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Clients often ask "Which policy is better?"
So let's examine some life insurance designs and you be the judge.
Assumptions: Male, age 40, no nicotine use, average health (what agents often call a Standard Non-Smoker).
Face Amount: $1,000,000
| Policy Type |
20 Year Term |
30 Year Term |
Guaranteed Universal Life |
| Monthly Premium |
$114.91 |
$212.54 |
$539.43 |
| Total Premiums - 20 Years |
$27,578 |
$51,010 |
$129,460 |
| Total Premiums - 30 Years |
$272,180 |
$76,514 |
$194,190 |
| Total Premiums - 40 Years |
$1,020,916 |
$825,250 |
$258,920 |
| Total Premiums - Age 95 |
$6,611,393 |
$6,415,727 |
$356,015 |
Premiums are guaranteed. The 20-year term policy has level premiums for 20 years, then annually increasing premiums to age 95. The 30-year term policy has level premiums for 30 years, then annually increasing premiums to age 95. The Guaranteed Universal Life (GUL) policy has level premiums for 55 years. The term policies cannot be renewed beyond age 95, but the GUL policy can be renewed to age 121.
The 20-year term policy is cheaper than the 30-year term policy or the GUL, if you only need coverage for 20 years. If you only need coverage for 30 years, the 30-year term policy is cheaper than the 20-year term policy, or the GUL. But if you need coverage longer than 30 years, or for a lifetime, the GUL beats all forms of term life insurance because the premiums are guaranteed to never increase.
If you only need coverage for 20 years or 30 years, the decision is easy. If you need insurance that lasts a lifetime, the decision is also easy.
The one question that needs to be answered is this: How long will you need your life insurance?
Reasons for Lifetime Coverage
- Final Expenses
- Social Security Optimization
- Pension Maximization
- Retirement Income Maximization
- Post-Retirement Mortgage / Debt Payoff
- Income Replacement beyond Normal Retirement Age
- Charitable Gifting
- Wealth Replacement
- Buy/Sell Agreement Funding
- Key Person Protection
- Salary Continuation Plan
- Estate Liquidity
- Estate Equalization
If you want to make sure you have the right kind of coverage, in the correct amounts, call today (800) 680-5596.
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