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Reasonable-Program29 OP t1_iuekgto wrote

Reply to comment by sonnyfab in Parents in IUL will it hurt them by Reasonable-Program29

Can you dive deeper into the unnecessary part of life insurance until death?

What do older people do when they don't have the most money but still want to guarantee there is something for their children after death? They believe that with Term Life insurance it isn't guaranteed they'll pass before the policy expires.

For the 5k a year not losing money part, I didn't consider it because my thought is the 70k after 14 years will continue to pay the premium for the remaining years they'll live. And 200k policy - 70k cost = 130k is still positive in the long run for their dependants.

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sonnyfab t1_iuekwzt wrote

>What do older people do when they don't have the most money but still want to guarantee there is something for their children after death?

People who die destitute typically do not leave a legacy to their children. People who make wide financial decisions and do not die destitute and pass on their wealth to their children.

>They believe that with Term Life insurance it isn't guaranteed they'll pass before the policy expires.

Correct. The purpose of life insurance is to provide a replacement for your income if you pass while people still depend on your income.

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Reasonable-Program29 OP t1_iueo8yp wrote

Is there no middle ground for the legacy portion? My parents aren't poor, they still make a little more than 100k gross combined in a year, and will continue to work for a few more years. So I wouldn't say they are destitute, but I wouldn't say they have been the wisest with their money, they still have a bit of savings at the minimum and just want to help their children a bit more when they pass.

Your 2nd point also makes sense. No one depends on their income at this point. It's just a tough situation for them due to no other investments but they want to leave their children more than what they currently have in the future.

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sonnyfab t1_iueoovz wrote

If the just invest 5k per year for 14 years into VTI, they're going to leave you and your siblings a lot more than 200k if they live into their late 70s or later.

That's the whole point.

The only way you and your siblings end up ahead with this life insurance scheme is if they die very soon, in which case term insurance would pay a lot more anyway.

Term life + index fund investment is a better way to leave a legacy than IUL.

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Reasonable-Program29 OP t1_iuepvgt wrote

All good points and what I already plan/am doing with my 401k, IRA etc. And when I have kids do Term life + continue indexing.

They're old-mindset people. They're afraid of stocks and the idea of losing money in the short term and enjoy the idea of an IUL being life insurance for their remaining life. Even though the IUL is already buying Index's (which are stocks lol) with high costs it won't go negative at least.

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Reasonable-Program29 OP t1_iueqrek wrote

But from everything here I guess ultimately it won't necessarily hurt them or their current lifestyle if they continue with this? And on the side, I push for them to open an IRA at least and help them pick low-cost indexes. Sounds like the only thing I can help do for them?

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sonnyfab t1_iuesnic wrote

>it won't necessarily hurt them

They'll be dead. It's you who is being hurt by the insurance company taking your inherence.

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Reasonable-Program29 OP t1_iuevxi3 wrote

Lmao fair. I don't need nor want their money. Just want them happy with their current lifestyle and that this won't bite them in the ass 14 years later and they're still alive.

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akmco14 t1_iuf02jt wrote

It might bite them in the ass when they don't have access to the funds if they need them like they would of they put this money in a retirement account.

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