{ "media_type": "text", "post_content": "How are folks thinking about permanent life insurance? 45, making let’s say for example (not my exact numbers): $1M per year, not yet vested in pension. Was thinking need to replace the post tax take home, about $550k NPV’ed at 5% to age 55, so that’s like $3.2M. Maybe pension is worth $2.5M so I think that means I should have $5.7 total you want death to have no financial impact. Also was going to do $1M of that in perm w/ LTC rider. Sound right?", "post_id": "61508a8c211438002363b350", "reply_count": 17, "vote_count": 1, "bowl_id": "5c133802e4f35d0012ad759f", "bowl_name": "Partners Only" }

How are folks thinking about permanent life insurance? 45, making let’s say for example (not my exact numbers): $1M per year, not yet vested in pension. Was thinking need to replace the post tax take home, about $550k NPV’ed at 5% to age 55, so that’s like $3.2M. Maybe pension is worth $2.5M so I think that means I should have $5.7 total you want death to have no financial impact. Also was going to do $1M of that in perm w/ LTC rider. Sound right?

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Buy term insurance and invest the delta. You will be way better off.

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Help me with the math on “way better off”? Illustration I got show 6-7% annual return every year with no negative years as compared to average 9-10% stock market return which has up years and down years and tax. Guaranteed return no tax wins apparently. Granted you lose flexibility to withdraw funds in the early years.

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Not a big fan of permanent life insurance - I do have a small policy (I think $500k that costs $8k a year after rolling in $50k from a variable policy). The firm has a policy that covers $5mm if I die before I retire (costs $8k a year). Which I think is ample. Any available money goes 100% into stocks. Little aggressive perhaps with 10 years to go but the fixed income profile of the firms pension plans means overall portfolio is plenty diversified.

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Thanks for reply!

If you die, does your pension vest? I thought that my deferred compensation vests if I die. It will obviously be worth less than if I work 10 more years but I don’t think it’s worth 0. I bought a 30 year term policy in my mid 30s. Sound like you only need a 10 year term policy. That will be a lot less than permanent life policy.

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(1) yes non-vested pension pays zero in this example, so that needs replacing - as I start to vest I’d roll off some term coverage in that first vesting year and each year or so after to offset (2) yes only need term for 10 years in this example and bulk of coverages would be term, (3) yes agree term is practically free as compared to perm today and there is no reason not to have enough term - I was viewing perm as a tax advantaged investment and also I like the LTC rider.

Consider when you leave firm your cost for term policy change. Advantage to perm may be if u ever become uninsurable (eg health event like cancer) you will still have perm

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Don’t buy standalone LTC. The rate increases you’ll encounter will blow up your math. Do it as an accelerated death benefit rider to a life policy.

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D2, I bought my policy 15 years ago at 46. No rate increases so far. It was hard to find a lock, but I did. Just bought one for my wife and have the same lock. I know a lot of companies failed and dropped out of the market. You state matters greatly when buying since state regs are critical.

What is your current net worth? Did I miss that in your calculation?

When we did the calculation, it took less than 48 months for separate LTC and term to be better than permanent. We used a 25% immediate market downturn. So we just bought a bit more term fir the first 2 years, when the market didn't drop we were good to go. We don't have any fixed income allocation, and now entering retirement still don't. All of our parents lived into their 90s, so need to plan for ~40 years of retirement.

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