Hi anon,
Probably the most cost effective way to get some level of ECI/CI cover in retirement years would be via a limited pay whole life plan.
Put it this way, you simply don't know when you will be diagnosed with CI/ECI, if ever. So let's say you take a term plan cover $200K ECI, and you're a male non smoker, 38 years old turning 39.
A quick quote gives a term plan covering this amount costing $2540/yr for 31 years. That's $78740 in total.
A whole life limited payment (20 years) plan with x4 multiplier (i.e. $50K x 4 = $200K ECI cover till age 70) would cost $3378.5/yr or $65750 in total.
Yes, you didn't see that wrongly. It's actually cheaper in total, and the coverage is the same till age 70. After 70, you still retain $50K of ECI cover plus all bonuses that have build up in the policy over the years.
Sure, it's more costly by about $800/yr, but people often overlook total premiums when looking at a plan. After you turn 58, you're done with the whole life premiums right before you retire, whereas you'll have to continue to pay for the term.
On top of that, if you buy term and invest the rest, then you're going to have an uphill battle trying to ensure that you have $50K - $80K of liquidity in risk-free assets when your term plan expires at 70 in order to match the benefit that a whole life plan would provide.
So if you really want CI/ECI cover in retirement, a whole life plan isn't a bad idea at all.
Edit: Corrected some numbers but the maths still stands
Hi anon,
Probably the most cost effective way to get some level of ECI/CI cover in retirement years would be via a limited pay whole life plan.
Put it this way, you simply don't know when you will be diagnosed with CI/ECI, if ever. So let's say you take a term plan cover $200K ECI, and you're a male non smoker, 38 years old turning 39.
A quick quote gives a term plan covering this amount costing $2540/yr for 31 years. That's $78740 in total.
A whole life limited payment (20 years) plan with x4 multiplier (i.e. $50K x 4 = $200K ECI cover till age 70) would cost $3378.5/yr or $65750 in total.
Yes, you didn't see that wrongly. It's actually cheaper in total, and the coverage is the same till age 70. After 70, you still retain $50K of ECI cover plus all bonuses that have build up in the policy over the years.
Sure, it's more costly by about $800/yr, but people often overlook total premiums when looking at a plan. After you turn 58, you're done with the whole life premiums right before you retire, whereas you'll have to continue to pay for the term.
On top of that, if you buy term and invest the rest, then you're going to have an uphill battle trying to ensure that you have $50K - $80K of liquidity in risk-free assets when your term plan expires at 70 in order to match the benefit that a whole life plan would provide.
So if you really want CI/ECI cover in retirement, a whole life plan isn't a bad idea at all.
Edit: Corrected some numbers but the maths still stands