Magnum Opus Financial | Life Insurance

There are 3 basic types of life insurance:

life insurance1) Term available in 10, 15, 20, & 30 year time periods.
2) Return of premium Term, get all your money back when your term is up if nothing happens to you.
3) Permanent, have it your entire life and it is GUARENTEED to pay as long as you make your payments until you die.

Good: Cheap, cheap, cheap...did I mention cheap?  You can pick the term and it's the most affordable type of life insurance.  It's also convertible in many cases to a permanent policy without underwriting at time of conversion.
Bad: It ends, and usually not before you die.  After age 55 the 30 year term is no longer available for most companies and when most people get it, in their late 20s and 30s...that means they can only get a 20 year term at that point.  Not only will it cost 3 or 4 times more expensive...but you'll probably still outlive it.  Only 7% of all term cases pay out and not because of a natural death, its due to accident or unexpected illness. 

When you get term you are saying that you MUST die early in order to get the money.  You WILL NOT pass on money to your spouse or children unless you die young.  When you convert the term insurance to permanent, you will lock in the price at the age you convert...not at the age you got the term so if you want permanent, it's best to get it up front if you can afford it.  Term cannot be used for Legacy Planning or Estate Planning because it's too expensive past age 60.
Return of Premium Term:

Good: It's cheaper than permanent insurance.  It's a great way to save money (not on cost, but literally save money).  You get a BIG check back at the end of your term.  You come out pretty much even with the insurance company at the end of the term.
Bad: The insurance company invests your payments over the time frame, say 30 years, and you would have done better had you done the same.  It still ends and cannot be used for Legacy or Estate Planning because you'll outlive it.  Return of Premium is also not available but in some cases past 50.  While you "break even" you still don't have a permanent life insurance policy.
Permanent Life Insurance:

Good: It lasts your entire life as long as you make the payments.  It is the NUMBER ONE way to transfer wealth because proceeds from life insurance is TAX FREE.  This IS used for wealth transfer, estate taxes, create wealth (most families get richer each generation not because more money is made but because more LIFE INSURANCE gets paid and the amounts are bigger and bigger as the family is worth more).  You ALWAYS beat the insurance company.  When you add up all that you pay in over the years, even if it's 60 years. 

You will NEVER pay in more than the insurance company will pay out.  They use the money they get from term, which is a 93% win for the insurance company to pay the claims on the people who do get permanent insurance.  You spouse or kids will ALWAYS get paid because we will all die eventually, in blazing glory or otherwise. :-) It comes with supplemental retirement benefits.  That means you'll have money saved up for extra expenses like vacations, homes, and other expenses because of the cash value that accumulates in the policy and you get that PLUS the death benefit! 

Whatever you don't use in retirement gets added to the death benefit so use it without being worried about the death benefit.  You can choose to invest your OWN money instead of letting the insurance company do it for you and keep the profits.  For wealthy people you can save money that will be TAX FREE retirement, even if you can't qualify for a ROTH IRA because you make too much.
Bad: It is more expensive than temporary insurance (Term).  There ARE bad forms of permanent like whole life in which your cash value pays first and THEN the insurance company pays the you basically pay for your own death benefit (whole life).  Even Universal Life does not afford you the full benefit of your own investments but Universal Life is cheaper than whole life.  
Example of Rates for a 29 year old non-smoking male:
Rates: All rates are for $250,000 so that you have a way to compare.  We can adjust the amount once we determine what TYPE of Life Insurance you'd like to get.

10 year: $12.09/month
15 year: $13.75/month
20 year: $15.98/month
30 year: $23.40/month
Return of Premium Term:
20 year: $32.81
30 year: $36.75
Whole Life:$180.07

VUL: $56.52/month

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