Aw, a macabre mental exercise for Monday morning. Rather than ask for “gut feelings”, perhaps it would be better to hit the actuary tables and a statistics book. I’d help but my statistics course is a distant memory. Too bad we don’t know some Statistics whiz… like perhaps a guy that has a blog about housing statistics 🙂

Anyhow, I’d be curious about the correct approach, but shouldn’t you be thinking in terms of “Expected Value”. For example if you’re 40 and the policy is for 30 years with a 1 million payout and the chances of death in that time are 10% wouldn’t the expected value be 100K? Then the question would be how much is it going to cost at $750 year. It’s certainly not just $22,500 as you could have been doing other things with the money. I realize there are a whole slew of complications (future value of 1 million comes to mind). By the way, all my figures are made up. I have no idea of your age, policy amount or the probability of death.

Perhaps another much lazier (I like lazy!) idea is this. Approach several insurance agents. Tell them that you have a policy that has another X years to go and pays out Y dollars. Ask them if they’d cut you a policy that could beat the current yearly payment. If the answer is “Heck no”, perhaps you have a good deal? I mention this because I recall that term life insurance is a good deal towards the end of the policy. The idea being that $750 a year for a 20 year old is a rip off but is a good deal for a 49 year old. Both because the the 49 year old is more likely to pop off and because $750 isn’t worth what it was at the beginning of the policy.

Well, with those cheery thoughts out of the way, I wish you a happy week!
Cheers