In the last post we talked about term life insurance, today we’ll talk about permanent life insurance policy.
Here are the similarities and differences between permanent life insurance vs term:
The similarities is that both permanent life insurance and term offers a death benefit.
The differences is that for permanent life insurance…
- It’s kept for life.
- It costs more
- Permanent life insurance is coverage for life vs. term which covers a term.
- It ADDS LONG TERM CARE
- It has flexible premiums.
- It has TAX FREE CASH ACCESS.
We talk more about it in our Permanent Life Insurance video:
Permanent Life Insurance with Long Term Care Rider
The thing is you’ll need it. You can couple it with your life insurance policy.
This is the thing that will pay for your in-home care OR nursing home when you’re old.
Here’s something to scare you into action. I just went ahead and googled what the average yearly cost of a nursing home is and the above picture is what came up.
A semi-private room costs $245 per day, and annually it is about $89,297.
A private room costs $275 per day, and annually it is about $100,375.
I just want you to know that EVERYBODY WILL NEED SOME SORT OF LONG TERM CARE at some point. Unless you are super fit, healthy, and have some extremely good habits that make you self-sufficient when you’re old.
But don’t count on that.
As far as I see, most people in America lead a poor lifestyle and are riddled with health problems. Worst of all, they cannot afford it.
My Grandparents needed Permanent Life Insurance with Long Term Care Rider
But none of them had it…
Of my four grandparents, three of them needed long term care because they either had Alzheimers, was paralyzed from stroke, or suffered from mild amnesia.
My family don’t have a history of health problems and we have pretty good genes. The health issues came from a poor diet and lifestyle.
Funnily enough, the one who lived the longest (and who is still living) is a chain smoker that smoked a pack of cigarettes a week. I don’t know how that’s possible, but god must really love him.
Don’t count on you being the 25%. Like I said, of my all grandparents, 75% needed long term care.
Of all my grandparents, for one of them, my parents had to visit her daily to make sure she’s all right. That is very intrusive to my parents’ lifestyle and I’m sure that you wouldn’t want to be a burden on your kids like that.
However, it’s a great way to force them to visit.
For the other two, we put them in nursing homes in a semi-private home I believe. It’s quite expensive to live in a semi-private nursing home. But, it’s also cheaper in Canada I believe because it’s subsidized.
In the US, it’s going to be $90K and $100K for semi-private and private rooms respectively in 2020. That cost is going to go up because of inflation.
Again, don’t think you won’t need it, because when you ACTUALLY do need it and you haven’t set it up, you’re screwed.
You don’t want to be the person that burdens your family and if you are on bad terms with your family, then chances are they won’t help you right?
These things happen.
Don’t prevent your kids from living their own lives just because YOU FAILED AT PLANNING for this, WHICH YOU WON’T BECAUSE YOU’RE GOING TO TAKE ACTION AFTER READING THIS.
Permanent Life Insurance – The 3 Cases In Life
There are really 3 cases with your permanent life insurance policy.
- YOU DIE EARLY, in which case, permanent life insurance gives your beneficiary a death benefit.
- YOU LIVE LONG, BUT YOU’RE CHRONICALLY ILL, long-term care benefits will give YOU money for long-term care. As mentioned before, long-term care benefits can be combined with your permanent life insurance policy. You won’t need to be a burden to your family.
- YOU LIVE LONG AND HEALTHY, in which TAX FREE CASH GIVES LIFETIME TAX FREE PERSONAL PENSION IN CASH.
A portion of your life insurance policy is set aside to invest. That’s the portion we’re taking out of for tax free cash.
Permanent Life Insurance Policy – What are Flexible Premiums
Like I said, a portion of your policy accumulates cash value. The tax-free portion. If you can’t pay the monthly premiums for a while, your policy can cover it with the cash value.
So what happens is that this portion is invested in the market. It earns money. At some point, if you find yourself unable to cover your premiums, you can draw upon your cash value to handle that for you.
What’s Permanent Life Insurance Policy with Cash Value?
Like I said, part of your monthly premium is put into an account that grows OVER the life of your policy.
That account can be invested in bonds, markets, guaranteed interest rates, etc.
Basically, that account is GENERATING COMPOUND INTEREST.
What’s Permanent Life Insurance Policy Conclusion
So, you learned basically everything you need to know about permanent life insurance. You learned about permanent life insurance with long-term care rider and had some examples with my own grandparents.
You learned about the three cases that you’ll fall into with permanent life insurance.
You learned about flexible premiums and what cash value really is.
If you want more depth into the different types of permanent life insurance, that is, whole life, variable, and index universal life insurance, then please get my free book Leverage here!
That’s all for today, now TAKE ACTION!