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Making this thread primarily for search engines and people can search for the title and read my post.
Just got off the phone with a newly licensed agent in another state. She was telling me about how "million dollar baby" was presented in a presentation she saw.
The agent said that if you put in $500 a month into a policy for your child, your child will have a MILLION DOLLARS by the time they're 18 years old.
Let's do the math on that with a financial calculator for a newborn:
Present Value (PV): $0
Payments (PMT): -$6,000 (it's negative because you're making a payment out of pocket and INTO the policy)
Number of years (N): 18
Future Value (FV): $1,000,000
Solve for Interest rate (i): 22.47% rate of return required each and every year for 18 years after costs of insurance.
This... will not happen. Ever. With any policy.
Agents representing a policy to expecting to put in $108,000 over that 18 years and expecting a million dollars... is borderline FRAUD. I doubt E&O would protect those agents against misrepresentation and ignorance charges. [EXTERNAL LINK] - National Ethics Association
Now, I'm certainly not against having life insurance coverage on children. I support it (after the parents are properly covered and max-funding their own policies), but these kinds of presentations... should be CRIMINAL.
/end rant
Just got off the phone with a newly licensed agent in another state. She was telling me about how "million dollar baby" was presented in a presentation she saw.
The agent said that if you put in $500 a month into a policy for your child, your child will have a MILLION DOLLARS by the time they're 18 years old.
Let's do the math on that with a financial calculator for a newborn:
Present Value (PV): $0
Payments (PMT): -$6,000 (it's negative because you're making a payment out of pocket and INTO the policy)
Number of years (N): 18
Future Value (FV): $1,000,000
Solve for Interest rate (i): 22.47% rate of return required each and every year for 18 years after costs of insurance.
This... will not happen. Ever. With any policy.
Agents representing a policy to expecting to put in $108,000 over that 18 years and expecting a million dollars... is borderline FRAUD. I doubt E&O would protect those agents against misrepresentation and ignorance charges. [EXTERNAL LINK] - National Ethics Association
Now, I'm certainly not against having life insurance coverage on children. I support it (after the parents are properly covered and max-funding their own policies), but these kinds of presentations... should be CRIMINAL.
/end rant