Buy Term And Invest The Difference
- Thread starter Atlas
- Start date
- 1,953
Me thinks he is looking at a specific target market of middle income and below rather than the over all function of the products and where they fit as a whole.
Term does what it does... just like all the other flavors. But the problem with the termite position is that it only works IF IF IF IF IF this or that happens. Unfortunately, reality gets in the way.
I must have done 10 or 12 substantial term conversions in the last year for people who were going into year 11 or 16 or even 21 who could no longer re-enter or qualify for standard or better rates. 3 or 4 of those had become totally uninsurable.
I must have done 10 or 12 substantial term conversions in the last year for people who were going into year 11 or 16 or even 21 who could no longer re-enter or qualify for standard or better rates. 3 or 4 of those had become totally uninsurable.
- 17,048
Was the "difference" they invested pretty substantial?
Most of the cases really weren't from BTID clients. Most were from orphans or my own clients that thought they would outgrow their "need" for the death benefit.
I finished one last week who bought 1M of 10-year term 10 years ago. His business and real estate hasn't done as well in the last 3 or 4 years as he hoped, so he still wants 600k. He's 63 and table F with 3 companies applied for. Our only option was to convert his term with the original company at standard rates.
Another was a teacher that insisted on term 10 years ago. She was preferred at issue. In the 9th year, she was diagnosed with breast cancer. She and her husband assumed they would just keep re-upping on their term until they reached retirement. They are now both in their early 50s and buying permanent instead of term.
I sell a lot of term because it's the right thing to do in many cases. It also creates a substantial inventory of future conversions. I don't get into the BTID debate simply because that whole concept is a myth - especially when you consider the realities of life.
- 10,709
Thats the biggest problem, it never is.... its always "buy term and blow the difference"....
But imo; people can buy term all they want..... last week I placed a $4K/year 10 year term for a 65 year old.... he had always been a termite.... he showed me an old proposal from 1990 that was for a WL; it was for $2k/year and at this point would have been more than what his insurance need is..... he just was always told he didnt need LI after 60....
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- 17,048
The thing I can't get past is the BTID people NEVER know what the difference is. They never get a price for whole life. They aren't investing squat.
They always know they can budget $75 or $150 or whatever the amount is on insurance and term will get them more death benefit.
I tell them if you are spending $100 monthly on term then your budget needs to allow $500 monthly for your investment of the difference. If you aren't going to do that step you are going to screw yourself up.
They always know they can budget $75 or $150 or whatever the amount is on insurance and term will get them more death benefit.
I tell them if you are spending $100 monthly on term then your budget needs to allow $500 monthly for your investment of the difference. If you aren't going to do that step you are going to screw yourself up.
- 1,459
For your "invest the difference" fund, would it be all go go gadget growth stocks/funds, or would a portion be more conservative fixed income? Say 10% to 20%, even for someone younger.
Without going into all the other holes in the arguement, that alone would mean permanent insurance would likley make sense if one has a desire for a permanent death benefit. If you are married and educated on the topic, you probably have a desire for a permanent death benefit in your later years.
- 7,790
Jamesrcooper, is there a Reader's Digest version of your post?
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