Disclosure: What follows is my thought process given me and my family's needs. Also, I have a direct financial interest in the performance of the company and its sales. The below is based on a 20-year term and an active UL policy.
I decided that a combo life insurance policy was right for me and my family. Here’s why.
I had just had a son and I wanted to make sure he and my wife were protected and that I could retire comfortably.
A 20-year term policy would be great for ensuring my wife and son were covered for the next 20 years, but it left them exposed after that. (Term coverages offer a death-benefit for a set term of time, but nothing after that term).
Indexed and Variable Universal Life Insurance policies are fantastic tools for building generational wealth. They offer death-benefits with no set expiration, the ability to build large amounts of cash in the policy, and the ability to loan yourself that money tax-free while you’re alive. These helped with my goals of ensuring my wife and son were always protected and could help me retire more comfortably - two huge plusses. The challenge is these policies are fueled by premiums and compounding returns and it can take time for these to build.
To better understand why neither type of policy on their own worked perfectly for me let’s go through some scenarios.
Scenario 1: I live for another 50 years.
First off, awesome, this is definitely gonna be my favorite scenario.
If you told me for sure I’d live another 50 years, I’d only buy a Universal Life policy. I’d let the funds compound in the account, loan them to myself as needed and leave the policies death-benefit and remaining cash-value to my wife and son.
Scenario 2: I live for another couple months.
Okay, things just got super dark. Not loving writing about this but it is sadly possible.
If I was only going to live for a couple months I’d want a sizable term policy to make sure my wife and son had the funds they needed.
Scenario 3: I have no idea how long I’m going to live.
And here we are, the unfortunate cold hard truth. I have no idea how long I’ll live. I hope it’s long but stuff happens so it could be a shorter ride than I’d like. That leaves me with one pretty clear path for accomplishing my goals.
I should get a 20-year Term Policy AND a Universal Life policy. At Amplify we call this the Protect & Grow Strategy.
This strategy makes a large death-benefit available if anything happens before my son is grown. As a quick note here, in this scenario I would have my wife get the death-benefits from both my Term and Universal Life policies and whatever cash-value my UL policy had accrued. This money will be tax-free for her, and she can use it to make sure they’re financially comfortable after I’m gone.
And I’m also covered if I live a while. Let’s say I’ve got another 30 years. I won’t get any benefit from the Term policy as that’ll have expired, but my Universal Life policy would have had 30 years to generate compounding returns, which, depending on my premiums, can create millions in cash-value.
It’s likely I’d have taken a loan against some of that cash-value to help pay for retirement, long-term care, etc…, but there should still be a large set of funds available for my wife to enjoy her golden years and spoil our grandkids.
And that’s why I decided for a combination of coverage. No matter which of those three scenarios occurs, my wife, son, and myself are protected.
Importantly, I was able to reach this conclusion because I work with a bunch of really smart life insurance experts. If you’d like to tap into that same network you can reach out to any of our agents at Amplify Life and they can help you see what coverage is right for you.
Access to the funds is typically through a loan or withdrawal. Loans or withdrawals will reduce the death benefit, cash surrender value, and may increase the likelihood of policy lapse.
The policy must be in force and all required premiums paid.