BTID certainly can work, unfortunately for many folks it becomes BTSD and they end up not having alot for retirement, much less taking care of their families.
No Lapse UL to Age 100?
- Thread starter Robert Barney
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I plan to work until I am dead.
But I save for retirement in case I become disabled.
- 25,095
How old are you and your friends? Your Parents and Uncles and Aunts? How many are millionaires? AL Williams started 40 years ago. There should be a lot more Millionaires out there.
Welcome to the forums.
Lee
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Fair point. Many people do NOT achieve their financial objectives and goals. But if you end up short, without the assets you hoped to have to be able to retire, what good is a permanent insurance policy?
You can't keep it because you can't afford the premiums.
You need to quit it to take out whatever cash is in it..
So, no more permanent insurance. It's gone. It has lapsed. Is is not longer with us. etc.
But, as the nanny thinking goes, at least there will be some money because you bought the permanent life insurance policy. If you hadn't done that, you would have blown the money on something else.
Perhaps, had the life insurance agent spent more time explaining the high cost of retirement, and the serious contributions needed to make that happen, and less time pushing the permanent product as the thing to buy, more people would have more money for their retirement.
Tell you what. Give this little program a go, based upon your own retirement planning situation, and see if that doesn't sober you up.
TERM4SALE | Retirement Calculator
I designed that program, and based upon what I have learned from it, and the total mismanagement of the nation's finances and my firm belief the Medicare and Social Security will bankrupt the nation, I have NO PLANS to retire, unless forced out of work by a disability. And, by the way, the number actually doing that is growing:
Analysis | A record number of folks age 85 and older are working. Here’s what they’re doing.
Gee... If you follow your reasoning, no one should buy final expense insurance to keep their families from paying the bills when they die without any accumulated assets. If they had bought permanent insurance at an earlier age, when it was cheaper, they would have enough paid up insurance not to need final expense insurance and would not have to be paying any premium out of their retirement income.
- 25,095
I believe you had an inflation calculator on your software back when I was a client. Maybe you can look this up.
A healthy 35 year old buys a GUL today $500,000 @ $206mo. What is the the $206 30 years from now in today's dollars? How much is that going to cost them since they will have a great retirement from the start up they will start next year?
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What I am saying is that a lot of people who are buying final expense insurance aren't going to be able to keep buying it because they won't have the money to pay the premiums. What good is a canceled Final Expense policy?
I remember a 63 year old woman calling me saying she was considering the purchase of a $25,000 Final Expense policy and I do what I always do, I asked her why at age 63 she thought she needed the policy. She said she wanted a policy that would bury her.
I then asked her about her assets, and what would be the value of her estate if she died. Turns out she had virtually no assets.
I then asked this 63 year old woman, with no assens, where she was going to get the $1,000 per year to pay these premiums. She then told me she had a job and was making $60,000 per year. In my mind I was wondering, how a 63 year old single woman could be making $60,000 a year and have no assets, but that's a side issue.
I then asked how much longer she expected to work. She said 4 or 5 years. I then asked what income she would have in retirement, once she stopped working. She told me it was going to be a small pension and Social Security. I then asked her how she expected to live, with the dramatic reduction in income that would result. She told me her son was a wealthy doctor and would help her out.
I then said that she should take up this topic with her son, given that he would be inheriting the financial responsibility of paying this premium given she would not be able to afford it herself. I told her I was pretty sure he would want a say in it now, rather than to get stuck with her decision in 5 years, having dumped $5,000 into it. I said that he might, if he was me, tell her to forget about it, that he would worry about paying for the funeral, and that she should save her $1,000 per year to help her with her retirement.
But my point remains, what good is a Final Expense policy later, if you won't be able to pay the premiums. Now I know how that's good for the life insurance company and the agent, I just want to know how it's good for the person who bought it.
First of all, who says the family will need it "later" and not next month? Plus, how can you be so assured she will not be able to pay the premium. There are millions of people paying premiums on final expense plans who are living on meager incomes. Plus, if they had bought a permanent plan when they were younger, they could use the optional paid up insurance for funeral expenses and have no premiums to pay out of their retirement income. My children could "help" with my final expense but they have never had to provide for me in that past, and I would not want my last act on this earth to be leave them with a bill I could have taken care of myself.
- 25,095
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Not going down that rabbit hole ........
Not going down that rabbit hole ........
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Sorry, my computer did a restart halfway through this post. Here's what I meant to say in full.
You can do that in your head.
Do you know the rule of 72?
You take the interest rate (or inflation rate) divide it into 72 and that's the number of years it takes for interest to double money, or inflation to cut money in half.
So let's assume we are looking at 5% inflation, for the 30 years. 72 / 5 = 14.4 years.
In 14.4 years $500,000 will be worth $250,000 and the premium will be worth $103.
In 28.8 years $500,000 will be worth $125,000 and the premium will be worth $51.50.
In 43.20 years, when this person is 78.2 years old, the face amount will be worth $62,500 and the premium worth 25.75.
Back to my argument. I have NO problem with this person having that policy (I have $350,000 of permanent for which I pay $100 per month) providing that they do not compromise the amount of total coverage that their family needs, and providing that they have an adequate savings plan for retirement, which ensures that they will be able to keep paying $206 per month for $500,000.
Hope that helps.
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