Life Insurance Recommendations Very Confusing
ESPlanner's life insurance recommendations continue to baffle me. I occasionally ignore them because I can't always explain them.
I'm working with a couple who are in their mid 50's who will be retiring in about 3 years. Both spouses have pension income ($40,000 for the husband and $55,000 for the wife) with 50% survivor benefits; household Social Security income is about $84,000; regular assets total about $800,000; and retirement accounts total about $1.5 million. When I run the analysis using a 7% nominal rate of return and a 3% inflation rate, no life insurance is recommended for either of them. When I change the rate of return to 5%, ESP recommends about $10,000 of life insurance for the spouse, for two years only, starting in 15 years. And when I change the rate of return to 3%, ESP recommends about $1 million of insurance for the wife this year, none for the next 10 years, then random amounts of life insurance for the spouse over the next 20 years (e.g., $635,000 in 2024; $149,000 in 2026; $787,000 in 2030; $480,000 in 2034; $0 in 2040; $220,000 in 2042; $0 again in 2043; $150,000 in 2045, etc.).
These are the most baffling life insurance recommendations I've ever seen (they jump all over the place and only come into play when I reduce the nominal rate of return).
Any insights would be greatly appreciated.
I'd be happy to upload the database if someone at ESP wants to look at it.