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 Posted: Tue Feb 02, 2010 8:42 pm Post subject: HI I am from Wisconsin. I am 57, I've been thinking of cashi |
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I can use the money now. If I would cash in my whole life take out the $12,000, Buy a $50,000 term for life which is $2000 more than I have now. Does that sound doable.
Thanks
John |
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jcgreene
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| Posted: Wed Feb 03, 2010 3:00 am Post subject: |
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| It's doable, but sounds like a bad idea. Why would you want to make this sort of change? Why would you want to lose a permanent policy--that you can take cash from and leave in force if you wish--and end up with a temporary policy? Doesn't make sense to me. |
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BNTRS
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| Posted: Wed Feb 03, 2010 5:17 am Post subject: |
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By any chance; did an agent suggest you cash in you old policy and buy a new term plan?
THis has got "Wrongful Policy Replacement" written all over it.
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InsInvestigator
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| Posted: Wed Feb 03, 2010 6:39 am Post subject: |
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| I asked my agent about doing this. The term would run until I'm 105 years old. It would be less than my payment now and be $2000 more coverage. Plus I would get $12,000 cash now. |
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jcgreene
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| Posted: Wed Feb 03, 2010 6:50 am Post subject: |
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Do you understand how expensive the cost of a term policy would be until you are 105? Unless ou have stock in oil (and maybe not then) you'd never be able to afford it.
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InsInvestigator
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| Posted: Wed Feb 03, 2010 6:51 am Post subject: |
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Is your agent with Primerica? This smells like a Primerica scam.
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InsInvestigator
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| Posted: Wed Feb 03, 2010 4:04 pm Post subject: Term |
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| The insurance company I'm working with is Equitable Reserve. My agent said if I want to do this I can get $50,000 for life at $67.43 A month. The whole life that I have now is $81.35 a month. for $48,000. |
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jcgreene
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| Posted: Wed Feb 03, 2010 6:52 pm Post subject: |
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| Quote: | | My agent said if I want to do this I can get $50,000 for life at $67.43 A month. The whole life that I have now is $81.35 a month. for $48,000. |
The premium you quoted sounds like it's based on your current age. Term insurance policy premiums are based on your CURRENT age when the policy renews. It's highly unlikely that the premium will remain at that monthly rate...my feeling is that it's going to get MUCH more expensive over the term of the contract.
This comment is precisely, exactly and perfectly on target:
| Quote: | | Do you understand how expensive the cost of a term policy would be until you are 105? |
Just playing with some software I have, the monthly premium for $50,000 of coverage under a 5-year level and renewable term insurance policy would be $188.00 per month for an 85 yr.old male, non-smoker, standard rates.
As well, you did quote us the rate you were given by your agent, but there are some missing details:
1. Specifically, what kind of term policy are you talking about?
2. We have no idea (health-wise) how insurable you are. If you cancel the existing policy and try and replace it with the term contract, you could easily run into potential insurability issues. What if the new term contract doesn't get issued? Now you have no life insurance. Not a good thing.
If you need some of the cash, make a withdrawal or borrow from the cash value. I would never suggest replacing your current contract...you won't find anything better that will remain consistent in terms of premium payments.
Finally, InsInvestigator said:
| Quote: | | This has got "Wrongful Policy Replacement" written all over it. |
Ah yes...the Mt. Everest of errors and omissions lawsuits- unsuitable replacements!
InsTeacher 
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InsTeacher
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| Posted: Wed Feb 03, 2010 9:35 pm Post subject: |
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Your agent will do you no favors in making this replacement. Your agent should refuse to be part of such a transaction.
There is no way you'll make out better, or cheaper on the insurance side, by lapsing a whole life contract and buying term insurance.
As has been stated, the premium you are quoting will not be the premium you'd be required to pay up to age 105. |
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BNTRS
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| Posted: Wed Feb 03, 2010 10:37 pm Post subject: |
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Just to play devil's advocate here, a $50k guaranteed UL to age 121 with Transamerica would be right around $75/month if you can qualify for preferred rates. I don't know about the company you're talking about, but it's certainly possible.....if you can qualify for it and need the cash, I don't see the problem with it. If you're being sold a term insurance policy that has increasing rates, that's another ballgame. The $75/month I quoted is guaranteed for life.
On a side note, if your cash value is $12k and your death benefit is $48k, you are really only insured for $36k....just throwing that out there too.
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dgoldenz
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| Posted: Thu Feb 04, 2010 12:37 am Post subject: |
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dgoldenz made a good point here. A number of companies, including Transamerica, it seems, have Universal Life policies with built-in guarantees to the end of time (whenever that might be). But, in order to acquire one of these policies, you'll be required to submit to an entirely new set of medical tests, underwriting, policy start-up fees, the agent's commission, etc, etc.
As my associates have said, I can guarantee you that whatever plan this agent proposed is NOT a yearly renewable term and I'm inclined to believe that if it's a level term, it's not much more than 5 or 10 years.
To me, it sounds as though the agent is looking for a quick paycheck and might not be giving you all the information you require to make an informed decision.
If you don't desperately need the $12,000, leave it alone. If you don't, be prepared to get a huge bill when you can least afford it.
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InsInvestigator
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| Posted: Thu Feb 04, 2010 4:36 am Post subject: |
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| Quote: | On a side note, if your cash value is $12k and your death benefit is $48k, you are really only insured for $36k....just throwing that out there too.
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Really, so if the insured dies does the insurance company give the beneficiary the 12k possible subject to taxes and then a death benefit of 36k?
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BNTRS
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| Posted: Thu Feb 04, 2010 4:40 am Post subject: |
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No, but $12k of that money is already yours...you're only insuring against the difference since you could walk away with the $12k at any time. If your death benefit is $1,000,000 and you have $900,000 in cash value, you are only "insured" for $100k. The only difference is the taxable consequences. If you didn't want the money and just wanted to pass along the death benefit, and you were healthy enough to exchange your $900k for a single premium UL policy at this guy's age, you could get a new policy for $4 million+. An extreme example, but you can see what I am getting at.
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dgoldenz
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| Posted: Thu Feb 04, 2010 5:41 pm Post subject: Term |
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Thank you all very much. I have a lot to think about.
Earlier you said it sounds like a Primerica deal Who are they? I have not heard of them, sounds like something to stay away from. |
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jcgreene
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| Posted: Thu Feb 04, 2010 7:33 pm Post subject: |
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| Quote: | | No, but $12k of that money is already yours...you're only insuring against the difference since you could walk away with the $12k at any time. If your death benefit is $1,000,000 and you have $900,000 in cash value, you are only "insured" for $100k. The only difference is the taxable consequences. If you didn't want the money and just wanted to pass along the death benefit, and you were healthy enough to exchange your $900k for a single premium UL policy at this guy's age, you could get a new policy for $4 million+. An extreme example, but you can see what I am getting at. |
Yeah I know what you mean, but I could also say you are only getting 3.1 million in life insurance since you already have $900,000 in cash. Far better than our hypothetical 900k with 1 mill db, yes. But we'd be hard pressed to find a WL policy in that situation, endowment contract yes, but there was a completely different point behind those.
Also with the guaranteed UL, if we pay premiums until age 100 he'll have paid $38700 in premiums. There's no cash value associated with guaranteed UL's (well there is, but we know you don't generally touch it), so by age 100 can we not then say that he's now only insured for $11,300?
The whole life policy on the other hand will most likely endow at age 100, it appears old enough to be a 1980 CSO product. At 85/mo and 12k in cash with a $48,000 death benefit, I'm guessing dividends are going towards paid up adds, meaning he'll end up with much more than $50,000 in death benefit and cash. In fact, it won't be too many years before his death benefit is higher than that.
And he has the flexiblity of taking money out of the policy if he wishes before endowment. |
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