A life insurance policy is designed to protect a family financially if in the unfortunate event of an income provider passing away. I have been a licensed agent for over 8 years in Connecticut and Massachusetts. There are essentially two types of life insurance out there, temporary or permanent. I own a Term Life policy (temporary) which gives my family coverage for thirty years. I bought the policy in 1995 and so it expires in 2025 at which time I will be 64 years old. Term insurance has a limit so after 30 years I have to obtain another term policy and qualify again or choose not to be covered.

TERM insurance has a limit:

In my case the price of my premium was increased, and I’m not sure if it was mortality or just because of my age. At any rate that hurt me because I was loyal to the company I bought my policy from and the one I sold for. My premium for around $800,000.00 worth of coverage went from $180/month to 380/month and at the time I was only 55 years old and held the policy for 21 years prior. Did the company have to do this to me? I don’t think so. I’m in good health and I always paid my premiums on time. This is just an example of what can happen with a term life insurance policy as your age goes up they have the option to increase your premium.

Regarding the premium cost I was told that once it was set, an increase in premium was unlikely but within the insurance company’s right if necessary due to mortality costs (or many insureds dying in a short period of time).

Not having life insurance is not an option when you are starting a family because in the case of a loss of income due to an untimely death someone must still pay the bills.

My policy premium went up and that’s not good especially when I was sold by the notion that the premium was much cheaper than the premium for the same amount of coverage for a Permanent policy. Also, as it is a Term policy it means it has a time limit. Mine is for 30 years and after that I can decline the coverage or pay a much higher premium to keep the coverage at probably $3000 – $5000/ year. That’s the problem with term it stops unless you want to pay much higher premiums to keep it going. For the insurance company that works out great because you pay the premium for 30 years and decide that its too much to continue and you cancel the policy. The insurance company now parts way with you knowing they have collected ~ $60,000.00 and you get nothing. That’s the problem with Term it ends and you have payed in and get nothing when it stops. Sixty thousand dollars for peace of mind for 30 years. The insurance company knows this fact, and that is most term policies do not pay out. They know people are living longer and so having to insure young thirty year olds is not so risky. Its good business for them and not for you.

Is a TERM POLICY a good investment?:

Another important sales pitch an agent selling term may tell you is that since your premium is so low you can invest the difference, or use the gap between what you would pay for whole life versus term and buy a mutual fund IRA so that by the time your policy ends you will be self insured by the amount of growth in your mutual fund. You may have heard the phrase” buy term and invest the difference”. This method of buying life insurance is fine but only if you do the second part and that is “invest the difference”. Most people do not save for the future and by the time they are 65 years old they actually need to continue owning life insurance to pay for a house, medical expenses, and food in case one of the spouses dies. The same company that I bought my policy from always mentioned in their presentations that department of health and human services says “by the time 100 people reach the age of 65, 54% are dependent on the government, 36% still have to work , 5% are dead, 4% have saved enough to retire comfortably, and 1% are wealthy. That inherently says that 90% of the people would still need life insurance after age 65. Term insurance usually ends at age 65 or less if you bought it like I did when your 25 – 35 years old. That means when your policy runs out by age 65 and if you have saved enough money for retirement you still need life insurance to cover for income losses.

However, life insurance products are changing and becoming more advantageous to own for other reasons than just a death benefit.

ALTERNATIVE:😍😍👉👉

Whats the alternative?. I am grateful for the opportunity to have been introduced to Freedom Equity Group. Unfortunately, I was educated believing that “buy term and invest the difference” is the right method to buy life insurance. Also believing that by the time your policy term ends you won’t need life insurance anymore. Freedom Equity Group believes that a permanent policy with indexed universal life is the best way one can manage a life insurance policy. It allows you to build or obtain immediately a substantial death benefit while accumulating cash values. There is also a new trend in life insurance which allows someone to draw from their death benefit in order to pay for a terminal illness, critical illness, or a chronic illness. Its called life insurance that “you don’t have to die to use”. These benefits are called “living benefits” with in the life insurance policy. They allow you to draw up to 99% of the death benefit. Yes, the premiums are higher for universal life but they do not skyrocket out of control when you reach retirement years. They stay the same. For example, I sold a IUL (indexed universal life) policy to my son who is 24 years old. He is going to pay ~ 2 – 3000/year for at least 30 years at which time he can choose to stop paying the premium. He pays the premium for 30 years he will have a death benefit of $300,000.00 and a cash value of $150,000 assuming an interest rate of 5% which is low considering the types of investments that are available with Freedom Equity Group. Oh, and by the way that death benefit is for life. It doesn’t end even if he stops paying the premium. Lets assume that he decides to pay the premium another 10 years to age 64. Now his death benefit is ~ $450,000 and his cash value is $250,000. His total premium payed in after all those years is $114,000. So he has doubled what he put into the policy at $250,000 and that is based on only 5% interest. The flexibility in these policies doesn’t end there. He can draw from at this point in the form of a policy loan that is TAX FREE. He does not pay the loan back because the interest that he accumulates on the cash value balance generates enough to pay it off and so he can take another loan the following year. This method of pulling retirement money is called POSITIVE ARBITRAGE. Once the cash value is built the amount of loans taken from it cannot breakdown the cash value balance so one can continue to take loans year after year. This is of course assuming your interest rate earned is greater than your interest rate loaned. As long as that holds true the POSITIVE ARBITRAGE method of retirement funding works and the best part is you do not pay income taxes on that money pulled out. Vise Versa a 401K or an IRA the money that is deferred will be taxed when drawn from an IRA or 401K. So this actually works against the investor because that money will be taxed as regular income both the growth and the principal. In the IUL the principal and the growth are not taxed because its with in the confines of an insurance policy. The IRS rules identify part 702.4 that goes into detail how insurance policy loans are treated by the IRS.