Can any one explain me, i wanted to take insurance policy for my mother. Can any one explain me how term life is different that Whole life insurance.
Total Comments: 60
Posted: Wed Jan 14, 2009 12:46 pm Post Subject:
There is no "all the time" answer for the question -"Should I buy whole life or term life insurance?" Every situation is different and it is unwise to listen to the "financial gurus" who tell us to always buy term.
The family of the person who purchased a $1,000,000 20-year term policy
when he was 20, then died at age 43, were left out in the cold.
The argument "buy term and invest the difference" has been around since there was a term policy. I have heard it for the past 20 years, but I have never seen anyone do it - "invest the difference", I mean.
Here's why:
Let's take a Male, age 30, in good health. He can buy a 20-year guaranteed level term policy in the amount of $100,000 for $175 per year.
This same person can buy a $100,000 Whole Life policy for $1,056 per year.
The difference in premium is $881 per year. So this man will attempt to invest $881 every year with the goal of accumulating $100,000 in 20 years (to replace the life insurance policy).
To accomplish this goal, this person would have to earn in excess of 19% interest on his investment. Does anyone know where I can invest $881 per year and earn 19%? It just won't happen.
The term policy is "renewable", which means he can renew it for another 20 years at age 51. The catch here is, the premium is now $792 per year.
The premium at age 52 is $850, and the premium continues to increase evelry year after that.
So, if he keeps the term to age 54, he will be paying more in premium that if he had purchased the Whole Life policy in the beginning.
He couldn't replace the life insurance policy by "investing the difference" because he couldn't get the high gain on his investment.
Don't be pursuaded to buy term with the wrong expectations. Buy your life insurance to fit your needs. If you want to be guaranteed that your life insurance policy will be in force the day you die, term insurance cannot make that guarantee.
You may need both.
Posted: Wed Jan 14, 2009 12:49 pm Post Subject:
good natured, if you are talking about 'credit life' that is different (and a rip off IMO)...than term ins...much much much better to buy a true term policy than ever buying credit life!
Posted: Wed Jan 14, 2009 08:59 pm Post Subject: Term VS. Whole Life
Taking Insurance Maze's 30yr old Male:
January 14, 2009
Interest Adjusted Cost Analysis
Face Amount: (1) 100,000.00 (2) 100,000.00
Product 1: Term
20yr
Product 2: Whole Life
Interest Rate: 5.00% Tax Rate: 0.00%(Assuming investment in tax deferred vehicle) After Tax Rate: 5.00%
Year Age Premium 1 Premium 2 1 minus 2 Premiums Saved
1 30 127.00 1,056.00 -929.00 -975.45
2 31 127.00 1,056.00 -929.00 -1,999.67
3 32 127.00 1,056.00 -929.00 -3,075.11
4 33 127.00 1,056.00 -929.00 -4,204.31
5 34 127.00 1,056.00 -929.00 -5,389.98
6 35 127.00 1,056.00 -929.00 -6,634.93
7 36 127.00 1,056.00 -929.00 -7,942.12
8 37 127.00 1,056.00 -929.00 -9,314.68
9 38 127.00 1,056.00 -929.00 -10,755.86
10 39 127.00 1,056.00 -929.00 -12,269.11
11 40 127.00 1,056.00 -929.00 -13,858.01
12 41 127.00 1,056.00 -929.00 -15,526.36
13 42 127.00 1,056.00 -929.00 -17,278.13
14 43 127.00 1,056.00 -929.00 -19,117.49
15 44 127.00 1,056.00 -929.00 -21,048.81
16 45 127.00 1,056.00 -929.00 -23,076.70
17 46 127.00 1,056.00 -929.00 -25,205.99
18 47 127.00 1,056.00 -929.00 -27,441.73
19 48 127.00 1,056.00 -929.00 -29,789.27
20 49 127.00 1,056.00 -929.00 -32,254.18
21 50 293.00 1,056.00 -763.00 -34,668.04
22 51 293.00 1,056.00 -763.00 -37,202.60
23 52 293.00 1,056.00 -763.00 -39,863.88
24 53 293.00 1,056.00 -763.00 -42,658.22
25 54 293.00 1,056.00 -763.00 -45,592.28
26 55 293.00 1,056.00 -763.00 -48,673.05
27 56 293.00 1,056.00 -763.00 -51,907.85
28 57 293.00 1,056.00 -763.00 -55,304.39
29 58 293.00 1,056.00 -763.00 -58,870.76
30 59 293.00 1,056.00 -763.00 -62,615.45
31 60 293.00 1,056.00 -763.00 -66,547.37
32 61 293.00 1,056.00 -763.00 -70,675.89
33 62 293.00 1,056.00 -763.00 -75,010.83
34 63 293.00 1,056.00 -763.00 -79,562.52
35 64 293.00 1,056.00 -763.00 -84,341.80
36 65 293.00 1,056.00 -763.00 -89,360.04
37 66 293.00 1,056.00 -763.00 -94,629.19
38 67 293.00 1,056.00 -763.00 -100,161.80
39 68 293.00 1,056.00 -763.00 -105,971.04
40 69 293.00 1,056.00 -763.00 -112,070.74
41 70 2,477.00 1,056.00 1,421.00 -116,182.23
42 71 2,477.00 1,056.00 1,421.00 -120,499.29
43 72 2,477.00 1,056.00 1,421.00 -125,032.21
44 73 2,477.00 1,056.00 1,421.00 -129,791.77
45 74 2,477.00 1,056.00 1,421.00 -134,789.31
46 75 2,477.00 1,056.00 1,421.00 -140,036.72
47 76 2,477.00 1,056.00 1,421.00 -145,546.51
48 77 2,477.00 1,056.00 1,421.00 -151,331.78
49 78 2,477.00 1,056.00 1,421.00 -157,406.32
50 79 2,477.00 1,056.00 1,421.00 -163,784.59
51 80 2,477.00 1,056.00 1,421.00 -170,481.77
52 81 2,477.00 1,056.00 1,421.00 -177,513.81
53 82 2,477.00 1,056.00 1,421.00 -184,897.45
54 83 2,477.00 1,056.00 1,421.00 -192,650.27
55 84 2,477.00 1,056.00 1,421.00 -200,790.73
56 85 2,477.00 1,056.00 1,421.00 -209,338.22
57 86 2,477.00 1,056.00 1,421.00 -218,313.08
When comparing the rates of two different Life Insurance products it is
important to take into consideration the "time value" or "opportunity cost"
of money. This comparison has done that for you. By taking the year by
year difference in premium costs between two products and investing the
difference at an assumed "after tax" rate of return, we can determine which
premium paying method is more advantageous in any specific year.
For this comparison, Product 2 has been measured against Product1. The
Difference column will show a positive value if Product 2 is less expensive
than Product 1. A positive value in the Premiums Saved with Interest column
indicates a lower accumulating cost difference to the credit of Product 2.
These values are to the credit of Product 1 where negative results occur.
____________________________________________________________________________
NOTE: In this example the 30yr old male is taking out a new 20yr policy every 20yrs. The premiums for future purchases are not guaranteed. They are based upon today's cost of insurance charges.
It is possible that the death benefit in the Whole policy will increase at some point and/or that you will be able to suspend premiums on the whole life policy at some point.
Posted: Wed Jan 14, 2009 10:14 pm Post Subject:
Victor your analysis is to say the least, interesting.
Posted: Thu Jan 15, 2009 04:44 pm Post Subject:
Taking the same 30yr old male, but converting to a UL in yr 20:
January 15, 2009
Interest Adjusted Cost Analysis
Face Amount: (1) 100,000.00 (2) 100,000.00
Product 1: Term
20yr
Product 2: Whole Life
Whole Life
Interest Rate: 5.00% Tax Rate: 0.00%(Tax Deferred Vehicle) After Tax Rate: 5.00%
Year Age Premium 1 Premium 2 1 minus 2 Premiums Saved
1 30 127.00 1,056.00 -929.00 -975.45
2 31 127.00 1,056.00 -929.00 -1,999.67
3 32 127.00 1,056.00 -929.00 -3,075.11
4 33 127.00 1,056.00 -929.00 -4,204.31
5 34 127.00 1,056.00 -929.00 -5,389.98
6 35 127.00 1,056.00 -929.00 -6,634.93
7 36 127.00 1,056.00 -929.00 -7,942.12
8 37 127.00 1,056.00 -929.00 -9,314.68
9 38 127.00 1,056.00 -929.00 -10,755.86
10 39 127.00 1,056.00 -929.00 -12,269.11
11 40 127.00 1,056.00 -929.00 -13,858.01
12 41 127.00 1,056.00 -929.00 -15,526.36
13 42 127.00 1,056.00 -929.00 -17,278.13
14 43 127.00 1,056.00 -929.00 -19,117.49
15 44 127.00 1,056.00 -929.00 -21,048.81
16 45 127.00 1,056.00 -929.00 -23,076.70
17 46 127.00 1,056.00 -929.00 -25,205.99
18 47 127.00 1,056.00 -929.00 -27,441.73
19 48 127.00 1,056.00 -929.00 -29,789.27
20 49 1,000.00 1,056.00 -56.00 -31,337.53
21 50 1,000.00 1,056.00 -56.00 -32,963.21
22 51 1,000.00 1,056.00 -56.00 -34,670.17
23 52 1,000.00 1,056.00 -56.00 -36,462.48
24 53 1,000.00 1,056.00 -56.00 -38,344.40
25 54 1,000.00 1,056.00 -56.00 -40,320.43
26 55 1,000.00 1,056.00 -56.00 -42,395.25
27 56 1,000.00 1,056.00 -56.00 -44,573.81
28 57 1,000.00 1,056.00 -56.00 -46,861.30
29 58 1,000.00 1,056.00 -56.00 -49,263.16
30 59 1,000.00 1,056.00 -56.00 -51,785.12
31 60 1,000.00 1,056.00 -56.00 -54,433.18
32 61 1,000.00 1,056.00 -56.00 -57,213.64
33 62 1,000.00 1,056.00 -56.00 -60,133.12
34 63 1,000.00 1,056.00 -56.00 -63,198.58
35 64 1,000.00 1,056.00 -56.00 -66,417.30
36 65 1,000.00 1,056.00 -56.00 -69,796.97
37 66 1,000.00 1,056.00 -56.00 -73,345.62
38 67 1,000.00 1,056.00 -56.00 -77,071.70
39 68 1,000.00 1,056.00 -56.00 -80,984.08
40 69 1,000.00 1,056.00 -56.00 -85,092.09
41 70 1,000.00 1,056.00 -56.00 -89,405.49
42 71 1,000.00 1,056.00 -56.00 -93,934.57
43 72 1,000.00 1,056.00 -56.00 -98,690.09
44 73 1,000.00 1,056.00 -56.00 -103,683.40
45 74 1,000.00 1,056.00 -56.00 -108,926.37
46 75 1,000.00 1,056.00 -56.00 -114,431.49
47 76 1,000.00 1,056.00 -56.00 -120,211.86
48 77 1,000.00 1,056.00 -56.00 -126,281.26
49 78 1,000.00 1,056.00 -56.00 -132,654.12
50 79 1,000.00 1,056.00 -56.00 -139,345.62
51 80 1,000.00 1,056.00 -56.00 -146,371.71
52 81 1,000.00 1,056.00 -56.00 -153,749.09
53 82 1,000.00 1,056.00 -56.00 -161,495.35
54 83 1,000.00 1,056.00 -56.00 -169,628.91
55 84 1,000.00 1,056.00 -56.00 -178,169.16
56 85 1,000.00 1,056.00 -56.00 -187,136.42
57 86 2,477.00 1,056.00 1,421.00 -195,001.19
When comparing the rates of two different Life Insurance products it is
important to take into consideration the "time value" or "opportunity cost"
of money. This comparison has done that for you. By taking the year by
year difference in premium costs between two products and investing the
difference at an assumed "after tax" rate of return, we can determine which
premium paying method is more advantageous in any specific year.
For this comparison, Product 2 has been measured against Product1. The
Difference column will show a positive value if Product 2 is less expensive
than Product 1. A positive value in the Premiums Saved with Interest column
indicates a lower accumulating cost difference to the credit of Product 2.
These values are to the credit of Product 1 where negative results occur.
____________________________________________________________________________
NOTE: Every effort has been made to ensure the accuracy of this information
but we cannot guarantee accuracy and are not liable for errors or omissions.
Posted: Thu Jan 15, 2009 04:48 pm Post Subject:
victor,
I understand you have software that runs this type of analysis, but I just don't think they mean very much to the average insured.
Could you abbreviate these figures for us and just come up with a bottom line?
Thanks
Posted: Thu Jan 15, 2009 05:00 pm Post Subject:
Bottom line is that it's cheaper to buy term for as long as you can and delay buying a permanent policy for as long as you can (when your health deteriorates - CONVERT).
There are other reasons that it may be advantageous to buy a permanent policy now, but not because it is cheaper.
Posted: Fri Jan 16, 2009 05:02 am Post Subject: insurance
From what I understand, WHOLE Life gives you more 'coverage' ( 'cash-value, etc.) TERM Life limits your 'coverage'.............what would be the purpose of getting a TERM Life policy? Cheaper isn't always the 'best'...ya know?
Posted: Fri Jan 16, 2009 08:53 pm Post Subject:
Some people chose term not because it is cheaper, it is for the time frame, right, at least that is the way that I understand it.
Posted: Fri Jan 16, 2009 09:34 pm Post Subject:
If this fictitious 30 year old male bought a $100k UL with Sun Life in perfect health, he would only be paying $404 per year guaranteed FOREVER regardless of cash value (no-lapse guarantee). It's easy to say that when your health deteriorates, you should convert. How about when the carrier gets bought out by someone else and the conversion option is limited to the most expensive whole life product they sell? How about when the insured forgets when the conversion options is set to expire, lets it expire, but has already had two heart attacks?
How many people ever invest the difference anyway when buying term? Answer - very few. Buy term and invest the difference would be a great strategy if everybody's life turned out exactly they way they expected it to. Do you know anyone whose life turned out exactly the way they expected it to? I sure don't.
Posted: Wed Jan 14, 2009 12:46 pm Post Subject:
There is no "all the time" answer for the question -"Should I buy whole life or term life insurance?" Every situation is different and it is unwise to listen to the "financial gurus" who tell us to always buy term.
The family of the person who purchased a $1,000,000 20-year term policy
when he was 20, then died at age 43, were left out in the cold.
The argument "buy term and invest the difference" has been around since there was a term policy. I have heard it for the past 20 years, but I have never seen anyone do it - "invest the difference", I mean.
Here's why:
Let's take a Male, age 30, in good health. He can buy a 20-year guaranteed level term policy in the amount of $100,000 for $175 per year.
This same person can buy a $100,000 Whole Life policy for $1,056 per year.
The difference in premium is $881 per year. So this man will attempt to invest $881 every year with the goal of accumulating $100,000 in 20 years (to replace the life insurance policy).
To accomplish this goal, this person would have to earn in excess of 19% interest on his investment. Does anyone know where I can invest $881 per year and earn 19%? It just won't happen.
The term policy is "renewable", which means he can renew it for another 20 years at age 51. The catch here is, the premium is now $792 per year.
The premium at age 52 is $850, and the premium continues to increase evelry year after that.
So, if he keeps the term to age 54, he will be paying more in premium that if he had purchased the Whole Life policy in the beginning.
He couldn't replace the life insurance policy by "investing the difference" because he couldn't get the high gain on his investment.
Don't be pursuaded to buy term with the wrong expectations. Buy your life insurance to fit your needs. If you want to be guaranteed that your life insurance policy will be in force the day you die, term insurance cannot make that guarantee.
You may need both.
Posted: Wed Jan 14, 2009 12:49 pm Post Subject:
good natured, if you are talking about 'credit life' that is different (and a rip off IMO)...than term ins...much much much better to buy a true term policy than ever buying credit life!
Posted: Wed Jan 14, 2009 08:59 pm Post Subject: Term VS. Whole Life
Taking Insurance Maze's 30yr old Male:
January 14, 2009
Interest Adjusted Cost Analysis
Face Amount: (1) 100,000.00 (2) 100,000.00
Product 1: Term
20yr
Product 2: Whole Life
Interest Rate: 5.00% Tax Rate: 0.00%(Assuming investment in tax deferred vehicle) After Tax Rate: 5.00%
Year Age Premium 1 Premium 2 1 minus 2 Premiums Saved
1 30 127.00 1,056.00 -929.00 -975.45
2 31 127.00 1,056.00 -929.00 -1,999.67
3 32 127.00 1,056.00 -929.00 -3,075.11
4 33 127.00 1,056.00 -929.00 -4,204.31
5 34 127.00 1,056.00 -929.00 -5,389.98
6 35 127.00 1,056.00 -929.00 -6,634.93
7 36 127.00 1,056.00 -929.00 -7,942.12
8 37 127.00 1,056.00 -929.00 -9,314.68
9 38 127.00 1,056.00 -929.00 -10,755.86
10 39 127.00 1,056.00 -929.00 -12,269.11
11 40 127.00 1,056.00 -929.00 -13,858.01
12 41 127.00 1,056.00 -929.00 -15,526.36
13 42 127.00 1,056.00 -929.00 -17,278.13
14 43 127.00 1,056.00 -929.00 -19,117.49
15 44 127.00 1,056.00 -929.00 -21,048.81
16 45 127.00 1,056.00 -929.00 -23,076.70
17 46 127.00 1,056.00 -929.00 -25,205.99
18 47 127.00 1,056.00 -929.00 -27,441.73
19 48 127.00 1,056.00 -929.00 -29,789.27
20 49 127.00 1,056.00 -929.00 -32,254.18
21 50 293.00 1,056.00 -763.00 -34,668.04
22 51 293.00 1,056.00 -763.00 -37,202.60
23 52 293.00 1,056.00 -763.00 -39,863.88
24 53 293.00 1,056.00 -763.00 -42,658.22
25 54 293.00 1,056.00 -763.00 -45,592.28
26 55 293.00 1,056.00 -763.00 -48,673.05
27 56 293.00 1,056.00 -763.00 -51,907.85
28 57 293.00 1,056.00 -763.00 -55,304.39
29 58 293.00 1,056.00 -763.00 -58,870.76
30 59 293.00 1,056.00 -763.00 -62,615.45
31 60 293.00 1,056.00 -763.00 -66,547.37
32 61 293.00 1,056.00 -763.00 -70,675.89
33 62 293.00 1,056.00 -763.00 -75,010.83
34 63 293.00 1,056.00 -763.00 -79,562.52
35 64 293.00 1,056.00 -763.00 -84,341.80
36 65 293.00 1,056.00 -763.00 -89,360.04
37 66 293.00 1,056.00 -763.00 -94,629.19
38 67 293.00 1,056.00 -763.00 -100,161.80
39 68 293.00 1,056.00 -763.00 -105,971.04
40 69 293.00 1,056.00 -763.00 -112,070.74
41 70 2,477.00 1,056.00 1,421.00 -116,182.23
42 71 2,477.00 1,056.00 1,421.00 -120,499.29
43 72 2,477.00 1,056.00 1,421.00 -125,032.21
44 73 2,477.00 1,056.00 1,421.00 -129,791.77
45 74 2,477.00 1,056.00 1,421.00 -134,789.31
46 75 2,477.00 1,056.00 1,421.00 -140,036.72
47 76 2,477.00 1,056.00 1,421.00 -145,546.51
48 77 2,477.00 1,056.00 1,421.00 -151,331.78
49 78 2,477.00 1,056.00 1,421.00 -157,406.32
50 79 2,477.00 1,056.00 1,421.00 -163,784.59
51 80 2,477.00 1,056.00 1,421.00 -170,481.77
52 81 2,477.00 1,056.00 1,421.00 -177,513.81
53 82 2,477.00 1,056.00 1,421.00 -184,897.45
54 83 2,477.00 1,056.00 1,421.00 -192,650.27
55 84 2,477.00 1,056.00 1,421.00 -200,790.73
56 85 2,477.00 1,056.00 1,421.00 -209,338.22
57 86 2,477.00 1,056.00 1,421.00 -218,313.08
When comparing the rates of two different Life Insurance products it is
important to take into consideration the "time value" or "opportunity cost"
of money. This comparison has done that for you. By taking the year by
year difference in premium costs between two products and investing the
difference at an assumed "after tax" rate of return, we can determine which
premium paying method is more advantageous in any specific year.
For this comparison, Product 2 has been measured against Product1. The
Difference column will show a positive value if Product 2 is less expensive
than Product 1. A positive value in the Premiums Saved with Interest column
indicates a lower accumulating cost difference to the credit of Product 2.
These values are to the credit of Product 1 where negative results occur.
____________________________________________________________________________
NOTE: In this example the 30yr old male is taking out a new 20yr policy every 20yrs. The premiums for future purchases are not guaranteed. They are based upon today's cost of insurance charges.
It is possible that the death benefit in the Whole policy will increase at some point and/or that you will be able to suspend premiums on the whole life policy at some point.
Posted: Wed Jan 14, 2009 10:14 pm Post Subject:
Victor your analysis is to say the least, interesting.
Posted: Thu Jan 15, 2009 04:44 pm Post Subject:
Taking the same 30yr old male, but converting to a UL in yr 20:
January 15, 2009
Interest Adjusted Cost Analysis
Face Amount: (1) 100,000.00 (2) 100,000.00
Product 1: Term
20yr
Product 2: Whole Life
Whole Life
Interest Rate: 5.00% Tax Rate: 0.00%(Tax Deferred Vehicle) After Tax Rate: 5.00%
Year Age Premium 1 Premium 2 1 minus 2 Premiums Saved
1 30 127.00 1,056.00 -929.00 -975.45
2 31 127.00 1,056.00 -929.00 -1,999.67
3 32 127.00 1,056.00 -929.00 -3,075.11
4 33 127.00 1,056.00 -929.00 -4,204.31
5 34 127.00 1,056.00 -929.00 -5,389.98
6 35 127.00 1,056.00 -929.00 -6,634.93
7 36 127.00 1,056.00 -929.00 -7,942.12
8 37 127.00 1,056.00 -929.00 -9,314.68
9 38 127.00 1,056.00 -929.00 -10,755.86
10 39 127.00 1,056.00 -929.00 -12,269.11
11 40 127.00 1,056.00 -929.00 -13,858.01
12 41 127.00 1,056.00 -929.00 -15,526.36
13 42 127.00 1,056.00 -929.00 -17,278.13
14 43 127.00 1,056.00 -929.00 -19,117.49
15 44 127.00 1,056.00 -929.00 -21,048.81
16 45 127.00 1,056.00 -929.00 -23,076.70
17 46 127.00 1,056.00 -929.00 -25,205.99
18 47 127.00 1,056.00 -929.00 -27,441.73
19 48 127.00 1,056.00 -929.00 -29,789.27
20 49 1,000.00 1,056.00 -56.00 -31,337.53
21 50 1,000.00 1,056.00 -56.00 -32,963.21
22 51 1,000.00 1,056.00 -56.00 -34,670.17
23 52 1,000.00 1,056.00 -56.00 -36,462.48
24 53 1,000.00 1,056.00 -56.00 -38,344.40
25 54 1,000.00 1,056.00 -56.00 -40,320.43
26 55 1,000.00 1,056.00 -56.00 -42,395.25
27 56 1,000.00 1,056.00 -56.00 -44,573.81
28 57 1,000.00 1,056.00 -56.00 -46,861.30
29 58 1,000.00 1,056.00 -56.00 -49,263.16
30 59 1,000.00 1,056.00 -56.00 -51,785.12
31 60 1,000.00 1,056.00 -56.00 -54,433.18
32 61 1,000.00 1,056.00 -56.00 -57,213.64
33 62 1,000.00 1,056.00 -56.00 -60,133.12
34 63 1,000.00 1,056.00 -56.00 -63,198.58
35 64 1,000.00 1,056.00 -56.00 -66,417.30
36 65 1,000.00 1,056.00 -56.00 -69,796.97
37 66 1,000.00 1,056.00 -56.00 -73,345.62
38 67 1,000.00 1,056.00 -56.00 -77,071.70
39 68 1,000.00 1,056.00 -56.00 -80,984.08
40 69 1,000.00 1,056.00 -56.00 -85,092.09
41 70 1,000.00 1,056.00 -56.00 -89,405.49
42 71 1,000.00 1,056.00 -56.00 -93,934.57
43 72 1,000.00 1,056.00 -56.00 -98,690.09
44 73 1,000.00 1,056.00 -56.00 -103,683.40
45 74 1,000.00 1,056.00 -56.00 -108,926.37
46 75 1,000.00 1,056.00 -56.00 -114,431.49
47 76 1,000.00 1,056.00 -56.00 -120,211.86
48 77 1,000.00 1,056.00 -56.00 -126,281.26
49 78 1,000.00 1,056.00 -56.00 -132,654.12
50 79 1,000.00 1,056.00 -56.00 -139,345.62
51 80 1,000.00 1,056.00 -56.00 -146,371.71
52 81 1,000.00 1,056.00 -56.00 -153,749.09
53 82 1,000.00 1,056.00 -56.00 -161,495.35
54 83 1,000.00 1,056.00 -56.00 -169,628.91
55 84 1,000.00 1,056.00 -56.00 -178,169.16
56 85 1,000.00 1,056.00 -56.00 -187,136.42
57 86 2,477.00 1,056.00 1,421.00 -195,001.19
When comparing the rates of two different Life Insurance products it is
important to take into consideration the "time value" or "opportunity cost"
of money. This comparison has done that for you. By taking the year by
year difference in premium costs between two products and investing the
difference at an assumed "after tax" rate of return, we can determine which
premium paying method is more advantageous in any specific year.
For this comparison, Product 2 has been measured against Product1. The
Difference column will show a positive value if Product 2 is less expensive
than Product 1. A positive value in the Premiums Saved with Interest column
indicates a lower accumulating cost difference to the credit of Product 2.
These values are to the credit of Product 1 where negative results occur.
____________________________________________________________________________
NOTE: Every effort has been made to ensure the accuracy of this information
but we cannot guarantee accuracy and are not liable for errors or omissions.
Posted: Thu Jan 15, 2009 04:48 pm Post Subject:
victor,
I understand you have software that runs this type of analysis, but I just don't think they mean very much to the average insured.
Could you abbreviate these figures for us and just come up with a bottom line?
Thanks
Posted: Thu Jan 15, 2009 05:00 pm Post Subject:
Bottom line is that it's cheaper to buy term for as long as you can and delay buying a permanent policy for as long as you can (when your health deteriorates - CONVERT).
There are other reasons that it may be advantageous to buy a permanent policy now, but not because it is cheaper.
Posted: Fri Jan 16, 2009 05:02 am Post Subject: insurance
From what I understand, WHOLE Life gives you more 'coverage' ( 'cash-value, etc.) TERM Life limits your 'coverage'.............what would be the purpose of getting a TERM Life policy? Cheaper isn't always the 'best'...ya know?
Posted: Fri Jan 16, 2009 08:53 pm Post Subject:
Some people chose term not because it is cheaper, it is for the time frame, right, at least that is the way that I understand it.
Posted: Fri Jan 16, 2009 09:34 pm Post Subject:
If this fictitious 30 year old male bought a $100k UL with Sun Life in perfect health, he would only be paying $404 per year guaranteed FOREVER regardless of cash value (no-lapse guarantee). It's easy to say that when your health deteriorates, you should convert. How about when the carrier gets bought out by someone else and the conversion option is limited to the most expensive whole life product they sell? How about when the insured forgets when the conversion options is set to expire, lets it expire, but has already had two heart attacks?
How many people ever invest the difference anyway when buying term? Answer - very few. Buy term and invest the difference would be a great strategy if everybody's life turned out exactly they way they expected it to. Do you know anyone whose life turned out exactly the way they expected it to? I sure don't.
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