With as little as she has, I wouldn't suggest that she direct the $310 per month that she would be paying in IUL toward equities. Rather, I'd keep it in a high yield savings account or a money market fund in order to be safe, plus earn a little interest income.Thanks, I appreciate the straight-forwardness. And I concur with your thoughts; I do realistcally feel like I will be providing some level of financial support to my mom (and dad) in her old age, on top of whatever she will receive in social security (I'm not expecting much given her relatively low-income profession).
I’m not at all excited about having mom spend $3,720 per year, about 10% of her gross income, on an IUL policy.
The link that you provided shows that the policy has only “some cash value growth potential”. I expect that if she got an illustration from the agent, it would show very minimal cash value after she pays about $18,000 in the first five years.
I’ll be blunt. With nothing saved for retirement, they’ll be living off Social Security in their old age. And if they need nursing care, they’ll need to rely on Medicaid. Those are the cold, hard facts.
Mom would be far, far better served to put that $310 per month into building her savings account, against future emergency needs.
I, too, feel like she would be better served investing the $310/mo. (ideally, much more than that) towards her retirement but it has been difficult to convince her/change her habits especially due to her background growing up in a family on the poorer side, and her belief/worry that investing in stocks is 'gambling' due to my father having previously lost significant sums of money in the past due to the stock market (I have reason to believe those losses were due to speculative investments in high-risk bio tech stocks that didn't work out and due to options trading which my dad is into).
Her attitude towards money nowadays (and I suspect, for quite a while) is that she is never going to amass a sum significant enough to fund a meaningful retirement anyways so she aims to spend more than save in order to 'live in the now' while she still has time/her health.
Knowing the above, do you think there is anyway I can lay out some simple points in layman terms that could convince her that this insurance policy/need for long-term (disability) care is not needed, or impractical, for her situation?
It's hard to "argue against" the possible payout of a life insurance policy at either her death or disability. But I'd be much more concerned about the near term concerns that could be solved by having a small nest egg of cash. For example, what if she needs an expensive car repair? Or what if somebody needs expensive medical treatments? Those are much more likely to happen over the next 10-20 years than either her need for LTC or her death.
If she hasn't gotten one, have her request an "illustration" on the policy. Look at how slowly the cash value builds up. I'll bet that she'll have a near-zero cash value for the first three years of the policy, when she could have stashed away about $10,000 if she diligently put aside the $310 per month. To me, that's the highest use of the money - allowing her to live a little more stress-free life for many years to come.
Statistics: Posted by Stinky — Tue Nov 19, 2024 4:19 am — Replies 7 — Views 274