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Stop paying my life insurance

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  • Thu, Apr 09, 2009 - 05:22pm

    #1
    capesurvivor

    capesurvivor

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    Stop paying my life insurance

This may be a foregone conclusion for some of you but not to me. I have a fair amount of term and whole life insurance on me for my wife. It costs about $500. for term, about $1600. for whole. If I stop paying this $2100 I could use if for something else (obviously). If I’m wrong and SHTF doesn’t happen for more 23 years (my actuarial life expectancy), I’ve condemned my wife to a much less comfortable existence. Even if it does happen at about 23 years, she gets $$$ in probably funny money dollars.

 

Has anyone else thought about whether life insurance makes sense anymore over the "long term"?

 

SG

 

  • Thu, Apr 09, 2009 - 06:11pm

    #2
    Peak Prosperity Admin

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    Re: Stop paying my life insurance

Do you have dependant children??  Are thee Bills monthly or annually??  I assume since your life expectancy is 23 years that you are in your 60’s.  If you have a huge amount of liabilities like monthly mortgage payments, and such that your wife cannot cover on her own, then you should keep the insurance.  Otherwise if you live comfortably within your means and your wife could continue your standard of living without you then by all means cancel it.  Life insurance is a funny thing since you only win if you die young.

  • Thu, Apr 09, 2009 - 07:17pm

    #3
    Peak Prosperity Admin

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    Re: Stop paying my life insurance

No dependents, no mortgage. Quarterly payments…but…limited retirement $ (not likely to get much bigger) means that at end of 20 years (I’m 60) we will have exhausted lot of $, leaving wife with very old, posssibly decrepit house, and minimal $, I suspect.

Insurance is indeed a loser’s game unless you die young, LOL.

 

SG

  • Thu, Apr 09, 2009 - 08:08pm

    #4
    Peak Prosperity Admin

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    Re: Stop paying my life insurance

 

This was a pretty easy decision for me, even though I was the beneficiary, not the insured.  Given the world as it is, I’d rather spend the money on proactive health measures, than to trust the stability of an insurance company, whose investments are difficult to assess.  Additionally, given that the sole motive of insurance companies is to make money, and that they do whatever necessary to avoid paying out, I am very leery about the likelihood that a policy would pay in the event of any death that could be declared terrorism, such as an epidemic, or violence due to social unrest. 

But really, it’s more than just that. . . the general condition of the world has moved me to a place of being dependent on ourselves and divine providence, rather than on some faceless paternalistic institution.  Frankly, I’m rather fed up and disillusioned by the latter.  I let my husband’s policy lapse this year.  We sre both in our 50’s.

  • Thu, Apr 09, 2009 - 08:46pm

    #5
    Peak Prosperity Admin

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    Re: Stop paying my life insurance

[quote=c1oudfire]

Additionally, given that the sole motive of insurance companies is to make money, and that they do whatever necessary to avoid paying out, I am very leery about the likelihood that a policy would pay in the event of any death that could be declared terrorism, such as an epidemic, or violence due to social unrest. 

[/quote]

 

My maternal grandmother died in her bed at the rest home about 4 days after 9/11 and the life insurance company basically said they weren’t going to pay, we could just go ahead and sue if we wanted.  Which we did.  Their strategy was "let’s drag this out and see if we can wear ’em down to where we can pay 50 cents on the dollar."  Didn’t work, but it took about 5 years dragging through the courts.  FWIW.  YMMV.

Viva — Sager 

  • Thu, Apr 09, 2009 - 08:57pm

    #6
    Peak Prosperity Admin

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    Re: Stop paying my life insurance

That’s the worst story I’ve heard. That was my other fear, that the company will be insolvent or crooked.

This is still not an easy decision for me as I’ve always counted on this to tide my wife over even if nothing else works out well.

I could keep the term at $500 (or cheaper) and take the surrender cash value out of the whole life and put in in..gulp..gold and other good stuff. Wife would not go for that, tho.

 

SG

  • Thu, Apr 09, 2009 - 09:02pm

    #7
    Peak Prosperity Admin

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    Re: Stop paying my life insurance

Since life insurance is a bet, where your betting against the house (Ins Co) that your going to die, and they are betting you will live, and since gambling is uaually heavily favored toward the house winning, my theory is if you have a very large amount of life insurance, you may never actually die… so I would think twice before cancelling that contract. 

  • Fri, Apr 10, 2009 - 02:11am

    #8
    Peak Prosperity Admin

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    Re: Stop paying my life insurance

Don’t go crazy here, people. Yes, times are tough but it is NOT yet time to stop paying your mortgages, drop your life insurance or stop paying your taxes. We are still living in a modern society.

Prepare, yes….but go overboard? Nope.

Prudence.

  • Fri, Apr 10, 2009 - 02:18am

    #9
    Peak Prosperity Admin

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    Re: Stop paying my life insurance

Jerry, 

I do not take this decision lightly. Thats’s why I wanted a discussion of pros and cons. The company solvency issue and inflation issue are what prompted my thoughts.

 

SG

  • Fri, Apr 10, 2009 - 03:55am

    #10
    Peak Prosperity Admin

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    Re: Stop paying my life insurance

[quote=c1oudfire]

This was a pretty easy decision for me, even though I was the beneficiary, not the insured.  Given the world as it is, I’d rather spend the money on proactive health measures, than to trust the stability of an insurance company, whose investments are difficult to assess.  Additionally, given that the sole motive of insurance companies is to make money, and that they do whatever necessary to avoid paying out, I am very leery about the likelihood that a policy would pay in the event of any death that could be declared terrorism, such as an epidemic, or violence due to social unrest. 

But really, it’s more than just that. . . the general condition of the world has moved me to a place of being dependent on ourselves and divine providence, rather than on some faceless paternalistic institution.  Frankly, I’m rather fed up and disillusioned by the latter.  I let my husband’s policy lapse this year.  We sre both in our 50’s.

[/quote]

I have been thinking about this issue for a while, too. C1oudfire, you did a good job stating the same arguments I would make. I also see that in a later post, you compared life insurance with health insurance, and I agree with that comparison, too. Although, as I have plenty of experience with health insurance, and practically none with life insurance, I would say the health insurance companies tend to be worse, but again, this is very likely to just be the bias of my experience.

For health insurance, I have suggested setting aside an amount roughly equivalent to what one currently pays for health insurance, keep it sacred as an emergency fund, and leave out the middle-man. I would also consider looking at a low-cost "catastrophic" health care policy, particularly if one’s emergency fund will be meager for a while, but pay out-of-pocket for other services which are deemed necessary. For those with chronic medical conditions or expensive prescriptions that are currently covered by a plan, this may not be the best option, however.

The only reason I haven’t taken my own advice with regard to health insurance is that as a small business owner, I provide coverage to my employees, including my wife, and I am covered by her policy. I would have to change our employee contracts for my wife and I to opt out. That’s probably not a big deal, but its just one more detail I haven’t taken the time to get to.

I will be cashing in some old (and small) life insurance policies my father bought when I was younger. I haven’t yet decided what to do with the policy I currently pay for, but am thinking seriously about dropping that, too. 

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