Wealth In Overdrive Podcast

3 Costs of Life Insurance

May 05, 2022 Hari Luker Episode 8
Wealth In Overdrive Podcast
3 Costs of Life Insurance
Show Notes Transcript

Most people think of monthly premiums when thinking of the "cost" of life insurance. That's only one of the 3... And it's the cheapest cost. Discover the other 2 and a new way how to calculate how much life insurance you should get with 1 very simple equation.

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Speaker 1:

Hey guys, this is Harry Luca , and welcome to the wealth in overdrive podcast. Today, we're gonna jump straight into this and we are gonna go over the three hidden cost of life insurance that are never disclosed . So no matter if you turn on your computer, watch your TV, listen to the radio, or read financial magazines and books regarding the subject of life insurance and the cost of life insurance. You will get dizzy and confused by all the different options that are out there. So just for fun, you can go do this as well. I recently Googled how much life insurance do I need, and I was amazed to get over probably 30 to 40 million different responses, videos, links. I think one website's life insurance calculator gave me a life insurance need of like quarter million dollars . The other one gave me about $3 million , um, all by using the exact same facts and dates. So how is a consumer supposed to decide what the current life insurance amount is for them? So no wonder there is so much confusion, cuz people just want the truth. As it relates to life insurance, it's already not the most interesting subject to be diving into people know they want it, but do they really need it? What's really best for me out there. And who can I trust to go to in the first place? So due to these findings, the following considerations will provide you with the truth in the education to help you make the life insurance decisions easier to understand and believe in. So the first one we're gonna jump into number one is your economic life value. Now this may be a new term to you when it comes to calculating the cost of life insurance, but it is one of the most important. There is no amount of money that will replace a husband or a father or a wife or a mother in the event of their death. However, their economic life value to the family can easily be calculated in its simple math. So we are gonna look at it as E L V equals retirement age minus current age times, current income. Now I know you weren't shown up here for a math lesson, but stick with me for a minute. So look at it this way. If you want to retire at the age of 65 and you are currently 45, you have an in and , and have an annual income of $100,000. This equals your economic life value of $2 million . Everyone deserves to understand their economic life value. So real quick there, this is gonna be your retirement age minus your current age times, your current income gets you, your economic life value. Now, number two, the true costs of term insurance. These were 100%. These are things that you need to know when you're calculating which option to get versus maybe term life insurance versus whole life. So after you've waited through all the options regarding the amount of life insurance you should own, you are bombarded with just as many conflicting options about the right type of insurance you should buy. Is it term insurance seems to be the product of choice because it provides a large benefit at a low cost . However, the low cost of term insurance is it really a low cost and one of the best things I ever heard long time ago, one from my dad, Phil, but is originally came from Benjamin.

Speaker 2:

Franklin is the bitterness of poor quality remains long after the sweetness of low price is forgotten. Again, the bitterness of lo of the bitterness of poor quality remains long after the sweetness of low price is forgotten. And that can be put into so many different aspects into life when you're looking to buy things. I think honestly, clothes is a huge one. I think I've had some of the same. T-shirts when I was younger, I used to spend stupid amounts of money on certain clothes. A t-shirt used to cost my 80 pounds back in England. And today I'm like, holy crap, 80 pounds on a t-shirt. But when I look back in my closet, I've still got that t-shirt if it fits, but then sometimes like each summer you might go to a specific, cheaper brand outlets let's say, and it might last you one to two years before the picture start fading, the cotton starts plucking and everything's on those lines. So I've always liked that statement. So as I share kind of getting off topic here , but so as I share with my clients, when it comes to term insurance discussions, why would you want to own something? Where if you get what you want, I, you live and don't die. You lose again. So if the term insurance, if you get what you want and you actually live, then you don't get the death benefit. You lose the term life premiums, you lose the interest. You could have earned on those term life premiums and you lose the death benefit. So when you apply the math to the lost , you know, term life premiums, plus lost percentage or lost opportunity, plus losing the death benefit, you have a potential mistake or cost of literally in the millions of. So as an example, if we just say that we have a term insurance policy that costs us 50 bucks a month, over 20 years, that's $12,000 in premiums. Now, if we then invested that, let's say for 20 years, an average APR of 6%, that's almost half a million dollars that you are losing in lost opportunity costs . Now, if you had a million dollar death benefit on that policy and you live past that policy's term date, then that premium 1 million has completely disappeared and will never enter your lifetime, your , your family's legacy. So you could say that that lost opportunity cost or the cost of that term insurance policy was 1.5 million. So I know that's not the most riveting piece of content right there, but let's take a real close look at the living benefits of whole life insurance. Obviously everyone wants to live well. If they get what they want, shouldn't their life insurance policy give them their living benefits. Whole life insurance provides the opportunity for you to enjoy the following living benefits. Number one, liability protection, which of course can be state specific. Number two, disability waiver of premium. That basically means if you get disabled at work or sometimes within life, and you cannot earn an income or nowhere near the income you deserve, then built into the policy of a whole life insurance , uh , policy. In many cases, it will continue to pay your premiums for you with

Speaker 3:

Inside the policy accelerated death benefit provisions, source of liquidity in re in estate planning, avoiding losing term life premiums and interest liquidity of cash value and tax deferred growth of cash value itself as well. And then of course, tax exempt distribution. When it comes to ax , it's never explained that permanent death benefit can be used with pension, max pay downs and or reverse mortgages to help you maximize your retirement income. I'm sure you've discovered by now, but there are many calculations and considerations regarding life insurance. And I believe that you deserve our time, our knowledge and our education in helping you to purchase the correct amount of the correct type of life insurance. That best suits your situation. There is no article or calculator that can be Google that will provide you the truth you deserve as it relates to the truth in life insurance itself. That's why I hope content like this and our podcast, the wealth and overdrive podcast helps provide the truth and education that you want and you deserve. So I know this was a real short and sweet podcast. I really wanted to get this off my chest. It was one of those things I woke up and I just need to make sure because it came up in a conversation the other day of buy term, invest the rest. Um, and I think some people just truly forget the expenses that can come with term insurance. It's not just a super low premium every month with this potential wow. Factor of a million dollars . You know, it's the , the most I impact you can have with the least amount of cost, but it really is costing you. If you get what you want when with something like whole life, you are guaranteed to get it as course of if you stand up for the , the provisions of the contract itself as well. So anyway, I appreciate you spending the time with us here today. This is Harry Lura and the wealth and overdrive podcast. If I've provided value in any way today, please like share comment down below. And if you really feel that we deserve it, pass this content onto a friend, family member, share it on social media so we can help impact lives just outside of this podcast as well. Again, this is Harry Luca wealth and overdrive podcast. We'll speak to you shortly.