LIFE INSURANCE

[aygart]

Correct.

Is there a way to predict dividends?

Year 4 was $12 and year 5 $17.

How much are you expecting dividends on $1000 to be?

[yr]

How much are you expecting dividends on $1000 to be?

I have no particular expectation. Just that those values are quite low. Combined with the fact that it take a very long tike to break even , let alone earn a return,  I'm questioning whether I should keep this policy.

[skyguy918]

Correct.

Is there a way to predict dividends?

Year 4 was $12 and year 5 $17.

Ask your agent for an illustration. You can probably also go back and look at the illustration from when you bought the policy to get a rough idea.

[ExGingi]

How far is fully seasoned and when you say shine brighter, are the rates of return actually higher, or just proportional to the face value?

IINM most policies are designed to amortize over 20 years. I'm sure @yos9694 can chime in with more accurate information. 

Larger policies will usually have better performance.

[yos9694]

IINM most policies are designed to amortize over 20 years. I'm sure @yos9694 can chime in with more accurate information. 

Larger policies will usually have better performance.

I know a lot less about this stuff than I used to... but it's true that surrender charges are allowed by law to be included for 20 years (or in WL an amortized expense allowance). At the end of the day, the cash value IRR won't be more than 4%-5% anyway, will it?

[yos9694]

Correct.

Is there a way to predict dividends?

Year 4 was $12 and year 5 $17.

Yes. An illustration

$12 on a $150k policy is 8 cents per thousand. Not that bad for an early duration dividend. Over time you'd start to see a few dollars per thousand. You'll still be getting an IRR in the single digits, but its a good diversification from sticks

[Yo ssi]

Does a life insurance agent get more for selling a term policy for the company they work with or do they get more for a third party?

[ExGingi]

Does a life insurance agent get more for selling a term policy for the company they work with or do they get more for a third party?

It depends. But very often they will get higher first year compensation from brokered policies rather than their own captive company.

[Yo ssi]

It depends. But very often they will get higher first year compensation from brokered policies rather than their own captive company.

I assume not just the first year since with a term not much is received after the first year either way

[Josef.koney]

Would love to hear from people what they think for what I currently was offered.
I'm second to top in health, my wife is the top bh. I'm 28, my wife 24.
I got a term plan that the rates can potentially go up, however they havent ever actually gone up to my understanding. The plan is one price now, and as we age, the price goes up (supposedly a set amount which they have charted out for me already.) The main plus is, the plan CAN continue till 80 without any other tests to my understanding(although it's crazy high the older you get)

This plan has a chartered raise of price as we get older. This plan can potentially go until age 80, although it does get quite expensive once we get there. The benefit is that no medical testing will be taken again to my understanding. From what my agent told me, they do have the right to change the pricing however they haven't done that ever it seems.
He told me it has the convertibility option as well.
I'm getting 1.7 and my wife 1
Payments per month are $136, hundred for me and 36 for her.
The questions that I'm thinking of although I'm happy to hear anyone's thoughts, if anybody has any experience with this kind of plan.
 Am I taking a unnecessary risk that I'm not locked in to a set price.
 Is there better options that I should look into?
 I see something about waiver of premium charge, is that something I'm forced to pay? is it something I should be paying for?
thanks!!
 

[ExGingi]

Would love to hear from people what they think for what I currently was offered.
I'm second to top in health, my wife is the top bh. I'm 28, my wife 24.
I got a term plan that the rates can potentially go up, however they havent ever actually gone up to my understanding. The plan is one price now, and as we age, the price goes up (supposedly a set amount which they have charted out for me already.) The main plus is, the plan CAN continue till 80 without any other tests to my understanding(although it's crazy high the older you get)

This plan has a chartered raise of price as we get older. This plan can potentially go until age 80, although it does get quite expensive once we get there. The benefit is that no medical testing will be taken again to my understanding. From what my agent told me, they do have the right to change the pricing however they haven't done that ever it seems.
He told me it has the convertibility option as well.
I'm getting 1.7 and my wife 1
Payments per month are $136, hundred for me and 36 for her.
The questions that I'm thinking of although I'm happy to hear anyone's thoughts, if anybody has any experience with this kind of plan.
 Am I taking a unnecessary risk that I'm not locked in to a set price.
 Is there better options that I should look into?
 I see something about waiver of premium charge, is that something I'm forced to pay? is it something I should be paying for?
thanks!!

This is known as YRT (Yearly Renewable Term) or ART (Annual Renewable Term).

There are things to like about it, but it's not very popular nowadays as the slope of increase for the rates that I have seen is steeper than it was with older products.

If conversion is in the cards for you (down the road) but you want to get something inexpensive in the interim (often the case with people that are saving to buy a house, or who expect their income to increase significantly down the road), a 10 or 15 year level term (convertible until the end of the level term - might require a rider) might make more economic sense. No-one knows what will happen down the road, and different people feel and act differently in various situations.

[shmooz]

Just as a consumer, I would not take life insurance that can be raised even if they never did. They also never had a crisis that forced them to do it, but they could.
I'd take 20 year term, that's enough hishtadlus.

[ExGingi]

Just as a consumer, I would not take life insurance that can be raised even if they never did. They also never had a crisis that forced them to do it, but they could.
I'd take 20 year term, that's enough hishtadlus.

The reason for the first line in your statement is that you don't understand how these things work. The reason the product has guaranteed and non-guaranteed pricing is in order to be able to offer it at a lower premium. Guarantees require reserves, which cannot be invested like other assets. So the lower the guaranteed rate is, the more "idle cash" in reserves is required from the insurance company. The insurance company isn't likely to ever raise rates beyond the non-guaranteed scheduled premiums, as that could result in adverse selection - the only people that will stick with the company are those who are less likely to get approved for new coverage elsewhere.

20 year term at age 28 isn't hishtadlus (unless there's a clear plan for conversion), it is quite foolish IMHO. I would also be skeptical of 30 year term (as the only coverage) at that age. But that is just my opinion and how I see things. There is no right or wrong.

[yos9694]

What you described is known as YRT or ART, i.e. Yearly (or Annually) Renewable Term. Sometimes it's called YCT instead (yearly convertible term). The premium rates for each year of coverage are higher than the previous year, because mortality rates increase with age, but the rates disclosed are on an indeterminate schedule- meaning that what you see illustrated on paper now is subject to change in the future (though as you said, it is not so common).

Waiver of premium should be optional. It's a form of disability insurance, and you should be able to decide whether you want that in addition to the policy or not.

Like any other insurance plan, it makes sense if it aligns with your goals. Because the premiums increase every year, a YRT plan usually attracts people who have a short-term need for coverage or who know that they plan to convert to a permanent plan within a few years. If someone knows that they want longer-term coverage though, they might prefer a level-premium term plan for its lower total cost (the flat rate may be higher initially but as the YRT plan premium increases the equation flips). Same logic probably applies if you're thinking of keeping the YRT plan until age 80.

[ExGingi]

Waiver of premium should be optional. It's a form of disability insurance, and you should be able to decide whether you want that in addition to the policy or not.

I will just add that, especially when it comes to term policies, not all waivers are equal, and often the same company might have several waiver riders available.

In its purest form it waives the premiums due while the insured is totally disabled (no partial disability) for 6 months or more.

The question is what happens if the disability is permanent, or if one wants to convert (fully or partially) to whole life. That is where you start to see differences (which will often also tie to how the base product is structured - is the level term product renewable past the level term period?).

[yos9694]

Just as a consumer, I would not take life insurance that can be raised even if they never did. They also never had a crisis that forced them to do it, but they could.
I'd take 20 year term, that's enough hishtadlus.

A mortality crisis is quite unlikely. Believe it or not, life insurance companies don't live or die by the level of volatility in death rates. And companies have left rates unchanged despite mortality going against them, mostly because it's a massive undertaking to change things technologically as well as from a public relations standpoint.

But I too would not buy an indeterminate plan. It's a personality thing

[ExGingi]

A mortality crisis is quite unlikely. Believe it or not, life insurance companies don't live or die by the level of volatility in death rates. And companies have left rates unchanged despite mortality going against them, mostly because it's a massive undertaking to change things technologically as well as from a public relations standpoint.

But I too would not buy an indeterminate plan. It's a personality thing

I am surprised that you, of all people, didn't mention adverse selection that could come from raising rates.

[ExGingi]

A mortality crisis is quite unlikely. Believe it or not, life insurance companies don't live or die by the level of volatility in death rates.

May I add that if they were able to weather the years of near-zero and zero interest rates, they can definitely survive a mortality crisis.

[yos9694]

I am surprised that you, of all people, didn't mention adverse selection that could come from raising rates.

First, you already mentioned it. But adverse selection probably isn't as big a deal as some think it is for modest rate changes. Life insurance switching costs can be insanely high, I find it hard to believe that someone would give up a 10 year old UL policy because COIs increased 5%.

[yos9694]

May I add that if they were able to weather the years of near-zero and zero interest rates, they can definitely survive a mortality crisis.

Mortality just isn't that volatile. But if you want to talk interest rates.... they survived declining and low interest rates, but can they survive rising rates?