Continue Term Life insurance?

[Lakebound]

I'm considering changing from carrying the term life insurance policy that I have kept for over 25 years now. I am pretty secure with my three legged federal retirement plan.

And each month I see my premium payment go to an insurance company and I wonder if I need to do that any longer? So I am pondering thoughts about taking that small amount of money and using it to pay for federal long-term care insurance or opening a simple ETF account and investing that money.

My concerns are that upon my death, my spouse would receive a reduced annuity. She has her own Investments and would still have full control over my TSP account.

We're both retired and I am rethinking why I am carrying term life insurance in the same amount that I had when I was a younger man and working full-time in a dangerous environment.

Thoughts?

 

[tsptalk]

I reduced mine dramatically when it expired. I kept a very small amount so that there would be some cash available quickly for expenses rather than waiting for TSP or IRA money to be available, plus my good friend is my insurance agent and I didn't want to shut him out him completely.

 

[evilanne]

You shouldn't need the same amount of life insurance as when you were younger. I got rid of my optional additional coverage under FEGLI when I turned 50 as the rates started getting ridiculous. Still paying for the basic until age 65 when it will reduce to 25% over a couple of years but no additional cost.

After looking at Federal Long Term Care Insurance, I figured it would be better to self insure and do conversions from Retirement funds to Roth over a period of time. If you look at the plans, they have a maximum payout. If you never need to use it, the money is gone whereas with the Roth it continues to grow and your beneficiaries get the money tax free.

 

[PessOptimist]

I'm considering changing from carrying the term life insurance policy that I have kept for over 25 years now. I am pretty secure with my three legged federal retirement plan.

And each month I see my premium payment go to an insurance company and I wonder if I need to do that any longer? So I am pondering thoughts about taking that small amount of money and using it to pay for federal long-term care insurance or opening a simple ETF account and investing that money.

My concerns are that upon my death, my spouse would receive a reduced annuity. She has her own Investments and would still have full control over my TSP account.

We're both retired and I am rethinking why I am carrying term life insurance in the same amount that I had when I was a younger man and working full-time in a dangerous environment.

Thoughts?

Really good idea about cancelling or cashing out term life and using the money to pay for FLTC. My premiums for various term life are very high since I’m over 65.

You shouldn't need the same amount of life insurance as when you were younger. I got rid of my optional additional coverage under FEGLI when I turned 50 as the rates started getting ridiculous. Still paying for the basic until age 65 when it will reduce to 25% over a couple of years but no additional cost.

After looking at Federal Long Term Care Insurance, I figured it would be better to self insure and do conversions from Retirement funds to Roth over a period of time. If you look at the plans, they have a maximum payout. If you never need to use it, the money is gone whereas with the Roth it continues to grow and your beneficiaries get the money tax free.

I chose the 0% option for FEGLI so it costs nothing. Should have enough to dispose of my remains unless some decedent wants a circus. VGLI cost a bunch too. No cash value there. There is some cash value in some of the policies so cash them out, cancel them, take the money and put it in a Roth (if I can) and put the premium amount in the Roth? Tax hit of course.

PO

 

[Scout333]

Good to rethink this issue as we get older. Premiums are certainly getting more expensive as I get older. The term life insurance plan I have has a premium refund feature which cuts back on the net cost by 40% or so but it only provides coverage to aged 80. Lots to consider since we don't know what the future will bring but the Federal LTC is something to think about. Good thinking Lake!

 

[nasa1974]

When I retired I chose to let my FGLI policy slowly expire. The wife and I have other coverage and I didn't think it worth keeping up payments.
We also looked into long term care and our investment manager suggested two policies that were pretty reasonable and not that expensive. The problem was with both of them if you actually didn't use the long term care the up front investment wasn't refundable. We didn't pick up anything.

 

[James48843]

I had FEGLI X 5 optional all my career, until last year.

Upon reaching age 58 and seeing what the premiums are, I decided to pull back a little- to X3 optional. I have a 23-year son who is still at home, and is having issues with mental health, so I don't know for sure if or when he will be able to support himself.

I also have a WAEPA Term plan for $500K, and with that, my wife is covered for $250K, so that I will have no bills to worry about, or she will have no bills to worry about, if either of us kick the bucket soon. Doing WAEPA was VERY important and wise choice for coverage for me- when I first bough in at age 31. It had much better rates than alternatives or FEGLI at the time. At Age 60, the prices are about equal to other plans, but for somebody younger, they do very, very well, and have a good reputation.

As I am 59 now- I'm planning on doing another review of life insurance at the time of my retirement later this year, and will likely be downsizing both insurance plans.

 

[uscfanhawaii]

I like evilanne’s comment. Plan needs to be based on your current age.

Stats show that most people get FLTC in their 50’s. Rates are still relatively low, and the length of time remaining on this earth is becoming shorter.
I purchased FLTC for me and my wife at age 48. I have been letting term insurance expire as it runs out (I am now 66). In fact, I just let a $500K term poiicy run out, when told the monthly was going from $89 per month to $2,500 per month! My financial advisor agrees that the extra term insurance is no longer required. But like TSPtalk, I have kept a little here and there, if it made sense.

There is nothing wrong with self insuring for old age, especially if getting FLTC is high due to your age. But a word of caution....care homes are expensive, and get increasingly more expensive as you age and need more care. You risk spending all your funds, so that none is left for your heirs. That may not be important, but if you are planning on having a Roth IRA to leave to heirs, be aware that there may not be any Roth IRA left. (Just sayin’). :wink:

 

[Maricar19]

1.At 55 years old, before we retired, we gradually reduced our 5X to 0 and took private insurance for a 20 year term for $300K each (monthly premium ($189 -smoker and $79 for non-smoker).
Our HFA (high functioning autistic) son will be somewhat provided for if we die before 75 years old. And if we are still alive past 75, then our TSP will provide for him and our other son.

2. When we retired at 57 yo, we kept our FEGLI, but chose the declining basic and optional insurances. If I'm not mistaken, the government still pays 1/3 of the basic insurance premium and we pay the full cost of Optional Insurance premium.
We look at the final benefits as our funeral costs. And if my math is correct, we still come out ahead.
[TABLE="width: 372, align: left"]
[TR]
[TD]Monthly Premium[/TD]
[TD]Mos.[/TD]
[TD]Per Year[/TD]
[TD]Yrs.[/TD]
[TD] Total Outlay after 8 yrs.[/TD]
[TD]Benefits after 65,
no more monthly premium[/TD]
[/TR]
[TR]
[TD] $ 27.95[/TD]
[TD="align: right"]12[/TD]
[TD] $ 335.40[/TD]
[TD="align: right"]8[/TD]
[TD] $2,683.20[/TD]
[TD] $21,500.00[/TD]
[/TR]
[TR]
[TD] $ 13.00[/TD]
[TD="align: right"]12[/TD]
[TD] $156.00[/TD]
[TD="align: right"]8[/TD]
[TD] $ 1248[/TD]
[TD]$2500[/TD]
[/TR]
[/TABLE]










3. We are now considering long term care insurance. The premiums are a little expensive at our current ages- $289 and $271 (monthly). The plan is for 3 years at $200/daily benefit. Maybe we will opt for the 2 years $150 daily benefit @ $143 and $138 monthly premiums. We never considered LTC until recently, we saw firsthand the hardship experienced by the family of my brother in law who was diagnosed with parkinson's disease. He was very healthy and then all of a sudden, he deteriorated in a year.

Note: Still trying to understand what the "other rules and restrictions": Refund of premium death benefit If your FLTCIP coverage is in force on your date of death, a refund of premium death benefit may be payable. Other rules and restrictionsmay apply.

 

[Stoplight]

Great topic, Lakebound !!! Thanks for bringing this subject up ! Good to read how many others are viewing this decision...

FWIW...For us, we recently let our long term term life insurance policy on me lapse...I never had the Fed insurance, because the cost through USAA was ALWAYS cheaper than the Fed version (FEGLI) !

Looking at our current situation, it made no sense to keep paying the increasing premiums to USAA. Wife will get part of my pension ; I'll get part of her pension...depends on who goes first !!!

Our "nest egg" is big enough, and we both have small policies that'll cover the "basics" for when we croak...the Wife through her school board retirement, which costs LITERALLY only pennies per month, and me through a whole life policy that my Uncle (an insurance agent) gave me, as a wedding present, in my 1st marriage...a LONG time ago !!! He's long gone...Holding it more for sentimental value than real "need" !!! Probably worth a lot of money by now...

A HUGE point raised by others is beneficiaries and their needs...we have no Kids or others that we worry about having $$$, so that wasn't even a consideration to us...very simple !!!

Long Term Health Care IS a topic that we're thinking about, but I think we've pretty much decided that our "nest egg" will probably outlive both of us...but that's the crap shoot, isn't it ???

Best wishes to all !!!

Stoplight...

 

[Mcqlives]

Just a suggestion for anyone shopping...check out Thrivent.com. Originally set up by Lutherans for Lutherans it opened up several years ago to open enrollment. Prices are extremely competitive. I'm not advertising for them but did find the best rate when I was shopping for a 30 yr term on 500k a few years back. Beat the next closest by about $20 a month if I recall.

 

[flalaw97]

Age 55 FEGLI life insurance increases

I am glad I found cheaper life insurance - looked at rates for 5X Part B FEGLI ($865,000 coverage) and premiums skyrocket at 55 and 65

$206/month at age 50
$375/month at age 55
$1012/month at age 65:blink:

I was able to get fixed premium $300/month for $750k coverage for 20 years (nonsmoker) with USAA.

Will keep part A with the 75% reduction into retirement since it is free after age 65.

 

[Maricar19]

Re: Age 55 FEGLI life insurance increases

I am glad I found cheaper life insurance -....
...I was able to get fixed premium $300/month for $750k coverage for 20 years (nonsmoker) with USAA...

FF, our biggest regret was that we tried to save money by opting only for 20 years.
We should have chosen the 30 years at a slightly higher premium and slightly lower coverage.
Stats say majority live past age 75.

 

[flalaw97]

Re: Age 55 FEGLI life insurance increases

True on the longevity, but my hope is that if we live to 75, we won't need the payout anymore - purchased it to take care of mortgage, parent plus loans and fill in for my income. By 75, mortgage and student loans should be paid. Not trying to create a nestegg for descendants with life insurance, just trying to protect spouse if pension is cut in half and one SS payment disappears which would happen if I die. I agree that if you eventually want to make sure you get something in return (other than just peace of mind), longer term, lower coverage would be prudent. Or some type of whole life product perhaps?