LIFE INSURANCE

[knowitall]

Long-term Term Life Insurance as the only coverage can make people avoid revisiting their coverage often enough.

I agree that many buy one small 30 year term policy and never revisit it, even if their needs go up by 10x. But the solution is to revisit it every year, or every time you have another kid. THE SOLUTION IS NOT TO BUY PERMANENT INSURANCE!

[ExGingi]

I agree that many buy one small 30 year term policy and never revisit it, even if their needs go up by 10x. But the solution is to revisit it every year, or every time you have another kid. THE SOLUTION IS NOT TO BUY PERMANENT INSURANCE!

I can never argue with someone who is convinced that he knows it all. (Not that I care to argue with anyone, I just educate, people make their own decisions).

[ExGingi]

I am not understanding you thought process here. By buying that term he ensured that he had coverage for that long whereas had he taken a shorter term and cv became uninsurable then he would be left without coverage at the end of the term even though it was even more needed then.

Case in point: an existing client who bought from me two term policies almost 10 years ago, one being a 30-year term, and the other a yearly renewable term, decided he needs more insurance now, and split his additional coverage between new 30-year and new 15-year term policies, and considering conversion of the yearly renewable term to permanent insurance. The old 30 year policy is being kept for the 20 years it still has.

Also paying annually rather than monthly automatic payments can serve as a reminder to review (but could run the risk of a missed bill/payment). 

[knowitall]

I can never argue with someone who is convinced that he knows it all. (Not that I care to argue with anyone, I just educate, people make their own decisions).

Making an assumption about someone’s ability to have a rational conversation based on an online chat room username chosen 10 years ago is not logical IMHO.

[aygart]

Long-term Term Life Insurance as the only coverage can make people avoid revisiting their coverage often enough.

I personally never owned long-term term life insurance, I ended up either converting (most) or dropping whatever term insurance I had over the past 20 years. Term cost increases and expiring conversion privileges prompted review and action.

(and dealing with assets other than life insurance left in the estates of family members, just strengthen my belief that a life insurance death benefit is the best material asset to leave behind).

It may not be a ne time set and forget, but it does form a great foundation for future planning to have this guarantee. Personally, I have a 30 year term coverage and later got permanent policies to supplement it and I keep going back and forth about whether or not I should keep the term now that the permanent policy is adequate on its own, but in the end it is cheap enough that it is not a big deal to pay it anyhow.

[JMHO]

Making an assumption about someone’s ability to have a rational conversation based on an online chat room username chosen 10 years ago is not logical IMHO.

My humble opinion too!

[yuneeq]

Making an assumption about someone’s ability to have a rational conversation based on an online chat room username chosen 10 years ago is not logical IMHO.

I believe he was responding to the definitive tone of your post

[ExGingi]

It may not be a ne time set and forget, but it does form a great foundation for future planning to have this guarantee. Personally, I have a 30 year term coverage and later got permanent policies to supplement it and I keep going back and forth about whether or not I should keep the term now that the permanent policy is adequate on its own, but in the end it is cheap enough that it is not a big deal to pay it anyhow.

How old were you when you got the 30 year term?

[ExGingi]

I believe he was responding to the definitive tone of your post

Indeed. And then seeing the username I just couldn't resist the sarcasm.

[aygart]

How old were you when you got the 30 year term?

I think late 20s

[knowitall]

Long-term Term Life Insurance as the only coverage can make people avoid revisiting their coverage often enough.

You can have the same issue with permanent insurance. I’ve seen families get a small permanent policy, and consider themselves covered, while in reality they end up underinsured as their family grows.

That doesn’t negate the point that 99% of lower to middle class families would be best off covering their need with term insurance, and investing the rest of their money in typical investments.

[EliJelly]

Thank you for this! Just got a quote for a 20 year $1 million term policy which is cheaper than the $500k 20 year I got 4 years ago.

So you paid 20 year rates for something you only kept 4 years...

Why should he stick to a more expensive product when he can get now more coverage for cheaper just because that would mean he overpaid on the old policy to lock a year term he didn't need? If something, locking additional 20 year rate with more coverage for less, makes it so much more lucrative.

Why not buy the $1m cheaper quote as additional insurance? You can always decide to drop the $500k policy once the $1m policy is issued.

Or even better, just get $1.5m in coverage from that newer quote and pay less than keeping both policies. ($1m in coverage for a frum family is anyway a joke)

[yuneeq]

So you paid 20 year rates for something you only kept 4 years...

Sunk cost fallacy

[ExGingi]

Why should he stick to a more expensive product when he can get now more coverage for cheaper just because that would mean he overpaid on the old policy to lock a year term he didn't need? If something, locking additional 20 year rate with more coverage for less, makes it so much more lucrative.

Or even better, just get $1.5m in coverage from that newer quote and pay less than keeping both policies. ($1m in coverage for a frum family is anyway a joke)

Sunk cost fallacy

Why do any of you think I am advocating for keeping it for longer? I am just stating one of the common outcomes of 20 year term. A 10 or 15 year term would be more economical.

[AsherO]

Why do any of you think I am advocating for keeping it for longer? I am just stating one of the common outcomes of 20 year term. A 10 or 15 year term would be more economical.

That’s a risk, that assumes that by the time that term ends adequate whole life will be affordable. Might be worth “risking it” with longer term, where the policy can always be kept as additional coverage or converted if that’s an option.

[aygart]

Why do any of you think I am advocating for keeping it for longer? I am just stating one of the common outcomes of 20 year term. A 10 or 15 year term would be more economical.

Nothing is even more economical

[zh cohen]

A 10 or 15 year term would be more economical.

At a higher level of risk.

[ExGingi]

Nothing is even more economical

And a well funded permanent policy is even more economical than that 

[aygart]

And a well funded permanent policy is even more economical than that 

That doesn't mean it is the right product for everyone.

[knowitall]

And a well funded permanent policy is even more economical than that 

Not mixing investing and insurance is even more economical than that  (99% of the time)