by Guest » Thu Dec 18, 2008 07:15 am
Hi friends,
A few things to know..
Is the term life insurance of any real help to people? Is it possible for a consumer to opt for multiple policies at the same time?
Otherwise what would happen when the term lapses!
Purpleheaded08
A few things to know..
Is the term life insurance of any real help to people? Is it possible for a consumer to opt for multiple policies at the same time?
Otherwise what would happen when the term lapses!
Purpleheaded08
Posted: Thu Dec 18, 2008 09:56 am Post Subject:
Hi there! Your coverage would be quite secured through your term life coverage. It would also allow you to save your marginal cost over a permanent insurance. You could invest it to any bonds or stocks that you prefer. I'm sure you're well aware of the savings potential of stocks and bonds today.
:) Crossbreed
Posted: Thu Dec 18, 2008 10:59 am Post Subject:
Is the term life insurance of any real help to people?
Well, the term life plans have become quite outdated, initially it was the only form of life insurance available in the market. The term life plans may serve its purpose if you have debts which can put an extra burden on your family after your death. Therefore, if you have mortgage loans and/or secured or unsecured loans you can opt for term life plan. Also, if you are sure that you'll die within the term of the plan, term life is a good option.
Posted: Thu Dec 18, 2008 11:34 am Post Subject:
Is the term life insurance of any real help to people?
It's of GREAT value to the beneficiary.
It's of no value to the deceased person.
Is it possible for a consumer to opt for multiple policies at the same time?
Yes, but it would be foolish, each and every policy carries its own yearly policy fee build into the premium so you'd be paying multiple policy fees needlessly.
Plus many companies greatly reduced the cost per thousand for higher face amount policies.
It would cost way more money to have 10 - $100,000 policies rather than just one - $1 million dollar policy.
Otherwise what would happen when the term lapses!
Term policies don't typically lapse at the end of the "term." The premium is simply adjusted, albeit to an unaffordable rate.
10 year level term premiums will typically double in the 11th year and the policy changes to Annual Renewable Term to age 95 or 100 with premium increases each and every year.
If you become uninsurable you're stuck with the last policy you bought. If you're still healthy and fit you'll simply submit new evidence of insurability either with the same company or buy a new policy with a different company to lower your premiums. Or you can convert your term policy to some form of cash value policy your current company offers without new evidence of insurablility but you'll find for that to be affordable you'll have to cut the face amount (probably about in half) and increase your premium, (probably about double).
Posted: Thu Dec 18, 2008 03:25 pm Post Subject:
Term life insurance is of help to people. It provides peace of mind to the insured person knowing they are providing for the future security of their beneficiaries.
it provides much needed money (financial security) for the beneficiaires who may receive the proceeds of the term life insurance policy if the insured dies during the policy term.
Yes, a consumer may purchase multiple policies at the same time. For instance a 10 year term, a 15 year term, and a 20 year term.
The term does not lapse. A life insurance policy lapses if the premiums are not paid on time.
A term life insurance expires if you outlive the term of the policy.
When the term ends, you may apply for another term life insurance policy. The rates will be higher based on your age, health, and other underwriting factors at that time.
It may be wise to consider renewable term life insurance that does not require you to take a physical exam to qualify for another term policy.
Also, the conversion privilege allows you to convert your current term life insurance policy into a permanent life insurance policy by a specific date in the future.
Posted: Thu Dec 18, 2008 06:57 pm Post Subject:
You've had some interesting responces to your question. If you need $1,000,000 of life insurance to protect your family and it would cost $15,000 a year you might not buy the insurance that your family needs. You might be able to afford $250,000 of the needed million dollars. On the other hand, the $1,000,000 policy, in the form of a contract that would be guaranteed for 20 years might only cost $3,000 a year for 20 years. As an investment, term life sucks! But, if it affords you the ability to insure your life for the amount to meet your family needs, IT'S OUTSTANDING!
This from the experiences of 35 years as an independent insurance agent.
Posted: Fri Dec 19, 2008 04:36 am Post Subject:
Well, Pro, what I can surmise from your post that term life is still a valid option for people with limited financial ability, but it may not necessarily offer additional advantages apart from the death benefits like the whole life plans, which accumulates cash value as well.
Now, my question to the agents on the board, that what life coverage would you suggest to an individual in his mid thirty and with three dependants, term life or whole life? Supposing that money isn't a concern :wink:
Posted: Fri Dec 19, 2008 12:47 pm Post Subject:
Now, my question to the agents on the board, that what life coverage would you suggest to an individual in his mid thirty and with three dependants, term life or whole life? Supposing that money isn't a concern.
coffeeandcaramel, that's an easy one.
I'll use a standard male 35 non-smoker rate class and $500,000 initial death benefit.
Remember, money isn't an issue.
The guideline single premium is $70,188.
So by paying the one-time maximum premium would produce the following results.
@ age 50 the cash value would be $180,599
@ age 60 the cash value would be $383,246
@ age 65 the cash value would be $564,888 and the death benefit would be $677,865
@ age 70 the cash value would be $1,235,081 and the death benefit would be $1,296,835
@ age 90 the cash value would be $3,991,911 and the death benefit would be $4,191,507
@ age 120 the cash value would be $44,876,739 and the death benefit would be $44,876,739
Even if these PROJECTED numbers are wrong by 50% the insured person would still have a substantial amount of additional cash available to supplement retirement if the death benefit was no longer needed.
Also bear in mind I used the worst rate class for the life insurance. The cash would grow better if our 35 year old qualifies for a preferred rate class.
Posted: Thu Jan 01, 2009 03:30 am Post Subject: GarySpicuzza
Gary,
What net rate of return are your using in your assumptions?
Posted: Thu Jan 01, 2009 12:40 pm Post Subject:
For the cash value to equal $180,000 @ age 50 (15 years) would require a "net" rate of return of 6.3% compounded monthly.
That's NOT reality. It's just math.
When looking at cash value life insurance projections 15, 20, 30 years in the future the numbers are WRONG.
But I'll restate my main point from above:
Even if these PROJECTED numbers are wrong by 50% the insured person would still have a substantial amount of additional cash available to supplement retirement if the death benefit was no longer needed.
Posted: Thu Jan 01, 2009 05:03 pm Post Subject:
So what gross rate of return would you need to end up with a 6.3% net rate of return in the product you are using, which I'm assuming is an Aviva Index UL... 7.95%?
Also, if you are going to use this for supplemental retirement income, I wouldn't fund the policy with such a large lump sum, because it will become a modified endowment contract (MEC). Once it's a MEC, you can no longer take out tax free loans from the policy, which is the biggest reason to sock away extra money into a life insurance policy.
You could take that same lump sum and pay it over 5 yrs (5 x 14037). You will have roughly 150k at age 50 assuming a 7.95% gross rate of return and you will still be able to take out tax free policy loans.
Keep in mind, while your money is not in the stock market, these results would require positive stock market returns (S&P 500). In any year that the market is not up, your gross return will be zero. Your guaranteed cash value in Gary's example at age 50 is only 57k and at age 66 your guaranteed cash value is ZERO.
If you prefer to have higher guaranteed cash values, you should look at a whole life policy.
If you just want affordable permanent coverage with a lifetime guaranteed death benefit and you don't want to overfund a life policy for supplemental retirement income, here's another option:
You could buy a 500k guaranteed ul for about 3633/yr. Beginning in the 20th yr, if you surrender your policy for any reason, you are guaranteed at least your money back. These numbers are based on standard non-tobacco rates.
However, if money is truely not a concern, why are you buying insurance? Is it to pay for estate taxes at death? If so, you need a different strategy. If this is the case, let the board know.
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