Term life insurance duration

[Anonymous]

Anonymous wrote:I actually think almost everyone here is wrong. A 20 year is what you need and want. The extra $50 is effectively gambling for a return. If you want to do that I have no objection, but recognize it for what it is.

This guy is correct. You are not insuring against a possible liability beyond 20 years. Your mids will be well established. you are just speculating on your own death.

[Anonymous]

I got a 20-year because (a) I have a lifelong chronic autoimmune disease that, apparently, from the standpoint of life insurance underwriters makes me a worse risk than if I smoked multiple packs a day, so any insurance was annoyingly expensive and (b) that term length was enough to carry us through our kids being out of college. Plus, related to (a), my parents bought several whole life policies for me when I was first diagnosed with this disease in elementary school (that they've generously continued paying the premiums for, possibly because they feel guilty about their lousy genes), back when it was relatively affordable to do so, so if I die a few years after the term expires, my spouse will still get something.

Seems like there's no particular reason to insure for 10 years longer than your kids can reasonably expect you to support them. Once college tuition is paid for (and hopefully that'll mostly be covered by our 529 savings, anyway), I don't need to be paying some insurance firm thousands of dollars a year so our kids can get rich in case I die.

[Anonymous]

Anonymous wrote:

Anonymous wrote:I actually think almost everyone here is wrong. A 20 year is what you need and want. The extra $50 is effectively gambling for a return. If you want to do that I have no objection, but recognize it for what it is.

This guy is correct. You are not insuring against a possible liability beyond 20 years. Your mids will be well established. you are just speculating on your own death.

No. Risk/reward says you take the longest term you could plausibly need.

I’m the broker PP and I can’t tell you how many times people develop some major health condition before the end of their term and still need insurance beyond this term for a variety of reasons.

As an example, I had a guy who was diagnosed with cancer one year before the end of his term. Therefore, he would be uninsurable for many years even after remission, if he were to in fact survive the cancer. He was well-off but still had loans in his business and wanted/needed life insurance to provide some liquidity in the event of his death.

Since he was uninsurable, the only way to extend coverage was to do a conversion of his existing term policy into an indexed universal life policy (which is contractually guaranteed even if one’s health changes). His premium went from $4,000 per year on the term policy (he was a smoker) to about $20,000 per year on the universal life policy. It was great for me – I made a $22,000 commission on that sale – but it was a totally avoidable situation for him if he had just done a longer term. (He initially did a 10-year term at age 50, thinking he probably would not need coverage beyond age 60).

And of course, as others have mentioned, even if you get a 30-year term, you can always drop it after 20 years if you no longer need it. Trust me, there’s no scenario in which the risk/reward calculation does not heavily favor buying the longest term you might plausibly need.

[Anonymous]

I did 30 but cancelled after about 20. Yes, it cost me a modest amount more but it gave me flexibility as I can’t predict 20 years out.

[Anonymous]

My husband who is in the insurance industry just told my friend to get it until her kid is 18 or 21.

I feel we are over-insured. He just told me he has a 20 year one expiring in the next year - that surprised me since we have been married 17 years and our oldest child is 14. He apparently got it when we were engaged and has me as my maiden name as the beneficiary.

In terms of what he wants to give our kids as a safety net - he also has a universal life insurance policy. I think at 20 years we can get back what we paid in OR elect to keep paying it for a death benefit. I told him we can decide what to do with it in 10 years when we need to make the decision.

[Anonymous]

Anonymous wrote:My husband who is in the insurance industry just told my friend to get it until her kid is 18 or 21.

I feel we are over-insured. He just told me he has a 20 year one expiring in the next year - that surprised me since we have been married 17 years and our oldest child is 14. He apparently got it when we were engaged and has me as my maiden name as the beneficiary.

In terms of what he wants to give our kids as a safety net - he also has a universal life insurance policy. I think at 20 years we can get back what we paid in OR elect to keep paying it for a death benefit. I told him we can decide what to do with it in 10 years when we need to make the decision.

if it was a choice between insuring til the kid was 18 or 28 I'd take 28 but it sounded like for OP it was more like 28 or 38 and I think there it's just a question of whether you'd miss the $600 or whatever (or whether you'd rather have $1.5M for 20 years or $1M for 30 years)

[Anonymous]

I would do 30. You must be young. That’s really cheap.

[Anonymous]

Anonymous wrote:I am getting a term life and the beneficiaries will be my two minor kids (age 11 and 9). I am most inclined to a 20 year one but wonder if 30year would make more sense. The monthly difference is ~$50 for 2m and ~$40 for 1.5m

Technically 20 year would suffice since my kids will be 31 and 29 and will be able to support themselves but I also want to build a bigger safety net for them whenever I can. Plus I have 27 years left on mt mortgage. Am I worrying too much?

That seems really cheap what company are you using??

[Anonymous]

Check the terms of your insurance. I thought I had a 20 year term policy but after my term expired my rate increased but I could still keep my policy if I just paid the higher premiums. The premiums doubled in year 21. I thought it was an ok price so I paid. Next year the premiums went up 6x so I dropped the coverage. The point is that if you change your mind after your term expires you may still be able to keep your policy.

[Anonymous]

You only need 30 if you won’t already be rich at the end of 20. If DH dies in the 21st year, I’ll be just fine.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I actually think almost everyone here is wrong. A 20 year is what you need and want. The extra $50 is effectively gambling for a return. If you want to do that I have no objection, but recognize it for what it is.

This guy is correct. You are not insuring against a possible liability beyond 20 years. Your mids will be well established. you are just speculating on your own death.

No. Risk/reward says you take the longest term you could plausibly need.

I’m the broker PP and I can’t tell you how many times people develop some major health condition before the end of their term and still need insurance beyond this term for a variety of reasons.

As an example, I had a guy who was diagnosed with cancer one year before the end of his term. Therefore, he would be uninsurable for many years even after remission, if he were to in fact survive the cancer. He was well-off but still had loans in his business and wanted/needed life insurance to provide some liquidity in the event of his death.

Since he was uninsurable, the only way to extend coverage was to do a conversion of his existing term policy into an indexed universal life policy (which is contractually guaranteed even if one’s health changes). His premium went from $4,000 per year on the term policy (he was a smoker) to about $20,000 per year on the universal life policy. It was great for me – I made a $22,000 commission on that sale – but it was a totally avoidable situation for him if he had just done a longer term. (He initially did a 10-year term at age 50, thinking he probably would not need coverage beyond age 60).

And of course, as others have mentioned, even if you get a 30-year term, you can always drop it after 20 years if you no longer need it. Trust me, there’s no scenario in which the risk/reward calculation does not heavily favor buying the longest term you might plausibly need.

.

Brokers are literally the last people I would trust on this since they have a vested interest in selling as much insurance as possible. I therefore don’t trust you. And as an economist I am very familiar with risk/reward calculations, and I assure you that you are wrong.

[Anonymous]

Anonymous wrote:You only need 30 if you won’t already be rich at the end of 20. If DH dies in the 21st year, I’ll be just fine.

Lol, that is the spirit

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I actually think almost everyone here is wrong. A 20 year is what you need and want. The extra $50 is effectively gambling for a return. If you want to do that I have no objection, but recognize it for what it is.

This guy is correct. You are not insuring against a possible liability beyond 20 years. Your mids will be well established. you are just speculating on your own death.

No. Risk/reward says you take the longest term you could plausibly need.

I’m the broker PP and I can’t tell you how many times people develop some major health condition before the end of their term and still need insurance beyond this term for a variety of reasons.

As an example, I had a guy who was diagnosed with cancer one year before the end of his term. Therefore, he would be uninsurable for many years even after remission, if he were to in fact survive the cancer. He was well-off but still had loans in his business and wanted/needed life insurance to provide some liquidity in the event of his death.

Since he was uninsurable, the only way to extend coverage was to do a conversion of his existing term policy into an indexed universal life policy (which is contractually guaranteed even if one’s health changes). His premium went from $4,000 per year on the term policy (he was a smoker) to about $20,000 per year on the universal life policy. It was great for me – I made a $22,000 commission on that sale – but it was a totally avoidable situation for him if he had just done a longer term. (He initially did a 10-year term at age 50, thinking he probably would not need coverage beyond age 60).

And of course, as others have mentioned, even if you get a 30-year term, you can always drop it after 20 years if you no longer need it. Trust me, there’s no scenario in which the risk/reward calculation does not heavily favor buying the longest term you might plausibly need.

.

Brokers are literally the last people I would trust on this since they have a vested interest in selling as much insurance as possible. I therefore don’t trust you. And as an economist I am very familiar with risk/reward calculations, and I assure you that you are wrong.

You got me – I have a huge vested interest in whether some rando on the internet spends an extra $50 to buy a 30-year term from someone else.

By the way, I explained in detail why there’s a large asymmetric downside risk in doing a shorter term. You’ve asserted that shorter terms are better – care to provide your risk/reward analysis, or are we supposed to take your word for it because you happen to be part of a profession that gets almost everything wrong?

[Anonymous]

Anonymous wrote:

Anonymous wrote:You only need 30 if you won’t already be rich at the end of 20. If DH dies in the 21st year, I’ll be just fine.

Lol, that is the spirit

That's the problem though. You don't know that you'll be rich. You don't know how life will turn out in 20 years.

[Anonymous]

Anonymous wrote:I did 30 but cancelled after about 20. Yes, it cost me a modest amount more but it gave me flexibility as I can’t predict 20 years out.

Why would you cancel after 20 years? Your rate was locked in and due to inflation over the 20 years, your premium was probably half of when you started (adjusted for inflation).