My mom called me the other day saying that, with her about to hit retirement, she is cutting some costs. One of those is a life insurance policy that was handed down to her when her own mother passed away last year. She already has her own for us, so this one is just extra and she can cash it out.
My two older brothers are pretty well set, and declined to take on the monthly premium. So she asked me if I wanted to...
It's about 70 USD a month for as long as she lives. The payout is 140K.
She is fairly healthy, nothing life threatening currently. Super fit, she cleans homes for a living and is very active. She won't like me saying it, but she's about 60 years old, and our family members tend to live longer than average life spans.
Our great grandma was like 94, and my grandma I think was 89.
So if I were to assume that my mom lives until about 90, that's about another 30 years of premiums. I'd be 65 by then.
70x12= 840 USD a year.
840x30= 25,200 USD for 30 years.
140,000-25,200= 114,800 USD payout total.
When I look at it that way, that seems like a pretty good deal. But there are also lots of different factors that go in to it. Like, inflation. Lost opportunity costs. Maybe she lives to be 110? Etc...
What would that 70 USD a month look like in 30 years if say, I just put it all into BTC? Or HIVE? Or LEO? Or pick any other crypto, stock, bond, or investment opportunity.
I'm currently not sold in either direction. But would love some outside perspective from people who may have had similar investments or insurance plans in the past.
What would you do?
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Dang insurance. Those things that you pay out the nose for but hope you never had to use. That $70 doesn't seem like too bad of a deal, but like you said, you have to wonder how that money would grow if it were invested somewhere else. I don't envy the decision you have to make. Best of luck!
Yeah, I'm leaning towards no as of now. That way my mom can cash out, and I can decide how I want to put my money to work for me.
Oh man... I have no idea dude, sorry.
Why is the insurance company even offering this? No offense to your Mom, but she is certainly going to die one day, how do insurance companies make their money off these type of deals? I don't get it.
Putting it in crypto is likely to get you bigger returns, but is obviously more risky. Even if your Mom lived for another 120 years (just a lazy 180 years old) you'd still be significantly ahead financially, so it kind of seems like a crazy certain financial deal.
Good question, idk how they make money on it. I do think that the premiums rise as the person gets older. So that 70 USD would probably be more as time went on, which would make the pay out less overall.
I'm leaning towards crypto.
Oh yeah, that kinda changes everything if the premiums increase. Throws out all the math honestly.
I’m assuming it’s term life insurance rather than whole life? An old whole life policy might be something she could cash out.
It’s a gamble either way. Not sure there’s really a right answer.
But maybe look at it from a different angle. If she’s statistically/genetically likely to live a long life, maybe some money should be going to pay for long-term care insurance rather than life insurance. My parents spent their last years in a nursing home. It was insanely expensive.
She can cash it out, I'm not sure exactly what it is as she didn't even have all the details on our 3 minute phone convo.
Life is a gamble, isn't it? Time will tell what the better bet was.
I am a big fan of Dave Ramsey and his philosophy on money. Here is a clip of him explaining why whole life insurance is not a good investment. Hope this helps :)
I like Dave. Me and the wife did his FPU before we got married, definitely helped us get out of debt and be more financially secure/stable. I disagree with him on some things, but he's pretty smart overall when it comes to the easy things most people don't understand about interest and debt. I'll have a watch when I have a free minute, thanks Tim. Hope all is well back in MN!
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I mentioned inflation. Agreed. Also told my mother to cash it out as I believe there are better options.
There is hardly any balance in real-world expenditures. To be honest, I refrain from holding my money in the existing ecosystem. De-Fi works as a saver for me. Inflation in my homeland has become unbearable. I transfer my "store of value" to the PolyCUB stablecoin pool, some on Nexo and a little for trades. The majority is on Polygon De-Fi projects like AAve & PolyCUB.
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For sure man, true story. I opted not to do it. I'm leaning towards high APR stable coins like HBD. They are certainly risks involved with that as well, but I feel better about it than the other existing ecosystems like you mentioned.
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It depends a lot on circumstances.
Getting involved in liquidity pools like on polycub are a great option if you can get the liquid funds. It's an easy way to increase your returns and buy back into hive with the profits.
It always depends on your current position to chase your opportunities.
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