William Penn Life, 2019 (54. évfolyam, 2-5. szám)
2019-04-01 / 4. szám
Moneywise portion of the company's financial surplus which are returned as often as annually to certificate holders. While never guaranteed, most of WPA's permanent whole life plans earn an annual dividend beginning at the end of the second policy year. Currently our Ordinary Life Senior Special plans are the only non-dividend producing plans that we offer. Dividends can be taken in cash, used to reduce your premium payments, accumulate at interest or used to increase the policy death benefits by purchasing "paid-up additional" insurance that builds your policy's death benefit. Known by other names, but still whole life. Many companies (including WPA) offer a variety of whole life plans that might be known by different names, such as "ordinary life" or "permanent life." There are also variations based on the number of years that premium payments are required. For example: WPA's Ordinary Life Now, let's assume the 35-year-old male was working within a somewhat limited budget and couldn't afford the entire $250,000 of whole life coverage. Here is a look at plans are payable every year until death (or age 121, whichever comes first). But, you can also purchase a whole life plan for which you pay premiums only for a set number of years, such as 20-year payment life, Life Paid-Up at Age 65 (LPU65), or even a "single premium" whole life plan for which you pay a one-time premium for a lifetime of coverage. As you can guess, the premium payments would be higher for a 20-year payment life plan than an ordinary life plan, since the total of all of your premium payments are squeezed into a shorter payment time period. All of those plans however, still provide coverage for your entire life, even after you have finished paying the premiums. We've been talking a lot about the differences in features and benefits of both term and whole life insurance. In the chart below you can see an illustration of how the costs vary for each type of insurance plan: a "combo" plan that combines the best of both worlds: a whole life "base" policy combined with a term insurance rider: MALE • AGE 35 • NON-TOBACCO USER • INSURANCE AMOUNT = $250,000 Plan of Insurance Monthly Premiums Total Payments to Age 65 Cash Value at Age 65* Total Net Cost 30-Year Term $68.40 $24,624 0 $24,624 Ordinary (whole) Life $236.25 $85,050 $98,750-$ 13,700 (Profit) Life Paid Up at age 65 $298.13 $107,327 $125,750-$18,423 (Profit) FEMALE • AGE 45 • NON-TOBACCO USER • INSURANCE AMOUNT = $250,000 Plan of Insurance Monthly Premiums Total Payments to Age 65 Cash Value at Age 65* Total Net Cost 20-Year Term $56.25 $13,500 0 $13,500 Ordinary (whole) Life $290.93 $69,823 $69,000 $823 Life Paid Up at age 65 $430.88 $103,411 $1 10,750-$7,339 (Profit) *Cash values at age 65 represent the guaranteed certificate values; dividends (if any) are not included. Plan of Insurance Monthly Premiums Total Payments to Age 65 Cash Value at Age 65* Total Net Cost Combo $116.60 $41,976 $25,150 $16,646 $50,000 LPU65 $200,000 30-Year Term *Cash values at age 65 represent the guaranteed certificate values; dividends (if any) are not included. As you can see, although the monthly payments are higher for the Ordinary and Life Paid-Up at Age 65 options, the net cost at age 65 is much better with any of the whole life options-even the option using the combined term and whole life plans. You can think of it this way: Term insurance is like renting an apartment while whole life insurance is more like buying a home. When you rent, you have nothing to show for your rent payments. Compare that to purchasing a home. When you buy a home, you might be paying more each month on a mortgage than you were for rent, but you are building something of value: equity. When I was a field agent and someone would ask me whether they should purchase term or whole life, my typical response would be: "Well, that depends: tell me when you are going to die, and I'll tell you which type you should purchase." While that would usually elicit a chuckle, it made the person think about their decision. There's nothing wrong with term; I've owned (or rented) a bunch of it during my lifetime but don't currently own any. Whole life is the best choice for permanent needs and cash accumulation. Early in my insurance career, I attended a conference where the keynote speaker suggested that you purchase as much whole life insurance as you can afford and supplement that with term insurance if your needs are higher. I heard that nearly 40 years ago, and his comments still ring true today. I hope this explanation of the basic differences between term and whole life have given you (and my brother) the ability to make a more informed decision, and maybe even provided enough information to be able to answer the question, "which type should I buy?" Whether you're still confused or ready to make a purchase, give your WPA agent or broker a call. They'll help you pick out a plan that is perfect for you and fits your budget. Don't have an agent? Call the Home Office Sales Department, and we'll be happy to help. Until next time, Happy Easter! □ WILLIAM PENN LIFE 0 April 2019 0 5
