Is this good life insurance deal?

Question

I have to pay 14700$ per year for 20 year, At the end of 20 year I will get 1200,000$.Also it cover life insurances in case of death return will be 600,000,What do you suggest.Insurances company is state own and there is no chance of fraud.

Answer 1

it is usually better to get term life instead of whole life.
However, if you're going to get 1,200,000 after 20 years that sounds like a better return than most mutal funds. If you have a typo and are only going to get 120,000 then get term, invest the remainder and you should get between 200,000 and 500,000 in 20 years

Answer 2

Assuming you are young (i.e. 25-30) and in excellent health, this is still not possible. The interest rate they would have to pay would be around 10% and no life insurance policy pays that high.

What is more likely is for that money, a univeral life policy with a $600,000 face value with increasing death benefit (cash value in the policy is added to the face value for a total death benefit) If this is the case, it is possible that your death benefit in 20 years is estimated at $1.2mm. Your actual cash value would be around $600,000. This is the amount that you could withdraw. This is still not necessarily a bad deal. Your interest rate is around 5 - 5.5%. You can make more in the stock market. However, if you set it up in an IRA, all withdrawals are taxable when drawn, so you lose up to 35% of your money. In a universal life policy, you can borrow against the cash value of the policy. If you take it out over 15 years or so, you will probably double the cash value (You will draw $1.2mm instead of just the $600,000 cash value) Since it is a loan, it is not taxable. (And in most policies, the loan does not have to be paid back) If you die, it's a life insurance policy and is not taxable to survivors, either, so there are definately some benefits of going this way.

Plus, the insurance is permanent. If you buy term, it will only be good for the specified term. Then you have to buy term again. The only problem with this is that in 10 or 20 years, you may not be in as good of health as you are now. Plus, you will be older. Both of these issues will cost you money, if you are even still insurable at that point.

Just make sure that you are writing with a reputable company and a reputable agent.

Answer 3

Something is fishy here....Lets say your survive 20 years, and you make your $14,700 at the begining of each year. (it does make a slight difference whether your paying your premiums at year begining - annuity due, or at the end of the year - annuity immediate) That would amount to a guarenteed slightly better than 12% ROI. (return on investment) Like the others above mentioned most (99%) of the mutual funds out there don't do this well and they certainly don't guarantee results as such. Even ignoring the 20 year $600,000 term insurance policy that is a phenomenal deal - too good to be true - there has to be a catch!
You have to be very careful with what the insurance sales person says, and what is written in the actual contract. Practicing as an Actuarial Analyst for the last 5 years I can honestly tell you I never seen a real deal like this before, but I have seen countless people duped into contracts they are ignorant about. I love to know what company you are refering to, because I just don't beleive it. If you do decide to take them up on the offer, please make sure you hire a lawyer to review contract...it's just too good to be true, there has to be some clause or hidden fees you are overlooking or not aware of. I would be especially weary also if they gave you this offer without an extensive medical examination. Besides oil companies, insurance companies are the richest businesses in the world and they didn't get that way by offering deals like this. Be careful, insurance salespeople are very crafty, they play upon your emotions and rarely sell anything unless it is for their own benefit. Good luck, but be weary.

Answer 4

Just an opinion: if you're offered life insurance for anything other than insuring your future income stream, turn and walk away.

$14,700/ yr for a $600k policy??? And a guaranteed cash value of $1.2M after 20? No chance of fraud because it's state-owned? Paging Santa Claus...

I think I have better ways to cover my future liabilities for the next 20 years for much less than this policy. Steady investments, term life insurance coverage in the meanwhile.

Answer 5

If you pay $14700 for 20 years, your death benifit should be more than your cash value, some thing is not right.

Answer 6

Sounds like a variable life insurance sale to me... Just to let the cash value is not guaranteed because your investing your cash that isn't paying for the cost of insurance inside of mutual funds. Which we all know have the possibility to go down. In permanent policies the fixed rate is usually paying 4.5% to 5%. I would shop around more and ask more questions. Depending on your age I'm sure that I can not only explain it better to you but be able to get you a cheaper policy. That seems awfully expensive.

Answer 7

well do a little mathematics here multiply 14700 by 20 and see what you comes up with them match that to 1200,000 and give it your judgement, from time to time people are been warned.