Term Life Insurance's Achilles Heel: Part 2

Welcome to Term Life Achilles Heel Part Two. I am Frank Biaggi, CEO of Biaggi Life. Today, I am here with my special guest, Kimberly Tran.



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Why Do People Still Buy Term Insurance?

Term insurance has long been a popular choice, but indexed universal life (IUL) has become so competitive that it sometimes baffles me how many people still choose term insurance. So…

"Why do people still buy term insurance?"

The main argument from those selling term insurance is that you can buy the term with lower premiums, invest the difference, and by the time you're retired, 65 or 70, you won't need the life insurance anymore. This strategy drives many to purchase term policies.

The Risks of Not Being Properly Self-Funded at Retirement

"What about those who aren't properly self-funded for when they are at that retirement age?"

This is a great question. How many people accomplish self-funding? 

A study from Money Magazine a few years ago showed that by the age of 60 to 79, only about one-third of people had invested $100,000 to $500,000. This was true for both age groups, 60 to 69 and 70 to 79. Only about one-third. 



The problem with telling people to buy term and invest the difference is that only one out of three accomplishes this with their investments. The average amount of money they have is only about $100,000 to $500,000.

The Reality of Term Insurance Coverage

So, two-thirds of the people who bought term insurance ended up losing their coverage by the time they're 60 or 65, or 30 years from now. They don't have any more coverage. But what about the third that did buy term and invest the difference?

Consider a 35-year-old individual with a $500,000 IUL policy. The monthly payment is $198. In the 30th year, at age 65, this person has $107,000 in cash value in this product, which is an indexed universal life product.

We've done other comparisons showing that with this product, if you buy term and invest the difference, you'll have about the same amount of money in investments. So if this person had bought term and taken the savings, they would have $107,000, putting them in that survey of one out of three with at least $100,000 invested. But the problem with the term policy is that now they lost their $500,000 term, so all they have is the $107,000 investment.

The Advantages of Indexed Universal Life (IUL) Over Term Insurance

"What would have happened if they had purchased an IUL instead of the term?"

With the term insurance scenario, they would have $107,000 in investments but lose the $500,000 coverage. In contrast, with an indexed universal life plan, here's what happens:

Monthly Payment: $198

First Year: $1,500 of cash value, increased death benefit

30th Year (Age 65): $107,000 cash value, $667,000 death benefit

Age 75: Paid in $95,000, $170,000 accumulation value, $669,000 death benefit

Age 85: Paid in $118,000, $194,000 accumulation value, $694,000 death benefit

With the IUL product, the policyholder gets the cash value, the death benefit, and the option of flexible premiums. If they can afford $198 a month, that's fine, but the minimum premium is only $119 a month, giving flexibility.

Conclusion: A No-Brainer Decision

Buying term and losing your coverage doesn't make sense when you can buy indexed universal life. It's a no-brainer, especially with premiums under $200 a month. It's amazing, really. This particular product is from an A+ company. When you get A+ companies offering these products, it's refreshing because we didn't have this for many years, and now that we do, it's an exciting time.

Upcoming: Living Benefits and More

Next time, we'll talk about living benefits. Imagine being able to use your policy’s cash value while you're still alive. Some policies even let you access up to 80%, or even 100%, of the death benefit while you're alive if you qualify. This is a big shift from the old way of thinking about life insurance. Instead of just a payout after death, you can use your policy to support yourself financially now.



Look forward to our next discussion where we’ll cover these innovative features in depth.

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Don't settle for less. Contact Biaggi Life today to learn more about our innovative insurance products and how we can help you achieve your financial goals. Call us now and take the first step towards a secure future.