Term Life Insurance

Financial Planning - Financial planning in general. (Moderated) 

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Subject Author Date Term Life Insurance sandybeth 10-01-2007  Re: Term Life Insurance joetaxpayer 10-01-2007  Re: Term Life Insurance Thumper 10-02-2007  Re: Term Life Insurance joetaxpayer 10-02-2007  Re: Term Life Insurance kastnna 10-01-2007  Re: Term Life Insurance sandybeth 10-02-2007  Re: Term Life Insurance joetaxpayer 10-02-2007  Re: Term Life Insurance kastnna 10-02-2007  Re: Term Life Insurance sandybeth 10-02-2007  Re: Term Life Insurance kastnna 10-02-2007  Re: Term Life Insurance Ron Peterson 10-15-2007  Re: Term Life Insurance kastnna 10-15-2007  Re: Term Life Insurance Ron Peterson 10-16-2007  Re: Term Life Insurance kastnna 10-15-2007
Posted by sandybeth on October 1, 2007, 2:33 pm I have a single premium life insurance policy since 1985 that had basically forgotten about. I paid a one-time premium of $5000 to be insured for $39,000. This $5000 earned tax-free interest with the market, but I noticed it didn't earn much due to high fees. After 22 years, the $5000 had grown to $17,000 (I figured that it earned about 2.5%/year overall). Still only worth $39,000 at death--the $17,000 disappears. So now I'm age 60 and have decided to cash this dinosaur in & pocket the 17K. I applied for term insurance and have a quote for a 20 year fixed premium of $460/year to get 100K coverage (Genworth Life). Sounds excellent to me, so I'm having the physical done this Thursday & I should qualify if there are no surprises. Questions: Am I missing something here? It seems like a good deal to me since I'll be getting 100K worth of insurance for a total of $9200 total over 20 yrs. Before I was only getting 22K worth of insurance by keeping my 17K tied up. I do know that I will have to pay taxes on that 12K interest profit when I cash out, does anyone know how to soften that? Also I can put that 17K (minus taxes) into a mutual fund or something to earn much more interest, even if it is taxable. My ins agent is trying to talk me into rolling the 17K into a Jackson variable, but I don't know if I want to mess with another annuity--we have 2 already. Any advice or thoughts on all of this? SandyBeth Posted by joetaxpayer on October 1, 2007, 3:05 pm sandybeth wrote: > I have a single premium life insurance policy since 1985 that had > basically forgotten about. I paid a one-time premium of $5000 to be > insured for $39,000. This $5000 earned tax-free interest with the > market, but I noticed it didn't earn much due to high fees. After 22 > years, the $5000 had grown to $17,000 (I figured that it earned about > 2.5%/year overall). Still only worth $39,000 at death--the $17,000 > disappears. > So now I'm age 60 and have decided to cash this dinosaur in & pocket > the 17K. Who is the beneficiary? I'm asking why you need, or think you need, insurance. Had you invested that $5000 in an S&P index fund, it would have grown to over $65000, water under the bridge I suppose. Unless you are working and have a dependent to protect, you may not need insurance at all. (Disclaimer - I have a working Wife and Child and both Mrs. Taxpayer and I have enough term to replace our income should the other die) JOE Posted by Thumper on October 2, 2007, 3:53 pm On Mon, 1 Oct 2007 14:05:05 -0500, joetaxpayer >sandybeth wrote: > >> I have a single premium life insurance policy since 1985 that had >> basically forgotten about. I paid a one-time premium of $5000 to be >> insured for $39,000. This $5000 earned tax-free interest with the >> market, but I noticed it didn't earn much due to high fees. After 22 >> years, the $5000 had grown to $17,000 (I figured that it earned about >> 2.5%/year overall). Still only worth $39,000 at death--the $17,000 >> disappears. >> So now I'm age 60 and have decided to cash this dinosaur in & pocket >> the 17K. > >Who is the beneficiary? I'm asking why you need, or think you need, >insurance. Had you invested that $5000 in an S&P index fund, it would >have grown to over $65000, water under the bridge I suppose. Unless you >are working and have a dependent to protect, you may not need insurance >at all. >(Disclaimer - I have a working Wife and Child and both Mrs. Taxpayer and >I have enough term to replace our income should the other die) >JOE Perhaps he has a younger wife as I do. Thumper Posted by joetaxpayer on October 2, 2007, 4:16 pm > Perhaps he has a younger wife as I do. > Thumper Younger husband or not, she isn't working, has no estate tax concern, and no younger dependants. JOE Posted by kastnna on October 1, 2007, 8:55 pm Sandybeth, As Joe asked, do you need insurance now or for the next 20 years? Going another direction, I happen to sell Genworth Life (that's not a solicitation), and I had a little difficulty getting the same numbers your agent did. Using your above details, I got $491/annually as a "preferred non-smoker" and $423/annually as a "Preferred Best non- smoker". A "standard non-smoker" health rating is $866/annually (100% more). Are you sure you can get these above average health ratings, or are you getting setup for a bait-and-switch. The only time I was able to get $461/annually was for a "preferred best non-smoker" as a 61 year old. Are you closer to age 61 or 60 (most companies use the age you're closest to)? If you are technically 61, add about 10-15% to the prices quoted above. Health ratings are a double-edged sword in the insurance industry. The better your health rating, the less likely you are die in the next 20 years, and the more likely your insurance will become unaffordable prior to your passing. Unless your agent has thoroughly discussed your medical history and is extremely confident that you are in exceptional health, he/she is may be acting predatorily to get your business. Similar Threads Posted Term Life Insurance November 13, 2006, 2:01 pm Term Life Insurance in later years January 15, 2008, 5:15 am Term Life Insurance Coverage January 27, 2008, 12:21 pm Life insurance in 401(k)-PSP November 29, 2006, 11:53 am Do I need life insurance? October 31, 2007, 5:15 pm A term life question April 22, 2007, 11:08 am Life insurance exclusions November 10, 2006, 2:03 pm whole life insurance numbers November 13, 2006, 5:02 am Re: Life Insurance Annuity August 13, 2007, 3:50 pm "Paid Up" Whole life Insurance August 25, 2007, 7:50 pm