Prulife life insurance

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talnoe
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Prulife life insurance

Post by talnoe » Thu Sep 12, 2019 11:18 pm

Hello everyone,
I am new to this forum and happy that I found it. I have read here about life insurance but did not find an answer for me.
I would like to leave some gifts to my grandchildren when I die. I am 61 y.o. female, healthy, went through the exam, Prudential offered me Prulife Universal life insurance, 100K till 121 y.o. with payment of $153 per month for the first year. Seems like it is guaranteed as long as I am paying this amount on time for the rest of my life, right?
I asked why it says that premium for the first year and what will happen next year? I did not get the answer.
Is it a good deal? It seems to me it is because I don't have time to pay 100K in premiums before I die and even I don't pay this amount my grandchildren will get 100K. Is it a good product and company for my goal?
I would appreciate any opinion and advice. Thank you.

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simplesimon
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Re: Prulife life insurance

Post by simplesimon » Fri Sep 13, 2019 5:20 am

Don't get the policy. Save and invest the dollars you'd be paying and gift that to the grandchildren.

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Nate79
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Re: Prulife life insurance

Post by Nate79 » Fri Sep 13, 2019 6:01 am

Universal life insurance is a horrible product. No the premiums are not fixed. Google the horrible problems with these products blowing up as the holders get older and older and the people going broke just to keep the policies alive.

Save your cash, invest it instead. Don't put it in these borderline scam products.

FoolStreet
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Re: Prulife life insurance

Post by FoolStreet » Fri Sep 13, 2019 6:20 am

talnoe wrote:
Thu Sep 12, 2019 11:18 pm
Hello everyone,
I am new to this forum and happy that I found it. I have read here about life insurance but did not find an answer for me.
I would like to leave some gifts to my grandchildren when I die. I am 61 y.o. female, healthy, went through the exam, Prudential offered me Prulife Universal life insurance, 100K till 121 y.o. with payment of $153 per month for the first year. Seems like it is guaranteed as long as I am paying this amount on time for the rest of my life, right?
I asked why it says that premium for the first year and what will happen next year? I did not get the answer.
Is it a good deal? It seems to me it is because I don't have time to pay 100K in premiums before I die and even I don't pay this amount my grandchildren will get 100K. Is it a good product and company for my goal?
I would appreciate any opinion and advice. Thank you.
Stay away from salesmen selling these kinds of schemes. It is far better for you to open a Vanguard account or Schwab or Fidelity, and just invest $153 per month in a life strategy index fund.

The whole concept is bizarre. Are you hoping you die early so that your heirs get the 100k while having pay the life insurance company as little money as possible?

Not sure if you are good with Google Sheets or Excel, but calculate 150 per month for 10 years at some nominal rate of return.

You can play around with this online calculator.


https://www.calculatorsoup.com/calculat ... ulator.php


Seems to me most life insurance salesmen prey on the elderly.

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Stinky
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Re: Prulife life insurance

Post by Stinky » Fri Sep 13, 2019 9:57 am

Welcome to the Forum! Glad that you posted your question before you made this horrible purchase.

As others have said, you will be much better served by investing your $153 per month in a low cost index fund. Since you intend to leave the money for grandchildren and you could easily live 25 or more years, I’d suggest a Total US Market or Total World Market fund.

The motivation of the agent to sell you this policy is that he will make something like $1,000 to $1,800 if you take the bait and buy the policy. Don’t do it. Save your money instead.
It's a GREAT day to be alive - Travis Tritt

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David Jay
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Re: Prulife life insurance

Post by David Jay » Fri Sep 13, 2019 10:09 am

Welcome to the forum!
talnoe wrote:
Thu Sep 12, 2019 11:18 pm
Prudential offered me Prulife Universal life insurance, 100K till 121 y.o. with payment of $153 per month for the first year. Seems like it is guaranteed as long as I am paying this amount on time for the rest of my life, right?
No, the cost of insurance goes up over time with Universal Life. At some point the $153 per month will not be enough to cover the insurance cost and you will need to pay more to keep the policy from lapsing. Universal Life is only appropriate, if at all, for a high income (high tax bracket) individual who has used all tax advantaged space that is available (401K, IRA, etc.) and wants to save more.

I asked why it says that premium for the first year and what will happen next year? I did not get the answer.
That is very poor behavior, bordering on evil. Do not have any further interaction with them.

Is it a good deal?
No
Prediction is very difficult, especially about the future - Niels Bohr | To get the "risk premium", you really do have to take the risk - nisiprius

Topic Author
talnoe
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Re: Prulife life insurance

Post by talnoe » Fri Sep 13, 2019 10:17 am

Thank you for advice, I just having a hard time to convince myself that $153 per month can ever make 100K. Compound interest formula looks good on paper but probably not so good in real life. I need to go to an investment topic for that. I really appreciate your help.

FrugalConservative
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Re: Prulife life insurance

Post by FrugalConservative » Fri Sep 13, 2019 10:19 am

Run, dont walk, from that garbage policy.

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BL
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Re: Prulife life insurance

Post by BL » Fri Sep 13, 2019 10:27 am

FrugalConservative wrote:
Fri Sep 13, 2019 10:19 am
Run, dont walk, from that garbage policy.
+1
run!
The payments will keep increasing. It should be illegal, if it isn't!

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David Jay
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Re: Prulife life insurance

Post by David Jay » Fri Sep 13, 2019 12:25 pm

talnoe:

Check out this BH thread - At age 96 the cost to keep insurance in force is $11,000 per year: viewtopic.php?t=224625
Prediction is very difficult, especially about the future - Niels Bohr | To get the "risk premium", you really do have to take the risk - nisiprius

BruDude
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Re: Prulife life insurance

Post by BruDude » Fri Sep 13, 2019 12:32 pm

Nate79 wrote:
Fri Sep 13, 2019 6:01 am
Universal life insurance is a horrible product. No the premiums are not fixed. Google the horrible problems with these products blowing up as the holders get older and older and the people going broke just to keep the policies alive.

Save your cash, invest it instead. Don't put it in these borderline scam products.
Actually it is fixed and guaranteed if it is the Universal Protector product, OP doesn't state the specific product name. While I understand BH is not fond of these products, it would still be helpful to have the correct info before making definitive statements. There is a difference between "regular" universal life policies and guaranteed UL policies. Regular UL is dependent on interest rates and cash values, guaranteed UL is not. GUL is essentially term insurance guaranteed for life.

BruDude
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Re: Prulife life insurance

Post by BruDude » Fri Sep 13, 2019 12:37 pm

On a side note for those that say "invest the $153/month instead" well....nobody knows when they are going to die, and investment returns are taxable, so in order to generate $100k after tax, the investments would have to return more than $100k total. Someone in their 60's is also not going to be investing in risky assets, so the overall rate of return should be expected to be lower than a younger investor.

The life insurance policy is the only way to guarantee that the grandchildren will receive $100k as intended. If OP dies tomorrow, they will have $153 instead of $100,000.

esteen
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Re: Prulife life insurance

Post by esteen » Fri Sep 13, 2019 1:07 pm

I'm glad you found the Bogleheads, and thank you for posting your question.

Could it possibly end up a good purchase decision, if you were to pass away early? Possibly. Is it on average the best idea? No. Mathematically it can't be - you are paying a middleman in terms of commission and ongoing costs to give you an investment product, when you could invest the money yourself without the middleman fees.
talnoe wrote:
Fri Sep 13, 2019 10:17 am
Thank you for advice, I just having a hard time to convince myself that $153 per month can ever make 100K. Compound interest formula looks good on paper but probably not so good in real life. I need to go to an investment topic for that. I really appreciate your help.
I have a hard time believing $153/mo will stay $153/mo after the first couple years. From Prudential's non-answer on premium changes, it sounds like most likely there will be substantial premium increases in order to keep your policy going once you feel "locked in". Think of it this way: if you were a Prudential salesperson, and you got a big up-front paycheck for each person who bought a whole life insurance policy from you, you would want to highlight all the info that makes the policy good and hide anything that makes the policy bad, right? So if the product was a guaranteed $153/mo premium, never increases, that would be a major selling point and they would be tripping over themselves to point that out to you. If the premiums increased, especially if they increase a lot in future years, they would rather hide or be unclear on the future premium rates to not discourage the purchase.

If I were to seriously consider this policy, I would want Prudential to give me in writing the exact monthly premium amounts each year for the duration of the policy. If they can't do that, a list of exact maximums (i.e. the premium would not go above X amount) each year for the duration of the policy. If they can't do either, you are buying something for which you do not know the cost. That is a bad idea!

If they are able to give you exact premiums, then you can sit down and do the calculation yourself (or ask us to help you) to determine if it is a reasonable investment.

Otherwise, I would do what others have suggested and set aside a monthly amount specifically for your grandchildren in an investment account. If you are concerned about passing away early and leaving $100K for them during the next decade or so, buy a (much cheaper) term life policy that will allow you to do that, and invest the difference.

Best of luck to you!

esteen
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Re: Prulife life insurance

Post by esteen » Fri Sep 13, 2019 1:18 pm

BruDude wrote:
Fri Sep 13, 2019 12:37 pm
Someone in their 60's is also not going to be investing in risky assets, so the overall rate of return should be expected to be lower than a younger investor.
Disagree - this money is being set aside for her grandchildren, so using her lifespan is not an appropriate time horizon.
BruDude wrote:
Fri Sep 13, 2019 12:37 pm
The life insurance policy is the only way to guarantee that the grandchildren will receive $100k as intended. If OP dies tomorrow, they will have $153 instead of $100,000.
This is true, but to me not the complete story. It is definitely not a guarantee the grandchildren will receive $100K in purchasing power - if the OP lives another 25 years, at a modest 2% inflation that $100K is only worth about $60K. Additionally, if you're worried about leaving money when dying tomorrow or any near-term timeframe, 2 things to consider: 1) a term life insurance policy will be much cheaper, and 2) life insurance isn't hte only way. If there is money OP has saved up to spend in her retirement years, but she dies tomorrow, in her Will she can bequeath $100K or some other amount of that nest egg to her grandkids.

BruDude
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Re: Prulife life insurance

Post by BruDude » Fri Sep 13, 2019 2:22 pm

esteen wrote:
Fri Sep 13, 2019 1:18 pm
BruDude wrote:
Fri Sep 13, 2019 12:37 pm
Someone in their 60's is also not going to be investing in risky assets, so the overall rate of return should be expected to be lower than a younger investor.
Disagree - this money is being set aside for her grandchildren, so using her lifespan is not an appropriate time horizon.
BruDude wrote:
Fri Sep 13, 2019 12:37 pm
The life insurance policy is the only way to guarantee that the grandchildren will receive $100k as intended. If OP dies tomorrow, they will have $153 instead of $100,000.
This is true, but to me not the complete story. It is definitely not a guarantee the grandchildren will receive $100K in purchasing power - if the OP lives another 25 years, at a modest 2% inflation that $100K is only worth about $60K. Additionally, if you're worried about leaving money when dying tomorrow or any near-term timeframe, 2 things to consider: 1) a term life insurance policy will be much cheaper, and 2) life insurance isn't hte only way. If there is money OP has saved up to spend in her retirement years, but she dies tomorrow, in her Will she can bequeath $100K or some other amount of that nest egg to her grandkids.
Purchasing power doesn't really have anything to do with it. If she invests money to save up $100k it will still have the same value as $100k paid on a death benefit at that point in time.

In any case, if she is absolutely set on leaving the kids with $100k that she doesn't have at this point in time, then there really isn't any other way to guarantee they will get that amount of money other than buying a life insurance policy. There are no guarantees in the stock market, and she could die next year and be left with the $1800 in premium savings instead of the $100k she wanted to leave them. This is a personal decision based on her goals, it's not really a math problem. If the premium was $8k per year sure you could easily argue she would outlive the death benefit, but at $1800/year for $100k guaranteed, that's a very good rate for a 61 year old. It is not easy to qualify for P+ rates at that age.

Buying a term policy doesn't solve the problem because she could easily outlive the term period and then be left with nothing for the grandkids.

FWIW, I looked it up and a 61 year old woman with a Preferred Plus health rating is exactly $153.67/month with Prudential to guarantee the policy for life, so yes that very well may be the correct premium forever.

FoolStreet
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Re: Prulife life insurance

Post by FoolStreet » Fri Sep 13, 2019 3:57 pm

BruDude wrote:
Fri Sep 13, 2019 2:22 pm
esteen wrote:
Fri Sep 13, 2019 1:18 pm
BruDude wrote:
Fri Sep 13, 2019 12:37 pm
Someone in their 60's is also not going to be investing in risky assets, so the overall rate of return should be expected to be lower than a younger investor.
Disagree - this money is being set aside for her grandchildren, so using her lifespan is not an appropriate time horizon.
BruDude wrote:
Fri Sep 13, 2019 12:37 pm
The life insurance policy is the only way to guarantee that the grandchildren will receive $100k as intended. If OP dies tomorrow, they will have $153 instead of $100,000.
This is true, but to me not the complete story. It is definitely not a guarantee the grandchildren will receive $100K in purchasing power - if the OP lives another 25 years, at a modest 2% inflation that $100K is only worth about $60K. Additionally, if you're worried about leaving money when dying tomorrow or any near-term timeframe, 2 things to consider: 1) a term life insurance policy will be much cheaper, and 2) life insurance isn't hte only way. If there is money OP has saved up to spend in her retirement years, but she dies tomorrow, in her Will she can bequeath $100K or some other amount of that nest egg to her grandkids.
Purchasing power doesn't really have anything to do with it. If she invests money to save up $100k it will still have the same value as $100k paid on a death benefit at that point in time.

In any case, if she is absolutely set on leaving the kids with $100k that she doesn't have at this point in time, then there really isn't any other way to guarantee they will get that amount of money other than buying a life insurance policy. There are no guarantees in the stock market, and she could die next year and be left with the $1800 in premium savings instead of the $100k she wanted to leave them. This is a personal decision based on her goals, it's not really a math problem. If the premium was $8k per year sure you could easily argue she would outlive the death benefit, but at $1800/year for $100k guaranteed, that's a very good rate for a 61 year old. It is not easy to qualify for P+ rates at that age.

Buying a term policy doesn't solve the problem because she could easily outlive the term period and then be left with nothing for the grandkids.

FWIW, I looked it up and a 61 year old woman with a Preferred Plus health rating is exactly $153.67/month with Prudential to guarantee the policy for life, so yes that very well may be the correct premium forever.
What heir would recommend their parent or grandparent do this? It is ridiculous. Noone will cheer that they got 100k because grandma died early.

Instead heirs would much rather the parent or grandparent invest the 153/mo in a low cost fund. Personally I would suggest a moderate life Strategy fund, but that's debatable. If Grandma lives a long time, the money grows. If she dies early, so be it. If she has an emergency and needs the money for something unexpected, thank God it is liquid in the index fund and can be used for grandma's health.

The only time I have heard this recommended is in the book Beyond the Grave in a situation where grandma remarried and wants to give the life estate usage of the family house to her new spouse, but wants to leave some cash to the kids so that they have a way to break ties financially from the new family.

But that is an edge case.

esteen
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Re: Prulife life insurance

Post by esteen » Fri Sep 13, 2019 4:19 pm

BruDude wrote:
Fri Sep 13, 2019 2:22 pm
Purchasing power doesn't really have anything to do with it. If she invests money to save up $100k it will still have the same value as $100k paid on a death benefit at that point in time.
Agree, preserving PP may not be the OP's intent, I was more addressing your comment of guaranteeing $100K. I may have misinterpreted your meaning of that statement htough, if you meant a guarantee nominally and not in real terms.
BruDude wrote:
Fri Sep 13, 2019 2:22 pm
In any case, if she is absolutely set on leaving the kids with $100k that she doesn't have at this point in time, then there really isn't any other way to guarantee they will get that amount of money other than buying a life insurance policy.
There is if she has a nest egg she would be otherwise utilizing for her future retirement expenses, that she didn't already have earmarked for other heirs upon death.
BruDude wrote:
Fri Sep 13, 2019 2:22 pm
If the premium was $8k per year sure you could easily argue she would outlive the death benefit, but at $1800/year for $100k guaranteed, that's a very good rate for a 61 year old. It is not easy to qualify for P+ rates at that age.
It's probably a great rate for the product. My point is that's an expensive product compared to her other options. Example, a 20yr term policy would be more like $40/mo according to term4sale.com if I model with my zip code. Hers may be less.
BruDude wrote:
Fri Sep 13, 2019 2:22 pm
Buying a term policy doesn't solve the problem because she could easily outlive the term period and then be left with nothing for the grandkids.
Disagree here - you wouldn't consider the policy in a vacuum. It's a question of "what do I want to do with my 150+ dollars/mo"? If only $40 goes toward an insurance policy, then $113/mo can go into an investment account for the next 20 years.

As you said no one knows the exact amount the market will return, but modeling with various rates I can assume the end result will likely be closer to $50-70K than $100K. For the sake of argument let's say it's a mostly stock portfolio with 7.5% nominal returns. You end 20 years with ~$62K. 5 more years of putting in the $153/mo gets you to over $100K with NO premiums going forward. That may be worth it for the OP, or maybe not - I personally see the benefits of a term policy plus a liquid investment fund outweighing a uni life policy that you're stuck paying premiums on forever - and if you can't pay the premium in your old age, POOF that $100K turns to nothing.

Note this math changes drastically more in favor of the term life if the $153/mo premium is not static.
BruDude wrote:
Fri Sep 13, 2019 2:22 pm
FWIW, I looked it up and a 61 year old woman with a Preferred Plus health rating is exactly $153.67/month with Prudential to guarantee the policy for life, so yes that very well may be the correct premium forever.
That guarantees the policy, I don't know if it guarantees the premium. As I said before I would want the premium rules in writing before I signed up for any policy.

BruDude
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Re: Prulife life insurance

Post by BruDude » Fri Sep 13, 2019 6:36 pm

FoolStreet wrote:
Fri Sep 13, 2019 3:57 pm
What heir would recommend their parent or grandparent do this? It is ridiculous. Noone will cheer that they got 100k because grandma died early.

Instead heirs would much rather the parent or grandparent invest the 153/mo in a low cost fund. Personally I would suggest a moderate life Strategy fund, but that's debatable. If Grandma lives a long time, the money grows. If she dies early, so be it. If she has an emergency and needs the money for something unexpected, thank God it is liquid in the index fund and can be used for grandma's health.

The only time I have heard this recommended is in the book Beyond the Grave in a situation where grandma remarried and wants to give the life estate usage of the family house to her new spouse, but wants to leave some cash to the kids so that they have a way to break ties financially from the new family.

But that is an edge case.
OP didn't say one of the grandkids recommended it, she just said she wants to do something nice for them. $153/mo isn't going to leave them with $100k if she dies next year and put it into an index fund. You can argue what's best until the cows come home, but if she wants a guaranteed $100k for the grandkids, it's really the only way to do it. If everyone knew their expiration date, the answer would be clear-cut, but we don't.

FoolStreet
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Re: Prulife life insurance

Post by FoolStreet » Fri Sep 13, 2019 7:33 pm

BruDude wrote:
Fri Sep 13, 2019 6:36 pm
FoolStreet wrote:
Fri Sep 13, 2019 3:57 pm
What heir would recommend their parent or grandparent do this? It is ridiculous. Noone will cheer that they got 100k because grandma died early.

Instead heirs would much rather the parent or grandparent invest the 153/mo in a low cost fund. Personally I would suggest a moderate life Strategy fund, but that's debatable. If Grandma lives a long time, the money grows. If she dies early, so be it. If she has an emergency and needs the money for something unexpected, thank God it is liquid in the index fund and can be used for grandma's health.

The only time I have heard this recommended is in the book Beyond the Grave in a situation where grandma remarried and wants to give the life estate usage of the family house to her new spouse, but wants to leave some cash to the kids so that they have a way to break ties financially from the new family.

But that is an edge case.
OP didn't say one of the grandkids recommended it, she just said she wants to do something nice for them. $153/mo isn't going to leave them with $100k if she dies next year and put it into an index fund. You can argue what's best until the cows come home, but if she wants a guaranteed $100k for the grandkids, it's really the only way to do it. If everyone knew their expiration date, the answer would be clear-cut, but we don't.
I don’t understand the weight you put on the word guaranteed. It is a true statement, but why do you make such a big deal of it?

According to a quick Google search, 90% of all non smoker 60yr old women will live for at least 10 more years. And the calculator si posted said 153 per mo will grow to 190k with a 5% return over 10yrs.

This isn’t binary. Lower the expcted rate of return, drop from 10 to 8 years and increase survivalists odds. Or even less years. The family will be ahead regardless

And no one has to say, “geez when is grandma gonna die so I can get the death benefit”.

My opinion is that your repeated and emphasized use of the binary word “guaranteed” gives an emotional trigger to grandma that is unwarranted.


https://www.aafp.org/afp/2007/0315/p885.html

ofckrupke
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Re: Prulife life insurance

Post by ofckrupke » Fri Sep 13, 2019 7:58 pm

FoolStreet wrote:
Fri Sep 13, 2019 7:33 pm
And the calculator si posted said 153 per mo will grow to 190k with a 5% return over 10yrs.
Oh I'd like some of that....

FoolStreet
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Re: Prulife life insurance

Post by FoolStreet » Fri Sep 13, 2019 8:11 pm

ofckrupke wrote:
Fri Sep 13, 2019 7:58 pm
FoolStreet wrote:
Fri Sep 13, 2019 7:33 pm
And the calculator si posted said 153 per mo will grow to 190k with a 5% return over 10yrs.
Oh I'd like some of that....
What would you use for planning with a 10 yr period in a life strategy fund?

Aggressive? 8%?
Moderate? 5%
Conservative? 3%?
Income? 1-2%?

Honest question?

ofckrupke
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Re: Prulife life insurance

Post by ofckrupke » Fri Sep 13, 2019 8:16 pm

FoolStreet wrote:
Fri Sep 13, 2019 8:11 pm
ofckrupke wrote:
Fri Sep 13, 2019 7:58 pm
FoolStreet wrote:
Fri Sep 13, 2019 7:33 pm
And the calculator si posted said 153 per mo will grow to 190k with a 5% return over 10yrs.
Oh I'd like some of that....
What would you use for planning with a 10 yr period in a life strategy fund?

Aggressive? 8%?
Moderate? 5%
Conservative? 3%?
Income? 1-2%?

Honest question?
In the mid-1980s it was said that what distinguished computer from car sales was that the car salesman knew he was lying to you.

Look, by the rule of 72 even the longest-compounding contribution won't double, and the sum of contributions over 10 years is under 18.5k.
So the 190k number is obviously wrong.
Last edited by ofckrupke on Fri Sep 13, 2019 8:27 pm, edited 1 time in total.

BruDude
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Re: Prulife life insurance

Post by BruDude » Fri Sep 13, 2019 8:26 pm

FoolStreet wrote:
Fri Sep 13, 2019 7:33 pm
BruDude wrote:
Fri Sep 13, 2019 6:36 pm
FoolStreet wrote:
Fri Sep 13, 2019 3:57 pm
What heir would recommend their parent or grandparent do this? It is ridiculous. Noone will cheer that they got 100k because grandma died early.

Instead heirs would much rather the parent or grandparent invest the 153/mo in a low cost fund. Personally I would suggest a moderate life Strategy fund, but that's debatable. If Grandma lives a long time, the money grows. If she dies early, so be it. If she has an emergency and needs the money for something unexpected, thank God it is liquid in the index fund and can be used for grandma's health.

The only time I have heard this recommended is in the book Beyond the Grave in a situation where grandma remarried and wants to give the life estate usage of the family house to her new spouse, but wants to leave some cash to the kids so that they have a way to break ties financially from the new family.

But that is an edge case.
OP didn't say one of the grandkids recommended it, she just said she wants to do something nice for them. $153/mo isn't going to leave them with $100k if she dies next year and put it into an index fund. You can argue what's best until the cows come home, but if she wants a guaranteed $100k for the grandkids, it's really the only way to do it. If everyone knew their expiration date, the answer would be clear-cut, but we don't.
I don’t understand the weight you put on the word guaranteed. It is a true statement, but why do you make such a big deal of it?

According to a quick Google search, 90% of all non smoker 60yr old women will live for at least 10 more years. And the calculator si posted said 153 per mo will grow to 190k with a 5% return over 10yrs.

This isn’t binary. Lower the expcted rate of return, drop from 10 to 8 years and increase survivalists odds. Or even less years. The family will be ahead regardless

And no one has to say, “geez when is grandma gonna die so I can get the death benefit”.

My opinion is that your repeated and emphasized use of the binary word “guaranteed” gives an emotional trigger to grandma that is unwarranted.


https://www.aafp.org/afp/2007/0315/p885.html
$1800 for 10 years at 5% is $22k, might want to check your math on that...I think you started with $100k principal plus the $1800/year to get to $190k.

I use the word guaranteed because it accomplishes OP's goal. OP wants to leave $100k to the grandchildren whenever they happen to pass away. Can you name me another way to guarantee that they wind up with $100k? If she dies in 5 years, they have $9k plus interest. If she dies in 10 years, they have $18k plus interest. Those scenarios don't accomplish the goal. How much return over what period of time does OP need to generate for the grandkids to wind up with $100k after taxes? The life insurance is tax free, the investments are not.

I'm not selling anything to OP, so I have nothing to gain. I'm just playing devil's advocate because there was a lot of misinformation posted early in this thread about how the policy isn't guaranteed and it's a scam, rates will go up, etc, which is just plain wrong. The rates are guaranteed to age 121, period.

GuyInFL
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Re: Prulife life insurance

Post by GuyInFL » Fri Sep 13, 2019 8:58 pm

Just as a comparison, I checked out Zander Insurance (www.zanderins.com) to see what a 100K level term policy for a 61 year-old female in excellent health would be.
The longest level term policy was for 25 years and was $952 per year. That means less than $952 per month for 25 years. No change in policy premiums.

Of course the life expectancy of an average 61 year-old female is 23 years.

To see what a level term policy would run in the higher years, I tried to get a quote for 25 years for a 66 year-old female and got no results,

As everyone else has said, I'm sure the premiums would be cost prohibitive once you get past 86. Definitely agree that investing the $153/month is the way to go.

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Re: Prulife life insurance

Post by BruDude » Fri Sep 13, 2019 10:35 pm

GuyInFL wrote:
Fri Sep 13, 2019 8:58 pm
Just as a comparison, I checked out Zander Insurance (www.zanderins.com) to see what a 100K level term policy for a 61 year-old female in excellent health would be.
The longest level term policy was for 25 years and was $952 per year. That means less than $952 per month for 25 years. No change in policy premiums.

Of course the life expectancy of an average 61 year-old female is 23 years.

To see what a level term policy would run in the higher years, I tried to get a quote for 25 years for a 66 year-old female and got no results,

As everyone else has said, I'm sure the premiums would be cost prohibitive once you get past 86. Definitely agree that investing the $153/month is the way to go.
The premiums are still $153 at age 120 if they live that long. It’s a guaranteed for life premium.

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talnoe
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Re: Prulife life insurance

Post by talnoe » Fri Sep 13, 2019 11:04 pm

Thank you very much, everyone, for the input. It is so nice to have other people helping you to make your decision.
The policy name is PruLife Universal Protector, 100K fixed death benefit and $153 per month for the first year. I am still waiting for the advisor to answer about the maximum premium, he can't find it.
First I was offered VUL Protector, 100K fixed death benefit with $165 monthly premium. I did not want it because it is not guaranteed, depends on the market performance. I had hope that PruLife Universal Protector is GUL but why the premium is not fixed here also?
The grandchildren are just babies now and probably will not need this money, especially inflation will eat it. So I probably will listen to your advice and will go to invest in Roth IRA. Unfortunately, I did not do any investments yet but think better later than never.
I really appreciate all your time here.
"
I like that "And the calculator si posted said 153 per mo will grow to 190k with a 5% return over 10yrs" but doubt this calculator is correct.

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Re: Prulife life insurance

Post by FoolStreet » Fri Sep 13, 2019 11:09 pm

talnoe wrote:
Fri Sep 13, 2019 11:04 pm
Thank you very much, everyone, for the input. It is so nice to have other people helping you to make your decision.
The policy name is PruLife Universal Protector, 100K fixed death benefit and $153 per month for the first year. I am still waiting for the advisor to answer about the maximum premium, he can't find it.
First I was offered VUL Protector, 100K fixed death benefit with $165 monthly premium. I did not want it because it is not guaranteed, depends on the market performance. I had hope that PruLife Universal Protector is GUL but why the premium is not fixed here also?
The grandchildren are just babies now and probably will not need this money, especially inflation will eat it. So I probably will listen to your advice and will go to invest in Roth IRA. Unfortunately, I did not do any investments yet but think better later than never.
I really appreciate all your time here.
"
I like that "And the calculator si posted said 153 per mo will grow to 190k with a 5% return over 10yrs" but doubt this calculator is correct.
Yeah as other mentioned my math was off. I do apologize!

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Re: Prulife life insurance

Post by BruDude » Fri Sep 13, 2019 11:55 pm

talnoe wrote:
Fri Sep 13, 2019 11:04 pm
Thank you very much, everyone, for the input. It is so nice to have other people helping you to make your decision.
The policy name is PruLife Universal Protector, 100K fixed death benefit and $153 per month for the first year. I am still waiting for the advisor to answer about the maximum premium, he can't find it.
First I was offered VUL Protector, 100K fixed death benefit with $165 monthly premium. I did not want it because it is not guaranteed, depends on the market performance. I had hope that PruLife Universal Protector is GUL but why the premium is not fixed here also?
The grandchildren are just babies now and probably will not need this money, especially inflation will eat it. So I probably will listen to your advice and will go to invest in Roth IRA. Unfortunately, I did not do any investments yet but think better later than never.
I really appreciate all your time here.
"
I like that "And the calculator si posted said 153 per mo will grow to 190k with a 5% return over 10yrs" but doubt this calculator is correct.
The premium should be fixed on universal protector. The agent would have been required to have you sign a quote illustration that shows the guaranteed premium for all years. The insurance company cannot issue the policy without that signature page.

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Stinky
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Re: Prulife life insurance

Post by Stinky » Sat Sep 14, 2019 5:34 am

BruDude wrote:
Fri Sep 13, 2019 8:26 pm

I use the word guaranteed because it accomplishes OP's goal. OP wants to leave $100k to the grandchildren whenever they happen to pass away. Can you name me another way to guarantee that they wind up with $100k? If she dies in 5 years, they have $9k plus interest. If she dies in 10 years, they have $18k plus interest. Those scenarios don't accomplish the goal. How much return over what period of time does OP need to generate for the grandkids to wind up with $100k after taxes? The life insurance is tax free, the investments are not.

I'm not selling anything to OP, so I have nothing to gain. I'm just playing devil's advocate because there was a lot of misinformation posted early in this thread about how the policy isn't guaranteed and it's a scam, rates will go up, etc, which is just plain wrong. The rates are guaranteed to age 121, period.
Of course, BruDude is correct in what he is saying above. Now that we have additional information from OP, it does appear that she purchased a fully guaranteed universal life contract from Prudential. BruDude also (somewhere else in this thread) suspected that she was in a "select preferred", or "best", rate class, which he observed is very difficult for someone who is 61 years old to qualify for.

I'm away from my former employer, so I can't use their mortality tables for 61 year old female select preferred to see what the life expectancy is. Per the Social Security Life Expectancy Calculator (on the internet), the average life expectancy for a female age 61 is 25.1 years. By my calculation, she would need just over 5.5% annual return to hit $100k on a $153 per month investment, per the SS tables. But OP's mortality rate is much lower than the SS tables - she is "select preferred", and SS tables are "population" (that is, with a slice of the overall population, which is much less healthy than "select preferred"). If she lives 30 years (entirely reasonable for OP, given her health), the required rate of return drops to 3.66%. If she lives 35 years (certainly possible), the required rate is 2.37%.

Finally, BruDude was correct when he said that the only way that OP can guarantee that grandkids will get $100k is to buy the life insurance. While I think that OP can probably do better than $100k by investing in a Total Stock Market Fund, she is subject to both market and mortality risk of not reaching the $100k goal.

One more minor point. If OP finds that she cannot continue premium payments on the universal life policy at some time in the future, the cash surrender value of this policy is probably approximately zero. On the other hand. If she were to invest the money in a mutual fund and need to cease her deposits, she would still have the accumulated value of her contributions up to the date that she ceases to leave to her grandchildren.

OP, let us know what you decide to do.

BruDude, as always, your obvious deep knowledge of insurance information that you share on this Forum is appreciated.
It's a GREAT day to be alive - Travis Tritt

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Re: Prulife life insurance

Post by ivk5 » Sat Sep 14, 2019 6:51 am

Stinky wrote:
Sat Sep 14, 2019 5:34 am
BruDude, as always, your obvious deep knowledge of insurance information that you share on this Forum is appreciated.
+1. BruDude you add valuable perspective and knowledge to this community.

Look, I wouldn’t buy this policy myself nor recommend it to my grandmother, but it’s nice to make choices based on facts rather than dogma.

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Re: Prulife life insurance

Post by BruDude » Sat Sep 14, 2019 2:57 pm

ivk5 wrote:
Sat Sep 14, 2019 6:51 am
Stinky wrote:
Sat Sep 14, 2019 5:34 am
BruDude, as always, your obvious deep knowledge of insurance information that you share on this Forum is appreciated.
+1. BruDude you add valuable perspective and knowledge to this community.

Look, I wouldn’t buy this policy myself nor recommend it to my grandmother, but it’s nice to make choices based on facts rather than dogma.
Thanks, I try :sharebeer

I'm not saying OP should buy this policy, that is a personal decision. I'm just pointing out that the rate for a guaranteed-for-life policy is very good and it accomplishes OP's goal of leaving a legacy for the grandchildren at a reasonable cost. Of course the market could perform better and if OP lives a long time that may be the better choice, but those factors are unknown while the policy eliminates the "what if" questions.

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talnoe
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Re: Prulife life insurance

Post by talnoe » Mon Sep 16, 2019 3:33 pm

I got the answer, they said premium will never go up from $153. I found that for 250K deal is even better, $304 per month. I am thinking about what one to take and when, maybe wait for one more year, the rates are not much higher but I can save a year premium.
I have read that rates for life insurance are decreasing. Is it true?
Does anybody know from experience -how risky is VUL Protector? They say in VUL Protector the risk is potential but it will never happen that market performance will be zero for many years.
Thank you, everyone, for your comments. I think after learning here and on the Internet, I can get a job- selling life insurance and having money to pay for my life insurance :)

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Re: Prulife life insurance

Post by Stinky » Tue Sep 17, 2019 4:55 am

talnoe wrote:
Mon Sep 16, 2019 3:33 pm
I got the answer, they said premium will never go up from $153. I found that for 250K deal is even better, $304 per month. I am thinking about what one to take and when, maybe wait for one more year, the rates are not much higher but I can save a year premium.

I have read that rates for life insurance are decreasing. Is it true?

Does anybody know from experience -how risky is VUL Protector? They say in VUL Protector the risk is potential but it will never happen that market performance will be zero for many years.

Thank you, everyone, for your comments. I think after learning here and on the Internet, I can get a job- selling life insurance and having money to pay for my life insurance :)
If your goal is to guarantee that your grandchildren will get money from you no matter when you die - if you find that $153 per month for $100k is a good deal, then $304 per month for $250k is an even better deal (that is, per dollar of guaranteed death benefit).

Life insurance rates are pretty low. I wouldn't have any idea whether Prudential will be increasing or decreasing rates on the particular product you're looking at.

I'm not familiar with the Prudential VUL Protector, but I googled a brochure for it. It has the same ability as your policy to fully guarantee coverage to age 121. But it also is meant to accumulate cash values, and therefore its rates are probably higher than the product you're considering. My question to you - if your goal is to provide guaranteed funds to your grandchildren, why would you want to pay more money just to accumulate a cash value? I wouldn't do it.

And about getting a job selling life insurance - if you do that, make sure that you're one of the "good guys" like BruDude. :D
It's a GREAT day to be alive - Travis Tritt

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Re: Prulife life insurance

Post by RickBoglehead » Tue Sep 17, 2019 5:31 am

talnoe wrote:
Fri Sep 13, 2019 11:04 pm
Thank you very much, everyone, for the input. It is so nice to have other people helping you to make your decision.
The policy name is PruLife Universal Protector, 100K fixed death benefit and $153 per month for the first year. I am still waiting for the advisor to answer about the maximum premium, he can't find it.
First I was offered VUL Protector, 100K fixed death benefit with $165 monthly premium. I did not want it because it is not guaranteed, depends on the market performance. I had hope that PruLife Universal Protector is GUL but why the premium is not fixed here also?
The grandchildren are just babies now and probably will not need this money, especially inflation will eat it. So I probably will listen to your advice and will go to invest in Roth IRA. Unfortunately, I did not do any investments yet but think better later than never.
I really appreciate all your time here.
"
I like that "And the calculator si posted said 153 per mo will grow to 190k with a 5% return over 10yrs" but doubt this calculator is correct.
If you have no other investments, how are you going to retire someday?
Avid user of forums on variety of interests-financial, home brewing, F-150, PHEV, home repair, etc. Enjoy learning & passing on knowledge. It's PRINCIPAL, not PRINCIPLE. I ADVISE you to seek ADVICE.

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Re: Prulife life insurance

Post by RickBoglehead » Tue Sep 17, 2019 5:36 am

BruDude wrote:
Fri Sep 13, 2019 8:26 pm
If she dies in 5 years, they have $9k plus interest. If she dies in 10 years, they have $18k plus interest.
In 5 years, the premiums add up to $9,180. At 10 years, twice that. The policy will pay out exactly that, correct? So when does the policy payout equal more than the premiums?

OP should not focus on leaving grandchildren a sum of money that is unrealistic. This is unrealistic based on life expectancy, no?
Avid user of forums on variety of interests-financial, home brewing, F-150, PHEV, home repair, etc. Enjoy learning & passing on knowledge. It's PRINCIPAL, not PRINCIPLE. I ADVISE you to seek ADVICE.

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Re: Prulife life insurance

Post by simplesimon » Tue Sep 17, 2019 7:03 am

RickBoglehead wrote:
Tue Sep 17, 2019 5:36 am
BruDude wrote:
Fri Sep 13, 2019 8:26 pm
If she dies in 5 years, they have $9k plus interest. If she dies in 10 years, they have $18k plus interest.
In 5 years, the premiums add up to $9,180. At 10 years, twice that. The policy will pay out exactly that, correct? So when does the policy payout equal more than the premiums?

OP should not focus on leaving grandchildren a sum of money that is unrealistic. This is unrealistic based on life expectancy, no?
No, the policy would pay $100k.

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Re: Prulife life insurance

Post by simplesimon » Tue Sep 17, 2019 7:08 am

RickBoglehead wrote:
Tue Sep 17, 2019 5:31 am
talnoe wrote:
Fri Sep 13, 2019 11:04 pm
Thank you very much, everyone, for the input. It is so nice to have other people helping you to make your decision.
The policy name is PruLife Universal Protector, 100K fixed death benefit and $153 per month for the first year. I am still waiting for the advisor to answer about the maximum premium, he can't find it.
First I was offered VUL Protector, 100K fixed death benefit with $165 monthly premium. I did not want it because it is not guaranteed, depends on the market performance. I had hope that PruLife Universal Protector is GUL but why the premium is not fixed here also?
The grandchildren are just babies now and probably will not need this money, especially inflation will eat it. So I probably will listen to your advice and will go to invest in Roth IRA. Unfortunately, I did not do any investments yet but think better later than never.
I really appreciate all your time here.
"
I like that "And the calculator si posted said 153 per mo will grow to 190k with a 5% return over 10yrs" but doubt this calculator is correct.
If you have no other investments, how are you going to retire someday?
Maybe social security + pension but have no assets.

The whole idea of using insurance as a way to "gift" something seems odd to me.

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talnoe
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Re: Prulife life insurance

Post by talnoe » Tue Sep 17, 2019 7:01 pm

simplesimon wrote:
Tue Sep 17, 2019 7:08 am
RickBoglehead wrote:
Tue Sep 17, 2019 5:31 am


" If you have no other investments, how are you going to retire someday?"
Do you really think that stock is the only way to get the money? I know too many people who lost so much on the stock. I think only a few people really make money on the stock. Those people who are there and manage all money. Others go up and down because managers don't have time to manage for everyone, they do it just for themself and some rich people. Regular people just have an illusion.

"The whole idea of using insurance as a way to "gift" something seems odd to me."
Yes, life insurance as a gift is not sound right. But what life insurance is? It is money you leave to someone after your death. And it does not matter how that money will be used. However, my purpose is education.

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Re: Prulife life insurance

Post by BruDude » Tue Sep 17, 2019 8:17 pm

RickBoglehead wrote:
Tue Sep 17, 2019 5:36 am
BruDude wrote:
Fri Sep 13, 2019 8:26 pm
If she dies in 5 years, they have $9k plus interest. If she dies in 10 years, they have $18k plus interest.
In 5 years, the premiums add up to $9,180. At 10 years, twice that. The policy will pay out exactly that, correct? So when does the policy payout equal more than the premiums?

OP should not focus on leaving grandchildren a sum of money that is unrealistic. This is unrealistic based on life expectancy, no?
The policy would pay out $100k upon death whether it happened on day one or at age 120.

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simplesimon
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Re: Prulife life insurance

Post by simplesimon » Wed Sep 18, 2019 6:22 am

talnoe wrote:
Tue Sep 17, 2019 7:01 pm
simplesimon wrote:
Tue Sep 17, 2019 7:08 am


"The whole idea of using insurance as a way to "gift" something seems odd to me."
Yes, life insurance as a gift is not sound right. But what life insurance is? It is money you leave to someone after your death. And it does not matter how that money will be used. However, my purpose is education.
I have term life insurance. I didn't buy it as a gift...it's to cover costs in case I die early. I hope the premiums go to waste. If you want to compare costs, take a look at how much a 20-year term life policy would cost you on $100k or $500k.

I can understand older people feeling like because death is much closer that permanent life insurance is a much better product, but there is no such thing as a free lunch. As someone said above, the insurance companies already know how much they pay out on average. The variable here is the individual's risk aversion.

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Re: Prulife life insurance

Post by Stinky » Wed Sep 18, 2019 7:08 am

simplesimon wrote:
Wed Sep 18, 2019 6:22 am
talnoe wrote:
Tue Sep 17, 2019 7:01 pm
simplesimon wrote:
Tue Sep 17, 2019 7:08 am

"The whole idea of using insurance as a way to "gift" something seems odd to me."
Yes, life insurance as a gift is not sound right. But what life insurance is? It is money you leave to someone after your death. And it does not matter how that money will be used. However, my purpose is education.
I have term life insurance. I didn't buy it as a gift...it's to cover costs in case I die early. I hope the premiums go to waste. If you want to compare costs, take a look at how much a 20-year term life policy would cost you on $100k or $500k.

I can understand older people feeling like because death is much closer that permanent life insurance is a much better product, but there is no such thing as a free lunch. As someone said above, the insurance companies already know how much they pay out on average. The variable here is the individual's risk aversion.
I agree that most folks buy term life insurance to insure against their early death, especially when they have children or dependent spouses.

However, OP’s situation is that she wants to provide a fully guaranteed “endowment” upon her death for her grandchildren, by purchasing a life insurance policy. The policy she has chosen has premiums that will never increase, and she is healthy enough that she has gotten a very attractive premium rate.

Personally, I’m not planning to provide for grandchildren in the way that OP has done. But I think that OP has made a rational choice for her, and she plans to buy an excellent product that will fulfill her wishes. More power to her!
It's a GREAT day to be alive - Travis Tritt

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talnoe
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Re: Prulife life insurance

Post by talnoe » Thu Sep 19, 2019 1:44 pm

Thank you, everyone, for the discussion. I think this insurance is a good deal for the money but I am not taking it, it does not make me feel good.

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