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luckydriver

whole life insurance. do you ever stop paying for it?

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person is 71 and the insurer is offering to change a 35 /month 10K term policy into a whole life policy for 61 per month. they already paid 4 years into the policy. if my math is right, by the time they are 84 they would have paid 10K into the 10K policy.

 

i'm assuming you stop paying all premiums at that point since you would never get more than 10K out of the policy but wanted to post here and see

 

also do you then just get your money back or do you have to wait until you die to get your money back ;) 

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No it doesn't work that way.  Conventional life insurance you have to keep paying the premiums until death, then the benefit amount is paid. 

 

With term insurance, should you live past the term it becomes worthless.  That is why it is less expensive.

 

In general it isn't worth it for old people to buy new life insurance policies.

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holy cow..seriously? so she would keep paying after she got to the 10K threshold just to recoup 10K. that sounds crazy. who would do that? if she lived 10 more years that would be 17000 to get 10K back. 

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A whole life policy has an "investment" portion as well, so at some point, if she passes, the policy could be worth more than $10k,.

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they dont explain any of that on the faq sheet very well though. that sounds like would be a selling point. hope she gets the answers in a phone call

 

she's ok if its used as forced investment for 10K but if i tell her she has to pay it even after she gets up to 10K that may not be so appealing

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No one should buy any insurance without fully understanding the product.  For Life Insurance especially. 

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There are options for a whole life policy where you can stop paying premiums, but I doubt any would apply in this case.  

 

There are also term policy conversions to whole life - which means she could get the policy with  no underwriting involved - again, no point in it at this life-stage.

 

I think most of the popular interpretations of different types of life insurance are incorrect. 

 

 

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26 minutes ago, breeze said:

There are options for a whole life policy where you can stop paying premiums, but I doubt any would apply in this case.  

 

There are also term policy conversions to whole life - which means she could get the policy with  no underwriting involved - again, no point in it at this life-stage.

 

I think most of the popular interpretations of different types of life insurance are incorrect. 

 

 

this is whats being offered. term to whole life. also my theory is if someone is offering something it probably benefits the company more. 

 

cynical but probably true. 

 

if turns out she has to keep paying well after the 10K is put in the policy in premiums i cannot imagine she would want to continue but then there's that few thousand already paid in the term the past few years.. sigh. i think its AARP , not that it means anything. but would be sad to have spent all that and then stop. 

 

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as a total aside. a friends mom was offered 100K for under 400 a month. age 77. whole life. i couldnt believe it sounded too good to be true. i looked at the policy and i emailed the agent myself with specific questions. he answered them all. indeed if she died a month after signing she would get 100K. took months for doctors reports etc to be done too. thats quite the deal there if you ask me. even after 15 years of payments that is only 72K.  

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Insurance is an intangible. What you get for your money is "the company standing ready to pay" in the event of the insured's death.

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they finally called the insurance company and the woman on the other end of the line said you keep paying it till you die. didnt matter that at 84 years old you paid in what the policy limit was

 

so they are just gonna keep the term until 80. would be insane to keep paying over 10K to get 10K

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life insurance is income protection for survivors. anything else is high priced scams.

 

who's income does a 71 year old need to protect?

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23 hours ago, hegemony said:

life insurance is income protection for survivors. anything else is high priced scams.

 

who's income does a 71 year old need to protect?

 

i disagree about income protection being the only reason for insurance. the persons children dont have money for funeral /plot/services etc so this policy was to pay for that. has nothing to do with their income nor their kids. its meant to be payment for final expenses.

 

sounds like a nice thing to want to take the burden off the kids if you ask me

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18 hours ago, luckydriver said:

 

i disagree about income protection being the only reason for insurance. the persons children dont have money for funeral /plot/services etc so this policy was to pay for that. has nothing to do with their income nor their kids. its meant to be payment for final expenses.

 

sounds like a nice thing to want to take the burden off the kids if you ask me

If dying with no money meant that one's corpse would just rot in the street, there would be a lot of corpses rotting in the street.

 

And let's not forget that whole life insurance is one of the reasons people die with no money.  

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I know this can vary from state to state, but what happens to unclaimed bodies these days?

 

After all, taking on the final expenses of cremating or burying the deceased is a choice. 

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If a relative dies of natural causes and you can't afford a funeral, the county or city will accept the body and dispose of it at no cost.  It's a public health issue.

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12 minutes ago, mk_378 said:

If a relative dies of natural causes and you can't afford a funeral, the county or city will accept the body and dispose of it at no cost.  It's a public health issue.

Well there ya go. No more excuses for going into debt over the deceased. 

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It depends at what age insurance is purchased and whether or not the policy is underwritten. I have an underwritten whole life policy that is paid up after 20 years of payments. Some of the no questions asked policies have payments that go until a very old age which for most people is effectively pay until you die.

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1 hour ago, chicagorich said:

It depends at what age insurance is purchased and whether or not the policy is underwritten. I have an underwritten whole life policy that is paid up after 20 years of payments. Some of the no questions asked policies have payments that go until a very old age which for most people is effectively pay until you die.

Not sure what you mean. Underwriting is the essence of insurance. A future risk is underwritten by someone or some entity that can absorb the risk. Perhaps resulting in payouts that far exceeded the accumulated premiums.

 

Someone takes out insurance to mitigate adverse effects from specified risks. The cost includes a premium (expected positive return) to the insurer. It can be thought of as reverse gambling but, as always, the house still has the edge. Businesses aren't charities and employees have to be paid even for non-profits.

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8 hours ago, mk_378 said:

Life insurance for old people is heavily advertised on TV, which means it is something that is a bad deal.

same as the Gerber Life garbage insurance.

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When I said underwritten, I meant medically underwritten, where you supply medical records to the insurance company. Most of the final expense policies I see advertised are not medically underwritten, thus the higher cost and payments that, for all intents and purposes, last the rest of most people's lives.

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1 hour ago, chicagorich said:

When I said underwritten, I meant medically underwritten, where you supply medical records to the insurance company. Most of the final expense policies I see advertised are not medically underwritten, thus the higher cost and payments that, for all intents and purposes, last the rest of most people's lives.

Thanks for the clarification. You are absolutely right. There is the problem of self selection in that peeps that sign up for these are, statistically, less healthy and medically screened insurance is going to be cheaper for most. For large policies, a physical is required as well as accessing one's medical record database.

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