LIFE INSURANCE

[ckmk47]

thanks for that info. That makes sense..

Do you have any experience getting it reinstated without a medical?

Did you call the company and ask?  Maybe it can be waived because it was an oversight.

[ExGingi]

thanks for that info. That makes sense..

Do you have any experience getting it reinstated without a medical?

That depends on the company.

NYL has a short-form reinstatement within 6 months (1 or 2 questions IIRC). Companies that don't have a short-form reinstatement will generally require a reinstatement application including a non-med form (a form asking medical questions without requiring a special examination, or even having a paramedic asking questions). Depending on the answers on the form they might reinstate or ask for medical records. If there was a significant change in health since original policy was issued, they might not reinstate.

[Yosel]

That depends on the company.

NYL has a short-form reinstatement within 6 months (1 or 2 questions IIRC). Companies that don't have a short-form reinstatement will generally require a reinstatement application including a non-med form (a form asking medical questions without requiring a special examination, or even having a paramedic asking questions). Depending on the answers on the form they might reinstate or ask for medical records. If there was a significant change in health since original policy was issued, they might not reinstate.

NYL will take the payment if it is before 90 days of premium due date, he mentions December...........

[Yosel]

I appreciate your articulate and instructive contribution to the discussion

"""I find it hard to believe that someone would give up a 10 year old UL policy because COIs increased 5%."""

I don't find it so hard to believe, people will usually do what is right for them if explained properly 

[ExGingi]

"""I find it hard to believe that someone would give up a 10 year old UL policy because COIs increased 5%."""

I don't find it so hard to believe, people will usually do what is right for them if explained properly

Well, how many people would really know how to properly analyze the replacement?

Unless it's a UL with a secondary guarantee (in which case the COI increase is meaningless), there are serious implications in starting a new surrender charge period and giving up one that is half way through. Will people really look at multiple illustrations with various funding levels, or if it's a good salesperson they will just accept what he or she shows them?

Believe it or not, I have an old client that it holding on to an old UL which he funded at minimum levels, even though he can get a new policy where his bottom line outlay for the coverage might be lower.

[yos9694]

Well, how many people would really know how to properly analyze the replacement?

Unless it's a UL with a secondary guarantee (in which case the COI increase is meaningless), there are serious implications in starting a new surrender charge period and giving up one that is half way through. Will people really look at multiple illustrations with various funding levels, or if it's a good salesperson they will just accept what he or she shows them?

Believe it or not, I have an old client that it holding on to an old UL which he funded at minimum levels, even though he can get a new policy where his bottom line outlay for the coverage might be lower.

That's interesting, because I'd expect the bottom line cost to be higher as a result of being older at issue. Even if it can be made to seem cheaper at first by minimally funding the policy, over time wouldn't it be much more expensive to keep the newer UL account value up? Is there something I'm missing here? (Of course an old UL with 0 AV is one exception, since it wasn't funded as intended... and a COI increase will hurt much more than it's supposed to)

[ExGingi]

That's interesting, because I'd expect the bottom line cost to be higher as a result of being older at issue.

Why would that matter?

In a UL the COI increases with age regardless of age at issue. As a matter of fact, recently underwritten (and current mortality tables and company experience used) might have lower COI for the first several years than an older issue UL. You should be more familiar with the various designs and consideration than I am, I just look at the illustrations (and I haven't done much UL in recent years).

I would be very surprised if a newly issued UL done as a replacement/1035 exchange would outperform the old UL (unless it was minimally funded) over 20 years. In the very long run a new one might outperform.

[Zalc]

Do specific age thresholds (30 etc) cause disproportionate price increases compared to any other year?

Can a simple life insurance policy be started and issued within a week?

[Yosel]

Do specific age thresholds (30 etc) cause disproportionate price increases compared to any other year?

Can a simple life insurance policy be started and issued within a week?

1. no  2. yes

[Yo ssi]

1. no  2. yes

IME the opposite

[Am]

1. no  2. yes

I don't know if your response to #1 is accurate but there are definitely thresholds where underwriting guidelines change (for example under 30 and under 1mm they are much quicker to approve without medical etc.)

[dovy2]

Got myself a 30 year term when I was about 25 y/o. Now, about 10 years later, Just did some quotes from the wiki, and seems like it's just a few dollars more per month to start another 30 term . Is it a no-brainer? Or is there something better to do?

[farmbochur]

Got myself a 30 year term when I was about 25 y/o. Now, about 10 years later, Just did some quotes from the wiki, and seems like it's just a few dollars more per month to start another 30 term . Is it a no-brainer? Or is there something better to do?

To help explain what you're observing: there are 2 key inputs for insurance pricing.

(A) Mortality risk (higher mortality risk -> higher prices)
(B) Interest rates (higher interest rates -> lower prices [this is particularly true for policies with longer duration])

In your case, the changes to (A) and (B) (relative to when you priced out your policy 10 years ago) are partially offsetting one another.

[dovy2]

To help explain what you're observing: there are 2 key inputs for insurance pricing.

(A) Mortality risk (higher mortality risk -> higher prices)
(B) Interest rates (higher interest rates -> lower prices [this is particularly true for policies with longer duration])

In your case, the changes to (A) and (B) (relative to when you priced out your policy 10 years ago) are partially offsetting one another.

Correct, so is it a no brainier to basically extend my term by 10years?

[yos9694]

Correct, so is it a no brainier to basically extend my term by 10years?

No brainer. Or keep both policies.

Age 25 to 35 isn't a big price difference if you still qualify for the same health rating. That's why it's best to lock it in early. But coverage ending at age 55 is too soon for most people in our community, so it should be the plan that such a policy will not be the last time you should buy life insurance (be'h)

[skyguy918]

Or keep both policies.

Highly doubt keeping the current policy will ever make sense in any capacity (other than lower health rating).

[AsherO]

Highly doubt keeping the current policy will ever make sense in any capacity (other than lower health rating).

+1

Might as well take the premium from both policies and try to get a higher coverage (combined) coverage amount in a single policy.

[AsherO]

To help explain what you're observing: there are 2 key inputs for insurance pricing.

(A) Mortality risk (higher mortality risk -> higher prices)
(B) Interest rates (higher interest rates -> lower prices [this is particularly true for policies with longer duration])

In your case, the changes to (A) and (B) (relative to when you priced out your policy 10 years ago) are partially offsetting one another.

Thanks, very informative. I didn’t realize that, it would mean that nows a great time to review my policies with rates as high as they are.

[ExGingi]

No brainer. Or keep both policies.

Age 25 to 35 isn't a big price difference if you still qualify for the same health rating. That's why it's best to lock it in early. But coverage ending at age 55 is too soon for most people in our community, so it should be the plan that such a policy will not be the last time you should buy life insurance (be'h)

Wouldn't that be succumbing to the sunken cost fallacy?

Presuming a person bought a $1MM 30 year term at age 25 for $50/mo. At age 35 same person can purchase a new $1MM 30 year term for $64/mo extending coverage for extremely critical 10 additional years. It is very likely that at this point said person realizes that he needs at least $2MM. He could opt to keep the old policy, that  would last for only 20 more years, or he could buy a new 20 year term for around $33/mo.

I think this could illustrate why I am NOT a fan of 30 year term (especially if purchased under age 35). Purchasing a 10 or 15 year term policy at age 25 (presumably before being settled with family and career) would likely cost less than $20/mo.

[Sammy82]

Wouldn't that be succumbing to the sunken cost fallacy?

Presuming a person bought a $1MM 30 year term at age 25 for $50/mo. At age 35 same person can purchase a new $1MM 30 year term for $64/mo extending coverage for extremely critical 10 additional years. It is very likely that at this point said person realizes that he needs at least $2MM. He could opt to keep the old policy, that  would last for only 20 more years, or he could buy a new 20 year term for around $33/mo.

I think this could illustrate why I am NOT a fan of 30 year term (especially if purchased under age 35). Purchasing a 10 or 15 year term policy at age 25 (presumably before being settled with family and career) would likely cost less than $20/mo.

unless one thinks that by the time they are 35+, his health may decline