downfall.

dk240t
Posts: 47
Joined: Wed Jun 03, 2015 12:49 pm

Re: Grandpa's 88 and has term life insurance

Post by dk240t » Thu Jul 12, 2018 1:17 pm

Grandpa doesn't have dependents that need the money.

Therefore, this is purely a bet by Grandpa that he'll die. Why would he want to bet on that? Cancel it and he aligns his rooting interests with living a long time...

NotWhoYouThink
Posts: 2072
Joined: Fri Dec 26, 2014 4:19 pm

Re: Grandpa's 88 and has term life insurance

Post by NotWhoYouThink » Thu Jul 12, 2018 1:18 pm

If he's of sound mind the only decision is to let him spend his own money any way he likes. You can ask him about it if you like, and you can make a suggestion exactly once before you start overstepping boundaries, but it is still his decision. As we've seen on another thread, some people just like to have life insurance that will pay out on their death, and it doesn't have to make sense.

FIL had a slightly smaller policy when he died at that age. I told the family that since some notes in his files indicated it was for funeral expenses, that we should have the memorial service on the beach in Hawaii instead of at a Midwest Parish Hall. Didn't win that one.

I don't and never will again have life insurance, and that's my decision to make.

Afty
Posts: 828
Joined: Sun Sep 07, 2014 5:31 pm

Re: Grandpa's 88 and has term life insurance

Post by Afty » Thu Jul 12, 2018 1:56 pm

hicabob wrote:
Thu Jul 12, 2018 12:33 pm
He certainly doesn't need it but it might be a good bet actuarially if he likes that sort of thing. At 88 he has a life expectancy of a little under 5 years aka social security table.
https://www.ssa.gov/oact/STATS/table4c6.html
From the actuarial tables, here is the probability of him surviving until various ages:

Code: Select all

Age	Percent survival
89	86.48%
90	73.50%
91	61.27%
92	50.00%
93	39.85%
94	30.97%
95	23.41%
96	17.20%
97	12.29%
98	8.54%
99	5.79%
100	6.24%
He would need to survive past age 97 for the cost of premiums to exceed the payout; the likelihood of that is 12%. Thus, the policy seems like a good bet at this point.

(I am not an actuary, and I'm sure there are subtleties I've missed in this calculation.)

denovo
Posts: 4379
Joined: Sun Oct 13, 2013 1:04 pm

Re: Grandpa's 88 and has term life insurance

Post by denovo » Thu Jul 12, 2018 2:18 pm

Rupert wrote:
Thu Jul 12, 2018 12:27 pm
Cancel it, and I wouldn't be so sure about the "sound mind" if he's paying $900/month for a $100K term life insurance policy.
+1
"Don't trust everything you read on the Internet"- Abraham Lincoln

NotWhoYouThink
Posts: 2072
Joined: Fri Dec 26, 2014 4:19 pm

Re: Grandpa's 88 and has term life insurance

Post by NotWhoYouThink » Thu Jul 12, 2018 3:01 pm

We don't know that his rates will remain constant in the future. IIRC, my term insurance policy would have allowed me to extend it past the 10 year term but at rates that started out high and got higher.

grkmec
Posts: 97
Joined: Wed Jun 22, 2016 8:46 am

Re: Grandpa's 88 and has term life insurance

Post by grkmec » Thu Jul 12, 2018 3:07 pm

bigtex wrote:
Thu Jul 12, 2018 12:23 pm
His health is also excellent for 88. He still drives daily, sound mind, normal health issues for someone that age. He is fine financially as he has a couple million in liquid assets plus a pension.
Given this, I say cancel it. If he was of average health (for 88yr old) or worse, I would keep it.

Separately, probably doesn't apply in this case, but one could make an estate planning argument for keeping insurance in a case like this. For example if policy is owned by a trust and outside estate - so proceeds would be exempt from estate tax. And insurance premiums become annual gifts to trust using gift exclusion. So there would be an economic reason to keep paying the policy even if it didn't make sense from an expected mortality angle.

Dottie57
Posts: 4655
Joined: Thu May 19, 2016 5:43 pm

Re: Grandpa's 88 and has term life insurance

Post by Dottie57 » Thu Jul 12, 2018 3:29 pm

Leave grandpa alone since he wants the policy. I sounds like he has enough even for LTC.

User avatar
Sheepdog
Posts: 5185
Joined: Tue Feb 27, 2007 3:05 pm
Location: Indiana, retired 1998 at age 65

Re: Grandpa's 88 and has term life insurance

Post by Sheepdog » Thu Jul 12, 2018 3:46 pm

Dottie57 wrote:
Thu Jul 12, 2018 3:29 pm
Leave grandpa alone since he wants the policy. I sounds like he has enough even for LTC.
Fully agree. If he is as sound of mind as you say he is, it is his business not yours (from an octogenarian)
It's not what you gather, but what you scatter which tells what kind of life you have lived---Helen Walton

Leesbro63
Posts: 5517
Joined: Mon Nov 08, 2010 4:36 pm

Re: Grandpa's 88 and has term life insurance

Post by Leesbro63 » Thu Jul 12, 2018 3:51 pm

NotWhoYouThink wrote:
Thu Jul 12, 2018 3:01 pm
We don't know that his rates will remain constant in the future. IIRC, my term insurance policy would have allowed me to extend it past the 10 year term but at rates that started out high and got higher.
1 This. Are you sure the premiums won’t jump at some point?

123
Posts: 3830
Joined: Fri Oct 12, 2012 3:55 pm

Re: Grandpa's 88 and has term life insurance

Post by 123 » Thu Jul 12, 2018 3:52 pm

Most of the discussion seems to have been with the assumption that the term life insurance is a "level" term policy, the premiums are the same each year. Is that the case or do the premiums change with age? If it's a "level" term policy the premium level is usually set for a specific number of years, is the policy close to expiration (i.e. 20 year policy, 30 year policy, etc). Depending on the specifics of the policy the course of action be different. Even "simple" term insurance can have complicating factors.

Edited to add:
I have helped elderly relatives with their finances and found that they are very reluctant to cash in even small (whole) life insurance policies that they have had for 30 years or more when there really isn't any advantage to keeping them in force. They seem to consider canceling insurance policies "bad luck" and you just have to respect their wishes.
The closest helping hand is at the end of your own arm.

inbox788
Posts: 5663
Joined: Thu Mar 15, 2012 5:24 pm

Re: Grandpa's 88 and has term life insurance

Post by inbox788 » Thu Jul 12, 2018 3:56 pm

JoeRetire wrote:
Thu Jul 12, 2018 12:34 pm
bigtex wrote:
Thu Jul 12, 2018 12:23 pm
My grandpa is 88 and has a $100k life insurance policy that he pays $900 a month for.
When did he purchase this policy?
Why? What was his goal?
Who is the beneficiary?

Some folks purchase life insurance to "even out" the beneficiaries of a will. Knowing what the thinking was behind the purchase may prove instructive.

Rather than cancel it, he may be able to sell it to one of the companies offering life settlement products.
It might be a tax management tool too, but doesn't seem like it based on limited information provided here. I'd lean towards keeping it for now. How many more years before the rate lock term ends?

mptfan
Posts: 4722
Joined: Mon Mar 05, 2007 9:58 am

Re: Grandpa's 88 and has term life insurance

Post by mptfan » Thu Jul 12, 2018 4:21 pm

JoeRetire wrote:
Thu Jul 12, 2018 12:57 pm
One guy I know purchased life insurance with his only daughter as the beneficiary. He was worried that his second wife (the daughter's step-mother) would disinherit the daughter after he passed, but was afraid to amend the will to account for it.
Assuming most of his assets are in financial accounts (brokerage and bank accounts), and assuming he has designated beneficiaries on his financial accounts, then his will is irrelevant to transferring those assets. All he has to do is designate his daughter as a beneficiary on any of those accounts at whatever percentage he chooses, no need to amend the will or do anything else.

PatrickA5
Posts: 321
Joined: Mon Jul 28, 2014 1:55 pm

Re: Grandpa's 88 and has term life insurance

Post by PatrickA5 » Thu Jul 12, 2018 8:53 pm

123 wrote:
Thu Jul 12, 2018 3:52 pm

Edited to add:
I have helped elderly relatives with their finances and found that they are very reluctant to cash in even small (whole) life insurance policies that they have had for 30 years or more when there really isn't any advantage to keeping them in force. They seem to consider canceling insurance policies "bad luck" and you just have to respect their wishes.
Yep, my dad had a $8K life policy for 55 years! He even got a letter congratulating him on hitting 50 years of premium payments and what a great investment he had made. Finally, at age 96, I talked him into canceling the policy and taking the cash value (which wasn't that much less than the pay out amount would be). It never ocurred to him to stop making the payments, since they were automatically drafted from his account monthly.

The most amazing part was that the policy went through 4 different insurance companies over the years.

47Percent
Posts: 348
Joined: Tue Oct 29, 2013 9:59 pm

Re: Grandpa's 88 and has term life insurance

Post by 47Percent » Thu Jul 12, 2018 9:07 pm

Shouldn't this decision really involve and revolve around the beneficiary of the life insurance, and possibly the beneficiaries of his estate -- in conjunction with him, of course.

I can see a scenario, where he may have designated a third party (his driver or his god son) as the beneficiary of his life insurance and may not have wanted that person to be involved in the estate settlement process.

If on the other hand, if the life insurance beneficiaries are the same as the ones for his estate (his sons), then they need to be involved in advising him whether this is a worthwhile expenditure of their inheritance.

If he is of sound mind, he can choose to override any advise and continue to do what he chooses, of course.

User avatar
dodecahedron
Posts: 3743
Joined: Tue Nov 12, 2013 12:28 pm

Re: Grandpa's 88 and has term life insurance

Post by dodecahedron » Thu Jul 12, 2018 9:20 pm

bigtex wrote:
Thu Jul 12, 2018 12:23 pm
Hello, I will keep this short. My grandpa is 88 and has a $100k life insurance policy that he pays $900 a month for. I believe if he were to cancel the policy today, he would not get any of the $100k. What is a better financial decision, to continuing paying the $900 a month, or just cancel it because $900 a month is way too much to be paying for life insurance? His health is also excellent for 88. He still drives daily, sound mind, normal health issues for someone that age. He is fine financially as he has a couple million in liquid assets plus a pension.
Has he asked for your input on the decision of whether to keep this policy? If not, I would say to stay entirely out of this decision. You said that he is of sound mind and it sounds like he has plenty of assets to deal with any needs.

If he is of sound mind, in no danger of being unable to meet his needs, and if he hasn't asked for your advice, it is truly not your place to tell your grandfather what to spend his money on.

Edited to add: lots of seniors spend substantial sums on what most of us would consider worthless junk from the Home Shopping Network or QVC or infomercials. If they are of sound mind and can easily afford it and their home isn't so crowded as to constitute a fire hazard, the same reasoning applies: not other people's place to tell them what to do.

Life insurance at least has the virtue that it doesn't leave a big hassle for the estate's executor to deal with after his death. Very easy to deal with a life insurance policy after death. Not so easy to deal with a ton of junk from HSN/QVC/infomercials.

User avatar
Earl Lemongrab
Posts: 5684
Joined: Tue Jun 10, 2014 1:14 am

Re: Grandpa's 88 and has term life insurance

Post by Earl Lemongrab » Fri Jul 13, 2018 2:35 pm

Imagine this scenario. You work on him and finally convince him to cancel. A short time later, he dies. You get to explain to the family why you cost them 100k. Don't get involved in other's finances unless you're asked, and even then tread very carefully.
This week's fortune cookie: "Your financial life will be secure and beneficial." So I got that going for me, which is nice.

JoeRetire
Posts: 1648
Joined: Tue Jan 16, 2018 2:44 pm

Re: Grandpa's 88 and has term life insurance

Post by JoeRetire » Fri Jul 13, 2018 2:46 pm

inbox788 wrote:
Thu Jul 12, 2018 3:56 pm
It might be a tax management tool too, but doesn't seem like it based on limited information provided here.
That was basically my point.

Without asking Grandpa, we have no idea why the life insurance was purchased. Thus we cannot reasonably presume it would be good to cancel it, nor an we presume it would be good to continue paying the premiums. We simply don't know enough.

User avatar
willthrill81
Posts: 6144
Joined: Thu Jan 26, 2017 3:17 pm
Location: USA

Re: Grandpa's 88 and has term life insurance

Post by willthrill81 » Fri Jul 13, 2018 4:08 pm

Earl Lemongrab wrote:
Fri Jul 13, 2018 2:35 pm
Imagine this scenario. You work on him and finally convince him to cancel. A short time later, he dies. You get to explain to the family why you cost them 100k. Don't get involved in other's finances unless you're asked, and even then tread very carefully.
:thumbsup :thumbsup :thumbsup

I've tried in good faith to help certain people just become aware of financial issues and to start them thinking about their future, and it has almost always gone nowhere. I really want to help them, but they won't have any of it.

Image
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

soccerrules
Posts: 803
Joined: Mon Nov 14, 2016 4:01 pm

Re: Grandpa's 88 and has term life insurance

Post by soccerrules » Fri Jul 13, 2018 4:14 pm

Afty wrote:
Thu Jul 12, 2018 1:56 pm
hicabob wrote:
Thu Jul 12, 2018 12:33 pm
He certainly doesn't need it but it might be a good bet actuarially if he likes that sort of thing. At 88 he has a life expectancy of a little under 5 years aka social security table.
https://www.ssa.gov/oact/STATS/table4c6.html
From the actuarial tables, here is the probability of him surviving until various ages:

Code: Select all

Age	Percent survival
89	86.48%
90	73.50%
91	61.27%
92	50.00%
93	39.85%
94	30.97%
95	23.41%
96	17.20%
97	12.29%
98	8.54%
99	5.79%
100	6.24%
He would need to survive past age 97 for the cost of premiums to exceed the payout; the likelihood of that is 12%. Thus, the policy seems like a good bet at this point.

(I am not an actuary, and I'm sure there are subtleties I've missed in this calculation.)
That does not take into consideration what he has already paid on the policy in years past.
Don't let your outflow exceed your income or your upkeep will be your downfall.

GeraniumLover
Posts: 117
Joined: Mon Feb 22, 2016 3:39 pm

Re: Grandpa's 88 and has term life insurance

Post by GeraniumLover » Fri Jul 13, 2018 4:16 pm

47Percent wrote:
Thu Jul 12, 2018 9:07 pm
Shouldn't this decision really involve and revolve around the beneficiary of the life insurance, and possibly the beneficiaries of his estate -- in conjunction with him, of course.

I can see a scenario, where he may have designated a third party (his driver or his god son) as the beneficiary of his life insurance and may not have wanted that person to be involved in the estate settlement process.
Exactly. Without knowing who the beneficiary is, this discussion is of limited value.

User avatar
munemaker
Posts: 3524
Joined: Sat Jan 18, 2014 6:14 pm

Re: Grandpa's 88 and has term life insurance

Post by munemaker » Fri Jul 13, 2018 4:17 pm

I agree with the others that say stay out of this.

Just want to mention though, that I think there are places that will buy the active life insurance policy. I have never done this and don't know anyone who has. I think I remember reading about this something about this. May or may not apply in this situation.

https://www.forbes.com/sites/forbesfina ... 06bee73367

Tdubs
Posts: 180
Joined: Tue Apr 24, 2018 7:50 pm

Re: Grandpa's 88 and has term life insurance

Post by Tdubs » Fri Jul 13, 2018 4:24 pm

As others noted, the price of the policy might go up drastically at 90.

02nz
Posts: 529
Joined: Wed Feb 21, 2018 3:17 pm

Re: Grandpa's 88 and has term life insurance

Post by 02nz » Fri Jul 13, 2018 4:32 pm

hicabob wrote:
Thu Jul 12, 2018 12:33 pm
He certainly doesn't need it but it might be a good bet actuarially if he likes that sort of thing.
I'm willing to bet that it would not be a good bet actuarially. For one thing, the insurance company has dozens or hundreds of actuaries on its payroll. I'm guessing grandpa has none. Actuarially grandpa will lose his bet (e.g., by seeing his rates rise as he continues to age).

inbox788
Posts: 5663
Joined: Thu Mar 15, 2012 5:24 pm

Re: Grandpa's 88 and has term life insurance

Post by inbox788 » Fri Jul 13, 2018 4:37 pm

soccerrules wrote:
Fri Jul 13, 2018 4:14 pm
Afty wrote:
Thu Jul 12, 2018 1:56 pm
hicabob wrote:
Thu Jul 12, 2018 12:33 pm
He certainly doesn't need it but it might be a good bet actuarially if he likes that sort of thing. At 88 he has a life expectancy of a little under 5 years aka social security table.
https://www.ssa.gov/oact/STATS/table4c6.html
From the actuarial tables, here is the probability of him surviving until various ages:

Code: Select all

Age	Percent survival
89	86.48%
90	73.50%
91	61.27%
92	50.00%
93	39.85%
94	30.97%
95	23.41%
96	17.20%
97	12.29%
98	8.54%
99	5.79%
100	6.24%
He would need to survive past age 97 for the cost of premiums to exceed the payout; the likelihood of that is 12%. Thus, the policy seems like a good bet at this point.

(I am not an actuary, and I'm sure there are subtleties I've missed in this calculation.)
That does not take into consideration what he has already paid on the policy in years past.
I don't think that matters. I think we're assuming it's a level term that goes beyond age 97, but even if it's not, the last few years of a term policy are "the best value" if you're looking at returns on a single year basis (not cumulative -- that would be the first eligible date).

47Percent
Posts: 348
Joined: Tue Oct 29, 2013 9:59 pm

Re: Grandpa's 88 and has term life insurance

Post by 47Percent » Fri Jul 13, 2018 5:19 pm

What has been paid into that policy up to this point has absolutely no bearing. The only thing that is useful for is as a lesson for making future decisions.. but at age 88, even that is of very little use.

I agree with previous posters about (not) giving financial advise to others.
If they take your advise: All upside is theirs, and all downside is your fault.

If they don't take the advise: All lost potential upside will make them feel guilty, and all potential downside avoided - they will be thinking "I am glad I didn't listen to this pushy person".

I am of course speaking from my personal experience!

User avatar
Earl Lemongrab
Posts: 5684
Joined: Tue Jun 10, 2014 1:14 am

Re: Grandpa's 88 and has term life insurance

Post by Earl Lemongrab » Fri Jul 13, 2018 5:32 pm

soccerrules wrote:
Fri Jul 13, 2018 4:14 pm
That does not take into consideration what he has already paid on the policy in years past.
That's a sunk cost. You won't get it back by cancelling. It's best to view the policy as if it had been written yesterday.
This week's fortune cookie: "Your financial life will be secure and beneficial." So I got that going for me, which is nice.

Post Reply