Rice - Optional Term Life Insurance Alternatives

 

If you are healthy, regardless of your current age, there may be interesting alternatives to your university Optional Life Insurance. The university coverage is provided with reduced underwriting requirements, and gives you the opportunity to retain coverage for life. As a practical matter, though, rates increase every 5 years, and coverage drops after age 70 - eventually to only 10% of the initial death benefit. Ultimately, there is no economic reason to continue the coverage.

For people currently in good health, there are other commercial term life insurance alternatives with substantially lower premiums over time, and sometimes lower premiums at the time of purchase. These alternative policies, if you purchase 10, 15, 20, or even 30-year term, eventually expire. The longer the term, the higher the premium.

Another alternative is a leveraged  version of Indexed Universal Life Insurance. After getting such a policy "kicked off" with some up-front "seed money", one might be able to contribute the same money on a net basis as for the best alternative term policy. While not guaranteed, using high-probability rates of return and the guaranteed rate of borrowing, the death benefit would grow for as long as you live. The "seed money", if allowed to do its job for at least 10 to 15 years, may eventually grow many fold, and provide supplemental retirement income later.

To learn more, we invite you as our guest to lunch at Cohen House. Click here to make a reservation. At the luncheon, we will go over details on such as follows here:

 

 
Optional Term Insurance vs. Alternatives
Annualized Premiums for a 35 Year Old Male - "Preferred Risk" (No Tobacco)*
Initial Death Benefit of $1,000,000
Cheapest Better Cheapest Better Leveraged IUL**** Leveraged
Optional Rate Features** Rate Features** with Seed Money IUL****
Term*** 20-Yr 20-Yr 30-Yr 30-Yr of $65,000 Leveraged IUL**** Net Death
Year Age EOY Insurance Term Term Term Term (Neg. = Income) Value of Seed Money Benefit
1 36 768 599 683 956 1,142 599 10,910 1,010,910
2 37 768 599 683 956 1,142 599 46,080 1,046,080
3 38 768 599 683 956 1,142 599 49,010 1,049,010
4 39 768 599 683 956 1,142 599 52,577 1,052,577
5 40 768 599 683 956 1,142 599 57,096 1,057,096
6 41 960 599 683 956 1,142 599 61,736 1,061,736
7 42 960 599 683 956 1,142 599 67,042 1,067,042
8 43 960 599 683 956 1,142 599 73,084 1,073,084
9 44 960 599 683 956 1,142 599 79,952 1,079,952
10 45 960 599 683 956 1,142 599 87,726 1,087,726
11 46 1,440 599 683 956 1,142 599 100,429 1,100,429
12 47 1,440 599 683 956 1,142 599 112,816 1,112,816
13 48 1,440 599 683 956 1,142 599 127,062 1,127,062
14 49 1,440 599 683 956 1,142 599 143,371 1,143,371
15 50 1,440 599 683 956 1,142 599 161,983 1,161,983
16 51 2,220 599 683 956 1,142 599 183,158 1,183,158
17 52 2,220 599 683 956 1,142 599 207,142 1,207,142
18 53 2,220 599 683 956 1,142 599 234,218 1,234,218
19 54 2,220 599 683 956 1,142 599 264,668 1,264,668
20 55 2,220 599 683 956 1,142 599 298,832 1,298,832
21 56 4,044 - - 956 1,142 - 336,400 1,336,400
22 57 4,044 - - 956 1,142 - 378,351 1,378,351
23 58 4,044 - - 956 1,142 - 425,116 1,425,116
24 59 4,044 - - 956 1,142 - 477,156 1,477,156
25 60 4,044 - - 956 1,142 - 534,989 1,534,989
26 61 6,264 - - 956 1,142 - 598,827 1,598,827
27 62 6,264 - - 956 1,142 - 669,429 1,669,429
28 63 6,264 - - 956 1,142 - 747,359 1,747,359
29 64 6,264 - - 956 1,142 - 833,284 1,833,284
30 65 6,264 - - 956 1,142 - 927,951 1,927,951
31 66 11,664 - - - - (90,000) 939,726 1,700,070
32 67 11,664 - - - - (90,000) 958,025 1,649,212
33 68 11,664 - - - - (90,000) 981,912 1,687,094
34 69 11,664 - - - - (90,000) 1,011,776 1,728,981
35 70 11,664 - - - - (90,000) 1,048,306 1,775,179
36 71 18,984 - - - - (90,000) 1,092,233 1,825,987
37 72 18,984 - - - - (90,000) 1,145,085 1,829,874
38 73 18,984 - - - - (90,000) 1,201,451 1,836,412
39 74 18,984 - - - - (90,000) 1,270,896 1,839,429
40 75 18,984 - - - - (90,000) 1,355,538 1,838,911
41 76 23,892 - - - - (90,000) 1,457,869 1,834,938
42 77 23,892 - - - - (90,000) 1,576,719 1,988,016
43 78 23,892 - - - - (90,000) 1,713,593 2,161,715
44 79 23,892 - - - - (90,000) 1,870,056 2,357,781
45 80 23,892 - - - - (90,000) 2,047,784 2,578,080
46 81 23,892 - - - - (90,000) 2,248,517 2,824,556
47 82 23,892 - - - - (90,000) 2,474,118 3,099,287
48 83 23,892 - - - - (90,000) 2,726,616 3,404,531
49 84 23,892 - - - - (90,000) 3,008,007 3,742,525
50 85 23,892 - - - - (90,000) 3,320,252 4,115,470
51 86 23,892 - - - - (90,000) 3,665,271 4,525,538
52 87 23,892 - - - - (90,000) 4,044,982 4,974,910
53 88 23,892 - - - - (90,000) 4,461,356 5,465,830
54 89 23,892 - - - - (90,000) 4,916,422 6,000,613
55 90 23,892 - - - - (90,000) 5,412,295 6,581,678
56 91 23,892 - - - - (90,000) 5,951,644 7,212,037
57 92 23,892 - - - - (90,000) 6,568,048 7,655,304
58 93 23,892 - - - - (90,000) 7,275,812 8,155,620
59 94 23,892 - - - - (90,000) 8,092,100 8,725,424
60 95 23,892 - - - - (90,000) 9,037,656 9,379,902
61 96 23,892 - - - - (90,000) 10,128,430 10,128,430
62 97 23,892 - - - - (90,000) 11,337,910 11,337,910
63 98 23,892 - - - - (90,000) 12,677,425 12,677,425
64 99 23,892 - - - - (90,000) 14,159,315 14,159,315
65 100 23,892 - - - - (90,000) 15,797,019 15,797,019
* Rates even lower if "Super Preferred" - higher for "standard" and above
** Chronic Illness Benefit / Converts to better IUL product as seen in Leveraged IUL columns
*** Death Benefit reduces after age 70 - eventually to only 10% of original amount
**** Not guaranteed. Assumes 7.35% index returns and 6% loan rate.

 

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