Chosen by Asker

Okay, I've read all the other answers so far posted and not one of them is fully accurate. Of course, that might be also because you haven't provided complete information. i suggest that you ask the agent you're sitting with to fully explain the policy in detail and why he/she is recommending this for you - e.g., Is the policy a Variable UL or an Index UL? What's the blend on the policy, i.e., what's the base amount and the term portion that brings the total to $500K. Is it all base or is it, in fact, blended? What is your ACTUAL cost of insurance (COI)? It's not $194. Part of that $194 is cost of insurance; part is premium load, and part goes into your allocated subaccounts if its a VUL or into the segment if it's an IUL. Not one of the answers here takes into account potential tax consequences of having your money grow outside of an insurance product. They toss out buy term and invest the difference (that's actually what can be done WITHIN your recommened policy as well, but with potential tax benefits as well) Nor do they take into account possible restrictions on your use of money outside of a policy, e.g., the age limitations on access of an annuity, 401k, IRA, or even ROTH IRA. They don't even take into account restrictions on the allowable reasons to withdraw early if you need money for an emergency. Just for the heck of it, I ran an IUL blended 50-50 and ran it level from one product provider. I figured you as preferred non smoker (two below the top) and assumed an interest over time at 9.5% using the numbers you gave. The actual numbers given are net of fees. Doing that and using the $194 you stated and paying until you retire at 67. I then had you stop paying premium and begin taking out through age 84 (after which I assumed you died). At that rate, you've put a total of $104,760 in; and you begin to pull out $79,900 a year from 67 to 84 for a total about $1.2 million. That money comes to you without taxes so far as laws are now. Your family is also projected to receive a death benefit of about $85K. (NO this is not some solicititation, I'm just trying to get some info for you.) If you happened to die at anytime before this, then your family would receive the death benefit Now having said all that - it's an INSURANCE policy and it's a life long one that happens to have some potential tax benefits as well. That may not seem important to you now, but try being 40 with kids at home and being uninsurable after your term policy has expired, it's not a good thing. Also try pulling out the same $79,900 a year out of you IRA or 401k and see how much you get after taxes are paid on it. Yes, you could pull out the full $79,900 out of a ROTH. Now, let me ask you something? WHY are you asking this here? Very very few of the folks answering questions like this on this board are dually licensed (having both a life and securities licensed) and as such many have pretty much zero idea of anything except buzz words. I believe most really do try to provide what they understand to be accurate info, but there is also no doubt that some have their own agenda to promote. Your life and your future are way too important to depend on "cliff notes" here, including mine. Sit down with your agent -- have anyone else there that you respect and have the agent explain the potential benefits fully to you. And BTW - $500k for a 23 year old could either be too much, just right, or not enough insurance depending on your income; debt; etc. Addendum: You DON'T need to be worth "a million bucks" to need at least $500k insurance. Suppose you make $45-50K/year and are living just okay. If you die, your income stops permanently - but your family continues to need food; shelter; bills paid, etc. $500k will cover them for ten years if they just stick it under the matress and use $50k/year. If they put it somewhere where they can get say 8-10% on it and just live off the interest each year, then it can continue pretty much indefinitely. Kids don't have to lose their home, their school, their friends. Wife doesn't have to go back to work while kids she and kids are grieving, etc. Insurance isn't just to pay burial and some credit card bills.

by ieguy

6 months ago

Asker's Rating: 

shop around, only term insurance

by ben l- 6 months ago

WOW!! That is why too much money to pay. And, are you worth a million dollars? Do you need that much insurance? Keep shopping around. Life Insurance is never an investment. Take term life insurance with level payments and find an investment advisor or bank to do your investments.

by car253- 6 months ago

yes. What's the POINT? What's the GOAL of your life insurance? Let's run the numbers. Assuming that your probably going to live until you're 70, do you have any idea how long until your money is worth $500K to the insurance company? Here's a great calculator: www ... It tells me, if you die at 70, and this policy pays out, well, you would have paid IN the approximate value of $$2,528,567.00. In other words, you get ONE fifth of the money, the insurance company keeps FOUR FIFTHS. If you pay yourself that $194 a month, and stick it in an index fund, after 31 years - you'd be 54 - you'll have more than the $500,000 - and you don't have to die to use it. Even better, by the time you'd retire, you'd actually have $2,000,000 in there - without putting a dime into an IRA or 401K. So. What's the GOAL of the insurance? If it's savings, or wealthbuilding, you've got a really BAD deal there.

by mbrcatz- 6 months ago

That seems like alot but I'm guessing it's whole life insurance? Regardless shop around and use quotes as leverage.

by Whoseitswhat- 6 months ago