quote:
You don't need an individuals information to prove "buy term, invest the rest" works. If it works it should be easy to prove. I will ask you, what sold you on the strategy? Did you see anything or are you just taking someone's word that it works?

Its actually pretty easy to prove. All insurance is term insurance. Its just what they attach to it. WL is nothing but decreasing term with an inefficient cash growth attached to it that grows at the exact rate that the insurance is decreasing. That increasing cash with the decreasing insurance is how the death benefit stays level. Honestly the returns don't have to even be great to beat WL. The first 3-5 years on the cash is a -100% return. Takes about 20 years to get even (0%), with a 1.3-3% return over the life time of the policy if it's kept to age 100 (maturity...which well...). You can do a fixed annuity with the term and get a better plan than what the whole life is offering all together (I'm not saying its what you should do. Just relaying to the fact of how really ineffective these policies are as a whole)

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I could increase the 3% to 5%, add a dividend, and then base the rate of returns on the 5 year Government bond for the last 30 years.

first off 3%/5% on what? You don't even know what its growing on. Its not the total premium. The agent that sells you couldn't even tell you that. The only person that can is the actuary that put the policy together. Plus dividends are just a return of the overcharged premium (Look up US Treasury Decision #1743). Why do you think its not being taxed. If it was additional it would be taxed as ordinary income. But this money you have already be taxed on (Not new money).

But overall it has to do with my responsibilities being high while my cash is lower at this current moment. I have enough term coverage currently to cover my loss of income, mortgage, and taking care of my kids. I continue to invest significantly. I have a SoloK, wife has a 401k, we both have Roths, and we have UGMAs for the kids. We invest a significant amount. As the mortgage is paid down, kids grow up, and move in to retirement our responsibility on coverage goes dowm. We then have entered in to financial independence phase where our gap for life insurance now is non-existent taken care of by our cash. But the cost effective term allows me to put more to these areas than an inefficient cash spot like I explained above in the post.

This post was edited on 7/28/23 at 12:11 pm