LIFE INSURANCE

[Pad18]

So i looked over what to get, and unfortunately 40x my salary i can't do that for now, so i change the strategy and look for what amount i could put, and came out with the number 600$/m.

Now I was offered 2 palns
1m term at 45/m for 30y
1m permeant at 545/m for 20y

That assuming tier 1. I am in my early 30.

Any thoughts ?

[yelped]

I would ping @ExGingi. He can get you the coverage you need plus plan it out in a way that will save you money and benefit you down the road.

[dm123]

Any thoughts ?

What are you looking to insure for? I.E. what specific financial needs are you looking to make sure get covered?

Asking b/c often people buy/are sold permanent policies when people would have savings/investments at the end of the term coverage that would obviate the need for it. (I'd be interested to hear why & what type of permanent you're looking at, assuming you're comfortable sharing, as most of the handful of people I've spoken to IRL regret buying whole life, as well as many internet anecdotes sharing buyers remorse on permanent policies)

For example - not sure of your situation but, perhaps, if you actually need the 40x income coverage to make sure you can, say, have all your kids raised & married off in financial comfort but wouldn't need it afterwards as you'd have fully funded retirement accounts by then it may be more important to get 40x income in term coverage you could afford, ensuring for the 30 years you covered your bases, then once you're 30 years down the line you are self insured and financially worry free.

That being said there may indeed be situations for permanent insurance, for more details not sure if you've seen the WL vs Term thread & Wiki?

[Moe Ginsburg]

Which insurance carriers still still offer Annual Renewable Term life insurance policies? For many, this is a much better option than fixed term policies that typically last only 10, 20 or 30 years, after which you need to purchase a new policy, with the likelihood that the average person's health won't be as good as it was when he purchased the lapsed policy, thereby resulting in a higher annual premium. Whereas with Annual Renewable Term you can keep the same policy until you're 90 years old (70 years old in New York); albeit with the policy premium increasing somewhat most years.

[yos9694]

Which insurance carriers still still offer Annual Renewable Term life insurance policies? For many, this is a much better option than fixed term policies that typically last only 10, 20 or 30 years, after which you need to purchase a new policy, with the likelihood that the average person's health won't be as good as it was when he purchased the lapsed policy, thereby resulting in a higher annual premium. Whereas with Annual Renewable Term you can keep the same policy until you're 90 years old (70 years old in New York); albeit with the policy premium increasing somewhat most years.

Most offer it.

Premiums increase a lot more than "somewhat" after the first few years

[ushdadude]

Which insurance carriers still still offer Annual Renewable Term life insurance policies? For many, this is a much better option than fixed term policies that typically last only 10, 20 or 30 years, after which you need to purchase a new policy, with the likelihood that the average person's health won't be as good as it was when he purchased the lapsed policy, thereby resulting in a higher annual premium. Whereas with Annual Renewable Term you can keep the same policy until you're 90 years old (70 years old in New York); albeit with the policy premium increasing somewhat most years.

are people's insurance needs the same as they get older?

[Moe Ginsburg]

Most offer it.

Premiums increase a lot more than "somewhat" after the first few years

The last time I compared ART to fixed term, ART had lower premiums than fixed term policies or pretty close to the same. By most ART policies, the first ten years of premiums were less than the total premiums over the life of a 10 year fixed term policy (for the same person), and the same for 20 and 30 year fixed term policies, if you totalled the premiums for the same number of years.

[Moe Ginsburg]

are people's insurance needs the same as they get older?

Sometimes not. But with ART it is your choice whether or not to renew it each year. You can renew it longer than 10, 20 or 30 years. Or you can choose not to. So it has all the same advantages of fixed term policies plus the significant additional flexibility of not having to take a new health test for a new policy when you're 30 years older than when you got the policy.

[ExGingi]

Which insurance carriers still still offer Annual Renewable Term life insurance policies? For many, this is a much better option than fixed term policies that typically last only 10, 20 or 30 years, after which you need to purchase a new policy, with the likelihood that the average person's health won't be as good as it was when he purchased the lapsed policy, thereby resulting in a higher annual premium. Whereas with Annual Renewable Term you can keep the same policy until you're 90 years old (70 years old in New York); albeit with the policy premium increasing somewhat most years.

I used to recommend Annual Renewable Term for several reasons (the increasing premium serving as a reminder to review coverage being one of them, but also due to better economics for what used to be around 17 years). However, most companies changed those policies where the initial premiums might be lower than they previously were, but the slope is steeper at an earlier stage.

[yos9694]

The last time I compared ART to fixed term, ART had lower premiums than fixed term policies or pretty close to the same. By most ART policies, the first ten years of premiums were less than the total premiums over the life of a 10 year fixed term policy (for the same person), and the same for 20 and 30 year fixed term policies, if you totalled the premiums for the same number of years.

One data point from quoting right now- the year 1 premium for ART is ~40% cheaper than the equivalent 10 year level term. Then the ART has ~10% increases per year in the first 5 renewals. Year 6 jumps up to 2x the starting premium. Year 11 is 4x.

Also remember that ART is indeterminate, so the rates quoted can go up (capped at the maximum).

[ExGingi]

One data point from quoting right now- the year 1 premium for ART is ~40% cheaper than the equivalent 10 year level term. Then the ART has ~10% increases per year in the first 5 renewals. Year 6 jumps up to 2x the starting premium. Year 11 is 4x.

Indeed. This is nowadays common, which makes ART a suitable product as a very short term bridge. Older designs (and term rates environment) made the economics of ART make sense for much longer periods.

Also remember that ART is indeterminate, so the rates quoted can go up (capped at the maximum).

I never considered this to be an issue, since an increase in rates from the scheduled rates would lead to adverse selection and is not likely. The way I understand it the reason for the scheduled vs guaranteed rates is lower reserve requirements (or something along those lines, I'm sure a good actuary can explain better than I can).

[Moe Ginsburg]

I believe the state insurance department needs to approve an increase from the scheduled rates, and it needs to be justified.

[yos9694]

The way I understand it the reason for the scheduled vs guaranteed rates is lower reserve requirements (or something along those lines, I'm sure a good actuary can explain better than I can).

Indeterminate premiums were around long before deficiency reserves. But maybe over time the market evolved so that the design that originally allowed for rate increases became used for reserve games. Let me know when you find a good actuary.

ART is going to result in adverse selection whether you change the scheduled premiums or not.

[ExGingi]

ART is going to result in adverse selection whether you change the scheduled premiums or not.

Under current designs with the steep (relatively) early increases.

I can tell you that NYL 5YT series AD101 had excellent pricing for the client (with increases every 5 years rather than annually). For my clients that still have it I tell them that it's the last term coverage that they should convert or get rid of. I have also seen some versions of older Guardian YRT that was priced quite decently.

But overall I hear your argument that an ART will inherently have some adverse selection built in. But I think we can agree that an increase in premiums up to the guaranteed rate will result in a much more pronounced exit of the good risks.

[skyguy918]

If you don't care about convertability, or other feature related differences, is there any real difference between the cheapest A+ carriers and the A++ for plain vanilla term (20 or 30 yr)? I've been told (obviously by someone trying to sell A++) that they're more likely to try to find any excuse to drop you mid-term (since you've paid in and lapse would mean they don't pay out), have worse customer service, etc. Any truth to this?

[ExGingi]

If you don't care about convertability, or other feature related differences, is there any real difference between the cheapest A+ carriers and the A++ for plain vanilla term (20 or 30 yr)? I've been told (obviously by someone trying to sell A++) that they're more likely to try to find any excuse to drop you mid-term (since you've paid in and lapse would mean they don't pay out), have worse customer service, etc. Any truth to this?

A non-convertible policy is a dead-end policy. It is what it is for as long as it lasts. If one gets the best possible ratings and pays their premiums on time, there is little risk with A+ vs A++ rated companies. OTOH if one doesn't get the best rating, and at a later time their underwriting might improve (better health, better driving record, etc.) the better companies might allow for an improvement in rating, while the lower rated companies might not. But then again, if one is an excellent risk, they can likely just get a new policy at their attained age pricing.

[yos9694]

If you don't care about convertability, or other feature related differences, is there any real difference between the cheapest A+ carriers and the A++ for plain vanilla term (20 or 30 yr)? I've been told (obviously by someone trying to sell A++) that they're more likely to try to find any excuse to drop you mid-term (since you've paid in and lapse would mean they don't pay out), have worse customer service, etc. Any truth to this?

What would they do to drop you mid term? That should be reported to the NY insurance commissioner at the DFS

[Zalc]

After reading through this thread as a younger married person with no dependents, it seems that the complicated part is that the amount needed can change over your lifetime by a factor of 5 or more.

I won’t know how large my household will be for at least 10 years, but there is a risk of not being insurable once I do know how much I’ll need.

Does it make sense to do something like the below?
- Buy a cheap 30yr term for a regular amount, like $500k (to cover spouse a bit).
- Add an additional 20 year policy every time the household grows.
- Have a very small WL policy with the option to increase the benefit (PUA) to guard against becoming uninsurable. Worst case it’ll be a bad savings account.

How much does attained age cost assuming you stay rated preferred best?

Thanks

[gozalim]

After reading through this thread as a younger married person with no dependents, it seems that the complicated part is that the amount needed can change over your lifetime by a factor of 5 or more.

I won’t know how large my household will be for at least 10 years, but there is a risk of not being insurable once I do know how much I’ll need.

Does it make sense to do something like the below?
- Buy a cheap 30yr term for a regular amount, like $500k (to cover spouse a bit).
- Add an additional 20 year policy every time the household grows.
- Have a very small WL policy with the option to increase the benefit (PUA) to guard against becoming uninsurable. Worst case it’ll be a bad savings account.

How much does attained age cost assuming you stay rated preferred best?

Thanks

convertability and other similar riders probably solve exactly this dillema. but I'll let the agents describe those

[ExGingi]

After reading through this thread as a younger married person with no dependents, it seems that the complicated part is that the amount needed can change over your lifetime by a factor of 5 or more.

This is why IMHO the Human Life Value approach makes more sense. And I'm generally not a fan of long-term term plans for young people. A short term plan will "encourage" you to review and update sooner/more frequently.