Lucia - Introduction

General TSP Discussion.

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stilljammi
Posts: 181
Joined: Sun Dec 01, 2019 3:59 pm

Re: Lucia - Introduction

Post by stilljammi »

Like all insurance by profit-driven entities, it's a racket. They don't make money by paying out claims. You are the product, you're not going to make money by giving it to some company. Save your money early and often and invest it yourself and be your own insurance company. Teach your kids this and get them started early.

VAmanBulls
Posts: 250
Joined: Wed Jul 24, 2019 8:37 am

Re: Lucia - Introduction

Post by VAmanBulls »

crondanet5 wrote:Remember there is only a 2% payout from insurance companies on term insurance, and the cost goes up as you age. If you want to continue with a life insurance program for an extended period whole life may be better than term.

Additionally annuities nowadays offer tempting investment options that I think are tax free withdrawal. That might be another venue to research. Disclosure: I do know someone who is in the annuity business. She does ten million a year. Not too shabby.
This is a little misleading. If you are 32 and in good health, you can get a million dollar 30 year term policy supper cheap. Your annual premium will be the same for that 30 year period and if you die during that 30 year period, you leave a million dollars to your family. By the time you are 62 and your term policy expires, you should have little debt and a nice next egg to supplement your death pension and ss death benefit for your spouse (at least that is the concept). Thus, you no longer should have a need for a life insurance policy. A Roth S&P Index fund also has tax free withdraws. The fact that your friend is in the annuity business and doing ten million a year underscores my point about why this junk product is pushed so much.

crondanet5
Posts: 4330
Joined: Tue Aug 19, 2008 8:51 pm

Re: Lucia - Introduction

Post by crondanet5 »

Think through what you are saying. You bought the term policy but there is a very low possibility it will pay out. That means the insurance company keeps your payments with no payout. If the insurance company gets enough termers in the pool they reap a huge profit even with a million dollar payout here and there. It's like USAA. They have many policies in Texas floodplain and California mountains. Even with the payouts for losses I get a distribution every year. I would also suggest you review the cost of that million dollar term policy at age 45, 55, 65. It gets expensive.

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bloobs
Posts: 1616
Joined: Tue May 21, 2019 8:00 pm

Re: Lucia - Introduction

Post by bloobs »

Cronds and VA

It all comes down to the MATH, meaning which option (term+investment vs. whole life) will cost less (and earn you more) over say a 35 year career.

The basics are thus, and this is somewhat simplified so forgive me:

Say I have a total avg budget or $10k yearly for both life insurance premium and investment capital....

OPTION 1: Term + Investments - i estimate on average for 35 years, i put in $1000 a year in premiums (less when I was younger and more as I approach retirement). That's $35k total that I will NEVER get back as a return--should I be so fortunate as not to die within those 35 years. That leaves me $9k a year to invest HOWEVER I want--free of the encumbrances and constraints (and FEES) of a whole life policy. That $9k a year growing at 8% average return results in a $1,550,851.23 balance after 35 years.

Summary: my profit/cost is $1,550,851.23 - $35k = $1,515,851.23.

OPTION 2: WHOLE LIFE: I pay an average $833/month premium for a policy covers both life insurance and "investments". This totals $10k a year. I am told it averages a whopping 6% average annually.

Summary: My profit is a $1,114,343.34 balance after 35 years.

OPTION 3: I DIE before 35 years.

Summary: I (or my heirs) get $1,000,000 minus whatever premiums I've paid to that point. But hey, its tax free :wink:

crondanet5
Posts: 4330
Joined: Tue Aug 19, 2008 8:51 pm

Re: Lucia - Introduction

Post by crondanet5 »

Nice.

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