Learn how life insurance works in this quick 10 minute video lesson. This free video training reveals the secrets that you won’t learn from the insurance companies or your financial advisor.
After watching this video, you will probably know more about life insurance than most life insurance
agents, should you ever have to talk with one again. At a minimum, you will probably know more than
they are willing to tell you.
Just complete the form and you’ll gain instant access to the video, 10 Minute Lesson on Life Insurance.
How Do Premiums Work?
There is the “minimum one can pay” — for a given amount of insurance coverage for a specific age, and
the “maximum one can pay”. There is almost an infinite amount of premiums that can be charged between the “minimum” and the “maximum”.
What’s Better, Term or Permanent Insurance?
There are circumstances where one only needs death protection—and a low, “level premium” is desirable.
In this situation, and when coverage is needed for a “short period of time”— “term coverage” may be the
best immediate temporary solution.
On the other hand, if you’re seeking more benefits for your premium dollars, then whole life or permanent insurance may be a better option.
Let’s forget about insurance for just a minute and talk about benefits. In any vehicle one would use to
accumulate money over time—a major desire would be to maximize benefits—in addition to achieving an
acceptable “rate of return”.
If you could waive a magic wand—what benefits would you desire?
- Would you like the money in the account to grow “tax deferred” as opposed to “taxable”?
- Would you want the money to come out “tax-free”?
- Would you want a competitive Rate of Return?
- Would you like the interest guaranteed?
- In the event you get sued—would you want it protected from judgments?
- Would you like to contribute as much in the account as you desire—without restrictions?
- Would you like to invest in anything you choose?
- Would you like to be able to use this money as collateral?
- If possible—would you want this money exempt from estate tax?
- Would you want access to this money while you are working—as well as during your retirement?
- In the event of your disability—would you want your contributions to the account to continue even though you can no longer make them yourself?
- Would you want your contribution to this account to be tax deductible?
Of course! You would want all these benefits—if you could get them.
There is only one product that offers the majority of the benefits on the list—and it is “permanent life
insurance”. However, not just any type of contract will do. Life insurance policies that are “minimally
funded” only provide minimum levels of benefits.
What is Opportunity Cost?
When determining the cost of “term insurance”—one must also factor in the “opportunity cost” of owning
this product. Remember the cost is not just the amount you paid in premiums—but what those dollars
“could have earned” had you not bought the coverage—and taken the risk yourself—which we are not
suggesting you do.
What is a MEC Modified Endowment Contract?
Basically the government decided the upper limit of tax advantaged growth they would allow and the
policy holder still have access to the cash value. Policies outside this allowable corridor are determined to
be a “Modified Endowment Contract” or MEC—which simply means the government will treat the
insurance contract like they do “Qualified Plans”—with all the rules, regulations and penalties.
You May Not Need Life Insurance…
How Much Life Insurance Do You Want?
Most of us assume this is a needs discussion. It is really a “wants” decision because life insurance is the
only product that can provide the resources should you not live long enough to accumulate them. There is no-one wise enough to determine what one needs—since the very thought of “need” represents the least amount necessary. It would be hard to find anyone, who has been successful at anything, who began by calculating the least they would have to do to make it.
Life insurance is a “want” product. You decide how much it will take to accomplish what you “want” in the
event of death and then it can be determined how much coverage it will take to accomplish what you
want. Life insurance is the only product that can provide the immediate funds to guarantee that what you
want to happen—will happen.
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