Level Term Vs Adujstable Premium Term

[one321]

NWM doesn't have a friendly name for it, so I called it adjustable premium. LGilmore was correct in calling it an "annual increasing premium term." That's exactly what it does.

I'm not favoring NWM over other options. Basically, I've discussed insurance with a NWM agent and that's why I know more about their products. He can sell other company insurance, but he fights for NWM. I'm open to any reputable company.

I guess, the overall question for me is term vs. perm. I want a death benefit that will cover my family when they are in need. When my wife and I are old and grey with SS, investments, savings, and no children to take care of, I'm not worried about having a death benefit. Also, I'm not interested in generating savings or investments through my life insurance. Unless I'm missing something, I think that pretty much means I should just find a good term life policy that will cover me up to my late 50s.

 

[LGilmore]

"And if you feel better with your little kickback they give back to you in the form of a 'dividend' then sure stay with it. I don't buy it for a minute"

Thanks, I will.

I think we may be working from a different experiences base here. I own and do enjoy my little dividend ontop of the guaranteed return, especially when my portfoilio is down about 45% right now.

At this point in time, I'm really not questioning the decision to "invest the difference" back into my life policy over putting it into the market. There have been times where I wondered if that was the right thing to do. The last six months confirms it was a good choice for me. That annual statement with those solid cash values eases the pain and reduces the panic levels of the securities statements I am getting right now.

For you? who knows? I viewed my choice as part of several choices. If I was wrong, how much would it hurt me? If my wl provides me a 5 or 6% return on x amount of money (difference between cost of term and wl) and IF my other choices make 9% (or lose 9%) am I really that bad off? Is that little bit of money earning less than hoped market returns, but STILL moving forward... going to make me or break me?
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"I think that pretty much means I should just find a good term life policy that will cover me up to my late 50s."

Ah, then just look for a good policy that allows you to convert just in case you reach your 50's and things haven't worked out the way you thought they would. As I said ask yourself "if I am wrong" when viewing your future plans.

Your thoughts and ideas aren't new. However, for a large segment of people, they don't pan out. I make more commission off of term sales these days to people over 50, trying to cover their obilgations. I don't think purchasing coverage in their 50's 60's and even 70's was part of their plan.

There's cheapest today and there's cheapest over time. Usually in insurance they are two different products.

 

[one321]

Thank you, LGilmore. Your posts give me plenty to think about.

 

[dgoldenz]

I guess, the overall question for me is term vs. perm. I want a death benefit that will cover my family when they are in need. When my wife and I are old and grey with SS, investments, savings, and no children to take care of, I'm not worried about having a death benefit. Also, I'm not interested in generating savings or investments through my life insurance. Unless I'm missing something, I think that pretty much means I should just find a good term life policy that will cover me up to my late 50s.

I explain this to every client deciding on their life insurance options. When you look at term vs. permanent, you are hoping that your life turns out perfectly. Investments perform as expected, savings are built up to a substantial level, and you are well off going into retirement. Unfortunately, life is not perfect and for most people, things never turn out the way they planned. Issues with children arise, jobs are lost, people get sick and need help, they must take care of elderly parents out of their own pocket, etc.

Most people don't consider the fact that at some point they may be spending down the assets they thought they would save. How much does a nursing home cost per year, $50k if you are lucky? What if a nursing home is needed for 5 years and there is no long term care insurance involved? How are you going to replace the $250k, out of your own pocket or through the life insurance? You sure could buy a huge policy with that kind of money. We have one client whose mother has extreme dementia and they are spending $400k per year out of their own pockets for her care. What if she lives for 1 year, 2 years, 5 years? Most people can't afford that kind of financial shock.

The best thing you can do is purchase a permanent policy when you are young and healthy. A 25 year old male in perfect health can get $500,000 in permanent coverage (guaranteed to age 121) for only $1,381.50 per year. If you lived 50 years, you only spent $69,000 to generate $500k income tax free. How long would it take you to earn $500k, which is more like $900k before taxes? If you lived for 70 years to age 95, you'd have spent $96,705 to generate $500k tax free. Even if you don't want to spend X amount of dollars for a permanent policy because of budget constraints, it would be wise to consider at least a portion of your benefits as permanent.

Keep in mind that as your health changes and you get older, your premiums will only go up. It is unlikely that you will be more healthy in the future than you are now. To continue the example, if you decided to convert your policy at age 55 to a permanent one because things have changed, it would cost you $5,327 per year.....year after year after year after year. You get the idea.

 

[LGilmore]

"Thank you, LGilmore. Your posts give me plenty to think about."

Thanks.

Just a quick observation.. look around at the people you know that are in their 50's and 60's now. Do you think everything went the way they thought it would?

As I said your idea isn't new.. it's been kicked around for decades. It works for some and not for others. Avoid the "absolute" people as most are full of Shite. As you plan, plan for change.. be it more kids, different jobs, tax brackets, an accident or illness, and so on... Figure out what choices that you make that can still be successful (to you) in an ever changing environment.

There is no perfect investment, study the ones you're interested in, learn about the down side and see if that's acceptable to you as the upside to any investment is cake. Then remember your choices don't have to please anybody else as there will always be critics.

 

[bobson]

Don't be a fool and buy their crap. Find the cheapest term you can and lock it in for a stable 20 years. What if you become uninsurable but NWML will continue to strangle you with the increasing rates every year if you want to keep their increasing premium life insurance.

These are two amazing sentences when put together. In one sentence the insured is told to buy the cheapest term insurance possible. In the next he is asked "what if you become uninsurable?"

What happens at age 50 if he becomes uninsurable and he realizes his cheapo term does not allow any conversion options or limited options? What if he realizes he needs insurance beyond the term?

The uninsurable question is a great question to ask, I just think you gave him the wrong answer.

 

[one321]

This discussion on term vs. whole has given me even more to think about.
www<period>theroundtable<period>org/topics/show/212

I don't know what I want to go with now. I'm actually reconsidering whole life insurance when I was sure that wasn't the best option for me. The thing is, I don't trust insurance sales people. I just don't. The NWM guy I am dealing with has been around for a while and knows what he's talking about. I just can't shake the feeling that I'm being tricked into something that is better for him and not the best option for me. I don't think it's him either... it's just my lack of trust.

Sorry about the <period> stuff. I wish I could post clickable links, but I don't have enough forum posts yet.

 

[dgoldenz]

This discussion on term vs. whole has given me even more to think about.
www<period>theroundtable<period>org/topics/show/212

I don't know what I want to go with now. I'm actually reconsidering whole life insurance when I was sure that wasn't the best option for me. The thing is, I don't trust insurance sales people. I just don't. The NWM guy I am dealing with has been around for a while and knows what he's talking about. I just can't shake the feeling that I'm being tricked into something that is better for him and not the best option for me. I don't think it's him either... it's just my lack of trust.

Sorry about the <period> stuff. I wish I could post clickable links, but I don't have enough forum posts yet.

If you aren't worried about cash value, you shouldn't be buying whole life. You should be buying universal life, which is sort of a hybrid between term and whole life. It can guarantee the benefits for life until age 120 but minimizes cash value (in comparison to whole life) to keep the premiums at the lowest level. At the most preferred rate, a UL policy will usually be about 40% of the cost of a whole life policy for the same death benefit.

 

[LGilmore]

"it's just my lack of trust."

It's Ok to be skeptical. But remember to apply that skeptism to all sides of the arguement. If you only apply it to the agent and to whole life, but accept that term is better without really looking closer at it's faults, have you applied your skeptism equally?

Cause kinda what you're saying is "if he told me to buy term, maybe I should buy whole life".

Here's a suggestion, tell him you're not sure yet. Apply for the term policy that you can convert later.

Your first priority really is get insurance. period. Especially if you have none. Then once you're covered, you can decide to convert or not. Your opportunity costs might be a few bucks but hey, you're covered.