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HI everyone I can some of you please give me some opinions or suggestions for my parents.I met with their insurance salesman to go over their investments because my parents had some concerns with thier policies and investments. My parents are in their 80's and in pretty good health. They receive my fathers pension (which is 100 per cent in other words nothing for my mother if he passes away first) and their social secrity checks and small amount from an annuity. They each have a 30,000 term life insurance policy which costs my father 1,800 dollars and my mother is 1,400. The salesman said the annuity is fixed but the rate of return is less this year?? Also they are locked in for another 3 years to have no surrender charge. I am not a fan of annuities and voiced my opinion on that but however they have 3 more years. My concern is my mothers life insurance policy I don't think they need it because my father will still have his pension so I suggested they drop hers and put that money away am I wrong and where would be a good place to put it. Any serious suggestions would be greatly appreciated. thanx
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You mentioned an annuity but not what the specifics of the annuity are. I agree that non-immediate annuities are usually a pretty poor choice, but with interest rates dropping like a rock for the last ten years some annuities have actually done pretty well despite the odds against them. Heck, even a broken clock is right twice a day, they could have gotten lucky and cashing it out early could cost them a lot more than just the surrender charge like some sort of guaranteed minimum return if they hold it a certain amount of time. Be sure to understand all the details.

You also didn't mention how long the term of the term of the life insurance policy goes for or if it is a level term policy there they cost and benefit always remain the same. It could make a difference if it lasts just a few more years or for a long time.

To me the question of keeping the policies or not really depends on what would happen if one of your parents does outlive the other by a long time and if having the premiums to spend now would make their life significantly better. Without knowing many of their details, my gut feel is that the $30K benifit amount may not make a lot of differene someday, but having an extra $3,200 to spend each you might make their life much more pleasant now if they don't have a lot of other assets.



Greg








Greg
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You might wish to talk with them about a prepaid funeral, and drop the life insurance. This would cost them far less in the long run.

Donna
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watty, the annuity is a fixed and they get about 75 dollars a month from it at 3 % this year they could leave the interest in there and let it accumulate. the ins. is term but the concern is that if my father passes first my mother will only have his social security because he took 100% of pension. He should be ok if my mother passes first. That is why we may drop her policy and save the premium.
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oh yeah the length of ins. policy is as long as they want it started as a universal.
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the concern is that if my father passes first my mother will only have his social security because he took 100% of pension. He should be ok if my mother passes first.

Too late for you but more for other people reading. Here is where the mistake was made and more thought should have gone into the decision. Statistically women live longer than men. The decision on what type of pension payout to take should be very considered. I would only go with 100% for a man if you have somehow self-insured that income for the surviving wife.

Basing a financial plan on expectation of death w/o any basis(terminal illness, etc) is not a plan. I think your parents would benefit by paying for a couple of hours with a fee-based financial planner who specializes in retirement issues.
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I would only go with 100% for a man if you have somehow self-insured that income for the surviving wife.

There are other reasons as well. For example, I had a relative who chose the 100% for the husband because the wife had cancer at the time he retired and her prognosis was not good.

He remarried after she passed away, leaving the new couple is the position mentioned by the OP.

--Peter
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He remarried after she passed away, leaving the new couple is the position mentioned by the OP.

So true and a great reason for women to make sure they are well educated about finances.
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the ins. is term but the concern is that if my father passes first my mother will only have his social security because he took 100% of pension

That depends. She won't get his benefits plus her benefits. She gets the higher as I understand it. This should be looked into.
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