The Term Insurance Failure
2 weeks ago Ted Bernstein 0
Buy Term and Invest the Rest – A Failed Theory.
Are you worried about your existing term life insurance policy that may be expiring without good options?
Maybe you still need this coverage for your family or business but the premiums will be much higher for a new policy? You’re older and your health may not be the same, or both. If you are unable to change your term policy into something more permanent and you are concerned about where you go from here, you’re not alone. Millions of people in their 50’s and 60’s still need and want coverage but they feel trapped.
If you are facing any of these issues, there are solutions you should consider. Time is a factor, especially when it comes to conversion options that may be expiring. There is definitely a sense of urgency for many reasons. The sooner you speak with a professional, the better off you should be. Flexibility and options are important intangibles when selecting the right insurance policy.
Because we don’t know how life will play out, it is impossible to “time” the future point when our need for life insurance coverage goes away, if that ever really happens. Level term life insurance was typically guaranteed for 20 and 30 years. When you bought the policy, you were probably told that term insurance was your best option.
“Millions of people were sold a theory, not a strategy. They were told they could beat the insurance company by investing the difference, each year, between the term premium and the premium for permanent coverage. That was a mistake for which life insurance buyers are paying today.”
You were likely told you wouldn’t need coverage once your kids were grown and on their own. Over these past 25 years, term life insurance has been oversold, leading to a coverage crisis for those needing protection for the rest of their lives.
This theory was known as “buy term and invest the difference” or “buy term and invest the rest” and it gained credibility from non-insurance professionals like Dave Ramsey, Suzy Orman and thousands of untrained insurance agents who promoted it. Ramsey and Orman, still to this day, recommend term insurance for everyone. Unfortunately for many, it is nothing more than theory.
Nobody invested the difference. The result is that you end up in the worst possible position, without coverage or “the accumulated difference”. Life insurance is a lifetime need. Ask anyone over 50.
Don’t be fooled: “Buy term and invest the difference” was a failed theory because nobody invested the difference. Life insurance is a lifetime need. Ask anyone over 50 and they will tell you that they feel completely different at 50 than they did at 35 about leaving insurance proceeds to their family.