Apparently I can maintain my supplemental life insurance as a retiree. In my case this is about a grand a year premium with a 700,000 payout. I don't see any term limits. So my wife or kids are guaranteed a big payout with moderately small premiums. Obviously I won't see a benefit (I'll be 6ft under) but it seems like a no brainier investment for my heirs. Did I miss something ?
4 replies (most recent on top)
Thanks for the comments. Didn't realize the premiums would rise substantially but will keep it for now while they're low. Metlife quoted me $300 per month for 20 year $500k term continuation. (Tobacco user). I don't really need any and 300 pm wasn't attractive so I rejected that. The 90 pm for 700k piqued my interest though so will keep it for now. Thanks.
Life insurance premiums will go up every year with a sharp step increase each 5th year. Also, the retirement funds can be accessed by your spouse or heirs without penalty after your death. The early withdrawal 10% penalty imposed by the IRS is waived upon death, even before age 59.5. Aside from the supplemental life insurance, you also can maintain the 2-year basic life policy that Chevron pays for you. If you intend to cancel life insurance, don't forget to also cancel the 2-year policy as well. If you don't, you'll be getting a bill or letter from Met Lufe for those premiums.
Either you are young or something else, because at this time we will keep the life insurance also but for 880,000 it will cost us 3000.00 a year. My wife works so we are getting on her health insurance so we won't have the high cost retiree premium. For now we are going to try to keep it. Most of my co worker friends who have also retired at not keeping it. My wife still works and has a very good income so we will try it for now.
OP - You sound like you're ME.
I just retired with 2016 ESP and questioned the value of continued Supplemental Life Insurance. I was paying a lot more due to having pay-out maxed out at 6X salary. I pissed away a lot of money, but the thinking was protection for family until retirement funds could be accessed without penalty. I was also working overseas rotational and the risks of death (industrial, plane/helicopter crash, civil violence, disease, etc.) was somewhat greater than a desk job at 1500 Louisiana.
My retirement premium (based on today's age of 60) was going to be ~$3600/yr for a $1MM policy. That sounded great....a prorated investment of $108K total over an assumed max life of 30 yr for a cool $1 million for the wifey. Actually too great.
Wifey looked a bit deeper and premiums take steep increases with age, as would be expected by pretty much all term life insurance. In the end (no pun intended), and because it does no personal good while taking the "eternal dirt nap", I decided to drop the program and enjoy the premium $ living now. MY wife has already figured out how to spend it.
You should look at other life insurance companies before making a similar decision because we did find other term plans with lower premiums, but also lower pay-outs. I recommend you balance your decision considering the other assets (annuities, 401K, and real assets) you have in your portfolio against what your life objectives in retirement are and what your inheritance strategy is.
Just be advised that most financial planners (at least the ones I've considered) have hooks in them with Life Insurance underwriters and they may try to steer you into a policy as a hedge against them mismanaging your portfolio.
Best of Luck! I hope to meet you on the other side...but not too soon. LOL