Buy Term And Invest The Difference

[dyadvisor]

I strongly agree with all the last statements. First (if insurable) buy as much term as possible. Then do not view most life insurance policies as a cash investment.

When I earned heavily, I saved and diversified in real estate water property, mutual funds etc. I am glad I pulled out of real estate and put that money into a fixed annuity.

I never said UL was the only form of cash life, I said UL is a dangerous situation, for some companies, as right now not enough people will lapse, while the insurance company is committed. Nor did I say that a fixed annuity is the best long term investment. That is why a have a management firm on my other liquid assets, which spread options over many areas.

Life insurance is for risks, for investment depending on the economic times, there are many options. Personally, on that side I have remained flexible and it has paid off.

 

[Full Throttle]

Life insurance is for risks, for investment depending on the economic times, there are many options. Personally, on that side I have remained flexible and it has paid off.

What most people miss in the BTID arguement is this, you eventually need to use those "invest the difference" assets to generate an income you can not outlive. It's not the number you accumulate that matters, it's the income that you take off that number.

 

[xrac]

What most people miss in the BTID arguement is this, you eventually need to use those "invest the difference" assets to generate an income you can not outlive. It's not the number you accumulate that matters, it's the income that you take off that number.

That is the point that most termites miss. In a perfect world btid would be the strategy to pursue. WL works for people it don't save or for whom the markets go against.

 

[wfs]

Most people simply "buy term", then cancel their investment when times get tough. Then the term is eventually canceled. I don't know the exact numbers, but most term policies never pay a claim.

Conversly, I do not believe in the concept of a "forced investment". In fact, it's nothing but marketing spin, just like BTID. If a person is not financially disciplined, then any of their financial instruments that they are paying for may lapse or be canceled.

As you will learn in any ethics class, #1 is to properly insure, #2 is to properly invest. If the person cannot afford adequate permanent coverage, perhaps term is the answer. But not always. OK, I'm not going to go into the one size fits all discussion, most of us here understand this.

The BTID concept is flawed and does not take into account life changes, changes to tax law, health, etc... A comprehensive financial plan must make some reasonable assumptions about the future and must plan for unexpected events. I am going to stop short of saying that a good long-term plan should have some permanent insurance, since every case if different, but to instantly exclude permanent insurance from even being a consideration could be considered negligent IMHO.

 

[VolAgent]

The BTID concept is flawed and does not take into account life changes, changes to tax law, health, etc... A comprehensive financial plan must make some reasonable assumptions about the future and must plan for unexpected events. I am going to stop short of saying that a good long-term plan should have some permanent insurance, since every case if different, but to instantly exclude permanent insurance from even being a consideration could be considered negligent IMHO.

So, you're going to get someone who won't pay a couple hundred a month for a permanent policy where most of the premium goes to cash value, to pay a couple of thousand for a comprehensive plan?

How is that working out?

 

[wfs]

So, you're going to get someone who won't pay a couple hundred a month for a permanent policy where most of the premium goes to cash value, to pay a couple of thousand for a comprehensive plan?

How is that working out?

Umm no... I'm providing permanent, permanent plus term, or term whenever it makes sense based on the situation. I thought I made it clear that each situation depends on the circumstances.

 

[Cornelius]

I assume the BTID concept has been around for at least 30 years. Has anyone done a study on how the concept has performed long term as a whole? Especially considering it's said Term only goes to claim 1-3 %.

 

[Full Throttle]

Term and permanent are two different products for two different needs. BTID only makes sense for comparision if a person only needs or wants term insurance, if that's the case, permanent shouldn't be in the mix anyway, so there's nothing to compare.

 

[Cornelius]

I'm not talking about term verse Perm. Let's say 20 years ago a group of people replaced their Perm. product with BTID concept. Well how did they fare?

If they didn't save and 20 years later their term went to ART did they come out better? I'm talking about the the common working person. Not high income earners.

 

[WinoBlues]

I'm not talking about term verse Perm. Let's say 20 years ago a group of people replaced their Perm. product with BTID concept. Well how did they fare?

If they didn't save and 20 years later their term went to ART did they come out better? I'm talking about the the common working person. Not high income earners.

My experience is, that they are now 20 year older insurance shoppers. Now or future conversions.

I AOR every orphan term case that I can find. I love the old ones. If it is with a company I do not have, I put them in a green ($) file and touch them every so often. About 5 years out of expiration, I can convert them or rewrite them. The new ULTerm policies may put a dent in my method.