Life Insurance--pros & cons

<p>My mil is able to live at home with aides 12 hours a day because she has a good LTC policy – she’s been receiving benefits for four years now. LTC covers about 2/5 the cost, and that makes the difference between being able to swing living in the house, or not. </p>

<p>I wish that Assisted Living were more of a viable option, but it wasn’t an option for either my parents or my in-laws: first, very few facilities are set up for a couple where one needs assistance and the other is independent. Second, particularly in the case of a couple, it initially doesn’t take a lot of assistance (perhaps a few hours a day of aides) to support living at home, which is what people almost always want to do. But pretty quickly people come to the point of needing help with 3 ADLs, and suddenly they’re not considered independent enough for a lot of assisted living facilities, or they’re required to buy services at high rates above and beyond the high assisted living fees, while still trying to pay living expenses so that the healthy spouse can continue to live at home. YMMV. </p>

<p>You need to shop carefully, and read up on Consumer Reports and the WSJ stories, but going “naked” was a risk we didn’t feel we could afford.</p>

<p>You may want to consider survivorship insurance to cover the cost of estate taxes, if your estate is large enough to qualify. My policy consists of a term insurance portion, and a whole life investment portion which “grows” along with my estate. At a point, the policy should start to pay its own premiums (it does now). The value of my estate will remain intact for my heirs. It’s expensive, but better than the federal government taking half the proceeds.</p>

<p>Will ask about that with agent. </p>

<p>I guess the real issue is that our crystal ball isn’t all that clear–how long either of us will live, what our medical expenses & economic needs will be, what other assets we may acquire down the road, what our kids’ needs may be down the road. The financial planner we saw thought our economic situation was very comfortable, but she did mention considering a LTC policy as well.</p>

<p>A long time ago, the 1040 instructions stated that LI dividends are a refund of premiums. Check with your own tax program.</p>

<p>Almost all questions can be answered in 3 ways. For LI,

  1. If I died tomorrow, how much will my heirs get and how much did I pay for it.
  2. If I live to 100, how much will my heirs get and how much did I pay for it.
  3. Are there alternatives that can be had for the difference between the two forms of [
    add your product here*], aka marginal utility.</p>

<p>The same can be said (1,2, & 3) for the cash value in the LI.</p>

<li>products as college education, automobiles, houses, clothes, dishes, and other durable and some disposable items.</li>

<p>Yes, thanks, LP. Our tax preparers & the insurer agree that the dividends are retruns of preimiums & not taxable. Somehow, these economic questions have too many unknowns for me to resolve neatly (that was always a concern I had when I took econ back in the day as well). Thanks for laying out the framework you use.</p>

<p>Learned just like everyone else. When money got really tight you start looking at alternatives. I got P—. For LI difference could mean having LI or not, a few 10K$ or a few 100K$ to the heirs or being able to retire.</p>

<p>ALL LI is term. You stop paying, the LI coverage will end.</p>


When the cash value of a whole life policy gets large enough, the earnings will pay for the insurance. At that point you can stop paying.</p>

<p>If the cash value equals the policy value, you can stop paying then too.</p>


<p>Reread post #24 and apply it to your scenario, “When the cash value of a whole life policy gets large enough, the earnings will pay for the insurance. At that point you can stop paying.”</p>

<p>Ex: suppose at age 60 (my age), that you have a slugg of cash value, that your use to buy term insurance on top of your whole life policy. You died tomorrow. That extra term insurance that your cash value bought you many years of added insurance however you only lived one day: 1)How much did your heirs receive and how much did you pay for it? 2) not applicable,
and 3) What are the alternatives? ans1. If you are insurable at that age, wouldn’t it be better to buy term insurance paying monthly vs being forced to buy term insurance for N years, at X coverage, and paying for it in a lump sum? ans2. Insurance companies know more than you do, …</p>



<p>My father-in-law benefitted a great deal from his long-term insurance. He began having health issues a few years ago. He did not have an accident or stroke or dementia. He had serious cancer surgery in his eighties and then he began having trouble walking and getting around. Last June he broke his hip and became immobile. Long-term insurance helped him to have a private caregiver who became his lifeline. In fact, the family made a convincing case that he needed his caregiver in the hospital (because only the caregiver could get him to cooperate, etc. and made him feel safe enough.) Having LTI made a huge difference for him the declining years of his life.</p>

<p>Yes, LTC could & should have made a huge difference in my aunt’s life as she lived out the last year of her life in pain from lung cancer but the insurer denied the claim until the last month of her life, so she didn’t get the help she needed and deserved, despite the decades of paying into her policy. I agree with the concept but have not seen it benefit my loved ones.</p>

<p>Not having life insurance spices up things a little; living becomes an adventure. :)</p>

<p>Actually, life insurance is never for the person who is insured–it is for the survivors. Not sure why living w/o it “spices things up.”</p>

<p>arabrab - assisted living worked very well for my in-laws. One was independent and the other needed assistance. Being out of the house, where my MIL couldn’t leave anyway, to a place with activities and wholesome food, revived them quite a bit. I never understand why people would prefer to live shut-in their homes. My parents are trying to sell their hours in order to move to a continuing care retirement community. </p>

<p>HImom - I hope and pray that I or my loved ones won’t benefit from LTC. But, stroke or dementia will eat up savings and assets very quickly leaving you at the mercy of institutions that accept Medicaid. There are not that many out there and are often not pretty. I’m sorry your Aunt had to suffer in pain for the last year of her life, but LTC would only be applicable when she could no longer care for herself. I hope she was able to get help from hospice.</p>