Life Insurance, keep it or drop it ??

[Tigger2ntinkerbell]

My DH (68) has just upgraded his policy last year to a whole life($132 a mo.).
The rate that was to be a fixed amount is now up another $50 a month.
He said he should just put that in a savings account and let it build up and pay cash for his funeral.
He has some health problems and he takes his meds and he's doing great .
But We've always had Insurance policies.
Is this a good idea to do???. My isurance agent said not to drop the policy. Not sure what we should do.

 

[supersnoop]

"Whole life" insurance is usually a terrible investment. I wouldn't consider it an "upgrade." It may make sense in a few, very specific circumstances, but, in general, it's a terrible waste of money.

 

[HulaHoopy]

Why did your rate on a whole life policy go up? It should be a fixed rate

 

[Anthony1971]

it depends...
whole life insurance is actually an investment as it always has a cash value.. you are not renting insurance as in term life,car and house.
with that the depends comes as what the return is on your investment.. if it is better than a bank or what you can get than keep it..
the older ones are far better than the newer ones as they had a guarranted return which is no longer the case.... some of the older ones are still getting 5-7% or more or sometimes a little less per year... the return will pay the premium if there is one and build to beyond what the face value is should you need to cash it in.
Just an FYI your premiums will fluctuate with the return each year..
My wife has one that had a pay out last year that could not be applied to the premium as technically you own stock in a company and when the company is sold.... which is what happened. anyway the payout more than covered the premium but we did have to pay taxes on the payout..
you need to understand what you have before you cash it in and give it up. In your description it is newer you may be disappointed but may be still getting more than any bank will pay

 

[Alesia]

There are very, very few situations where whole life is a good idea. There are a lot of factors that go into it, and since no one here knows the pertinent details of your situation, you're not going to get good advice.

Find a good financial planner to help you with this stuff. My bank actually offers it for free. Do not trust an insurance salesperson to give you solid advice.

 

[Anthony1971]

There are very, very few situations where whole life is a good idea

Find a good financial planner to help you with this stuff. My bank actually offers it for free.

Banks offer free financial planners for free as they want to sell you their product which carries high fees.....

The best place to start is to find out exactly what she has then she can approach someone for advice.... Being it is new it likely is not a goodtdeal... However saying they very few situations that are a good investment is wrong. As I stated above a lot of the ones from years ago not only pay the premium but you will get a payout yearly on top of it. No one can predict the market and as with ones years ago the ones from today can do the same as the old ones did.... however more likely not as plenty of insurance companies are taking a bath on the old ones and learned.... BUT should this policy be tied to a company that for some reason does really well it could end up with large returns and achieve similar to the old ones.... less than 15 years ago banks were offering 5 year CD's with 5.5% interest plus a $200+ free gift... look back and see who made out on that deal.

 

[Alesia]

Banks offer free financial planners for free as they want to sell you their product which carries high fees.....

Our financial planner helped us roll a 401k into an IRA and helped us choose new life insurance when we lost ours due to my husband's company going out of business. We're not paying excessive fees for anything.

 

[msmayor]

The question that needs to be answered is...WHY do you have the life insurance?

Life insurance is designed to replace lost income that would hurt a budget. It should be used as one piece of a total financial plan to ensure that your lifestyle can remain the same in the even the insured dies.

At 68, what is the insurance designed to replace as part of your plan?

I am 55 and no longer carry a separate policy on myself. Our children are grown and the last is nearly through college. We have enough in savings as well as what my husband earns so that his budget won't suffer if I die before he does...the insurance through my employer will cover funeral costs. We are going to carry the extra life insurance policy on my husband another 10 years, to 65...by then we won't need it. There will be plenty in savings to cover everything.

 

[Judique]

My DH (68) has just upgraded his policy last year to a whole life($132 a mo.).
The rate that was to be a fixed amount is now up another $50 a month.
He said he should just put that in a savings account and let it build up and pay cash for his funeral.
He has some health problems and he takes his meds and he's doing great .
But We've always had Insurance policies.
Is this a good idea to do???. My isurance agent said not to drop the policy. Not sure what we should do.

I am curious as to how much insurance you are getting for $132 a month on a 68 year old? Are you also saying that what you thought was a fixed rate has increased by $50 from $132 to $182?

I have a policy that I am going to call about because it appears the rate is also going up and I thought it was a fixed rate. I am definitely keeping the policy regardless, but I need some clarity as to the terms.

 

[Sadie22]

A financial planner can help you determine whether life insurance is a necessary part of your retirement plan and your estate plan. An estate planning attorney may also have suggestions.

 

[tvguy]

The question that needs to be answered is...WHY do you have the life insurance?

Life insurance is designed to replace lost income that would hurt a budget. It should be used as one piece of a total financial plan to ensure that your lifestyle can remain the same in the even the insured dies.

At 68, what is the insurance designed to replace as part of your plan?

I am 55 and no longer carry a separate policy on myself. Our children are grown and the last is nearly through college. We have enough in savings as well as what my husband earns so that his budget won't suffer if I die before he does...the insurance through my employer will cover funeral costs. We are going to carry the extra life insurance policy on my husband another 10 years, to 65...by then we won't need it. There will be plenty in savings to cover everything.

Well put. My mom dropped all her life insurance when I graduated from college. She had more than enough in savings to cover any final expenses and since I was no longer financial dependent on her, it was a waste of money..
But a few years later, she picked up Long Term Care Insurance that had a small life insurance component. The life insurance component was equal to the premiums she had paid into the plan, less what the plan paid out in Long term expenses. She did require long term care the last year of her life, and that policy paid $3,800 a month of the $4,200 a month cost.

 

[HopperFan]

OP there are plenty of reasons to have it, and plenty to let it drop.
Every situation will be different, every family situation different.
And there are different kinds of insurance.
You need to do as a PP stated and determine why you have it, what your needs are.

You say DH has health issues but doing well now.
Could his issues involve large medical bills at some point?
Should he not survive the medical issues would you be left with large bills to pay?
Can you afford that?
I assume you have no dependent children, which is normally a reason to have insurance.
But there are others...
Do you have a mortgage, loan or car notes that you would have to pay?
Can you afford that?
Do you have a salary, insurance and adequate savings for you on your own?

There are lots of questions to ask yourself to determine if YOU have a need.
No one here can answer those questions.
Insurance is one of those things many have strong opinions about one way or another.
But what is good for some is not for others.

(Also you didn't say how much the policy was for so hard to know the premiums value.)

 

[MillauFr]

Our financial planner helped us roll a 401k into an IRA and helped us choose new life insurance when we lost ours due to my husband's company going out of business. We're not paying excessive fees for anything.

I have never heard of a bank providing financial planning without charging excessive fees?? Did you find one that is only charging you 0.1% per year???? I met with one and they were going to charge me 0.4% per year to manage my account and could escape their office fast enough. Those financial planners are leeches.

 

[Eastern]

I have never heard of a bank providing financial planning without charging excessive fees?? Did you find one that is only charging you 0.1% per year???? I met with one and they were going to charge me 0.4% per year to manage my account and could escape their office fast enough. Those financial planners are leeches.

I agree, the bank 'financial planners' are selling product. They make money off of your investments: it is not free.

If you want financial advice, go to a fee-only financial planner.

Also check out bogleheads.org

ps of course the insurance agent wants you to keep the policy; he makes commission from the sale http://www.bankrate.com/finance/insurance/life-insurance-agent-make-1.aspx

 

[Nebraska_Disney]

I have term life insurance for my wife and myself, 20 year policies which we are about 10 years into. The reason we went with term is that the difference between term and whole life was significant. I would rather put that money into a low fee IRA/Roth IRA instead of paying the high fees associated with a whole life policy. In this set-up, we have $500,000 on each of us (plus what we both have at work) and I can control our investments in our IRA's compared to giving it all to an insurance company and hope for the best, while they take their large fee every year. Again, this is part of a larger financial planning discussion. We did buy whole life insurance policies for both our kids and there was one selling point that made us decide upon this. As they were both young children, the whole life policies can be increased (at any time) without proof of insurability. What this means, is if they are diagnosed with a disease that would cause most insurance companies to not cover them, they at least have this policy and it is good for as long as they want it. It is gaining cash value as well, so it is an investment (albeit a small one).

As for medical bills, there are medical insurance policies which would cover those expenses. Medicare and another policy that covers what Medicare does not should take care of your medical bill concerns as there are limits to out of pocket expenses.

Good luck.