Any males in their late 40’s recently shop life insurance?

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veindoc
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Any males in their late 40’s recently shop life insurance?

Post by veindoc » Sun Aug 25, 2019 11:54 am

My husband, age 47, purchased 30 year term insurance around 10 years ago. He has 750,000 coverage for $1000/year. That was the preferred rate. My insurance cost $361/year for a million dollars for comparison. I do know woman pay less but I feel like we pay so much for so little but don’t really know. My husband has so little coverage because he was relying on employers coverage which is roughly another 750,000 but is now thinking he might switch jobs. We are so close to FI but I feel like if he passed I would want breathing room to not work and focus on the kids. My oldest, 11, has autism and is very high functioning but has the emotional maturity of a 5 year old and would not deal well with such a significant loss.

I recently shopped homeowners and now need to do car insurance since I just received word our rate jumped considerably, but I’m suffering from insurance search fatigue. What I’ve noticed is you plug your information and desired amount and then you get 3 sites that “match” your needs. Then you plug in your information AGAIN on each individual website to get a quote for an amount or product that doesn’t match your desired requests. Then the emails come to “please call!” and the phone rings off the hook. None of the information is stored and you again recount in exquisite detail what you want.

If what he pays is within normal range then I will drop it. As I said we are close to FI with current expenses, and certainly with some lifestyle changes like selling our home we are definitely FI, so it’s not a huge issue. But again for the sake of the kids I would want to keep life the same for them. If I find others are paying much less for more coverage then I will go through the drudgery again.

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Re: Any males in their late 40’s recently shop life insurance?

Post by BruDude » Sun Aug 25, 2019 12:28 pm

Preferred is the second best rate class so yeah, that is a pretty good rate to cover him through age 67. Of course it’s going to be more expensive for a new policy now that he’s 10 years older and possibly less healthy than before.

Everyone else’s cost is irrelevant, age/gender/health/term length are all variables that make it difficult to compare apples to apples. The question that matters is whether you are comfortable with the rate he can qualify for now. A good independent agent can help with that.

If you are simply asking whether he should keep the existing $750k, then you already answered your own question when you said it would make you feel more comfortable to have that $750k if he died. $1k is a small price to pay for that peace of mind. If anything, I would say you should evaluate your potential long term needs for the autistic child. If both of you died tomorrow, would someone be able to take care of the child? Will they be sufficient to live on their own when they reach adult age or will someone always need to be around/take care of them, and what will that cost if so?

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Re: Any males in their late 40’s recently shop life insurance?

Post by tigerdoc93 » Sun Aug 25, 2019 12:56 pm

If you’re FI you may not need insurance or at least not that much life insurance. Take the money you’d pay in premiums and invest it.

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Re: Any males in their late 40’s recently shop life insurance?

Post by David Jay » Sun Aug 25, 2019 4:43 pm

tigerdoc93 wrote:
Sun Aug 25, 2019 12:56 pm
If you’re FI you may not need insurance or at least not that much life insurance.
+1

The point of life insurance is to replace income to support living expenses. If you are FI you no longer need life insurance. I dropped my last policy (before the end of the term) in my mid-50s.
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Re: Any males in their late 40’s recently shop life insurance?

Post by randomguy » Sun Aug 25, 2019 5:08 pm

David Jay wrote:
Sun Aug 25, 2019 4:43 pm
tigerdoc93 wrote:
Sun Aug 25, 2019 12:56 pm
If you’re FI you may not need insurance or at least not that much life insurance.
+1

The point of life insurance is to replace income to support living expenses. If you are FI you no longer need life insurance. I dropped my last policy (before the end of the term) in my mid-50s.
Right now it sounds like they still need it. Maybe in 10 years they will not. Maybe buying coverage for 10 years instead of 20 (they are 10 years into a 30 year policey) might be cheaper. Or maybe 500k is enough given how close they are. Or maybe they need an extra 750k for the next 5 years to replace what the company was covering.

1k for 750k/30 years for a 37 year old seems with in the realm of reasonable. I paid slightly less(~15%) as a 35 year old but it was at a different coverage amount (i.e. not sure 1.5 million costs 2x as much a 750k) and a different issuing year. Other than calling around and asking what the rates are for a 47 year old guy for 20 years, I am not sure anyone can say much more. The issue tends to be that you will get the best possible rate and then after they review (or send out someone to do bloodwork), they will charge a bit more which makes it hard to do comparisons. But I would be shocked to see you saving more than a couple hundred bucks by getting a new policy. That might be at the level where it isn't worth worrying about.

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Re: Any males in their late 40’s recently shop life insurance?

Post by White Coat Investor » Sun Aug 25, 2019 5:18 pm

veindoc wrote:
Sun Aug 25, 2019 11:54 am
My husband, age 47, purchased 30 year term insurance around 10 years ago. He has 750,000 coverage for $1000/year. That was the preferred rate. My insurance cost $361/year for a million dollars for comparison. I do know woman pay less but I feel like we pay so much for so little but don’t really know. My husband has so little coverage because he was relying on employers coverage which is roughly another 750,000 but is now thinking he might switch jobs. We are so close to FI but I feel like if he passed I would want breathing room to not work and focus on the kids. My oldest, 11, has autism and is very high functioning but has the emotional maturity of a 5 year old and would not deal well with such a significant loss.

I recently shopped homeowners and now need to do car insurance since I just received word our rate jumped considerably, but I’m suffering from insurance search fatigue. What I’ve noticed is you plug your information and desired amount and then you get 3 sites that “match” your needs. Then you plug in your information AGAIN on each individual website to get a quote for an amount or product that doesn’t match your desired requests. Then the emails come to “please call!” and the phone rings off the hook. None of the information is stored and you again recount in exquisite detail what you want.

If what he pays is within normal range then I will drop it. As I said we are close to FI with current expenses, and certainly with some lifestyle changes like selling our home we are definitely FI, so it’s not a huge issue. But again for the sake of the kids I would want to keep life the same for them. If I find others are paying much less for more coverage then I will go through the drudgery again.
If you're close to FI, I hope you're looking at 5-10 year policies and not 20-30 year policies. They're obviously much cheaper.
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Re: Any males in their late 40’s recently shop life insurance?

Post by HomeStretch » Sun Aug 25, 2019 5:25 pm

$1k cost for $750k policy seems reasonable and a small cost to pay for peace of mind with young kids. Re-evaluate the need for life insurance every couple years.

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Re: Any males in their late 40’s recently shop life insurance?

Post by brianH » Sun Aug 25, 2019 6:07 pm

veindoc wrote:
Sun Aug 25, 2019 11:54 am
My husband, age 47, purchased 30 year term insurance around 10 years ago. He has 750,000 coverage for $1000/year. That was the preferred rate. My insurance cost $361/year for a million dollars for comparison. I do know woman pay less but I feel like we pay so much for so little but don’t really know.
Your rate sound extremely inexpensive. You got a deal if you're only paying $361 for $1MM (I'm assuming 30y policy purchased in your late 30s.)

His sounds a little pricey, but not outrageous. For comparison, I got a 30y/1MM policy at age 38, preferred plus, and it's $930/year.

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veindoc
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Re: Any males in their late 40’s recently shop life insurance?

Post by veindoc » Sun Aug 25, 2019 6:25 pm

But I would be shocked to see you saving more than a couple hundred bucks by getting a new policy. That might be at the level where it isn't worth worrying about.
Good point. I doubt being now 10 years older and a male would translate into significant savings, especially if we hope to drop it in five years or so.

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veindoc
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Re: Any males in their late 40’s recently shop life insurance?

Post by veindoc » Sun Aug 25, 2019 6:27 pm

White Coat Investor wrote:
Sun Aug 25, 2019 5:18 pm
veindoc wrote:
Sun Aug 25, 2019 11:54 am
My husband, age 47, purchased 30 year term insurance around 10 years ago. He has 750,000 coverage for $1000/year. That was the preferred rate. My insurance cost $361/year for a million dollars for comparison. I do know woman pay less but I feel like we pay so much for so little but don’t really know. My husband has so little coverage because he was relying on employers coverage which is roughly another 750,000 but is now thinking he might switch jobs. We are so close to FI but I feel like if he passed I would want breathing room to not work and focus on the kids. My oldest, 11, has autism and is very high functioning but has the emotional maturity of a 5 year old and would not deal well with such a significant loss.

I recently shopped homeowners and now need to do car insurance since I just received word our rate jumped considerably, but I’m suffering from insurance search fatigue. What I’ve noticed is you plug your information and desired amount and then you get 3 sites that “match” your needs. Then you plug in your information AGAIN on each individual website to get a quote for an amount or product that doesn’t match your desired requests. Then the emails come to “please call!” and the phone rings off the hook. None of the information is stored and you again recount in exquisite detail what you want.

If what he pays is within normal range then I will drop it. As I said we are close to FI with current expenses, and certainly with some lifestyle changes like selling our home we are definitely FI, so it’s not a huge issue. But again for the sake of the kids I would want to keep life the same for them. If I find others are paying much less for more coverage then I will go through the drudgery again.
If you're close to FI, I hope you're looking at 5-10 year policies and not 20-30 year policies. They're obviously much cheaper.
Another good point, I was focusing on 20 year since we do have a six year old but maybe 5-10 years is all we need. My youngest is by far and away the most responsible of the three, surprisingly.

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Re: Any males in their late 40’s recently shop life insurance?

Post by PharmerBrown » Sun Aug 25, 2019 7:34 pm

Once you factor in the amount you would get from SS if he were to pass early, I think you will feel much more comfortable.

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Re: Any males in their late 40’s recently shop life insurance?

Post by Stinky » Sun Aug 25, 2019 10:14 pm

If you want to do some quick, anonymous shopping for life insurance rates, go to Zander.com. No agent will call, and you can get quotes to your hearts delight. Very easy to navigate.
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Re: Any males in their late 40’s recently shop life insurance?

Post by BruDude » Mon Aug 26, 2019 1:40 am

Stinky wrote:
Sun Aug 25, 2019 10:14 pm
If you want to do some quick, anonymous shopping for life insurance rates, go to Zander.com. No agent will call, and you can get quotes to your hearts delight. Very easy to navigate.
You’ll also have no idea how accurate those rates are based on his health but at least you’ll see some numbers I guess.

OP isn’t going to get a better deal than they got 10 years ago.

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Re: Any males in their late 40’s recently shop life insurance?

Post by veindoc » Mon Aug 26, 2019 8:23 am

Stinky wrote:
Sun Aug 25, 2019 10:14 pm
If you want to do some quick, anonymous shopping for life insurance rates, go to Zander.com. No agent will call, and you can get quotes to your hearts delight. Very easy to navigate.
Ha! I did get a phone call but I actually got some real rates! And they were stratified by status: preferred plus, preferred etc. I took a look at our policy and actually my husband was preferred plus. A million dollar policy for 10 years is $700. I think this is perfect and just what we need.

If all goes according to plan this means so far this year we will save $700 on insurance. Hope this streak continues.

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Re: Any males in their late 40’s recently shop life insurance?

Post by BruDude » Mon Aug 26, 2019 10:39 am

veindoc wrote:
Mon Aug 26, 2019 8:23 am
Stinky wrote:
Sun Aug 25, 2019 10:14 pm
If you want to do some quick, anonymous shopping for life insurance rates, go to Zander.com. No agent will call, and you can get quotes to your hearts delight. Very easy to navigate.
Ha! I did get a phone call but I actually got some real rates! And they were stratified by status: preferred plus, preferred etc. I took a look at our policy and actually my husband was preferred plus. A million dollar policy for 10 years is $700. I think this is perfect and just what we need.

If all goes according to plan this means so far this year we will save $700 on insurance. Hope this streak continues.

Are you sure the rate on your current policy is correct? A 37 year old at Preferred Plus $750k/30 years is around $60-70/month. P+ is not easy to qualify for at age 47

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Re: Any males in their late 40’s recently shop life insurance?

Post by Boglegrappler » Mon Aug 26, 2019 11:27 am

If what he pays is within normal range then I will drop it. As I said we are close to FI with current expenses, and certainly with some lifestyle changes like selling our home we are definitely FI, so it’s not a huge issue. But again for the sake of the kids I would want to keep life the same for them. If I find others are paying much less for more coverage then I will go through the drudgery again.
Years ago I bought a term policy from Northwestern Mutual. I subsequently bought more from the SBLI in New York.

In looking around at advertised rates, I realized that my rate was materially higher on my older policy than it seemed I could get on a new policy. I called NML to ask about this and the woman I spoke to implied that these rates had a "negotiable" aspect to them.

I didn't act on it then, and the policies are lapsing now because of my age and no need.

But........I think there is a behavioral syndrome in the insurance business for both life and property casualty under which insurers simply raise your rates every year, regardless of the actuarial reasons to do so. For life insurance, where the coverage and claims issue is more straightforward, it likely pays to switch every so often. Just make sure you get the physical done before you cancel your old policy.

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Re: Any males in their late 40’s recently shop life insurance?

Post by Stinky » Mon Aug 26, 2019 11:52 am

Boglegrappler wrote:
Mon Aug 26, 2019 11:27 am

Years ago I bought a term policy from Northwestern Mutual. I subsequently bought more from the SBLI in New York.

In looking around at advertised rates, I realized that my rate was materially higher on my older policy than it seemed I could get on a new policy. I called NML to ask about this and the woman I spoke to implied that these rates had a "negotiable" aspect to them.

I didn't act on it then, and the policies are lapsing now because of my age and no need.

But........I think there is a behavioral syndrome in the insurance business for both life and property casualty under which insurers simply raise your rates every year, regardless of the actuarial reasons to do so. For life insurance, where the coverage and claims issue is more straightforward, it likely pays to switch every so often. Just make sure you get the physical done before you cancel your old policy.
I strongly doubt that you could “negotiated” a lower rate on a NWM term policy.

NWM’s term insurance rates are not competitive with the marketplace. NWM would much rather sell you a whole life policy than a term policy.

The vast majority of level term insurance sold these days have fully guaranteed premium rates. Rates can’t be unilaterally changed by the insurer.
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Re: Any males in their late 40’s recently shop life insurance?

Post by soccerrules » Mon Aug 26, 2019 12:49 pm

I obtained new Term LI at age 52. I decided on a 20 year level premium , $1M. I believe my annual premium is around $2300. I was told i qualified for level 3 of 14 levels.

My plan is to drop it completely when we retire (age 60) or drop benefit to $500K or $100K per child and change the beneficiaries to the kids. If I were to meet my demise before 72, then they could have tax free inheritance instead of waiting until we both pass to have any inheritance.
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Re: Any males in their late 40’s recently shop life insurance?

Post by Boglegrappler » Mon Aug 26, 2019 1:00 pm

I stand by what I said about the call with NWM. My take on it was that if I threatened to cancel the policy, things would be different. Maybe that wouldn't have happened, but that was my take.

I didn't have a level term rate. I had a term rate that rose as my age did.

The problem was that it increased over time faster than the actuarial data would have justified.

It was a decent deal when I got it over 40 years ago. Later it turned into a not as good deal, but it wasn't a big part of our budget and I could afford the gouging I took.

I understand the NML model. I also had a disability policy with them that required me to insist that they write one that paid only after a year of disability, and one that would continue to pay until, IIRC, age 65. Their pitch was the most disabilities end after a year, or the person dies from the disability. I told them I wanted what I saw as "real" disability insurance, and not insurance from someone who couldn't earn and save enough to afford an income interruption. And yes, they would have preferred to sell me the whole life policy instead of the term. I suppose they made up for it by raising my term premiums more than they should have been raised.

In any case, that was my point for the OP. If you have term that reprices annually, or periodically, I believe its quite likely that you'll pay more than you would for a new policy.

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Re: Any males in their late 40’s recently shop life insurance?

Post by BruDude » Mon Aug 26, 2019 1:31 pm

Boglegrappler wrote:
Mon Aug 26, 2019 1:00 pm
I stand by what I said about the call with NWM. My take on it was that if I threatened to cancel the policy, things would be different. Maybe that wouldn't have happened, but that was my take.

I didn't have a level term rate. I had a term rate that rose as my age did.

The problem was that it increased over time faster than the actuarial data would have justified.

It was a decent deal when I got it over 40 years ago. Later it turned into a not as good deal, but it wasn't a big part of our budget and I could afford the gouging I took.

I understand the NML model. I also had a disability policy with them that required me to insist that they write one that paid only after a year of disability, and one that would continue to pay until, IIRC, age 65. Their pitch was the most disabilities end after a year, or the person dies from the disability. I told them I wanted what I saw as "real" disability insurance, and not insurance from someone who couldn't earn and save enough to afford an income interruption. And yes, they would have preferred to sell me the whole life policy instead of the term. I suppose they made up for it by raising my term premiums more than they should have been raised.

In any case, that was my point for the OP. If you have term that reprices annually, or periodically, I believe its quite likely that you'll pay more than you would for a new policy.
It is impossible to negotiate life insurance rates, they are set with the Department of Insurance for your state and cannot be altered. You may be able to negotiate a better health rating in some cases, but two people with identical age/rating/amount cannot have two different premiums.

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Re: Any males in their late 40’s recently shop life insurance?

Post by Boglegrappler » Mon Aug 26, 2019 2:01 pm

I'd love to see those rates posted someplace then. You'd think it would be public information, or maybe I've missed where they are shown.

Sure would make it simpler than calling those term provider and other numbers or using those websites. :)

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Re: Any males in their late 40’s recently shop life insurance?

Post by Stinky » Mon Aug 26, 2019 2:13 pm

Boglegrappler wrote:
Mon Aug 26, 2019 1:00 pm

I didn't have a level term rate. I had a term rate that rose as my age did.

The problem was that it increased over time faster than the actuarial data would have justified.

It was a decent deal when I got it over 40 years ago. Later it turned into a not as good deal, but it wasn't a big part of our budget and I could afford the gouging I took.
It’s not surprising that your rate went up faster than what you expected. The reason that happens is because of what insurers call “selection bias“.

A pool of individuals in the same risk class will have mortality that goes up a certain amount, year upon year. Insurers could set their premium rates exactly to the slope of the mortality increase. However, individuals within the pool who can qualify for new policies at a cheaper rates will do so, leaving the remaining pool less healthy. Therefore, premium rates on the people remaining in the pool must rise faster than the average mortality for all those who were in the pool at the beginning.

That’s the reason that very few insurers sell annually increasing term insurance anymore. The healthy ones buy new policies; the unhealthy ones stick around.
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Re: Any males in their late 40’s recently shop life insurance?

Post by BruDude » Mon Aug 26, 2019 2:43 pm

Boglegrappler wrote:
Mon Aug 26, 2019 2:01 pm
I'd love to see those rates posted someplace then. You'd think it would be public information, or maybe I've missed where they are shown.

Sure would make it simpler than calling those term provider and other numbers or using those websites. :)
You won't find them posted in a chart anywhere because there are a million variations of benefit amount/age/gender/health rating, but they are definitely filed with the DOI and you can always look up rates for a given risk class on term4sale.com, though you won't find table ratings there. Unless you know what health rating you would get from the insurance company, looking at those rates would be useless anyway because every company has different underwriting guidelines.

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Re: Any males in their late 40’s recently shop life insurance?

Post by tj » Mon Aug 26, 2019 10:37 pm

My experience is that American general had generous underwriting. I've read that mutual of Omaha does as well but never requested a quote. You can get Amgen from independent agents including aigdirect.com. I saved $100 per year by replacing a 30 year with 25 years left with a 25 year policy. We'll see if similar savings can be achieved in another 5 years.

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Re: Any males in their late 40’s recently shop life insurance?

Post by MrsBDG » Thu Aug 29, 2019 11:42 pm

Check term4sale.com, you can just search rates, or you can click through and email (or talk) with three agents.

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Re: Any males in their late 40’s recently shop life insurance?

Post by Valuethinker » Fri Aug 30, 2019 7:30 am

Boglegrappler wrote:
Mon Aug 26, 2019 1:00 pm


In any case, that was my point for the OP. If you have term that reprices annually, or periodically, I believe its quite likely that you'll pay more than you would for a new policy.
I cannot think of any situation where I would advise someone to buy life insurance that was not level premium, fixed to end of term.

You can indeed then lapse those policies later and sometimes pick up a lower rate from another insurer.

However once you get past 40-45 it's very easy to develop conditions which make you uninsurable for a new policy, or only insurable at a much higher price. Genes & bad luck start to hit very hard past 40 and what disqualifies you can be something as simple as a bad accidental knock on the head.

In other words securing a superior rate is not a given. There was a big one off downshift because AIDS payouts were much less than had been actuarially anticipated in the 1980s, but generally your premium for a new policy will rise with age and may become impossibly expensive if you develop some conditions.

Therefore I suggest:

- getting 2 policies so that if assets rise and there is less need for insurance one can lapse one, without having to go through process of applying for new insurance (and maybe getting some nasty surprises).

Policies need to be guaranteed level premium to maturity.

- once you have an insurable need (spouse + mortgage; children etc.) then buy term life insurance as quickly as possible - the rates for healthy 20 or 30 somethings are so very cheap compared to what you pay at a later stage in life.

- buy too much not too little. 10x annual income is not a bad rule of thumb but in no way substitutes for a careful calculation of actual need. But if you think of the cost to put 2 children through to age 18, public high school but working single parent (so after school care, transport etc), plus college plus provision for the pension income you would have had (or some fraction of it) then you get to big numbers.

For healthy young people, 20 or 30 year term life is usually dirt cheap.

- if you do take out a new policy at a later date, make sure you do not lapse the original policy until all the exclusion periods are expired. You may have no plan to commit suicide, but a court could rule that, post accident, it was a suicide (I can think of at least 2 cases I know of where it was "verdict undetermined" and you plausibly could skew it that it was a suicide), and the insurer does not have to pay. Or they argue that you knew that you had that cancer when you took out new insurance, etc....

My father died very suddenly, zero warning. He was, like all of us I suppose, acting like he would live forever. We were lucky he left Mum in such a good financial position.

"Men make plans. God laughs".

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Re: Any males in their late 40’s recently shop life insurance?

Post by Stinky » Fri Aug 30, 2019 11:56 am

Valuethinker wrote:
Fri Aug 30, 2019 7:30 am

I cannot think of any situation where I would advise someone to buy life insurance that was not level premium, fixed to end of term.

You can indeed then lapse those policies later and sometimes pick up a lower rate from another insurer.

However once you get past 40-45 it's very easy to develop conditions which make you uninsurable for a new policy, or only insurable at a much higher price. Genes & bad luck start to hit very hard past 40 and what disqualifies you can be something as simple as a bad accidental knock on the head.

In other words securing a superior rate is not a given. There was a big one off downshift because AIDS payouts were much less than had been actuarially anticipated in the 1980s, but generally your premium for a new policy will rise with age and may become impossibly expensive if you develop some conditions.

Therefore I suggest:

- getting 2 policies so that if assets rise and there is less need for insurance one can lapse one, without having to go through process of applying for new insurance (and maybe getting some nasty surprises).

Policies need to be guaranteed level premium to maturity.

- once you have an insurable need (spouse + mortgage; children etc.) then buy term life insurance as quickly as possible - the rates for healthy 20 or 30 somethings are so very cheap compared to what you pay at a later stage in life.

- buy too much not too little. 10x annual income is not a bad rule of thumb but in no way substitutes for a careful calculation of actual need. But if you think of the cost to put 2 children through to age 18, public high school but working single parent (so after school care, transport etc), plus college plus provision for the pension income you would have had (or some fraction of it) then you get to big numbers.

For healthy young people, 20 or 30 year term life is usually dirt cheap.

- if you do take out a new policy at a later date, make sure you do not lapse the original policy until all the exclusion periods are expired. You may have no plan to commit suicide, but a court could rule that, post accident, it was a suicide (I can think of at least 2 cases I know of where it was "verdict undetermined" and you plausibly could skew it that it was a suicide), and the insurer does not have to pay. Or they argue that you knew that you had that cancer when you took out new insurance, etc....

My father died very suddenly, zero warning. He was, like all of us I suppose, acting like he would live forever. We were lucky he left Mum in such a good financial position.

"Men make plans. God laughs".
Excellent advice!
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Re: Any males in their late 40’s recently shop life insurance?

Post by Boglegrappler » Fri Aug 30, 2019 12:04 pm

I cannot think of any situation where I would advise someone to buy life insurance that was not level premium, fixed to end of term.
Maybe, as an earlier poster said, those are the only policies that the insurers want to sell today anyway.

However, if the problem with "yearly renewable" term is that you can't protect yourself from increases in the premium above the actuarily justified amount since you run the risk of health changes, then it seems to me that insurance companies probably have factored that risk (to them, of your declining health) into their level premium amounts as well. I suppose the advantage to the level premium route is that it protects you against the ability of the insurance company to arbitrarily raise your rate. But you'll be paying for that "protection" in the rate.

In any case, level premium does allow you to see your total cost over the period. But if you're 30 and looking for level premium term for the next 35 years, it's pretty clear that the early years premiums are going to be far above the actuarily justified amounts. For instance, the probability that a 60 year old male will die in that year is between six and seven times greater than the probability of a 30 year old dying. If premiums are level, the math is obvious.

The rest of the post I agree with completely, and the idea of splitting things into two policies makes a lot of sense.

Also, the advice to error on the side of buying more than you "think" you'll need makes a lot of sense. When we first bought insurance, the amount we felt we needed was enough to put us into the taxable estate category, since the exemption back then was less than $200,000. Under today's law, you at least don't have to worry as much about protecting your insurance proceeds from the estate tax.

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Stinky
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Re: Any males in their late 40’s recently shop life insurance?

Post by Stinky » Fri Aug 30, 2019 12:13 pm

Boglegrappler wrote:
Fri Aug 30, 2019 12:04 pm

However, if the problem with "yearly renewable" term is that you can't protect yourself from increases in the premium above the actuarily justified amount since you run the risk of health changes, then it seems to me that insurance companies probably have factored that risk (to them, of your declining health) into their level premium amounts as well. I suppose the advantage to the level premium route is that it protects you against the ability of the insurance company to arbitrarily raise your rate. But you'll be paying for that "protection" in the rate.

In any case, level premium does allow you to see your total cost over the period. But if you're 30 and looking for level premium term for the next 35 years, it's pretty clear that the early years premiums are going to be far above the actuarily justified amounts. For instance, the probability that a 60 year old male will die in that year is between six and seven times greater than the probability of a 30 year old dying. If premiums are level, the math is obvious.
Yes, you are absolutely right. For example, on a 20 year term policy the insured is “overpaying” for about the first 10 years and “underpaying” after that. It all works out fairly in the end for both the policyholder and the insurer.

What it also means is that you don’t want to buy a 20 year term policy when you only need protection for 10 years. If you lapse that 20 year policy after 10 years, you’ve overpaid for your insurance, and the insurer has made a good-sized “profit”.
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BruDude
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Re: Any males in their late 40’s recently shop life insurance?

Post by BruDude » Fri Aug 30, 2019 2:16 pm

Stinky wrote:
Fri Aug 30, 2019 12:13 pm
Boglegrappler wrote:
Fri Aug 30, 2019 12:04 pm

However, if the problem with "yearly renewable" term is that you can't protect yourself from increases in the premium above the actuarily justified amount since you run the risk of health changes, then it seems to me that insurance companies probably have factored that risk (to them, of your declining health) into their level premium amounts as well. I suppose the advantage to the level premium route is that it protects you against the ability of the insurance company to arbitrarily raise your rate. But you'll be paying for that "protection" in the rate.

In any case, level premium does allow you to see your total cost over the period. But if you're 30 and looking for level premium term for the next 35 years, it's pretty clear that the early years premiums are going to be far above the actuarily justified amounts. For instance, the probability that a 60 year old male will die in that year is between six and seven times greater than the probability of a 30 year old dying. If premiums are level, the math is obvious.
Yes, you are absolutely right. For example, on a 20 year term policy the insured is “overpaying” for about the first 10 years and “underpaying” after that. It all works out fairly in the end for both the policyholder and the insurer.

What it also means is that you don’t want to buy a 20 year term policy when you only need protection for 10 years. If you lapse that 20 year policy after 10 years, you’ve overpaid for your insurance, and the insurer has made a good-sized “profit”.
The problem with a 10-year policy is that by year 6 or 7 you need to start evaluating whether you need to buy another 10+ years of coverage because waiting until year 9.5 might cost you a lot more long-term due to being older and potential health changes.

There's still no real need to buy two separate policies. If you have a single $1M policy and want to reduce it to $500k later, almost every insurance company will allow you to do that. Unless you are in absolute perfect health, I would not buy two separate policies as you are going to deal with two different underwriting evaluations and potentially be assigned two different health ratings resulting in a higher overall cost.

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