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Have any of you bought a Single Premium Life Insurance policy?

#1 Cowboys Fan

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I'm in my 60s, and my current Life Insurance Policy's COST (hence 'premiums') are obviously getting HIGHER.

It fit me for years, but not as much now.

I am thinking of plunking down a One-time amount of money, and being done with it. (Single premium Policy)

I figure it'll be like 'savings' that 'they' (gov't, etc.) can't take away as I get OLDER, regardless.

I am inclined to buy just enough for it to cover my end of life expenses, etc. and a little more ---and just pay for it once.

I won't have to pay any more premiums, watch them RISE, etc...............

I'm not really looking for 'negative' thoughts on this---just want to know if others have done the same thing.

I guess I'm looking for reinforcement from those who maybe it was the way they thought was best for them, too.

BTW, looking to perhaps do it for my 3 years younger spouse as well (we have no children)---though her present 'cost' of insurance is about half of mine.

Thanks
 

WinniWoman

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We don't have it and our financial advisor did not suggest we do and believes we should not have any life insurance now in our 60's. We had term insurance. Hubby is 65 so he no longer has it. Mine is still in force until 65 or 66 or 67-- can't remember.

After that it gets prohibitably expensive anyway.
 

bogey21

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You might also consider Deferred Annuities for you and your wife. Income would start kicking in at the age you designate. I'm no where near an expert on these (never owned one myself) but I think you may be able to buy them with an insurance payout to the surviving spouse if you or your wife dies before collecting. Just a thought...

George
 

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The only reason to buy life insurance is if you have few assets than generate income and your family relies on your working income as the breadwinner. Even then only buy fixed term policies because they are much cheaper.

If you both have enough assets to retire and live on, then there is no reason for life insurance. If your income is still needed to support your wife and pay bills then term life may make sense. Save your money because once you get in your 60s the costs skyrocket. Our 15 year fixed term policy expires next year when our youngest graduates from college. We will not renew because we could live off of our retirement savings if something happened to one of us. Remember also that if one passes, the expenses go down too.
 
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jackio

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You might also consider Deferred Annuities for you and your wife. Income would start kicking in at the age you designate. I'm no where near an expert on these (never owned one myself) but I think you may be able to buy them with an insurance payout to the surviving spouse if you or your wife dies before collecting. Just a thought...

George
That is what we did when my husband's life insurance premiums got prohibitively expensive.
 

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It depends, what do you want to achieve with this purchase? Have you consulted a financial adviser?

As pointed out, buying insurance at you age is very expensive. Can that money be put into another instrument with a better payout?
 

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The only reason to buy life insurance is if you have few assets than generate income and your family relies on your working income as the breadwinner. Even then only buy fixed term policies because they are much cheaper.
Well, I'm going to disagree with that. Life insurance can serve different purposes at different stages of life. Life insurance can serve as a potential source of tax free retirement income later in life.

There are really only 3 sources of tax free income that I know of:
1. Municipal bonds - but unfortunately, interest rates are very low now. In the current interest rate environment, it's very difficult to generate much retirement income from munis.
2. Roth plans (IRA and 401k) - but putting money into a Roth plan, or Roth conversion, means biting the tax bullet now. And a large $ Roth conversion will bump you into a higher tax bracket.
3. Life insurance - you can borrow tax free from certain whole life policies (but not from term policies). The word for this is a LIRP, a Life Insurance Retirement Plan. It's a complex subject and way too much to explain here. There is a short book on the subject: "Look before you LIRP," by David McNight (available at Amazon).

And no, I am not an insurance salesman. My wife and I seriously looked at a LIRP when we were in our early 60s. Anyway, I digress, because this was quite different than what the OP is asking about.
 

GetawaysRus

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Almost forgot: life insurance is also an estate planning tool. But very few of us are wealthy enough to need it (that is, unless the government makes major changes to the estate tax rules).
 

bizaro86

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I haven't, but I'm considering it for when my current term life policy has its price reset in another ~10 years. We need much less insurance now then when we bought it, and will most likely need only a small amount then. I sort of figure I can buy it once and then never think about it again.

While I hope to live long enough that it would be a bad investment, if that happens I figure my children are unlikely to complain about a larger estate...
 

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We bought a large policy that will pay out after the deaths of my husband and me. We were obligated to pay the premium over a period of 5 years, but then we were done. Our purpose was to provide a guaranteed amount of money to help support our daughter with disabilities. We were both in good health so were able to qualify with no issues, and our financial planner recommended it as a way to supplement other funds that might be left upon our death.
 

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We have term life insurance because we have a son and if something happened he or his caregivers would need the money.
If I were in your position I might just pre-pay burial and funeral expenses and prepare a good will, maybe a trust. I would not bother with life insurance.
 

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I had term insurance since I was 22 years old and was against buying whole life insurance until six years ago. At that point, I was 59 years old and looking at asset allocation and wanting to get more conservative with my investments. Navy Mutual sells policies to military or prior military that can be used as long term care policies or life insurance. I bought a paid in full policy for $32,000 and also another policy that I pay $220 a month on for 20 years and then it is paid in full. Each of the policies have a benefit of $100,000 that goes up each year. The paid in full policy makes 5.5 percent return each year and now has a cash value of $51,000 and death or long term care benefit of $109,000. A couple months ago, I bought another paid in full policy that cost $52,000 for $100,000 of Insurance. I see the policies as part of my investments where I gain tax free returns. I have read magazine articles that other companies sell whole life that can be used as long term care policies, but I don’t know what companies do that. I hope I never need to use it as long term care. But, if I need too, the money is there and it is tax free.

Below is a quote I got from the insurance company for a $50,000 policy. Today they pay 5 percent and you can receive the dividend or invest it in the policy. Of course the dividend is not guaranteed, but so far so good.
 
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tompalm

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You do know you cannot depend on these assumptions in the table?
You can’t depend on social security to keep paying out. You can’t depend on the government to keep paying a pension that they owe from federal employment or my 20 years in the Navy. You can’t depend on your house value to keep going up or stay the same. I was supposed to receive $30,000 a year from Aloha Airlines pension fund, but now only get $5000 a year. You can’t depend on the stock market to keep going up or your financial planner to give you good advice. Also, most state pension funds are underfunded and when the market goes down, things will get ugly. What can you depend on? It is just a plan and only a small part of my portfolio. I am not worried about it. If there is another 1929 depression, everything will crash.
 
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Janann

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I have read magazine articles that other companies sell whole life that can be used as long term care policies, but I don’t know what companies do that.
One company that offers single premium life insurance with long term care is Lincoln Financial.

 

tompalm

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Makes life a real crapshoot doesn't it...

George
You can only make a plan and all plans are subject to change. When things don’t work out, I say I did my best and move forward. But life is a crapshoot. I didn’t know what I was getting into when I joined the Navy, I really didn’t know everything about my wife when I got married, but things turned out fine. The real issue is being able to roll with changes or things you didn’t expect. That is all we can do. Keep moving forward and don’t look back and try not to make the same mistake twice. Even better, try to learn from others and not make mistakes they made. Easier said than done.
 

#1 Cowboys Fan

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I am the OP, and thanks for you thoughts/ideas.

As I said at the top : "I am thinking of plunking down a One-time amount of money, and being done with it. (Single premium Policy)"

If we/me end up in a nursing home, 'they' can't take away my policy ( I may also get one for my spouse). They can make me pay down my assets, ----but when I die, someone (heirs) get the money to pay off my funeral, and keep a few bucks.
(BTW---as I pay down my assets----I wouldn't be able to afford premiums if it was not a totally paid for (Single Premium) policy.

It it was investments, Annuities, etc----'they' could take THAT.

Doesn't that make sense???
 

Brett

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I am the OP, and thanks for you thoughts/ideas.

As I said at the top : "I am thinking of plunking down a One-time amount of money, and being done with it. (Single premium Policy)"

If we/me end up in a nursing home, 'they' can't take away my policy ( I may also get one for my spouse). They can make me pay down my assets, ----but when I die, someone (heirs) get the money to pay off my funeral, and keep a few bucks.
(BTW---as I pay down my assets----I wouldn't be able to afford premiums if it was not a totally paid for (Single Premium) policy.

It it was investments, Annuities, etc----'they' could take THAT.

Doesn't that make sense???
not really.
"they" may require a large deposit to live in the nursing home and a life insurance policy doesn't relieve you of any final debts
 
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CanuckTravlr

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I haven't, but I'm considering it for when my current term life policy has its price reset in another ~10 years. We need much less insurance now then when we bought it, and will most likely need only a small amount then. I sort of figure I can buy it once and then never think about it again.

While I hope to live long enough that it would be a bad investment, if that happens I figure my children are unlikely to complain about a larger estate...
Since your location says Calgary, I am assuming you are a Canadian citizen and resident. If so, please be aware that single-premium life insurance policies have not generally been available in Canada since 1982. Since they are "offside" under CRA regulations for tax deferral, they would normally be subject to accrual taxation on the annual growth of the cash values.

There are ways around this, such as purchasing an annuity with a lump sum to fund the annual premiums until the policy can support itself. There would be some tax on the "interest portion" of the annuity payouts until it is fully sheltered inside the life insurance policy. You should consult a financial advisor with expertise in tax and estate planning and particular understanding of the workings and uses of permanent life insurance policies. In the right tax bracket they can be a very effective tax and estate planning tool. They generally work better the earlier you start them. You may not necessarily want to wait until your term policy renews.
 
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#1 Cowboys Fan

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When I said " 'they' can't take away my policy "
what I am referring to is having to spend your money down before the government's programs would kick in, should something happen to you.

So, at the end of your life, say 5 years before you die, you get seriously ill, needing many forms of health care, facilities, etc.
You would have to spend down your money; which I understand.

But, when that money gets to zero, or near it, you would have a paid policy (and benefit) in effect, when you die.
 

WinniWoman

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You can only make a plan and all plans are subject to change. When things don’t work out, I say I did my best and move forward. But life is a crapshoot. I didn’t know what I was getting into when I joined the Navy, I really didn’t know everything about my wife when I got married, but things turned out fine. The real issue is being able to roll with changes or things you didn’t expect. That is all we can do. Keep moving forward and don’t look back and try not to make the same mistake twice. Even better, try to learn from others and not make mistakes they made. Easier said than done.
I always say by the time you learn from all your mistakes in life you are dead and can’t go back and do everything the right way.

Unless you believe in reincarnation. Lol!
 

tompalm

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I always say by the time you learn from all your mistakes in life you are dead and can’t go back and do everything the right way.

Unless you believe in reincarnation. Lol!
I use to go online when I was in my 40s and estimate how much money I would have when I retired. Things changed and I didn’t have the same job or income and even bought another house that cost more money that needed a lot of work. I ended up being unemployed and taking an early retirement at 55 years old. So all that estimating I did 20 years ago was a joke. But for some people that keep the same job and same house for 40 plus years can estimate. I made plenty of mistakes and would do things different if I could.
 

DrQ

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When I said " 'they' can't take away my policy "
what I am referring to is having to spend your money down before the government's programs would kick in, should something happen to you.

So, at the end of your life, say 5 years before you die, you get seriously ill, needing many forms of health care, facilities, etc.
You would have to spend down your money; which I understand.

But, when that money gets to zero, or near it, you would have a paid policy (and benefit) in effect, when you die.
I'm assuming that your health will not allow you to purchase long term care insurance.

I would talk to an estate planner and possibly a lawyer to see if your idea holds muster.
 
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