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Thanks for the response, PSU.

You have stated the reason why I only owned term life insurance until my 60's. Up until then I received about a 7% return in my deferred tax accounts. At 60 years old, I had to drop the corporate term life insurance as it went up 300% in price. I have a $500K term life insurance on me that expires in two years but is too expensive to renew.

Here are a few rationalizations of my purchases.

I have no fixed income investments. I am 100% equities. Buying bonds in this rising interest rate market looks difficult. You are using equity returns to reject the returns of a dividend paying whole life insurance policy from a Mutual Insurance company (owned by policyholders). I have maxed out my deferred tax options i.e. 401K. So the 6.4% return would have to be after-tax versus tax deferred in whole life.

I compared the 2.8% tax free IRR on Policy B to my fixed income investment options. Since cash surrender value is a guarantied payment from a AA insurance company, it is a fixed income investment that exceeded CD's, bonds etc. at the time. Policy B is a winner on a Behavioral Finance analysis as its purpose was to have $360K available for my spouse when I am 90 years old and need LTC. The guaranty from a AA insurance company is $309K at 89 years old with dividend income to make it larger. My spouse does not have the financial expertise to manage an equity or bond portfolio so CSV will be available to pay LTC for both of us.

When my wife can get an 8% return on immediate annuities, I will buy an immediate annuity for her (and me)for the same Behavioral Finance reasons.
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