Should We Keep My Dad’s Life Insurance Policy?

Seeking Advice
1

Hello…I need some advice regarding my dad’s life insurance policy. He has a $1,000,000 policy that’s set to expire soon. He’s been paying into it for years, around $400 per month, and my sibling and I are the beneficiaries.

Here’s the dilemma: This fall, he has two options:

  1. Give up the plan when it expires.
  2. Keep the plan, but the new premium will be an astronomical $3,700 per month due to an extensive list of preexisting conditions he’s developed since he originally got the policy.

We’re struggling to decide what to do. On one hand, the payout would significantly help us when he passes. On the other hand, the new premium is extremely high, and we’re unsure if it’s worth it. :thinking:

2

You can keep paying for it, which you might want to do if his cancer is further advanced and there’s a chance he’ll pass away too soon OR Check if the policy can still be converted to permanent insurance; if so, consider selling it for cash through a life settlement.
If you decide to attempt selling the policy through a life settlement, locate a reputable life settlement broker because going direct with buyers is a surefire method to receive lowball offers.
Wishing you luck!

3

Depending on… Will he survive for ten more years? In such case, you have forked over $50,000 that could have been used for other purposes or invested in an alternative that would have generated interest. There are numerous variables involved with this.

4

Hello Christine, This situation involves both financial and emotional considerations. Here’s a breakdown of the key points:

Understanding Your Options

  • Option 1: Let the Policy Expire
    • Pros: No ongoing premium payments.
    • Cons: Loss of a $1 million payout upon your father’s passing.
  • Option 2: Continue the Policy
    • Pros: Guaranteed $1 million payout upon your father’s passing.
    • Cons: High monthly premium of $3,700.

Key Considerations

  • Financial Impact:
    • Compare the cost of continuing the policy with the potential payout.
    • Explore other ways to invest or save the $3,700 monthly premium.
    • Assess whether the payout is crucial for your family’s future.
  • Your Father’s Health:
    • Discuss his health with him and his doctors.
    • Understand his pre-existing conditions and their impact on life expectancy.
  • Emotional Factors:
    • Consider how this decision affects both you and your father.
    • Discuss his feelings about the policy and his financial goals.
  • Alternative Insurance Options:
    • Look into more affordable options like term life insurance.
    • Factor in your father’s age and health when considering alternatives.

Seeking Professional Advice

Consult a financial advisor to:

  • Analyze the financial implications of each choice.
  • Explore alternative insurance options.
  • Develop a financial plan based on your father’s current situation and future needs.