Wage earners of age ≥ 60 with dependents: What Life Insurance, if any, should they buy?
"The problem above is actually a pretty good list of the concerns around life insurance.  While there is no correct answer to the question as posed, this will vary among different WSCs, there is a simpler way to think about insurance in general that may make finding what is right answer for you easier. Buying life insurance, like almost all insurance, is on average a money losing purchase.  This is simply because the companies selling wouldn't offer it if they couldn't expect to make money on it.  Think about buying insurance (a warranty) on a new cell phone, maybe if you are particularly prone to damaging cell phones it can be in your favor, but for most of the people that buy it will lose money on average. People, of course, still buy insurance anyway to protect themselves from unlikely but very bad consequences.  The big reason to make this trade off is if the loss will have big lasting consequences.  To stay with our cell phone example having to replace a cell phone, at least for me, would be annoying but not a catastrophic event.  For myself, the protection is not worth the warranty cost, but that is not true for everyone. Life insurance is a pretty extreme case of this, but I find the best question to ask is ""if you (you and your spouse) were to die will your dependents lives become so much worse that you really dislike the idea of not being insured?"" For some working seniors, they already have enough saved to bridge their kids/spouse to adulthood/old-age that insurance makes no sense.  For some, their children/husband/wife would be destitute and insurance is an obvious choice and an easy price to pay even if it is very high.  The example you suggest seems on the border and good questions to ask are: Thinking about those questions may help you understand if the protection offers is worth the cost." Without knowing the WSC's objectives, priorities of those objectives and affordability we cannot determine which type of insurance is best. Life insurance for seniors is very expensive if you examine the per unit cost (e.g. cost per $1000 of death benefit). Therefore affordability is a critical deciding factor for WSC.  Let's assume that we know the WSC's affordability and therefore the monthly premium is a fixed determined number, then there is a inverse relationship between the length of coverage and the amount of coverage. We have to achieve a balance between these two factors to best meet the WSC's objective. If the proposed plan is not affordable then the WSC must leave out his/her objectives with lesser priorities out of the total coverage amount.
"Life insurance may be tax-privileged under certain circumstances. The intent must be to buy an annuity, at retirement age. Unlike ""banksparen"", you must consider what happens if you die early." "Short answer: Yes. Longer answer: There may or may not be a medical exam, or a physical, as with a life insurance policy. But your medical history is considered in the underwriting process. Disclosure: I once worked as a financial advisor, and held an insurance license for life, annuity and long-term care. It has been 8 years since I left that line of work. There are some ""knock-out"" questions that the salesperson is encouraged/required to ask just to see if there would be anything obvious that would disqualify you. The only one I can remember from that list is COPD. If you have that as a diagnosis in your personal medical history, the instruction to the salesperson is to not waste anybody's time. There were several other conditions, all with very long technical names.   If you're not disqualified by the no-brainer knock-out questions, your medical history will likely be included in the underwriting process.  Not every serious illness is an automatic disqualifier, including cancer. It may cause your premiums to be a little higher, as the underwriters will take a closer look and increase your risk profile due to the history. There may be some group policies where underwriting is limited or not required at all. As with all group insurance policies, the healthy members in the group are paying more in premiums than they otherwise would, in order to ""subsidize"" the premiums of the less healthy members. It's almost always cheaper to get your own personal policy unless you know you wouldn't qualify for it. Then, the group policy might be your only chance for some coverage. Age 60-62 is statistically the best time to purchase LTCI. On average, if you make it to 62, you have a very high chance of making it to 90. (These were the numbers available to me 8 years ago when I was in the business.) After 62, the prices go up a lot faster with each year of age.  I can't answer with anything helpful about your spouse's specific situation. It would be good to talk to a licensed insurance broker about it (not a salesman from a specific company). The broker is not necessarily bound to disclose personal details you might have shared with them. The company salesman would be obligated to disclose it to their company." You are likely thinking of a individual variable insurance contract (IVIC) , better known as a segregated fund, or a principal-protected note (PPN). For a segregated fund, to get a full guarantee on invested capital, you need a 100/100 where the maturity value and death benefit are each 100% guaranteed. The PPN works similar to a long-term GIC (or CD) with a variable investment component.  The thing is, neither of these things are cheap and the cost structure that is built in behind them makes it difficult to make any real above market rates of return. In both cases, if you try to break the contracts early then the guarantees are null and void and you get out what you get out. Most likely, yes. AD&D is insurance against a specific type of peril.  Life insurance is, too, but there are fewer exceptions to payout.  I'd imagine that you'd have to die by accident, or be dismembered but not die, for it to pay out.  The exceptions in the policy are what you need to be concerned about. If loss of you (and your income) would be of financial hardship to your wife and your goals for your family, then you should consider life insurance. (If you do, consider having your wife buy the policy on you, and make sure it's clear that her funds were paying for it.  It may be possible to avoid having the payout go into your estate that way.) "The following is from Wikipedia - Term life insurance (with very minor editing) Because term life insurance is a pure   death benefit, its primary use is to   provide coverage of financial   responsibilities, for the insured.   Such responsibilities may include, but   are not limited to, consumer debt,   dependent care, college education for   dependents, funeral costs, and   mortgages. Term life insurance is   generally chosen in favor of permanent   life insurance because it is usually   much less expensive (depending on the   length of the term). Many financial   advisors or other experts commonly   recommend term life insurance as a   means to cover potential expenses   until such time that there are   sufficient funds available from   savings to protect those whom the   insurance coverage was intended to   protect. For example, an individual   might choose to obtain a policy whose   term expires near his or her   retirement age based on the premise   that, by the time the individual   retires, he or she would have amassed   sufficient funds in retirement savings   to provide financial security for   their dependents. This suggests the questions ""why do you have this policy?"" also ""how many term life policies do you need?"" or ""how much insurance do you need?"" Clearly you will be better off investing the premiums in the market.  Your beneficiaries may be better off either way (depends when you die and to a lesser extent on market performance). If you are not able to retire now but expect to be able to later, you should strongly consider having sufficient insurance to provide income replacement for your spouse.  This is a fairly common why." I think it is too early to tell. They changed so many variables in an incredibly complex system, and a lot of it will depend on how the requirements in the legislation look once the bureaucrats and insurance companies get a chance to interpret them and implement them as policy. My gut feeling is that for most people, you should plan on some pretty price increases for insurance in the next few years as insurance companies try cover the costs of removing lifetime caps and insuring people with pre-existing conditions. That said, the personal finance issue that you really should be planning for is your portfolio not your insurance costs. The bill includes almost a 4% increase in capital gains taxes. "Does your new job include life insurance?  Most ""professional"" positions *will*, making your old insurance a moot point.   That said, even if the answer is ""no"", **and** you really, really need to maintain some level of term life (ie, newborn kid and unemployed spouse)... You would **still** want to shop around rather than just automatically converting your former employer's plan.  ""Group"" is a nice-sounding way of saying ""the young and healthy subsidize the premiums of the old and sick""; if you're not old and/or chronically unhealthy... You can probably do better on your own." There is no benefit in life insurance as such (ie, death insurance.) There is a great deal of value in other types though: total and permanent disability insurance, trauma insurance (a lump sum for a major medical event), and income protection insurance (cover against a temporary but disabling medical condition).  If you don't have that, you should get it right now. This is about the most important insurance you can carry.  Being unable to work for the rest of your life has a far larger impact than having, say, your car stolen. ...  If, later on, you acquire dependents, and you feel you ought to have life insurance, then you will have a relationship with a life insurance company, and maybe they will let you upgrade from income/TPD to income/TPD/life without too much fuss or requalification.  Some do; whether yours would I don't know.  But at least you have a toe in the door with them, in a way that is infinitely more immediately useful than getting life insurance that you don't actually need. "Disclaimer: I work in life insurance, but I am not an agent.   First things first, there is not enough information here to give you an answer.  When discussing life insurance, the very first things we need to fully consider are the illustration of policy values, and the contract itself.  Without these, there is no way to tell if this is a good idea or not. So what are the things to look for? A. Risk appetite.  People love to discuss projections of the market, like for example, ""7-8% a year compounded annually"".  Go look at the historical returns of the stock market.  It is never close to that projection.  Life insurance, however, can give you a GUARANTEED return (this would be show in the 'Guaranteed' section of the life insurance illustration).  As long as you pay your premiums, this money is guaranteed to accrue.  Now most life insurance companies also show 'Non-Guaranteed' elements in their illustrations - these are non-guaranteed projections based on a scale at this point in time.  These columns will show how your cash value may grow when dividends are credited to your policy (and used to buy paid-up additional insurance, which generates more dividends - this can be compared to the compounding nature of interest).   B. Tax treatment.  I am definitely not an expert in this area, but life insurance does have preferential tax treatment, particularly to your beneficiaries. C. Beneficiaries.  Any death benefit (again, listed as guaranteed and maybe non-guaranteed values) is generally completely tax free for the beneficiary. D. Strategy.  Tying all of this together, what exactly is the point of this?  To transfer wealth, to accrue wealth, or some combination thereof?  This is important and unstated in your question. So again, without knowing more, there is no way to answer your question.  But I am surprised that in this forum, so many people are quick to jump in and say in general that whole life insurance is a scam.  And even more surprising is the fact the accepted answer has already been accepted. My personal take is that if you are just trying to accrue wealth, you should probably stick to the market and maybe buy term if you want a death benefit component.  This is mostly due to your age (higher risk of death = higher premiums = lower buildup) and how long of a time period you have to build up money in the policy.  But if a 25 year old asked this same question, depending on his purposes, I may suggest that a WL policy is in fact a good idea." I know one piece of information that can help you (in a macabe sort of way) - from what my wife has told me, if your partner dies, you are not responsible for paying for their debts, especially student loans. I expect the same thing for credit cards - if someone were to happen to charge $2,000 on their credit card and get hit by a bus, the credit card company can cajole and plead for you to pay for it, but you have no legal requirement to do so.  Unfortunately I do not have as much information about as if you spouse is living. I'll start by saying that if this is being explored to scratch a specific itch you have then great, if this was a cold call it's probably safe to ignore it. Certain whole life products (they vary in quality by carrier) can make sense for very high earners who are looking for additional tax preferred places to store money.  So after you IRA, 401(k), etc options are maxed out but you still have income you'd like to hide from taxes whole life can be a potential vehicle because gains and death benefit are generally exempt from income taxes.  Be on the look out for loads charged to your money as it comes in to the policy.  Life insurance in general is meant to keep your dependents going without having to sell off assets in the event of your death.  People may plan for things like school tuition, mortgage/property tax for your spouse.  If you own a business with a couple of partners it's somewhat common for the partners to buy policies on each other to buyout a spouse to avoid potential operating conflicts.  Sometimes there can be estate planning issues, if you're looking to transfer assets when you ultimately pass it can make sense to form a trust and load cash in to a whole life policy because death benefits can be shielded from income tax and the estate tax calculation; the current estate tax exemption is about $5.5 million today (judging from your numbers you might actually be close to that including the net value of the homes).  Obviously, though, the tax rules are subject to change and you need to be deliberate in your formation of the trust in order to effectively navigate estate tax issues.  You seem to have a very solid financial position from this perspective it looks like your spouse would be in good shape.   If you are specifically attempting to manage potential estate tax liability you should probably involve an financial planner with experience forming and managing trusts; and you should be very involved with the process because it will absolutely make your finances more complicated. As a 24 year old, single,your needs for insurance are minimal. Why you might consider it are for these reasons. You are young, so it will be cheaper than buying say at 34. Insurance is always on sale. Two, there is no guarantee that your health will always be good, you may have to pay additional premiums later or even be refused coverage. Ask me, I pay 70% more than others my age for the same coverage.  Three, insurance ownership with equity values can grow tax free as you accumulate the monies. Consider it like a bond portfolio offering guaranteed returns on portions of the growth, and a long term return of 5.5% or slighly more. Four, stating sooner versus later means more cash buildup. Just like being in a pension will generate more cash for you by age 65, than if you had started at age 34. Insurance is only one tool in getting a good start. It is not a panacea. If you can not support yourself should your father die, an insurance policy may make sense as a safety net. As an investment, it is a bad bet unless he knows something about his health that would somehow not cause his premiums to be increased tremendously yet not cause them to claim he was attempting to defraud them and refuse payment. In other words, it is a bad bet, period. Insurance is a tool. If the tool doesn't do something you specifically need, it's the wrong tool. Since there is no match on the 401k, it seems to me that your first priority should be your IRA (Roth or otherwise). I don't know what your salary is, but most 22 year-olds won't be maxing out both an IRA and 401k on only 10% of their incomes, so the rest of the list may be irrelevant. Something I wanted to posit: Do you have a life insurance policy, either taken out yourself or offered through your company? Many of these policies will pay out prior to the death of the covered individual, given statements by medical professionals that the person has a terminal illness or condition. The benefit, once disbursed, can be used for almost anything, including to pay down a mortgage, cover medical bills and other care expenses, etc. If you have such a policy, I urge you to look into it; that is the money that should be used for your end-of-life care and to ease the burden on your family, not your retirement savings. Your savings, if possible, should be left to continue to compound to provide your wife with a nest egg to retire with.