Optimize and CDs got together?

Life insurance is for the young. It’s for paying for a mortgage if you die suddenly. Even if they only live 15 more years (likely could live longer) they would spend $270,000 on this policy. I think you’re much better off letting that money grow in investments and then it is available to them if they need it. And if they don’t it will go to you eventually. As someone else mentioned end of life care and those last years of life can be way way way more expensive than people realize. Maybe they will die quickly and painlessly may we all be so lucky but it’s not how most of us go. In my opinion, they should be less focused on what they leave you, but on making sure they have the funds ready to care for themselves if they live to 90, 95, 97. Needing more and more care. THAT will be the gift to you. Hopefully they have raised you to have a good job and take care of yourself and they’ve clearly already gifted you a lot, they may need to take care of themselves in future years. I’m not saying they don’t have enough - they have a great nest egg! But that’s where they should be checking first.

This may sound harsh, but it’s realistic. And should be considered as they give gifts every year just talking to a FEE BASED financial adviser to make sure they have enough to cover them for how many years to be gifting every year. People can get so focused on their heirs.. just my two sense!

Anonymous wrote:

Anonymous wrote:Forgot to add: They gift $25K to each kid every year.

They’re just wondering if this a sound decision since they have $ just laying around that they don’t know how to use.

They should buy equities— heirs will get a step up in basis and it’s a better long term investment than insurance.

This

They don’t seem to have a ton if one or both needs to go into AL or otherwise need to pay for care.

Is there a plan for that?

My mom pays $185ish a month for an $84k policy which her financial guy ran the numbers and figured out is worth it to keep even if she lasts to 100 due to the cost versus payout. The policy predates her finance guy so he has no skin in the game, just ran the analysis for her. Will the policy increase in price over $18k a year as they get older? You need to run the numbers. My dad died at 73 but my grandmother lived to 96.

Anonymous wrote:How much are the premiums for 70-year-olds? It seems unnecessary.

$18k per year

How much are the premiums for 70-year-olds? It seems unnecessary.

I don’t think life insurance is ever a good buy when people have sufficient assets. (Either spouse wound not be destitute if the other dies tomorrow).

Anonymous wrote:Forgot to add: They gift $25K to each kid every year.

They’re just wondering if this a sound decision since they have $ just laying around that they don’t know how to use.

increase the annual gift to $36k. Could give same amount to kid’s spouses and grandchildren if they wanted to spend down too.
Not sure what you mean by “if this is sound”

Anonymous wrote:Forgot to add: They gift $25K to each kid every year.

They’re just wondering if this a sound decision since they have $ just laying around that they don’t know how to use.

They should buy equities— heirs will get a step up in basis and it’s a better long term investment than insurance.

They don’t need the insurance and they don’t have enough money to try and game the estate tax with life insurance so buying it is just betting against the house (i.e. the insurance company). Could work out but chances are it won’t.

Forgot to add: They gift $25K to each kid every year.

They’re just wondering if this a sound decision since they have $ just laying around that they don’t know how to use.

They could die tomorrow (even tonight), or in 20+ years.

They don't need life insurance. I'd gift the money to the adult children annually.

I’d gift the $18k per year (or up to $36k per recipient) and forego the life insurance.

My dad is 70. Mom is 68. They have 1 million in cash (CDs, liquid mutual funds), each parent has $1.2 million in 401k, and 500K in universal life for insurance for each parent.) they also own as $1M home. Dad is fairly healthy. Mom is less so but doesn’t have any major issues.

Should they purchase another universal life insurance policy in which they would pay $18L per year and be guaranteed $500K death benefit?

They want to optimize how much $ they can pass to their 2 kids (me and my brother - we are both in our 40s).