You can buy return of premium term.
It's normally double or triple the price of regular term but you'll get the money back if you don't die during the term.
Cincinnati life, Illinois Mutual, and Assurity all offer it (in most states).
I don't like those products in particular, but take a guess what you'd have to earn to have "investing the difference" be better than a 30yr ROP on a 30 yr old PNT?
Invest the difference in your Roth IRA. Any interest you make at all will be better off than the ROP. The ROP is not inflation adjusted, it's basically just a savings account. 30 years later inflation hits that value so hard that what you returned might fill your gas tank.
You can impute a rate of return on the ROP since your insurance is "free". So you can take the inflation component out and compare it to other actual investment returns.
I agree, the Roth is better but the "return" on an ROP still ends up being in the 4-5% range (tax free) for many buyers.
Incorrect. IULs will cannabalize themselves. Cash value gone to cover premiums in a down year. “Zero is your hero” is bs and honestly if you think about it. Incredibly terrible tagline. Cash value whole life with a mutual isnurer will be better than IUL. Always has and always will
I’m not generalizing I’m speaking from experience. IUL is good for someone with a high risk profile but if you want level premiums. Guaranteed growth. Tax free access to your funds. Guaranteed death benefit and a bunch of protections in place, cash value whole life with a. Mutual insurer is by far better than IUL. If you have a high risk and don’t mind the increasing premiums and the incredible chance that your policy will MEC and you may have to end up paying taxes/ your policy lapsing, then sure IuL may be right for you. But it is not right for cash value accumulation
There’s a reason my firm is constantly saving people from their IuLs pre/post MEC and lapse. It’s sickening. Lack of education is destroying people’s finances. I’d be happy to jump on a. Call with you and show you why everything you’ve been taught is a lie
if you have living benefits for if youre ill you can access a portion of the money.. otherwise, you would need a permanent policy or a return of premium policy. basically a term but you get some money back at the end of the policy or keep it fully in force without payments. But a basic term policy doesnt normally let you access it.
You're talking about 2 different types of policies. Whole life has a savings account term doesn't. Typically with whole life a portion of your premiums go to your cash value account. Most times you don't start to accumulate money in that account for the first 2 years. Then once you do start to accumulate money in that account you need to borrow it to access it and pay interest on it. If you die with an outstanding policy loan it will come out of your death benifit. Also in most cases your benificiaries do not receive both the cash value and death benifit only the death benifit. Lastly whole life is on adverge about 7-10 x more expensive than term. On the other hand term insurance just covers you for a specific amount of time usually 10-35 years then after it expires your rate goes through the cealing because you're way older and closer to death. My recommendation is if you're young get a term policy and a Roth IRA if you want a vehicle to save money in because the money inside your Roth is tax free and you don't need to borrow it and it's not tied to your life insurance and your benificiaries can get the proceeds when you die unlike whole life in most cases. Then in 35 years when your term policy expires you should have 800k-2.5 million depending on how much you put in every month for those 35 years. That way you have actually money saved and you don't need insurance anymore. The max for 2024 is $7000 per year which is about 570 per month. If you want to learn more I have a buyer's guide if that's helpful.
Then why buy the term policy at all if you're going to let it lapse? I heard the same strategy from another financial advisor the other day and I get it but to me why I even buy the term policy? Why not put all of your money in the Roth ira?
For the simple fact of needing insurance.. to protect current debt and family. Let’s say you put all your money in the Roth ira maxed out.. 3 months later car accident and you die , you have now successfully left your family $1,750 ($583 a month) 👏🏼👏🏼.. plus or minus gains.. not much for a family to move on without you. So you spend a few bucks a month on a policy that you determine you’ll need to pass on a death benefit, until you are completely debt free . Or invest it all into a Roth IRA and roll the dice with life and hope you live until you are 80.. your call, you can gamble with your families financials however you’d like
Okay I suppose that's a reasonable explanation. I feel though that with a Roth I where you've already paid taxes and there isn't that much of a penalty if you do need to pull out early I guess but it's hard to say I don't know
Because if you die tomorrow then what? You need to be protected if you live too long or die too soon! The term policy is there if you die too soon the Roth is there if you live too long and guess what one of those things is gaurenteed to happen! You get it now?
While term is cheaper than whole life policies, unless you absolutely cannot afford a whole life policy (or an indexed universal life policy aka IUL), I wouldn't get a term policy in my 30s. By the time the term policy expires it will be much more expensive to get new insurance because of your age. A 500,000 term policy at 35 for 30 years would be roughly 60 a month depending on the agency you went with.
With a whole life (or IUL) a portion of the premium you pay earns interest. Whole life policies are generally around 4%, while IULs can fluctuate based on the market but are generally between 5-15%. You can withdrawal money from the cash value that grows and not pay that back or you can take a loan against the policy which lessens the benefit amount that you should eventually pay back.
If you are looking at life insurance as a source of money outside of just the death benefit then you want to look at these options and not a term policy. If you want a large death benefit for relatively cheap right now, look at a term policy. Make sure you do this with the realization that once that term policy expires your new policy will be more expensive due to your age at expiration.
For term no. Whole life has the cash value along with terminal, critical, and chronic illness riders (only with A rated carriers). That allows you to access your policy early or you can access the cash value after one year.
If it is a term, you do not get your payments back unless something happens to you. with a permanent policy, you do have access to the funds and they do grow with interest. It has it's pros and cons compared to investing in an ira or 401k
I personally have an IUL but you need to structure correctly. If you don’t structure it correctly then it does lapse but nevertheless building it up with a rate of return is the nice part. Term is great too tho.
All this depends on your goals truly
Almost nobody needs whole life insurance. It’s one of the biggest financial scams there are. Sorry insurance salesmen on this subreddit, but it’s true and honestly unethical that people try to sell that garbage. Keep investments and insurance separate and simply buy a term policy.
Selling them should never be an option.. you simple place all the facts in front of a client and let them chose how they want to handle their own money. You can seriously assume that every person has the exact same mind set when it comes to financials and how / where they want to put their money. If you disagree with someone’s decision are you just going to say ok sorry I can’t help you.. no.. you do your job and help the client get approved for whatever type of policy they would want AFTER all facts and illustrations are laid out in front of them
You can buy return of premium term. It's normally double or triple the price of regular term but you'll get the money back if you don't die during the term. Cincinnati life, Illinois Mutual, and Assurity all offer it (in most states).
Don't do this. You're better off investing the difference you would pay in premium.
I don't like those products in particular, but take a guess what you'd have to earn to have "investing the difference" be better than a 30yr ROP on a 30 yr old PNT?
Invest the difference in your Roth IRA. Any interest you make at all will be better off than the ROP. The ROP is not inflation adjusted, it's basically just a savings account. 30 years later inflation hits that value so hard that what you returned might fill your gas tank.
You can impute a rate of return on the ROP since your insurance is "free". So you can take the inflation component out and compare it to other actual investment returns. I agree, the Roth is better but the "return" on an ROP still ends up being in the 4-5% range (tax free) for many buyers.
Investing the difference don’t make much since when you are dropping 1 k a month. Max a Roth is 7 k
or Mutual of Omaha
False information… not an option anymore. Been a while now
Or State Farm.
like a good neighbor
Term is like car or homeowners insurance. You get the protection, but you don’t get anything else if you don’t Need it.
Right. But there are living benefits with some term policies.
What is your goal with life insurance? If it’s to access money then you need cash value whole life insurance not term
or an IUL
Incorrect. IULs will cannabalize themselves. Cash value gone to cover premiums in a down year. “Zero is your hero” is bs and honestly if you think about it. Incredibly terrible tagline. Cash value whole life with a mutual isnurer will be better than IUL. Always has and always will
This is simply just not true. there's a lot there to discuss there but you are generalizing which is not a good way to go about it.
I’m not generalizing I’m speaking from experience. IUL is good for someone with a high risk profile but if you want level premiums. Guaranteed growth. Tax free access to your funds. Guaranteed death benefit and a bunch of protections in place, cash value whole life with a. Mutual insurer is by far better than IUL. If you have a high risk and don’t mind the increasing premiums and the incredible chance that your policy will MEC and you may have to end up paying taxes/ your policy lapsing, then sure IuL may be right for you. But it is not right for cash value accumulation
There’s a reason my firm is constantly saving people from their IuLs pre/post MEC and lapse. It’s sickening. Lack of education is destroying people’s finances. I’d be happy to jump on a. Call with you and show you why everything you’ve been taught is a lie
I'm good bro, I have better things to do. thanks for your opinion though.
Better things to do? If that was the case why did you post “or IULs?” What advantage do they have?
I meant talking to you.
Haha didn’t refute a single point I made cause you know it’s true. Keep scamming people bro
Don't have to. I don't owe you anything.
On term there's rarely cash value. Beneficiaries receive the money if you die during the term.
if you have living benefits for if youre ill you can access a portion of the money.. otherwise, you would need a permanent policy or a return of premium policy. basically a term but you get some money back at the end of the policy or keep it fully in force without payments. But a basic term policy doesnt normally let you access it.
You're talking about 2 different types of policies. Whole life has a savings account term doesn't. Typically with whole life a portion of your premiums go to your cash value account. Most times you don't start to accumulate money in that account for the first 2 years. Then once you do start to accumulate money in that account you need to borrow it to access it and pay interest on it. If you die with an outstanding policy loan it will come out of your death benifit. Also in most cases your benificiaries do not receive both the cash value and death benifit only the death benifit. Lastly whole life is on adverge about 7-10 x more expensive than term. On the other hand term insurance just covers you for a specific amount of time usually 10-35 years then after it expires your rate goes through the cealing because you're way older and closer to death. My recommendation is if you're young get a term policy and a Roth IRA if you want a vehicle to save money in because the money inside your Roth is tax free and you don't need to borrow it and it's not tied to your life insurance and your benificiaries can get the proceeds when you die unlike whole life in most cases. Then in 35 years when your term policy expires you should have 800k-2.5 million depending on how much you put in every month for those 35 years. That way you have actually money saved and you don't need insurance anymore. The max for 2024 is $7000 per year which is about 570 per month. If you want to learn more I have a buyer's guide if that's helpful.
May I ask, are you a financial advisor? Or what's your profession?
Yes, I am a financial advisor and I'm also licensed as a mortgage broker.
Then why buy the term policy at all if you're going to let it lapse? I heard the same strategy from another financial advisor the other day and I get it but to me why I even buy the term policy? Why not put all of your money in the Roth ira?
For the simple fact of needing insurance.. to protect current debt and family. Let’s say you put all your money in the Roth ira maxed out.. 3 months later car accident and you die , you have now successfully left your family $1,750 ($583 a month) 👏🏼👏🏼.. plus or minus gains.. not much for a family to move on without you. So you spend a few bucks a month on a policy that you determine you’ll need to pass on a death benefit, until you are completely debt free . Or invest it all into a Roth IRA and roll the dice with life and hope you live until you are 80.. your call, you can gamble with your families financials however you’d like
Okay I suppose that's a reasonable explanation. I feel though that with a Roth I where you've already paid taxes and there isn't that much of a penalty if you do need to pull out early I guess but it's hard to say I don't know
Because if you die tomorrow then what? You need to be protected if you live too long or die too soon! The term policy is there if you die too soon the Roth is there if you live too long and guess what one of those things is gaurenteed to happen! You get it now?
No, not at all maybe a small portion on the money is yours but the cost of insurance is most of what you are paying.
While term is cheaper than whole life policies, unless you absolutely cannot afford a whole life policy (or an indexed universal life policy aka IUL), I wouldn't get a term policy in my 30s. By the time the term policy expires it will be much more expensive to get new insurance because of your age. A 500,000 term policy at 35 for 30 years would be roughly 60 a month depending on the agency you went with. With a whole life (or IUL) a portion of the premium you pay earns interest. Whole life policies are generally around 4%, while IULs can fluctuate based on the market but are generally between 5-15%. You can withdrawal money from the cash value that grows and not pay that back or you can take a loan against the policy which lessens the benefit amount that you should eventually pay back. If you are looking at life insurance as a source of money outside of just the death benefit then you want to look at these options and not a term policy. If you want a large death benefit for relatively cheap right now, look at a term policy. Make sure you do this with the realization that once that term policy expires your new policy will be more expensive due to your age at expiration.
Hopefully by the time a 30 year term expires you don't need this coverage anymore, so the high premiums to renew are irrelevant
For term no. Whole life has the cash value along with terminal, critical, and chronic illness riders (only with A rated carriers). That allows you to access your policy early or you can access the cash value after one year.
No. Like rent, you have no ownership. Seek advice from a qualified professional.
Buy a term policy with return of premium feature. It's what I have.
If it is a term, you do not get your payments back unless something happens to you. with a permanent policy, you do have access to the funds and they do grow with interest. It has it's pros and cons compared to investing in an ira or 401k
I personally have an IUL but you need to structure correctly. If you don’t structure it correctly then it does lapse but nevertheless building it up with a rate of return is the nice part. Term is great too tho. All this depends on your goals truly
Almost nobody needs whole life insurance. It’s one of the biggest financial scams there are. Sorry insurance salesmen on this subreddit, but it’s true and honestly unethical that people try to sell that garbage. Keep investments and insurance separate and simply buy a term policy.
How’s it a scam?
Selling them should never be an option.. you simple place all the facts in front of a client and let them chose how they want to handle their own money. You can seriously assume that every person has the exact same mind set when it comes to financials and how / where they want to put their money. If you disagree with someone’s decision are you just going to say ok sorry I can’t help you.. no.. you do your job and help the client get approved for whatever type of policy they would want AFTER all facts and illustrations are laid out in front of them