This comes to $360,920.41.Okay … so now you’re 65 years old and you have $360,920.41. But guess what?When you reach 66 your $500,000 term life insurance policy will lapse without value because the annual premium becomes $21,180.Yep, you read that right! It jumps from $700 to over 21 thousand dollars.At age 70, it’s $31,430. At age 75, it’s $52,970.There’s no way on earth you’ll pay this premium. Problem is … you ain’t dead yet!You have paid $21,000 over a 30 year timeframe to have a $500,000 life insurance policy during a period of time when the odds are you would never die anyway.
Your loved one’s investment account still won’t be worth $500,000.What’s more, she will have to pay income tax on the investment gains. Remember, life insurance proceeds are income tax free.Now let me quickly repeat myself. I am not against term life insurance … as long it’s purchased with an eye towards the reality of future expectations.If your term life insurance policy is issued by a highly rated company with a broad selection of products, you will have ample opportunity to convert the term into something more permanent over the course of the 30 years in our example.
You may not be able to get more than a 10 year guarantee if you are over 50 years of age.So, exactly what is the best kept secret in a life insurance policy?It is a universal life insurance policy that guarantees the death benefit regardless of investment performance.Universal life is the most flexible type of policy on the market. The premium is higher than term, but lower than whole life. There are several on the market, so you must be careful.If you decide to buy term because of budget constraints, then be certain to buy from a company that also offers universal life.
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