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That sounds really incredible, a 89 year old getting a new life insurance plan? Can you link to one of the providers?

LorenPechtel 3y ago
It doesn't surprise me at all. The customers of such policies are quite wealthy and have no actual need of life insurance. Rather, it's an estate tax dodge because life insurance proceeds are tax free.
CSMastermind 3y ago
They might be thinking of whole life vs term life policies. Whole life policies are basically investment vehicles that are an attractive asset class to a specific segment of the population because of tax reasons. For those unaware term life pays out if you die within a certain time period. There's a chance that they won't pay out - you're pooling your risk of dying along with that of other people because statistically you're not all likely to die. So the premiums you pay in go to pay out someone who does in fact die. For whole life the policy is for well your whole life - so the payout rate is 100% because everyone dies eventually. People take out whole life policies which they pay premiums into and those policies accumulate value allowing them to take out loans against the value of the policy. And because of a tax loophole in the United States this allows you to avoid paying taxes on the (what is essentially) investment dividends. When I worked in the industry the cut off for term life at almost every carrier was 65 years old, though I vaguely remember people introducing policies for 70 year olds which might be a false memory. Whole life can obviously be sold no matter how old you are. A 103 year old could probably find a carrier willing to issue them a whole life policy for the right price.
bombcar 3y ago
There was a whole thing called a tontine that basically worked like inverse life insurance. The insurers just look at the tables and give you what it will cost. It looks like an 89 year old has between 4-5 years life expectancy so expect to pay in premiums about 20% of the payout. Usually the payout is “burial insurance” at these ages.
- rundmc 3y ago
  "inverse life insurance" that's an interesting way to describe a tontine

It doesn't surprise me at all. The customers of such policies are quite wealthy and have no actual need of life insurance. Rather, it's an estate tax dodge because life insurance proceeds are tax free.

CSMastermind 3y ago

They might be thinking of whole life vs term life policies. Whole life policies are basically investment vehicles that are an attractive asset class to a specific segment of the population because of tax reasons. For those unaware term life pays out if you die within a certain time period. There's a chance that they won't pay out - you're pooling your risk of dying along with that of other people because statistically you're not all likely to die. So the premiums you pay in go to pay out someone who does in fact die. For whole life the policy is for well your whole life - so the payout rate is 100% because everyone dies eventually. People take out whole life policies which they pay premiums into and those policies accumulate value allowing them to take out loans against the value of the policy. And because of a tax loophole in the United States this allows you to avoid paying taxes on the (what is essentially) investment dividends. When I worked in the industry the cut off for term life at almost every carrier was 65 years old, though I vaguely remember people introducing policies for 70 year olds which might be a false memory. Whole life can obviously be sold no matter how old you are. A 103 year old could probably find a carrier willing to issue them a whole life policy for the right price.

bombcar 3y ago

There was a whole thing called a tontine that basically worked like inverse life insurance. The insurers just look at the tables and give you what it will cost. It looks like an 89 year old has between 4-5 years life expectancy so expect to pay in premiums about 20% of the payout. Usually the payout is “burial insurance” at these ages.

rundmc 3y ago
"inverse life insurance" that's an interesting way to describe a tontine