Profiting off of older relatives?

Discussion in 'Off-Topic' started by steinmetzify, May 26, 2017.

  1. steinmetzify

    steinmetzify CHUG & SLUDGE

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    Got an uncle...he's a good guy, older by 22 years, which makes him 65 this year.

    Sitting here drinking with him tonight, he broaches the subject of insurance.

    Dude is in relatively good health; 65, still works, still works out, smokes but not to excess, 6'1", 180, hits the gym. He could potentially live another 30 years.

    Wants me to take out an insurance policy on him, pay the premium, take benefits when he goes. Could probably insure him for $250,000/$300,000; payments would probably cost me $30,000.

    I love this guy, and don't want to think about insurance payments on him dying, but it's his idea.

    What would SSO do?
     
    Last edited: May 27, 2017
  2. M3CHK1LLA

    M3CHK1LLA angel sword guardian

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    i'll go in havsies with you...
     
  3. KnightBrolaire

    KnightBrolaire tinkerer/aspiring builder/8 string hoarder

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    take the max policy, have your uncle die in an unfortunate carbon monoxide leak/induced heart attack, get $$$. *kidding*
     
  4. Edika

    Edika SS.org Regular

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    I assume the $30000 cost is for the 30 years period of time. Does the insurance cover natural cause of death or prexisting conditions? Can the beneficiary be a person other than a spouse or first degree relative?
    If so go ahead even though that's a real morbid and strange discussion. Plus you'll be a suspect on whatever unnatural cause of death.
     
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  5. steinmetzify

    steinmetzify CHUG & SLUDGE

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    Thanks guys. Was a weird morbid thing for him to bring up, but apparently he was serious.
     
  6. Hollowway

    Hollowway Extended Ranger

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    I'd look into the actual numbers first. Are you solid numbers you've given? Older men with a smoking history aren't the cheapest to insure. If you're buying term life you have to specify a time length, and is be very surprised if they let you do 30 years.
     
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  7. Demiurge

    Demiurge Intrepid Jackass

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    Hollowway is right, the chances of getting a 30-year term policy is very slim. Term life is supposed to be a cheap solution for when death is least-likely. Once you get higher on the mortality table, it either won't be underwritten or the premium will be enormous.

    The arrangement that the OP's uncle suggested isn't that bizarre. In a prior and brief career in selling life insurance, I learned that there was a push to sell certain types of whole-life policies as a tool for estate-planning. In these cases, the policy would be purchased on a lump sum, and there would be a guarantee that the face value + remaining cash value would be greater than the purchase price upon the policyholder's death. Life insurance proceeds are tax-free and, IIRC, aren't subject to probate so it seemed like a clever means for leaving an inheritance. NOW, I don't know if regulators stepped in and put the kibosh on it, but it's a, uh, creative industry.
     
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  8. Hollowway

    Hollowway Extended Ranger

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    Yeah, they still push that whole life/universal life stuff. But the insurance companies still take a cut. I have a friend that does sells it. Basically, they have two options: A guaranteed certain percentage return, or a floating percentage return, where the insurance company takes a cut. Either way, these things aren't philanthropic - the actuaries have figured out a way to make money for the company. I'm sure in wealthy people there are instances where it makes sense, though.

    OP, ask you uncle that if it's worth $250,000 for him dead, what's it worth to him to survive another 5-10 years? Then have him pay you that amount, and force him to quit smoking. DONE! Everyone wins. (Only partly joking...)
     
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  9. bostjan

    bostjan MicroMetal Contributor

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    I don't know the details, but the bottom line is that insurance is never profitable for anyone other than the insurance provider. On the whole, there is <5% chance you'd ever make a penny. If there are extenuating circumstances to make this any more certain than average, you didn't disclose those. Pass. :2c:
     
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