Term Life Insurance - Rate Increase - Questions (1 Viewer)

[rick6668]

Just got my monthly bill in the mail and my premium cost went up 79%.

Background - I had all my life insurance through my employer though MetLife at my previous job which I got laid off from a year ago.

I was able to keep this coverage at decent group rate which I did and have been paying my premiums monthly for the past year.

This month's bill shows a 79% increase in the cost. I am thinking this is due to 2 possible factors, 1. I turned 45 last year in December and this moved me to the next age band and/or 2. I am no longer getting the group rate as it has been a year since I left the company.

When I was hired at my new job last year, I received 50K and purchased an additional 100K of insurance as this was the max without a Statement of Health. (This is also with Met Life).

I am going to call them today, to see what's up, but I am assuming the new cost is based on the above factors. If this is the case the rates at my new employer are a little better, is there any issue with canceling one policy and increasing the other?

I know the amount of insurance you need should vary based on your own situation, I'm currently the only breadwinner, wife is going back to school full time. Have 3 kids, one in high school, one in middle school, one in grammar school. I currently have ~10x my salary in insurance. Looking for some opinions on those who might be more familiar with the business.

 

[Ketamine Dreams]

Term life doesn't go up unless you lost the group rate, or the term specified ended.

 

[JoeSteeler]

Thanks Obama

 

[The Captain]

Term life doesn't go up unless you lost the group rate, or the term specified ended.

It can if you reach a new age bracket, but turning 45 won't increase the amount 79%. It sounds like you lost your group rate.

 

[rick6668]

Term life doesn't go up unless you lost the group rate, or the term specified ended.

It can if you reach a new age bracket, but turning 45 won't increase the amount 79%. It sounds like you lost your group rate.

Yeah, It does go up quite a bit from 44 to 45, might be a combination. Well that sucks. Seems super expensive now.

 

[Jayrod]

Term life is usually stupid cheap (compared to other forms of insurance).

You should be able to replace the policy fairly easily.

 

[belljr]

You most likely had Group Term. I had this happen to me when I lost my job. I was able to keep the coverage at a much higher price or get rid of it.

I got my own Term Life

 

[rick6668]

Just called. I am still getting the group rate, but the rate went up. Well that sucks.

Now I need to explore other options. This seems quite expensive.

 

[matttyl]

I'm a life agent. I agree with most of what was said above. If you're healthy at that age, term insurance is pretty damn cheap.

"Group term" can be very expensive, because they "guarantee issue" it to everyone at the company. If you're in good health, it doesn't matter because you're just offsetting a higher price for someone of poor health (see Obamacare). See if you can get a personally owned term policy, which will likely be cheaper than what you have (but you'll have to answer medical questions and such) - that way it won't be tied to any employer should you ever change jobs again in the future.

PM me for quotes if you want.

 

[ghostguy123]

Old thread, but got a question.
I'm going to get a term life policy, probably 10 year for maybe 500k.

So a term life policy is fairly inexpensive (say 40 a month), but the return of premium is closer to 150-200.

I was thinking of going the ROP option, any reason why I shouldn't?

I'm almost just kinda viewing it as forced savings. Of course I could invest it......

 

[-OZ-]

Of course I could invest it......

Generally, you’ll be better off investing the difference. But that actually requires you to do so.

Do you think you’ll actually need insurance past ten years?

 

[ghostguy123]

Of course I could invest it......

Do you think you’ll actually need insurance past ten years?

No

 

[matttyl]

Old thread, but got a question.
I'm going to get a term life policy, probably 10 year for maybe 500k.

So a term life policy is fairly inexpensive (say 40 a month), but the return of premium is closer to 150-200.

I was thinking of going the ROP option, any reason why I shouldn't?

I'm almost just kinda viewing it as forced savings. Of course I could invest it......

From your numbers above….$40 a month for 10 years is $4,800 total. Let’s say return of premium is $175/m. That’s $21k on the nose after 10 years, or $16,200 more.

The extra $135 a month in premium for 10 years grew to that $21k you get back if you don’t die in the next 10 years. That’s a shade under 5% ROR over the 10 years - but keep in mind it mandates you to keep the plan for the full 10 years. If you wanna drop it after 6 years, you need to fund it the next 4 years to get your return of premium. Depending on your age, I’d say no thanks and take the cheap term.

 

[Dickies]

Old thread, but got a question.
I'm going to get a term life policy, probably 10 year for maybe 500k.

So a term life policy is fairly inexpensive (say 40 a month), but the return of premium is closer to 150-200.

I was thinking of going the ROP option, any reason why I shouldn't?

I'm almost just kinda viewing it as forced savings. Of course I could invest it......

I'm a financial advisor who also happens to be life licensed, and I generally advise my clients against ROP terms as the cost is prohibitive and you could do better with that money by investing it elsewhere. That obviously carries some risk, but since we are talking about over 10-30 year periods, that risk is quite minimal IMHO.

ROP terms are also inflexible and if you cannot afford to maintain the premiums and the policy lapses I am unaware of a carrier that will pay you back the premiums without making it to the end of the level term period.

If you need forced savings then set up a brokerage account at the same time as the term and put the difference on a periodic investment plan that is taken from your checking and automatically invested.

 

[ghostguy123]

Old thread, but got a question.
I'm going to get a term life policy, probably 10 year for maybe 500k.

So a term life policy is fairly inexpensive (say 40 a month), but the return of premium is closer to 150-200.

I was thinking of going the ROP option, any reason why I shouldn't?

I'm almost just kinda viewing it as forced savings. Of course I could invest it......

I'm a financial advisor who also happens to be life licensed, and I generally advise my clients against ROP terms as the cost is prohibitive and you could do better with that money by investing it elsewhere. That obviously carries some risk, but since we are talking about over 10-30 year periods, that risk is quite minimal IMHO.

ROP terms are also inflexible and if you cannot afford to maintain the premiums and the policy lapses I am unaware of a carrier that will pay you back the premiums without making it to the end of the level term period.

If you need forced savings then set up a brokerage account at the same time as the term and put the difference on a periodic investment plan that is taken from your checking and automatically invested.

I actually want a short term. 5 years or even less.
Any thoughts on the annual renewable?
I'm 44 if that helps.

 

[matttyl]

Old thread, but got a question.
I'm going to get a term life policy, probably 10 year for maybe 500k.

So a term life policy is fairly inexpensive (say 40 a month), but the return of premium is closer to 150-200.

I was thinking of going the ROP option, any reason why I shouldn't?

I'm almost just kinda viewing it as forced savings. Of course I could invest it......

I'm a financial advisor who also happens to be life licensed, and I generally advise my clients against ROP terms as the cost is prohibitive and you could do better with that money by investing it elsewhere. That obviously carries some risk, but since we are talking about over 10-30 year periods, that risk is quite minimal IMHO.

ROP terms are also inflexible and if you cannot afford to maintain the premiums and the policy lapses I am unaware of a carrier that will pay you back the premiums without making it to the end of the level term period.

If you need forced savings then set up a brokerage account at the same time as the term and put the difference on a periodic investment plan that is taken from your checking and automatically invested.

I actually want a short term. 5 years or even less.
Any thoughts on the annual renewable?
I'm 44 if that helps.

If you know you’ll only need it for that short, annual renewable is the cheapest way to go. At your age, though, if you’re healthy, 20 year term is dirt cheap.

 

[Dickies]

Old thread, but got a question.
I'm going to get a term life policy, probably 10 year for maybe 500k.

So a term life policy is fairly inexpensive (say 40 a month), but the return of premium is closer to 150-200.

I was thinking of going the ROP option, any reason why I shouldn't?

I'm almost just kinda viewing it as forced savings. Of course I could invest it......

I'm a financial advisor who also happens to be life licensed, and I generally advise my clients against ROP terms as the cost is prohibitive and you could do better with that money by investing it elsewhere. That obviously carries some risk, but since we are talking about over 10-30 year periods, that risk is quite minimal IMHO.

ROP terms are also inflexible and if you cannot afford to maintain the premiums and the policy lapses I am unaware of a carrier that will pay you back the premiums without making it to the end of the level term period.

If you need forced savings then set up a brokerage account at the same time as the term and put the difference on a periodic investment plan that is taken from your checking and automatically invested.

I actually want a short term. 5 years or even less.
Any thoughts on the annual renewable?
I'm 44 if that helps.

I am generally not a fan. If you are 100% confident that you only need it for that short time period then it might be okay, but i generally recommend getting a term with a longer duration than you think you’ll need. The longer you renew these policies the more it ends up costing you in the long run.

I can maybe count on one hand the number of people who have voluntarily cancelled a term before the end of the level term period because they felt they didn’t need the coverage. I cannot count the number of people who wish they had done a longer term when they got their life insurance set up.