More Efficiency of Money

In a follow-up to The Efficiency of Money blog that we published a few weeks ago, I wanted to respond to some people who requested examples and actual case studies or illustrations of how life insurance can create an efficient place to put money.

The first request was regarding how a parent or grandparent can put money into a policy for a child. Our example is based on acquiring a Ten-Pay Insurance Policy when the child is 5 years old. The parents or grandparents pay $1,000 a month into a guaranteed policy which is paid up in ten years. The child can then pay for college through loans and then take money out of the policy to pay back all the loans. $12,000 a year is put into the policy for 10 years, then we pull out $18,500 a year for 16 years, which amounts to a lot more than what was put in. However, the policy stays in effect and without paying back any money into the policy, it will also provide an income at retirement of about $35,000 a year based upon current dividends and loan interest rates. And all the money withdrawn is tax free. The illustration shows how life insurance can be an efficient place to put money for children, by parents or grandparents. Click here to see the illustration.
(To view the complete illustration, Click here)

The next scenario is what we call a 20-pay whole life policy where the policy, with a premium of $22,400 a month, is guaranteed to be paid up in 20 years. As the illustration shows, eventually you can take out a retirement income of $117,827 a year for 15 years (based upon current dividends and loan interest rates), creating a tax-free pension through life insurance. Pretty impressive and a really great way to save money. Click here to see the illustration.
(To view the complete illustration, Click here)

The third scenario shows how life insurance could also be an efficient way to pay for long-term care. Using the same 20-pay policy described above, if you chose to add the long-term care rider at an additional cost of only $851.80, during retirement you would be able to access up to 90% of the death benefit while you are alive, to pay for long-term care. So, if you have a $1 million policy, you have a rider for $900,000 of long-term care benefits. A pool of money that can be accessed to help pay for long-term care, makes life insurance a really efficient way to save money because premature death, long-term care, forced savings and retirement income, are all encompassed inside the contract. Click here to see the illustration.
(To view the complete illustration, Click here)

Once you have had a chance to view the three different illustrations, if you have any questions or would like to see more information personalized to you, give us a call.

Dividends used to purchase Paid-Up Additions. Dividends are not guaranteed and are subject to significant fluctuations over the Lifetime of the policy. Changes in dividends will change all Non-Guaranteed values shown in this illustration. All illustrations are based also upon current loan interest rate which is adjustable each year.