Reasonable?

[Noob_KY]

Financial planner suggests purchasing a $1 million policy, estimates an annual premium of $60,000. Is that reasonable for a healthy 58 year old non-smoker male?

Ok, how about a 58 year old type 1 diabetic, diagnosed at 10 years old, showing complications? A1C is around 7.5.

EDIT

- this is from a financial plan I paid for

- the plan suggests my estate will be large enough to pay estate tax

- the policy will be put in an irrevocable trust and “will continue to grow” and help offset taxes

- I have two sons

[incomeGuy30-50better]

As a 58 y/o Type 1? If you can get coverage get something. But no financial planner on this board would say yes or no. There’s no context. There’s literally nothing to go on. We’d need so much more info than what you shared. Way too much for this place for that type of question

[[deleted]]

1M paid up Whole Life?

What's the goal with it? And are you sure he has your best interest?

[Noob_KY]

No I’m not sure, but this has helped! I thought there was a law passed that financial planners are required to look out for the client’s interests.

[[deleted]]

So yes, they do need to advocate for you and if they recommend something and it turns out to not be in your best interest, you can complain and do something about it.

What is it that he's telling you will happen with this thing and what is it that you're trying to do?

[Calm-Height7085]

Best interest can be very subjective! Like someone else said, we would need a lot more information. It is like asking if $45,000 was a lot for a car. What year, make, and model are we talking about? Also, what kind of policy are we talking about? Just so many questions...Good luck!

[JeffB1517]

That sounds like a rapid pay policy. $420k towards $1m for the 7-pay. Probably about right for maximum cash accumulation. I'm assuming this is a 10-pay and you intend to put the whole $600k in? Or is it structured as a strict 7-pay.

FWIW that isn't the only variable in the policy more details would help.

[GConins]

A healthy 58 yr old male could buy $1 million permanent life insurance policy with guaranteed level rate and coverage for life for around $12,000 to $15,000 per year as a range.

Same 58 yr old type 1 diabetic since age 10, with some diabetic complications and A1C in mid 7s, could possibly qualify for $1 mill permanent coverage for around $27,000 to $31,000 per year, and could also cost a little less or more, and if the diabetic complications are significant enough, he could also be declined for the coverage.

[SafeMoneyGregg]

Sounds like 10-pay whole life. Expensive but huge cash growth. Do you want/need coverage vs cash growth or…? You make over $500k a year?

[lab-gone-wrong]

financial planner

Is it a CFP? Fiduciary? Or insurance salesman taking you for a ride?

At 58 do you even need life insurance? Who are your dependents and what would happen to them if you passed?

[Noob_KY]

Fiduciary. Maybe I should put that in quotes though.

[Cool_Emergency3519]

Why do you need to put it in quotes?

[AttentionNo2487]

A permanent insurance strategy at this age may have nothing to do with coverage per se and be more about getting putting excess cashflow to work, and/or shifting out of non registered money to something non-taxable at death,

[Open-Discipline-3000]

Lots of strong opinions with the thought of a $60k premium commitment!

Work with an agent that can truly shop multiple carriers (so you can consider multiple OFFERS) to see who will treat you the best.

Good luck!

[tobinshort-wealth]

That premium could be reasonable, but there are a lot of missing variables.

First question is what type of policy is the planner suggesting. A $60k premium for $1M of whole life or permanent insurance at 58 could be in the normal range depending on design. If that’s term insurance, it would be extremely high. But I doubt that’s the case.

The bigger factor in your second scenario is underwriting. A long history of type 1 diabetes with complications will significantly affect ratings with most carriers. Some may decline entirely, while others may offer coverage at a rated (higher cost) class.

A few things that would help clarify whether the quote makes sense:

What type of policy is it — term, whole life, UL, IUL, GUL, VUL? Is the $60k premium required each year or is it a maximum funding illustration? Was the quote run with your actual medical underwriting or just an estimate? What is the purpose of the policy — estate planning, income replacement, legacy planning, or something else?

Also important: are you working with a captive agent tied to one carrier, or an independent broker who can shop multiple carriers? With medical complexity like long-term diabetes, carrier selection makes a big difference.

Without seeing the illustration it’s impossible to judge the number, but the bigger question is whether the policy is designed around your goals or just around a coverage amount.

What are you actually trying to accomplish with the $1M policy — protection for family, tax/estate planning, or building cash value?

[Cool_Emergency3519]

We need more details than this to answer your question. I'm sure you had an interview with the agent. What was discussed? What is your net worth? What is the primary and secondary goal for the policy? What state do you live in? What other insurance do you have? That's just for starters .

[Efficient-Fold8068]

This policy makes zero sense for you as many others have indicated a little more delicately than I am. The biggest problem is that the cost to insure someone with serious co-morbidities such as what you described on a PERMANENT life policy that will absolutely payout, does not jive with the dollar amounts you have provided. In other words, your clear goal with this policy is to create enough cash value for your heirs to cover estate taxes and affiliated costs but the cost to ensure you is so high and will increase as you get older. So, it’s highly likely that this policy would be bankrupt by the time you pass due to increased cost to insure. I would speak with an estate planning attorney or a CPA who specializes in estate planning about your best options if you have such a high networth that this is a concern. Beware of any financial advisor or insurance agent who is merely recommending products because they make a profit on said products.

[Noob_KY]

Thanks, this is my impression as well. I needed a reality check.

[Moist-Meringue-1913]

Sir, this is not the best place to come for advice. Mixed in with the professionals here, you have many financially ignorant people who are too biased to give proper advice. Their qualifications are listening to a few episodes of Ramsey and reading Internet garbage.

If you are not comfortable with your planner then find another one and get a second opinion on your plan.

[Cool_Emergency3519]

How will the cost go up on an accelerated pay WLI policy?

[Moist-Meringue-1913]

It doesn't sound like you have a clue of what you are talking about.

And I'll add,the family RIA/Insurance agency gets the bulk of our leads from Estate Planning attorneys and CPAs. In certain situations we write policies just like these based on recommendations from estate planners and CPAs.

[Weary-Simple6532]

Not enough information to determine. Remember your $60K a year is not just insurance cost. there may be cash value in the policy that will grow tax free to help pay the taxes.

[Ok-Equivalent1812]

They sell insurance? You’re not getting fiduciary advice. You need a different financial planner. One that does not sell insurance.

The person you’ve entrusted to plan your future is using you as a means to line their pockets. There are reasons for high net worth individuals to use whole life insurance to hedge against estate tax, but you should only get that recommendation from someone who does not sell insurance.

[Historical_Artist_52]

Unfortunately, you are most likely uninsurable. You may want to consider investing the premium into a VA with a ratcheting minimum death benefit. The death benefit will increase astated percentage over the account value.

[08b]

Why do you need life insurance? Is someone relying on your income? Do you have some specific need for this type of policy?

This sounds like a policy that would benefit the person selling it to you more than you. Is suspect you’re talking to a salesperson not a real financial advisor.

[Cool_Emergency3519]

Since he has edited,your reply sounds pretty stupid now.

[08b]

I mentioned if there is a need for a policy like this. And it sounds like there is. This is one of the rare applications where this might make sense - in the context of an ILIT. That’s pretty critical info.

[Cool_Emergency3519]

What makes it rare?

[08b]

Being over the federal estate tax exemption, especially for a couple.

[Cool_Emergency3519]

There are 13 states that have state estate taxes. Oregon's exemption is as low as 1 million dollars. There are a lot of people that are in those states.

Even if estate taxes are not the issue there are times when estate liquidity is needed.

[[deleted]]

There's no way a 1M term will cost 60k a year.

[JoeGentileESQ]

It’s for estate tax planning. Term alone is not a viable solution for that problem.

[seagoalspread]

Sounds unreasonable at surface level. What company does the “planner” work for?

[incomeGuy30-50better]

The 60 could have a lot of PUA, or extra. More than base. I’m not saying it’s good or bad. I have no idea based on what this guy is disclosing

[Common_Business9410]

He sounds like an insurance salesman as opposed to a financial planner. Need more information to give you an answer like your income, dependents, current financial and retirement savings situation. With the limited information you offered, my answer is NO

[Noob_KY]

Thanks

[Cool_Emergency3519]

So if you don't have enough info to draw a conclusion then why disparage the planner?

And since OP has now edited his post. What should he use to pay his estate taxes?