What Are Your Thoughts On Life Insurance?

L

Lon

Well-known Member
Location
Central California
Reading a few posts where widows talk about having to watch their finances since their spouse died made me think about Life Insurance. I am 82 years old and have $75,000 of Paid Up Group Term Insurance despite being single and no one financially dependent on me. The most life insurance I ever had was $500,000 when I was married and raising a family and had $150,000 on my wife at that time. When my first wife died in 1989 she had $75,000 on her life with me as the beneficiary.
I know all the excuses but I still can never understand some folks reluctance to purchasing ADEQUATE Life Insurance. My adult married grand mother daughter is my sole heir and primary beneficiary of my insurance.
 

Sorry Lon. I couldn't resist. :(
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It can be a great way to take forever taxed money and make it never taxed.

If i leave my wife a million dollar ira she has no idea what she gets to keep .in effect uncle sam holds a mortgage on that money only we have no idea what we owe .

Don't forget if i die she now files singe with some heavy rmd's.

But if early on i buy a single premium policy for 1 million with my ira money it will cost way less than 1 million.
So yes ,i will pay some tax on that money but no where near the 1million she wil get tax free..

Whatever is left in the ira the kids can have .they get to pay the taxes over their lifetimes.

A single immediate annuity coupled with your own investing and a single premium life policy can be a very powerful package for a married couple. It can be a better deal than using a joint annuity because of the tax freeness of the life insurance.

In 10,000 different scenarios run by dr wade pfau ,the integrated package provided a higher income 100% of the time and a bigger balance 2/3's of the time vs buy term and invest the difference.

100% of the time buy term and invest the difference had a bigger balance at age 65 but once you looked under the hood that is where the advantage ended under anything but the best outcomes in markets and rates.

So there are some big uses for some folks in using life insurance.

For my wife and i this is a second marriage. While we are leaving everything to each other we each have a small policy to leave immediate money to our own kids. This way they get something without having to wait until the second spouse dies who is not their parent.
 
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I don't have any. I took about a 20% hit on my pension in order to set it up so that my wife will continue to get it if I go first. So she won't take a cut in income, plus she'll realize a substantial savings on the household grocery bill once I'm not around to chow down. Also I have left instructions to dispose of my body in the cheapest manner available. A cut rate cremation followed by tossing the ashes into the Gulf of Mexico. For final sevices, I'm envisioning something on the order of this: (caution, the following video clip contains some rough language)



Bottom line, even without life insurance, I'm worth more dead than alive.
 
During the 'earning a living and raising children' phase of my life, I was always well insured. Now I have enough to cover my end-of-life expenses (burial or cremation, whatever my daughter decides is appropriate at the time) and see no need to have more.

I've no spouse or dependents. All children have been on their own for years and doing well. I have no personal debt and have not had for years. I do use credit cards for the convenience but pay bills in full before due date. My daughter co-signs on my bank account so she can take care of final expenses.
 
We were the executors for my MIL's estate when she died March 2015. She had a living trust, we already were co-trustees and handling her investment accounts and banking; no other heirs, no family left in the USA and all she wanted was a simple cremation. One final request, to have her ashes scattered with those of her beloved second husband, on the bay where they used to fish.

The trust became irrevocable upon her death, so that required a lawyer. Despite having only one heir, the fact that six cousins were named as secondary beneficiaries meant they HAD to be contacted to give their consent to wind up the trust, although we had full access to all funds immediately. The cremation and death certificate additional copies (always get at least a dozen; you'll probably need them) have to be paid up-front. The notices of death must be filed in the local paper's obits to ensure no unpaid accounts or unnamed claimants are around.

She was devoutly Catholic; we paid for a Mass and had funeral cards printed. To scatter ashes you need a permit; Neptune Society has a boat for this so we reserved for a party of friends and (my) family at additional cost.

Total was close to $8,000. For a high-cost urban area this is as low as it can probably get, without illicitly dumping ashes in a state park, LOL.

I used to work in insurance. My DH doesn't need it, his cash/investible assets are substantial. I needed insurance as my liquid assets were insignificant in comparison. I bought 15-yr Level Term, one policy runs out in 2019 and the other ends in 2021. I'll just let the policies terminate on their final date. They were protection for him as our working incomes were equal but our retirement assets were not.

Insurance has its uses in estate planning, I agree. We have no children, so no need for tax planning or asset protection after our deaths.
 
Lethe200 said:
We were the executors for my MIL's estate when she died March 2015. She had a living trust, we already were co-trustees and handling her investment accounts and banking; no other heirs, no family left in the USA and all she wanted was a simple cremation. One final request, to have her ashes scattered with those of her beloved second husband, on the bay where they used to fish.

The trust became irrevocable upon her death, so that required a lawyer. Despite having only one heir, the fact that six cousins were named as secondary beneficiaries meant they HAD to be contacted to give their consent to wind up the trust, although we had full access to all funds immediately. The cremation and death certificate additional copies (always get at least a dozen; you'll probably need them) have to be paid up-front. The notices of death must be filed in the local paper's obits to ensure no unpaid accounts or unnamed claimants are around.
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I don't know about other states, but in Florida they issue death certificates with and without the cause of death. Luckily, I got a bunch of both because some entities would only accept a death certificate that didn't have a cause of death listed (if I remember, that was his charge card company and the mortgage company) and others (the life insurance company, for one) would only accept one with the cause of death. It's best to be prepared.
 
Actually, we have ramped up our life insurance over the last 10 years. It is an easy way to leave $$ to our sons - tax free. I am lucky enough to have a policy where I can add money to it any time but withdraw it again later, should I need it.

We took out life insurance on our sons when they were born too - should they ever become ill or disabled, they would have something. Over the years they have been able to increase or add to it and they have. I had a whole life policy since I was born and we have been able to borrow against it, without a credit check, several times (always paying it back). Just FYI - that loan does NOT show up on a credit report either.
 
We have none. We maintain an account for final expenses. Our home is paid for and we have no debt. We are not wealthy people,we live a blue collar life and desire no more. We are leaving nothing for our children, we have already raised and supported them for 20 plus years, we paid for a good chunk of their university expenses,they are self supporting adults and in line too far exceed our lifetime income.
 
I took out modest private policies on myself and my son when I was in my twenties. In fact, a family friend who was an insurance agent reviewed my policy and said I was "insurance poor" so it got modified. The premiums were very inexpensive...they had to be because I could not have afforded to pay a dollar more. They must be term life policies. People ask why insure a child? I did it simply because God forbid if anything would have happened to him, I would not have been able to afford funeral and burial costs. At age 68, my policy was paid up. Both our policies continued to increase in worth over the years. I also had a policy through my job. If I had died while still working, it would have been worth triple my salary. That policy is still in effect as a retiree, but obviously not the triple salary benefit. The two policies combined should be more than enough to take care of remaining funeral expenses since I'm currently paying on my plot, including grave opening and closing fees.
 

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