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Term VS Permanent LIfe Insurance [3 Simple Facts So You Don't Get Screwed] - YouTube
Channel: Smartest Wealth Systems
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- Term versus permanent life insurance.
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How do you know which one
is the right one for you
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so you don't get screwed?
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That's exactly what you're
gonna find out in this video.
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And you're going to want to stay tuned
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until the end so you can learn
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how you can get your hands
on a valuable resource
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that will help you not
only avoid getting screwed,
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but also take advantage of the type
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of life insurance
contracts many rich people,
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and even some of the
biggest companies, use.
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And by the way, if you wanna be sure
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you're not getting screwed when
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it comes to all areas of your money
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and learn how you can
pay off all of your debt
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and build tax-free wealth
with the same dollars
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at the same time, subscribe to our channel
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and ring the bell so you'll be notified
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when we publish new videos.
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(upbeat music)
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Hi, I'm Tony Manganiello,
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bestselling personal finance author.
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Since 1995 my business partner and I,
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John Cummuta, have taught
over three million people
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how to accumulate real wealth.
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And accumulating real wealth means
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you're making smart
decisions with your money.
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And believe it or not, it applies
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to what kind of life insurance you choose.
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The secret to buying life insurance isn't
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to buying term or permanent insurance.
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The secret is to learn three simple facts
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on how to combine them so
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you can build a life insurance contract
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that pays for itself and pays you.
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(whooshing)
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The first simple fact is
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that term insurance is
cheap and temporary.
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Yeah, I know.
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Big surprise, right?
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But a fact that may surprise you is
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that less than 2% of all term
policies will ever pay out,
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and that fact means that there's a
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better than 98% chance you're going
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to outlive your term insurance,
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and what that means is
you're gonna pay thousands
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of dollars for nothing.
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Your reward for living is to wind up
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with a few grand less in your pocket.
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That's not being smart with your money.
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The reason most people buy term insurance,
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though, is because it is cheap
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and it gives them peace of mind.
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But that peace of mind is only temporary
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and it begins to dissolve real fast
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when you're getting older and
you're approaching the end
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of that term and you realize,
to replace that coverage,
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can cost 10 to 20 times more,
even if you're in good health.
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But term isn't all bad.
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There is a way to use it that provides
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a very significant lifetime benefit
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for you in your future, even
after that term expires.
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(whooshing)
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Simple fact number two is
that permanent insurance,
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also known as whole life
or cash value insurance,
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costs more than term.
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Yeah, I know.
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Another big surprise, right?
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But there are two primary
reasons why it costs more.
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Reason number one is you can't outlive it.
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That's why it's called permanent
or whole life insurance.
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Unlike term insurance, a permanent
insurance policy will pay
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out as long as you make
your premium payments.
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Term insurance only pays out
if you die during the term,
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even if you've paid all your premiums.
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And like I said, less than
2% of term policies pay out.
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That's why it's so much cheaper.
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The second reason permanent insurance is
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more expensive than term is because
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you're not just paying
for a death benefit.
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Part of your premium is applied
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toward something called cash value.
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The cash value of a
permanent insurance policy
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grows tax-free and can
offer significant benefits.
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The typical permanent insurance policy,
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however, well, it performs rather poorly
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when it comes to the
return on the cash value,
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and this is why there are a number
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of financial gurus that demonize
permanent life insurance.
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Most of the people buy what
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I call an off-the-shelf permanent
life insurance contract,
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and that's the kind most
of the gurus demonize
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and claim is a waste of money.
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Well, in some ways they're right.
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The off-the-shelf permanent
insurance cash value is limited
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for growth because of the tax advantages,
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and when it comes to taxes,
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you know who gets involved, right?
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The IRS.
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The IRS has limitations on how
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much cash can build inside
an insurance policy,
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and that limitation is based on
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how much death benefit
that policy carries.
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(bell ringing)
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When it comes to the debate
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over term versus permanent life insurance,
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If you pay close attention,
always a battle of the extremes.
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It's almost always a
this-or-that argument.
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Lemme know in the comments if you think
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that deciding what kind of life
insurance you should buy has
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always been a decision between
term or permanent insurance.
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The this-or-that idea is kind of
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like saying chocolate or peanut butter.
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Thank god H. B. Reese didn't
think that way, right?
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(angelic singing)
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Being smart with your money
means you understand that,
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between now and when you
wanna quit working someday,
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you're going to generate
a finite amount of income,
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and when it comes to accumulating wealth,
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you need to be sure you're getting the
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most outta every penny of that income,
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especially when it comes to how
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you spend money on necessities
like life insurance.
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To do that, you need to have
a this-and-that mentality
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so you don't get screwed.
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The smart thing to do is to
do what many rich families,
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and even some of the
biggest companies, do:
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combine term and permanent life
insurance into one contract.
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And combining both kinds of insurance
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into one contract leads us
to simple fact number three.
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(whooshing)
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Simple fact number three is that,
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when you combine term
and permanent insurance,
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you get one of the most
powerful financial strategies
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you can find.
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This is a strategy used
by many rich families,
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like I said, to tax-shelter
their money while it grows.
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But unlike many tax
shelters, like IRAs and 401ks
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that tie up your money until retirement,
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this kind of insurance contract allows
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you access to your money
at any time for any reason.
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Here are a few more facts
about this kind of contract.
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Combining a term insurance component
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on top of a permanent
insurance policy means
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you can stuff the contract with cash
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and still remain compliant
with the IRS regulations.
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This is money that grows tax-free
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and is liquid while it grows.
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And with the right kind of contract,
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you can use your money for things
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like paying of debt while it's earning
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you interest in dividends for your future
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at the same time.
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This means your cash value is growing
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much faster than it would in one
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of those off-the-shelf kind of contracts
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that the gurus are
always complaining about,
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and because the cash value
grows so much faster,
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the growth inside the contract begins
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to pay for the death benefit
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and your payments are
transformed from premium payments
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into wealth accumulation contributions.
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This kind of strategy transforms
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your life insurance contract
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into a cash accumulation engine,
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an engine where your
cash is growing tax-free.
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And by the time you're
ready to quit working,
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this kind of cash
accumulation engine will have
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so much cash in the contract that
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it will be able to pay you and still grow
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enough to pay for the death benefit,
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even after you've stopped paying premiums.
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This means, instead of
wasting thousands of dollars
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on a term policy that
you'll probably outlive
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or wasting money on an off-the-shelf
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permanent insurance policy where
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your premium payments are
structured inefficiently,
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your precious hard-earned
dollars are being used
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in the smartest way possible.
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Now let's take a quick look at
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how this would work for
the Fortunado family.
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They're the sample family from my book,
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The Debt-Free Millionaire.
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The Fortunados are making
$2,575 in monthly debt payments.
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They owe over $238,000 for their house,
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a couple cars, and a
handful of credit cards.
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They have 30 years
until they wanna retire,
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and between now and then they're going
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to generate $1,656,000 in net income.
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When they combine term and
permanent life insurance
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into one contract that's
designed to build tax-free wealth
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and use it the way we teach,
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here's what they can accomplish.
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They can pay off all of their debt
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in nine years and nine months,
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they can save over $169,000
in interest payments,
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and they can have almost
$50,000 in tax-free cash
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by the time they're debt-free.
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But this is just the beginning.
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Because they wanna continue
to be smart with their money,
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they keep using this kind of strategy,
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and by the time they reach retirement age,
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they have $1,000,0036 in tax-free cash,
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and they do this with no change
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to their personal monthly cashflow.
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Now, if you wanna learn how
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you can accomplish the
same awesome results
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with your personal cashflow,
click the link below
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and find out how you can get
your hands on our e-book,
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The Banker's Secret to
Permanent Family Wealth.
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It will walk you through
everything you need to know
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about putting a contract
like this together.
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And if you think this
strategy was helpful,
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click the Like button and let me know.
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And while you're at it,
subscribe to our channel
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so you'll continue to learn how
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you can keep being smart with your money.
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I'd also love to hear from you,
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so please leave a comment about what
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you thought was the most
interesting part of this video.
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Or if you have a question
about what we covered,
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let me know in the comments.
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Here is one final fact I'd
like to share with you.
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In recent years thousands
of dollars have been flowing
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through your hands and thousands
of dollars will continue
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to flow through your hands
in the years to come.
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The question is, what is your strategy
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to keeping as much of that
small fortune as possible?
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Helping you keep as much of
your hard-earned money is
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what we're all about.
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Thanks for watching, and
I'll see you next time.
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(upbeat music)
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