2
2insureyou
Guest
AMEN! We can get into all kinds of arguments with our clients, but at the end of the day, this is the key... Absolutely!
Buy Term And Invest The Difference
- Thread starter Atlas
- Start date
AMEN! We can get into all kinds of arguments with our clients, but at the end of the day, this is the key... Absolutely!
- 687
Speak for yourself. I tend to save at least $4.00 a week that I spend on my McDonald's Happy meal with slices of apple while I have kept my term policy, and dropped my wl, di and ci policies. I just can't afford the damn things anymore.
Maybe more of you spendthrifts should follow in my footsteps.
Here is one of the problems with BTID. The assumption is that we will not need or want the coverage after we get older but that is rarely the case.
- Staff
- #144
- 1,459
If they are not married, owe no one money, and want to spend every last dollar, then there is no need for life insurance in the later years. If all three are not true, they probably want some life insurance.
2
2insureyou
Guest
Admittedly, I haven't read all 15 pages of replies, so perhaps this has already been addressed?
Why does it have to be either/or? Why can't it be both? Term insurance has it's place, as does permanent. Permanent insurance fills a spot that no other instrument can, however.
First of all, it's not fair, unless we're talking variable or indexed based accounts, to compare whole life and the stock market. Two totally different worlds and expected rates of return.
We would all hope, that over time, you could beat the returns on a whole life contract in the market, no matter HOW good the dividends are.
I would direct you to the last several years though. People's appetite for risk has clearly decreased, and they are indeed looking for at least some of their money to be in safe, predictable accounts.
So, why not bonds, right? Well, that's fine... however, life insurance is typically even safer than bonds, and provides, if with the right kind of company, very similar and in some cases better returns than bonds. It certainly provides better returns than cash.
We don't have people come into our offices at 50 who want their life insurance to disappear.
If someone is committed to saving, let's say, $10,000/year, I may not suggest they have all of it in life insurance, but depending on their risk profile, we may devote, for example, $2500 to a life insurance contract, buy the remainder of the needed death benefit in term insurance, and invest the rest in equities if they so choose.
I had one client who has his emergency fund already saved in a liquid account. When I discussed the concept of converting his term and moving that $30,000 into an efficiently mixed contract with PUA's, he immediately saw the value. That portion of his life insurance will never go away, it will grow on a tax favored basis, and he can use it before 59 1/2, and he wants his emergency money to be SAFE... "why not use life insurance?" was his question to me.
We're putting it in over 8 years, but after that, he's got life insurance that will never go away, and a tax favored account for his emergency funds.
He still invests heavily in equities and bonds, but in this case, that's how he decided to use permanent in addition to his term insurance
There's a million ways to do this thing called "planning"... This is but one application. I just think the statement "Buy term and invest the difference" is the wrong argument to begin with. It starts with a faulty premise that it's either/or, when it is not.
Why does it have to be either/or? Why can't it be both? Term insurance has it's place, as does permanent. Permanent insurance fills a spot that no other instrument can, however.
First of all, it's not fair, unless we're talking variable or indexed based accounts, to compare whole life and the stock market. Two totally different worlds and expected rates of return.
We would all hope, that over time, you could beat the returns on a whole life contract in the market, no matter HOW good the dividends are.
I would direct you to the last several years though. People's appetite for risk has clearly decreased, and they are indeed looking for at least some of their money to be in safe, predictable accounts.
So, why not bonds, right? Well, that's fine... however, life insurance is typically even safer than bonds, and provides, if with the right kind of company, very similar and in some cases better returns than bonds. It certainly provides better returns than cash.
We don't have people come into our offices at 50 who want their life insurance to disappear.
If someone is committed to saving, let's say, $10,000/year, I may not suggest they have all of it in life insurance, but depending on their risk profile, we may devote, for example, $2500 to a life insurance contract, buy the remainder of the needed death benefit in term insurance, and invest the rest in equities if they so choose.
I had one client who has his emergency fund already saved in a liquid account. When I discussed the concept of converting his term and moving that $30,000 into an efficiently mixed contract with PUA's, he immediately saw the value. That portion of his life insurance will never go away, it will grow on a tax favored basis, and he can use it before 59 1/2, and he wants his emergency money to be SAFE... "why not use life insurance?" was his question to me.
We're putting it in over 8 years, but after that, he's got life insurance that will never go away, and a tax favored account for his emergency funds.
He still invests heavily in equities and bonds, but in this case, that's how he decided to use permanent in addition to his term insurance
There's a million ways to do this thing called "planning"... This is but one application. I just think the statement "Buy term and invest the difference" is the wrong argument to begin with. It starts with a faulty premise that it's either/or, when it is not.
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- 337
I sold a MAPD plan to a lady's husband and was able to become Agent of Record of the wife's life insurance policy. She was a teacher, needed money to survive over the summer, and we took over $31K out of that WL policy as loans.
I have not heard of any success stories of but term and invest the rest - I am sure there are some FAR & FEW... but for most folks, it just does not work!! Reality & discipline meet theory. I know of a 83 year old woman who needs to rely on her Granddaughter to pay her ever increasing Primerica term policy. And I have a couple I sold two FE policies from Monumental after having a Primerica policy for over 20 years. Sad but true - they were sold a bad package or would not listen to reason, the wife is not in good shape and already has gotten declined by a good carrier. The consequences of disinformation can be costly!!
I have not heard of any success stories of but term and invest the rest - I am sure there are some FAR & FEW... but for most folks, it just does not work!! Reality & discipline meet theory. I know of a 83 year old woman who needs to rely on her Granddaughter to pay her ever increasing Primerica term policy. And I have a couple I sold two FE policies from Monumental after having a Primerica policy for over 20 years. Sad but true - they were sold a bad package or would not listen to reason, the wife is not in good shape and already has gotten declined by a good carrier. The consequences of disinformation can be costly!!
I have a great success story of buy term and invest the difference. Bought the term 20 years ago and now that I am ready to retire I can see that my investments have done quite well. The new refrigerator I invested in is 9 years old, the new car is 8 years old.. Oh yeah, there is the new truck that is now 12 years and the boat that is 4 years old. I could go on and on but I don't want people to get the impression that I am bragging about my investment smarts.
- 8,707
Its a replacement strategy...It was designed to replace higher premium WL with lower (lower being relative to Primericas Premiums) term policies....With little to no thought to the invest the difference as a way to save the client money...But the true idea says no dollars as the same dollars should be going to the investment but it never does.
Now people buy term without any idea of the cost of wl and wonder why the plan fails having spent $23 a month for 20 year term for 20 year and putting $300 a year into a mutual fund.
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