- 17,077
No. Your first thoughts were correct.
If people buy level premium whole-life with lifetime payments, you can always figure the break-even point for them.
In your case on the Americo policy you figured it out of about 5-years. So if they die before 5-years they are money ahead. If they die after 5-years they have lost money. They lose more money the longer they live.
The mentality of people who buy this type of insurance seems crazy. But with some people, the more you try to talk them out of it, the more they want it. You can point out all day long how they can save their own money and in 5-years (or less with interest) they will be self-insured for that amount. They don't understand the concept of saving money. They know if they have the money come through their hands, they will spend it on something (usually lottery tickets, alcohol, cigaretts, firecrackers etc.) They see the fact that the insurance company will take the money from their account before they ever see it as a HUGE benefit. They think of their policy in the same way as we think of our net worth.
So after 10-years of selling against this mentality, I now offer it as a last resort choice. I sell very few pay for life level benefit policies because I preach so hard against them. But there are THOUSANDS of them sold everyday. Usually there is 10 to 20 years before the break-even point but almost ALL of them out live the break even point and lose money.
It's almost funny that the AARP gives a free calculator with the application when they sell their version. They know the people who respond don't know how to use the calculator anyway.
