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rated:
Hello all,

I'm a 34 year old male who is looking for the best way to get term life insurance coverage for the next 40 years.

I was just approved with AAA at the Super Preferred rate. So should I do the 30 year term like they're pushing and then try to get a 10 year term once it expires? Or a 20 year now then 20 year later? Or 10 year then 30 year?

Any advice is appreciated
 

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Suicide exclusion is typically a year.

Here's another pro tip...get your term policy BEFORE you pick up a new dangerous h... (more)

kriskos4 (Nov. 11, 2016 @ 5:22p) |

I own an Life, Disability, Health and Long-Term Care insurance brokerage in San Diego, CA, and am licensed in most all 5... (more)

chislands18 (Nov. 21, 2016 @ 12:25a) |

This isnt correct - while you likely will have to pay more like $5100/year, it's because you have to get a $1-million+ p... (more)

Glitch99 (Nov. 21, 2016 @ 7:23a) |

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rated:
PaulBanks said:   Hello all,

I'm a 34 year old male who is looking for the best way to get term life insurance coverage for the next 40 years.

I was just approved with AAA at the Super Preferred rate. So should I do the 30 year term like they're pushing and then try to get a 10 year term once it expires? Or a 20 year now then 20 year later? Or 10 year then 30 year?

Any advice is appreciated

  Do you absolutely need insurance for the next 40 years? Many folks need it for 20-30 years since by then they have little/financial dependents and/or would have accumulated assets to cover financial contingencies. If you really ought to have coverage for 40 years, you can look into products that provide coverage "up to age xx level" where xx = 75 for your situation. The premiums are likely to be significantly higher than that for a 30-year term.
ETA: Otherwise, I would recommend going with a 30-year term now and reevaluate in 5-10 years.

rated:
Why would you need term life insurance at age 74?  Even if just starting your family, 30 years should be plenty of coverage, if not 20 years.   I'm assuming the premium difference is pretty significant, too.  All things being equal, Buying life insurance now for when you are 70 will always be more expensive than buying it when you are 70 - but there's significant risk your health will not stay equal and could potentially make you uninsurable.

Unless you truly need coverage for that long, get a shorter, cheaper policy that covers the minimum necessary, then keep reapplying every couple years to "reset" the term.  Until the new premium quote increases too much, in which case you keep the existing policy for the remaining term.

rated:
If you need insurance at age 74 then you have done a horrible job of saving and investing over those 30 years.

There is no free lunch.

Lock in 30 years with a good cheap company and then read one of the boglehead books.

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op- would you mind posting premium amounts for each option being evaluated?

rated:
30 years is more than I'd get. At 33 years old I got a 20 yr 1M policy to get my kids through college, pay off the mortgage and get my widow the best plastic surgery available to hook herself up. I'm now 48, kids college is already squared away, wife is now the ex and my mortgage isn't paid off but is reasonable. I'M glad my policy expires in 5 years, can't imagine why I'd need another policy.

rated:
kriskos4 said:   I'M glad my policy expires in 5 years, can't imagine why I'd need another policy.
If you're just waiting out the clock and don't need or want the coverage, why not just let the policy lapse/cancel it now?

rated:
Another +1 for no need for 40 year term.  What could your rationale possibly be?

rated:
Glitch99 said:   kriskos4 said:   I'M glad my policy expires in 5 years, can't imagine why I'd need another policy.
If you're just waiting out the clock and don't need or want the coverage, why not just let the policy lapse/cancel it now?


I really cant, ex will get 50k if I die in next 3 years which is how long my child support lasts. Remaining 950k will be doled out to the kids according to a schedulesser by my brother. BUT I get the argument, I'll likely drop my insurance once last kid is off to college.

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Philanthropic Charitable Donation ??
in response to dcwilber

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castaline said:   Philanthropic Charitable Donation ??
  Combined with planned suicide?

rated:
Actually knew a addict that gave up on life and did exactly that.
Ruled accidental death.

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castaline said:   Actually knew a addict that gave up on life and did exactly that.
Ruled accidental death.

  Some policies only exclude suicide for a defined period of time, after which they'll pay even if the death is ruled suicide.

rated:
I agree with others that you probably don't need 40 years.

But assuming there is some special reason to need it (special needs child?) then:


If you really need 40 year coverage then the cost would all depend on your health at age 65.

Comparing rates on Term4Sale

A policy insuring "to age 75" for $500k would be $2100/yr and up. Total = $86,100

A 30 year level term for $500k is just $435/yr and up. A 10 year term policy for a 65 year old today is about $2100/yr. However that 10 year rate is in todays dollars. Assuming 30 years of 3% average inflation and you'd likely be paying more like $5100/yr for the 10 term at age 65. Total = 435x30 + 5100x10= $64,050
However you also have signficant risk at age 65 that your health has declined such that your premiums would be 50-100% higher. That would make the 30year + 10 year terms much more expensive than the "to age 75" policy. A 65 year old with 'regular' health would pay $3600 today and possibly like $8700 in future money. That could make your total cost more like $100k.


SO you could lock in total $84k cost with an "to age 75" policy or gamble with a 30 year policy today with a known cost ~$13k and then take a risk on how your health ends up giving a cost of a 10 year policy at age 65 ranging anywhere from ~51k to $87k (ballpark).

ETA:   This might also be a situation to  consider permanent insurance as an option.
 

rated:
anyone want to recommend a good term life insurance company? JD Power really liked state fram, but they provide almost no details so I can't tell if it is whole or term or how they even rate. Figured would start my search by asking FW.

I don't know if it matters, but I am 38 married, 2 kids, don't smoke, good health.  Looking for between $1 million to possibly $1.5 million.

rated:
tante said:   anyone want to recommend a good term life insurance company? JD Power really liked state fram, but they provide almost no details so I can't tell if it is whole or term or how they even rate. Figured would start my search by asking FW.

I don't know if it matters, but I am 38 married, 2 kids, don't smoke, good health.  Looking for between $1 million to possibly $1.5 million.

  check term4sale.com
You can get quotes as well as companies (with ratings) that provide insurance.

rated:
You need enough for them to survive and live off till the kids are out of school.. Too much insurance you start to look better "dead"

rated:
jerosen said:   I agree with others that you probably don't need 40 years.

But assuming there is some special reason to need it (special needs child?) then:


If you really need 40 year coverage then the cost would all depend on your health at age 65.

Comparing rates on Term4Sale

A policy insuring "to age 75" for $500k would be $2100/yr and up. Total = $86,100

A 30 year level term for $500k is just $435/yr and up. A 10 year term policy for a 65 year old today is about $2100/yr. However that 10 year rate is in todays dollars. Assuming 30 years of 3% average inflation and you'd likely be paying more like $5100/yr for the 10 term at age 65. Total = 435x30 + 5100x10= $64,050
However you also have signficant risk at age 65 that your health has declined such that your premiums would be 50-100% higher. That would make the 30year + 10 year terms much more expensive than the "to age 75" policy. A 65 year old with 'regular' health would pay $3600 today and possibly like $8700 in future money. That could make your total cost more like $100k.


SO you could lock in total $84k cost with an "to age 75" policy or gamble with a 30 year policy today with a known cost ~$13k and then take a risk on how your health ends up giving a cost of a 10 year policy at age 65 ranging anywhere from ~51k to $87k (ballpark).

ETA:   This might also be a situation to  consider permanent insurance as an option.
 



Not likely at all to be a situation where one would consider permanent insurance. Even the insurance component is more expensive in permanent insurance.

rated:
First, congratulations on figuring out term insurance is almost always a better deal than whole / universal / whatever new name they come up with for extremely expensive, usually unnecessary life insurance. Most people would be better off investing their whole life premiums.

It's important to understand what you are insuring against. If your intent is for insurance to cover expenses you will be unable to meet if you die young, you probably need to provide for the kids' college and your spouse's retirement. If you instead intend to substitute insurance for savings and investment, you may need more life insurance, but I think investing would give you a better result and more flexibility if you live longer.

I have no dependents, but if I did I would buy a large ten-year term, medium-sized twenty-year term, and maybe a small thirty-year term. Both the benefit and cost would start out large and diminish with the need for insurance as savings and investments accumulate.

Keep in mind, your income will likely increase over time, but a $1M payout in thirty years is not worth $1M in today's dollars.

rated:
kriskos4 said:   
Glitch99 said:   
kriskos4 said:   I'M glad my policy expires in 5 years, can't imagine why I'd need another policy.
If you're just waiting out the clock and don't need or want the coverage, why not just let the policy lapse/cancel it now?


I really cant, ex will get 50k if I die in next 3 years which is how long my child support lasts. Remaining 950k will be doled out to the kids according to a schedulesser by my brother. BUT I get the argument, I'll likely drop my insurance once last kid is off to college.

  
If you don't want to drop it, you can probably contact your insurer to reduce it and save some $.  My husband just did that this year.  He cut the policy in half, which reduced the premium by 40%.  So in your case, your ex gets $50k and your kids only get to split $450k if you have an untimely demise.  And you might save a few hundred per year.

rated:
I'm an independent life/disability/long-term care and health insurance broker in San Diego, who represents all of the major carriers and is licensed in most all 50 states. 

As others have stated, you probably will not need to go with a 40yr term (are you sure it's not a Universal Life policy that they're trying to sell you?), and you should be fine with a 30yr, especially if you're a true FW'er and good with finances and saving. With that being said, there are better rated carriers (AAA holds an AM Best A- rating) who not only have stronger financial ratings (AM Best A, A+, or A++), but their underwriting is more liberal, and their rates are also cheaper. Even when AAA bundles all your other lines of insurance discounts, they still usually can't compete with carriers who only focus on life insurance.

Lastly, we never recommend that people buy term life insurance in 10yr increments, as 1) your health could change, and 2) the rates will be higher at each 10yr bracket. You're much better off locking-in the policy now at your younger age, and forgetting about it, and a broker should be able to show you the math which would substantiate this claim - The numbers don't lie. You could also always ladder/stagger multiple policies, so that you have a 20yr term for the bulk of your liabilities (ie: when the kids are younger and the mortgage balance is higher), and then do a 30yr at a smaller face amount, to extend beyond these more urgent liabilities. The specific mechanics and setup would of course depend on your specific situation.

rated:
term4sale.com

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DTASFAB said:   
castaline said:   Actually knew a addict that gave up on life and did exactly that.
Ruled accidental death.

  Some policies only exclude suicide for a defined period of time, after which they'll pay even if the death is ruled suicide.

  
Suicide exclusion is typically a year.

Here's another pro tip...get your term policy BEFORE you pick up a new dangerous hobby.  I told the agent I might start amateur auto racing about a year after I was getting the policy and wanted to verify if the policy would pay in event of a racing related incident or if I needed to notify the company I was racing.  He said it would only be a problem if I were racing at the time I got the policy and did not disclose it, what happens after the policy is signed doesn't concern them.

rated:
kriskos4 said:   
DTASFAB said:   
castaline said:   Actually knew a addict that gave up on life and did exactly that.
Ruled accidental death.

  Some policies only exclude suicide for a defined period of time, after which they'll pay even if the death is ruled suicide.

  
Suicide exclusion is typically a year.

Here's another pro tip...get your term policy BEFORE you pick up a new dangerous hobby.  I told the agent I might start amateur auto racing about a year after I was getting the policy and wanted to verify if the policy would pay in event of a racing related incident or if I needed to notify the company I was racing.  He said it would only be a problem if I were racing at the time I got the policy and did not disclose it, what happens after the policy is signed doesn't concern them.

I own an Life, Disability, Health and Long-Term Care insurance brokerage in San Diego, CA, and am licensed in most all 50 states. The Suicide Exclusion is usually 2 years, and not 1 year. There's also a 2 year Contestability Period, where the insurance carrier can contest the claim if you pass away within the first 2 years after taking out the policy. This doesn't mean that they won't pay the claim, the Contestability Period just ensures that people are forthright and honest in answering the questions on the life insurance application and throughout the underwriting process, as it's very rare that people actually pass away due to natural causes during this first 2 year period. So long as you're upfront and honest, you have absolutely NOTHING to worry about, and the carrier will pay the claim with the first 2 years, even if you get hit by a bus, or pass away due to natural causes.

With regard to the auto racing question, many carriers will ask you if you have a history of a certain avocation, or if you have plans to participate in that avocation in the next few years (usually 2-5 years). Every carrier has different avocations that they mention on the application (ie: scuba diving, bull riding, skydiving, base jumping, rodeos, auto racing, hang gliding, mountain or rock climbing, etc.) and the question is a bit arbitrary, but they're just trying to field out people who have plans to participate in any of these avocations, as they're higher risk. Usually, if it's a one-time thing, we can get around it by writing a cover letter to the underwriter and explaining the situation, but it's best to just answer the questions EXACTLY how they're asked on the application.

A good broker will qualify you upfront in order to make sure that they're applying with the best carrier out of the gate, as you could end up paying a LOT more than you should for the same policy, due to carriers having different underwriting guidelines/criteria. Also, a lot of these call center brokerages don't shop out higher risk cases (ie: cancer/heart disease history, high blood pressure or cholesterol, hazardous hobbies, sleep apnea, overweight, family history, depression, A-Fib, Pain Medications, etc.), which is a very bad thing for the consumer. I routinely get people calling me after they've applied with one of these call center brokerages, and I end up saving them money almost every time.

Here's a question from Prudential's application regarding past/future avocations, so that you can get an idea of the verbiage:

"In the past five years, have you participated in any activities such as motorized vehicle racing, SCUBA diving, mountain climbing, skydiving, extreme sports such as BASE jumping, bungee jumping or cave exploration, or do you intend to? 

rated:
jerosen said:   A 10 year term policy for a 65 year old today is about $2100/yr. However that 10 year rate is in todays dollars. Assuming 30 years of 3% average inflation and you'd likely be paying more like $5100/yr for the 10 term at age 65.
This isnt correct - while you likely will have to pay more like $5100/year, it's because you have to get a $1-million+ policy to equal the same value of the $500k benefit today. Inflation doesnt affect the premium alone, it's based on the benefit; the same $500k benefit in 40 years will cost the same as the $500k benefit now. There are plenty of factors that can affect the premium 40 years from now, but inflation isnt one of them.

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