I bought a whole life policy in the '80s. The terms of the contract provided that after a certain number of years I stop paying premiums as the earnings of policy will be sufficient to pay them and increase the amount of insurance yearly. As a consequence I do not pay premiums and I have a Cash Surrender Value that does grow yearly.
My employer pays the premiums for the first $200k on life insurance and then I pay approx $2k/year for an additional $150k of insurance. However, if i input the total life insurance amount (the only amount allowed by ESP) then the program shows premiums almost twice what I actually pay because it doesn't reflect the employer paid portion. I can force ESP to show the actual premium I pay by inputting a lower insurance amount but then it doesn't show what my actual life insurance amount is. How about you guys add an extra field(s) to accommodate this?
What I have concluded is that the Basic version (at least) does not calculate life insurance correctly in situations in which credit constraints make it so that the standard of living cannot be fully smoothed over the lifetime (either in the actual results or in a survivor scenario).
I understand that the recommended life insurance is to allow the survivor to maintain the same living standard if a spouse dies before the end-of-life date set in the program. In our family, my personal assets-IRA Regular and income is 20x my wife's assets/income yet ESP recommends life insurance for her until end of life but no life insurance for me. She does not have any future Special Receipts so ESP can not be protecting future income. On the Annual Suggestions page and on my Wife's Estate page it shows life insurance for her but not for me. Am I reading the report incorrectly?
Can't seem to find explanation in manual or searching on-line. Can you explain please?
My understanding is that ESP calculates and adds life insurance when needed. I have seen discussions herein where it is stated that the premiums are added as expenses. Are the benefits also calculated in case of survivor reports? When I run the report with survivor reports set to start while life insurance is being recommended, I don't see the insurance benefit reported as income on any of the survivor reports. Wouldn't the life insurance be added to the regular assets? Or, do I need to add the benefit in the contingency, special receipts section?
ESPlanner recommends life insurance when needed. I have two questions:
1. What if a person can not obtain life insurance due to medical problems? Would it be possible to have a election to turn off the life insurance computation?
2. When life insurance is recommended, the amount recommended changes over time (dramatically). Term life insurance generally has two characteristics, a fixed death benefit and a fixed term. How should the reality of the marketplace for term life insurance be reconciled with the variable recommendation?
Thank you for the responses. After figuring out how to enter our self-employment earnings without doubling them by accidentally adding the earnings to Social Security future earnings as well...whew!...the only thing I'm stuck on at the moment is how to get rid of the insurance. We aren't going to do that. So how do I get that insurance requirement out of my calculations? I love ESPlanner, BTW. After I got over the disappointment that we wouldn't be able to buy our own island in retirement (duplicated our earnings), I discovered that we are in much better shape than I had imagined.
We have two policiies. My wife's policy is a fully funded whole life policy worth $200K; she contributes nothing to it and it will pay to the estate when she dies. If I show this as life insurance, do I show it as a cash value of $200k?
My life insurance is a bit different. My former employer fully funded a life insurance policy for me worth $700K upon my death. Should I put this in the "special" folder and show a future value and then the expected year of my death?
While I understand the purpose/suggestion of life insurance, can I remove it from my annual cost? Perhaps the SW should just suggest the amount and the user can add the specific cost. Having the amount in the reporting is just confusing.