When it comes to life insurance, probably 80% of us will find that term life insurance is the way to go. It is simple, affordable, and serves the right purpose. It provides protection for our family in case something happens to us while our family still depend on us providing for them. Ultimately, it is the main purpose of life insurance: provide protection in the worst case.
However, in some cases, a permanent life insurance policy is actually the better one, even it may appear to be a lot more expensive. We examined several real case studies to illustrate why it might make sense to buy a permanent life insurance policy.
You will also see that by permanent policy, we are always in favor for universal life insurance products, either indexed universal, variable universal, or guaranteed universal policy. We often illustrate that whole life policy is almost never a good option. So, choosing the right permanent policy from the right company is critical. And the only way to choose the right one is to work with an independent broker who can help you shop around with several insurance companies to compare their quotes. In the real case studies below, we helped our clients shop with 30+ leading life insurance companies and compare quotes from their 90+ permanent life insurance products.
There are two main reasons why a permanent life insurance policy is the right one.
- 1.) You need permanent protection: Regardless when you pass away, you want to leave a tax-free lump sum amount of money for your family for whatever reasons that you might have.
- 2.) You want to save and invest for retirement; benefit from tax-free withdrawal advantage of a permanent life insurance policy: You want to grow cash value in the policy through investment and withdraw from it, tax-free, whenever you need. In this case, leaving a lump sum amount of money for your loved ones when you pass away isn’t as important.
Permanent Life Insurance Policy for Permanent Protection at Reasonable Price
We examined two real cases:
Choosing a Guaranteed Universal Life Insurance Policy for Guaranteed Permanent Protection
We advised an engineer in Texas to choose a guaranteed universal life policy after comparing quotes and illustrations of 90+ permanent products. Learn the details of the case here.
Switching from Whole Life Insurance Policy to a Variable Universal Life Policy to Stop Paying Premiums, Yet Having a Larger Guaranteed and Permanent Death Benefit
We advised a 73- year-old retired man in Florida to replace his whole life policy which he has paid premiums for 40 years with a variable universal life insurance. As a result, he not only stop paying premiums for the rest of his life, he also has a larger guaranteed permanent death benefit for his family when he passes away. ($309K vs. $250K in his whole life policy. Learn the details of the case here.
Permanent Life Insurance for Retirement Savings to Benefit from Tax-Free Withdrawal Advantage
We also examined two real cases: high-income households have already maxed out their traditional retirement savings such as 401K, IRA, and Roth IRA; and an average American with medium-low income without access to traditional retirement savings like 401K.
Indexed Universal Life Policy is Better than Traditional Mutual Fund Investing Account in Retirement Savings
We advised a senior marketing manager in San Francisco with annual income of $170,000 to buy an indexed universal policy as a way to save for her retirement after she has maxed out her 401K and IRA contribution. We illustrate that the indexed universal policy will allow her to withdrawal more cash than a traditional low-cost or robot-assistance mutual fund investing account (like Wealthfront or Vanguard) thanks to tax-deferred growth and tax-free withdrawal advantage of a permanent life insurance policy. Even with the same interest rate (or investment return rate), the indexed universal life insurance will provide significantly better cash withdrawal when she retires. Read the details of the case study here.
Indexed Universal Life Policy is Much Better than Whole Life Policy in Retirement Savings
We advised a manicurist with a modest annual income of $40,000 – $50,000 (her income is unstable due to the nature of her job) to save and invest for her retirement income with an indexed universal life policy. We illustrated how this indexed policy is significantly better than a whole life policy that she had previously purchased for her retirement savings purpose. It not only provides a much more annual cash distribution when she retires (30 years), it is also cheaper in premiums. Read the details of the case study here.
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