Stop paying my life insurance

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capesurvivor's picture
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

 

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Jarhett
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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.

capesurvivor's picture
capesurvivor
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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

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Cloudfire
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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.

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SagerXX
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Re: Stop paying my life insurance
c1oudfire wrote:

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. 

 

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 

capesurvivor's picture
capesurvivor
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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

Rob Z's picture
Rob Z
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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. 

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jerrydon10
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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.

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capesurvivor
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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

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ccpetersmd
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Re: Stop paying my life insurance
c1oudfire wrote:

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.

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. 

suesullivan's picture
suesullivan
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Re: Stop paying my life insurance

Cape, I'm still paying our term insurance policies, but we're mid 40s with two young kids.

Whole life I've always read to be an underperforming use of money, compared to term. If you canceled, wouldn't you get some sort of payout?

What does your wife want to do about the policies? She's the person it most affects.

When you say no dependents, do you mean no adult children too? If it were me, as the beneficiary, and I had children I was on good terms with, I'd consider letting go of whole life at least. If I'm understanding that your $1600 is a quarterly expense for whole life, that's a lot of money each year to be put towards preparing for a more self-sufficent lifestyle. Even the $500 term life adds up, if it's quarterly. (With no children, or close nieces and nephews to take me in, I'd make sure I could survive on the term payout, before canceling whole life though.)

capesurvivor's picture
capesurvivor
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Re: Stop paying my life insurance

Hi Sue,

I was unclear about some factors. My son is 27; his financial future is his own concern.  My wife has no thoughts; she is totally unconcnerned about the future, whether hers or the planet's.  She lives in the present.

 The payments are actually $400. quarterly for the whole life and $500. annually. for the term. They are each for $150k, payout considerable amount of $ today; 20 years from now...who knows. I think the whole life has a surrender value of $20k, pretty good amount. I have been pretty pleased with that figure; it apperas to rise well yearly. I believe that there is a way to tap the surrender value to pay the yearly premium and reduce the death benefit but I haven't checked it out.

This is not a life changing amount of money yearly for me right now; I just don't like to throw out money. Under normal ie. no triple e circumstances I probably wouldn't think of altering these but as a quarterly pmt. is coming due, I started to think, always a dangerous thing.

 

SG

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Re: Stop paying my life insurance

If it came down to only being able to pay health insurance or life insurance, I'd probably pay for health first. Of course, we're looking at a situation where it's doubtful any insurance company will give us a policy for our house/farm for anything even approaching a reasonable rate. Life and health insurance is likewise going to be difficult (at least for me) due to "pre-existing conditions".  At this point, I think when we finally move to our remote cabin we're going to be uninsured except the minimum vehicle liability insurance required by law in our state... any other issues will have to come out of pocket, which is probably a safer bet in the long run anyway since I've been denied insurance coverage more than once for stuff they should have paid for according to the policy (health, vehicle and property). It's all a racket in the end... pay your several thousand a year in premiums and it's still a crapshoot whether they'll actually pay out when the time comes.

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plantguy90
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Re: Stop paying my life insurance

Personally I have come to the conclusion that all insurance is a scam.  Unless you are willing to set fire to your automobile or otherwise act fraudulently, no company has any interest in paying you more money than you pay it.  Not only that, these companies were supposed to invest their money conservatively, and earn a rate of return that covers all their policies.  We will soon discover that these companies were of the thought that commercial mortages never lose value, and are vested heavily into commercial properties and the paper created around them.

Even with health insurance if you do the math and actually save your premiums you would pay health insurance for emergencies, and negotiate cash discounts with health care providers, you come out ahead; even if catastrophe hits the insurance companies balk at paying your bills anyways. 

 

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Re: Stop paying my life insurance

I agree with you PlantGuy. When I was talking to our agent about insuring our cabin, he just laughed when I told him we were 4 hours from the nearest official police, fire or EMS station. Sure, there's a local volunteer fire brigade, and the state has it's forest firefighters, and there is a little native clinic in the village, and you can get med-evac out of the little village airport.... but no insurance company wants to touch such a "high risk" property. Whatever! That property premium savings will pay for a pond and our own fire pump out of it. Same thing goes for our medical... better to save our premiums for actual services and emergencies rather than throwing money into an insurance hole!

Cloudfire's picture
Cloudfire
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Re: Stop paying my life insurance

This might be a good place to repeat a story I told in another forum about a local farmer who was hit by lightning, early in the harvesting season.  The surrounding family farms (including the one I was associated with), without much ado or deliberation, pitched in and took turns combining his corn and beans, so that he would have a livelihood to return to when he recovered.  As I noted before, this was taken in stride, and no one thought of themselves as being particularly noble for doing this.  It was just accepted as the right thing to do.  Neighbors with that kind of attitude are far more valuable than any faceless, soulless insurance policy, in my mind.

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Re: Stop paying my life insurance
c1oudfire wrote:

This might be a good place to repeat a story I told in another forum about a local farmer who was hit by lightning, early in the harvesting season.  The surrounding family farms (including the one I was associated with), without much ado or deliberation, pitched in and took turns combining his corn and beans, so that he would have a livelihood to return to when he recovered.  As I noted before, this was taken in stride, and no one thought of themselves as being particularly noble for doing this.  It was just accepted as the right thing to do.  Neighbors with that kind of attitude are far more valuable than any faceless, soulless insurance policy, in my mind.

In my experience, such stories are indeed commonplace here in the midwest. Part of the work ethic and sense of right and wrong, I guess, but very admirable. And, you're correct that those providing the assistance simply do not feel they are doing anything exceptional. And, in a sense, they are not; that is just part of a healthy community. I suspect it is similar in other areas of the country, too, but I'll take some pride in my midwestern roots. 

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SagerXX
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Re: Stop paying my life insurance

Me three (my Mom's from E. Iowa)...

For a cinematic take on the above 2-3 posts, try the denouement of the film "Sweet Land"...

Viva -- Sager 

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Re: Stop paying my life insurance
SagerXX wrote:

Me three (my Mom's from E. Iowa)...

For a cinematic take on the above 2-3 posts, try the denouement of the film "Sweet Land"...

Viva -- Sager 

Where is your mom from in Iowa? We are in Iowa City. My wife is from northern Iowa. I am from Kansas, but my great grandfather and family emigrated from Germany to western Iowa in the late 1800s. 

capesurvivor's picture
capesurvivor
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Re: Stop paying my life insurance

Pirates..my,.. my thread..hijacked..where are the snipers when you need them?

My payment due on 4/16.

Just kidding, I appreciate the posts here. I actually have a 30 day grace period to keep avoiding making a decison, I mean, to deliberate.

 

SG

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ccpetersmd
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Re: Stop paying my life insurance
capesurvivor wrote:

Pirates..my,.. my thread..hijacked..where are the snipers when you need them?

Funny! And, I do apologize for helping to hijack your thread...

capesurvivor's picture
capesurvivor
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Re: Stop paying my life insurance

No problemo,

As I posted on another thread, this IS my community and I look forward to reading many of the posts.

 

SG

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SagerXX
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Re: Stop paying my life insurance
ccpetersmd wrote:
SagerXX wrote:

Me three (my Mom's from E. Iowa)...

For a cinematic take on the above 2-3 posts, try the denouement of the film "Sweet Land"...

Viva -- Sager 

Where is your mom from in Iowa? We are in Iowa City. My wife is from northern Iowa. I am from Kansas, but my great grandfather and family emigrated from Germany to western Iowa in the late 1800s. 

 

They're NW of Cedar Rapids.  Descended from Czech immigrants (actually from Bohemia between Czech/Germany) that arrived in the 1840s.  Headed west from NY until they hit good farmland, set up shop and haven't stopped since.  They're actually still making it as a family farm, partly because they're willing to innovate as they go -- biodynamic methods, no-till, etc.  

One possible SHTF scenario is if we're unable to make it in place, then we make it out there one way or another.  Hey, it's only 1000 miles.  We could walk that in 2 months...assuming we had food (and comfortable shoes).  Straight shot West on I-80.  

Viva -- Sager 

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ccpetersmd
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Re: Stop paying my life insurance
SagerXX wrote:

They're NW of Cedar Rapids.  Descended from Czech immigrants (actually from Bohemia between Czech/Germany) that arrived in the 1840s.  Headed west from NY until they hit good farmland, set up shop and haven't stopped since.  They're actually still making it as a family farm, partly because they're willing to innovate as they go -- biodynamic methods, no-till, etc.  

One possible SHTF scenario is if we're unable to make it in place, then we make it out there one way or another.  Hey, it's only 1000 miles.  We could walk that in 2 months...assuming we had food (and comfortable shoes).  Straight shot West on I-80.  

Viva -- Sager 

I know, another hijacked thread, sorry everybody!

I'm on staff at the two hospitals in Cedar Rapids, so am up there regularly in addition to my practice in Iowa City. There is a big Czech community around there, I understand. A good Czech museum, too, but I haven't visited yet. Well, if you have to move back to Iowa, or come out for a visit, I'd enjoy a meeting, if you are interested. Just drop me a line!

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Mr. Fri
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Re: Stop paying my life insurance
ccpetersmd wrote:

There is a big Czech community around there, I understand. A good Czech museum, too, but I haven't visited yet.

If I ever get over that way I'll have to czech it out.  (Sorry, couldn't resist. Smile)

SagerXX's picture
SagerXX
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Re: Stop paying my life insurance
ccpetersmd wrote:

I know, another hijacked thread, sorry everybody!

I'm on staff at the two hospitals in Cedar Rapids, so am up there regularly in addition to my practice in Iowa City. There is a big Czech community around there, I understand. A good Czech museum, too, but I haven't visited yet. Well, if you have to move back to Iowa, or come out for a visit, I'd enjoy a meeting, if you are interested. Just drop me a line!

Well, like any good Czech, I bounce back there every couple of years.  [ducking]  There's no pilgrimage in the datebook right now, but it'll happen soon enough.  I'd definitely let you know.

Heh:  bounce.  [big fat grin]

Viva -- Sager 

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