Introduction to the “Wise Investment” Calculator
- How to Use
- I see the Rate of Return… So is it a good investment? Depends on what you’re earning.
- Life Expectancy
- Annual Premium – must multiply by 12, can’t do
- For Agents
How to Use the Calculator
Directions: You need to already have a quote to use the calculator. Enter the details from your life insurance quote in the calculator fields. Need a Quote? Click here
Examples: Is Life Insurance a Good Investment?
Let’s say your family or business needs $500,000 to replace your income or pay off bills upon your passing. This calculator will help you determine:
- Which is better….? Saving that $500k yourself or using life insurance.
- The rate of return you’d have to earn for the remainder of your life in an investment to equal the life insurance payout.
1. “Life Insurance vs. Saving” for Family Protection
David, a 58 year old husband, has an offer to purchase a 30 year term policy with a $250,000 death benefit, for $201 per month. Is this a good deal or should he set that money aside in an alternate investment?
Using our calculator, David finds out that if he were to try to save up that amount during his estimated life expectancy (81 years old) he would have to earn 11.2% in an alternative investment for 23 years to save up $250k. He determines he won’t be able to earn that rate of return elsewhere, and opts to purchase the insurance.
2. Leaving an Inheritance
“Grandpa Art”, a 75 year old former business owner, lives comfortably off his pension income. He has well over a $1 Million in CD’s and bonds, which he intends to leave his family. He is currently earning around 3% interest annually.
Should he consider using some of these funds to purchase life insurance?
After speaking with his Huntley Wealth Insurance agent, Grandpa Art determines he can comfortably spend around $40,000 per year in life insurance premiums to purchase a lifetime, $1 Million life insurance policy, without ever exhausting his funds. (The exact premium is $40,015 annually)
Using the “Wise Investment” Calculator, Grandpa Art finds if he lives to his life expectancy of age 86, he’ll earn an equivalent rate of return of 13.2%. Even if he lives to age 90, he’ll still beat his current investments by earning 6.2%. He opts to purchase the insurance.
Insurance Agents: Earn Higher Commissions with this Calculator
Agents, feel free to use this calculator to help you sell:
- High premium cases
- Table rated or cases with flat extras (the numbers can still make sense)
- Convince your clients to lazy investment dollars to buy life insurance