In Part 3 of this 3-part blog, Byron Udell, Founder and CEO of AccuQuote, continues to share how YOU can Win the Game of Life Insurance. These tips will make buying life insurance easier and less expensive.
Now that you know the SECRET to winning the game of life insurance (DIE WITH YOUR POLICY IN FORCE!), it’s time for some real world examples.
Winning the Game with Term Life Insurance
On the surface, the only way to win the game with term life insurance is to do something you don’t want to do…die before you’re supposed to (dying young is not exactly ideal, at least not in my mind). But even if you don’t die before your time, a term life policy might still work, but only if you’re smart enough to “convert” your policy to permanent insurance before you lose the right to do so, and then hold on to the coverage long enough to die with it in force.
What about Permanent Insurance?
It costs more than term, but it DOES have a level premium for the rest of your life.
Consider this example: I bought a policy last year…at age 55. $1 million of coverage at a price of just over $10,000 a year. Assuming I live to age 85, I will have made 31 payments of $10,000, or around $310,000. My family will receive $1,000,000 tax FREE…for a gain of $690,000. That’s an AFTER TAX rate of return of over 7%, and the pre-tax equivalent rate of return, at least for me, is well over 11%, and it’s a conservative, fully guaranteed contract, issued by a multi-billion dollar, A+ rated financial institution that’s been around for well over 100 years.
And remember, that high return is if I die about when I’m supposed to. If I die early, then my policy really pays off. The returns are astronomically high. When I bought my policy, I tried to fathom a scenario under which I could live long enough to make the purchase a bad deal. The fact is, I can’t. Even if I live to 100, I still WIN the game.
Let’s look at another example, one that’s more representative of our average customers: Age 43, female. $500,000 policy, LIFETIME guaranteed premium of about $2,500 a year. Say she lives to age 86. She will have paid in $2,500 times 43 years, or a total of $107,500. Again, at her death, her family would receive $500,000…tax free…for a net gain of $392,500. The AFTER tax internal rate of return on that is over 7.5%. The pre-tax equivalent is, again, right around 10 or 11%, depending on your tax bracket.
In today’s world of ZERO interest, where else can you go and get returns this high WITHOUT taking market risks?
The Choice is Yours
Some people ask, HOW can the life insurance company make any money on a policy where they’re returning a 7% rate of return if you die at life expectancy, and an astronomical return if you die early? Especially when they’re only earning roughly 5-6% on the premiums you’re paying!
In case you weren’t listening, they DON’T make money on those policies. Again, If YOU DIE WITH YOUR POLICY IN FORCE, the insurance company WILL LOSE money on it. The people who buy…and DROP…their policies PRIOR to dying are the ones who subsidize the returns for people who are smart enough to DIE WITH THEIR POLICIES IN FORCE. Look at it like this: the losers pay the winners, and the house (the insurance company) takes a small cut. I know it sounds crazy, but it really is that simple.
Here’s the bottom line: TO WIN THE GAME OF LIFE INSURANCE…you have to own a policy that you’ll be able to KEEP until you die. Now for most of us, that means a policy with an affordable, predictable, and level premium for life. In short, buying life insurance could be one of the smartest financial decision you’ll ever make.
The choice is yours. If you are going to own life insurance, you’re either going to WIN the game, or you’re going to LOSE the game. We WANT our customers to WIN. When you call us at 800-442-9899 or get a FREE quote on AccuQuote.com, we’ll tell you how to win, and give you simple ways to make that happen. As always, it will be up to you as to whether you decide to take our advice.
At AccuQuote, we make buying life insurance quick and easy.