X-Message-Number: 6312
Date: Tue, 04 Jun 96 11:11:27
From: Steve Bridge <>
Subject: Life Insurance considerations
To CryoNet
>From Steve Bridge, Alcor
June 4, 1996
In reply to: Message #6306
Subject: I'm buying life insurance. Advice?
Date: Mon, 03 Jun 1996 13:31:29 -0500
From: Will Dye <>
>In the meantime, I'm about to upgrade my life insurance
>to $400,000 for myself and $300,000 for my wife. It will
>be "plain vanilla" term life insurance, 20-year fixed rate.
If you have children and need short-term coverage in case you die
with dependents, term insurance is cheap per dollar of payoff. For long-
term cryonics needs, term insurance by itself is almost certainly the
wrong choice.
A few tips from my 4th Quarter, 1995 *Cryonics* magazine article on
funding: (additional language for this post marked in [brackets])
-- Life insurance has one very big advantage [for cryonic suspension
funding]: no matter what the monthly premium is nor how long the
individual has had the policy, the full death benefit is paid to the
beneficiary when the policyholder dies. For people who do not have the
full $50,000 or $120,000 available in one sum, life insurance may provide
the only way to fund a suspension. A good insurance plan will allow the
total amount paid in to be much less than the minimum suspension funding.
Insurance may not be the best investment for retirement income; but it is
a very good investment for suspension funding. For more discussion on
Life insurance, see "Life Insurance Simplified" by Bob Gilmore and Mary
Naples in the December, 1991 *Cryonics.* (free reprints available [from
Alcor])
-- What type of policy should you choose? [for suspension funding]
*Term* insurance is relatively inexpensive when the member is young.
However, it gets more expensive or decreases in value every year [Will
states that he has a "level payment" policy, which probably means that the
death benefit starts dropping at some point.], which makes it impractical
or prohibitive to retain by the time the member reaches age 50. Also,
term insurance is typically for a particular "term" of years and so may be
completely unobtainable at the time the member actually needs it for
suspension.
If you begin your suspension funding with term insurance, make sure
the insurer guarantees it to be convertible to whole life insurance
whenever you can afford to pay the higher rate. Some cryonicists have
combined a term insurance policy which decreases in value with another
investment vehicle which increases in value. This is fine, but it takes a
lot of discipline to maintain. Most people who start this way discover
that the automatic insurance payments are simpler to keep up with.
*Whole life* insurance is a policy based on the individual paying the
same premiums as long as he lives [although practically, most policies
stop the premiums at around age 80]. These premiums are much higher than
for a term policy. However, this gives you several interesting
advantages.
[Typically, you can choose to have earnings above the company's
profit go into the cash value of your policy or into additional death
benefit. If you choose the cash value option, after 12-15 years the cash
value may be large enough to pay your premiums. This means after you have
paid perhaps less than 10% of the policy's value, you could stop making
payments altogether.
In my own case, I have a $100,000 Universal Life policy (see next
section) from New York Life. After 11 years (approximately $8,000 in
premiums), I no longer had to make premium payments, yet the death benefit
will always be $100,000. (This was a great advantage for me when I took a
large pay cut to become Alcor's President.) While these policies may be
more expensive up front, they will be less expensive in the long run,
especially if you are lucky enough to live to your 60's or longer.
Or you could *continue* to pay the premiums and convert the extra
money to additional paid-up insurance, increasing your policy's death
benefit to stay ahead of future cryo-flation.
Note: you have to actively *choose* which options you want. Do not
assume the insurance agent reads your mind or understands your cryonics
needs. And you can change the option later if you need to.]
*Universal life* policies may appear similar to whole life policies
in an insurance agent's sales pitch; but they are designed differently.
In some ways this is like a combination of term insurance and an outside
investment account. If the insurance company's investment strategies are
sound, the investment part of the policy will eventually outstrip the
insurance portion and provide the same advantages of a whole life policy.
If the insurance company *doesn't* do so well, the policyholder may be
required to make payments many years longer than predicted originally. My
own universal life policy appears to be doing very well; but some
insurance agents have warned me recently that they believe universal life
policies tend to be bad risks for cryonicists. These agents believe that
some of these policies will "collapse" from poor investments before the
cryonicist has need of the benefits. We'd be happy to hear other opinions
or real evidence from other people on this subject.
Recently, some insurance companies have been offering new
combinations of insurance policies and investment accounts for sale. The
unique aspect of these policies is that the policyholder controls most of
the investment decisions (mutual funds, stocks, bonds, etc.). This may be
an advantage for some cryonicists in that it allows a lot of control; with
the disadvantage that the policyholder takes the risks of bad decisions.
>We're both non-smokers in good health. I'm 36 and my wife
>is 34. Besides price, I'd also like to consider how stable
>& friendly the company is, but other than AM Best ratings
>I'm not sure how to measure that.
Ask for the experience of the cryonics companies, Will. Alcor has a
list of cooperative insurance agents experienced with cryonics funding
requirements. Several major insurance companies have been easy for Alcor
to work with in obtaining policies and in making payoffs. We have many of
years of experience with New York Life and Jackson National Life, but many
other companies are now cooperative, too. We have had good experience
with First Colony recently (which you mention) and Jefferson National.
(This is not to limit the field; these are companies with which I dealt
personally in the last couple of years.)
The only major company that seems to be an active problem for initial
cryonics coverage is Prudential, but I feel sure that even they would pay
Alcor as beneficiary on a policy which was first dedicated to a family
member and then transferred to Alcor.
>Since cryonet folk are well-versed in the wiles of life
>insurance, I would appreciate your advice on this matter.
>I am particularly interested in any hitch that may arise
>from the idea I have to later commit some of my policy
>towards cryosuspension. If that's untenable, then I'll
>need to make other arrangements.
All insurance companies allow you to split your policies between
several beneficiaries. This is acceptable to Alcor; but it does increase
our paperwork load in some cases, and the occasional conflict with other
beneficiaries can delay Alcor's payment. If you have a choice, it is
simpler for Alcor if you maintain a separate policy for your cryonics
coverage.
Stephen Bridge, President ()
Alcor Life Extension Foundation
Non-profit cryonic suspension services since 1972.
7895 E. Acoma Dr., Suite 110, Scottsdale AZ 85260-6916
Phone (602) 922-9013 (800) 367-2228 FAX (602) 922-9027
for general requests
http://www.alcor.org
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