Whole Life... Why Not to Love It?

SouthernComfort

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25 Year old male $500 month premium paid up @ age 65. 240,000 paid into policy, can withdraw 37,000/yr TAX FREE for 20 years.

On top of that leave a TAX FREE inheritance to his family of 343,000.

That is a total payout of 1,083,000 or a 451% return on premiums paid.

Par Whole Life insurance not only is a no brainer but should be the FOUNDATION of any plan.
 
I think you should calculate IRR on the benefit. Probably between 6 and 8 max return on the stream of payments.

451% = drop dead early
 
Uh... wrong math guys.

Pay $240,000 in premiums.

Receive: $37,000 x 20 = $740,000 in income

Remaining Death Benefit: $343,000

Total Benefits paid out: $1,083,000

$1,083,000 / $240,000 = 451% or 4.5x the money back of what you put into it.
 
25 Year old male $500 month premium paid up @ age 65. 240,000 paid into policy, can withdraw 37,000/yr TAX FREE for 20 years.

On top of that leave a TAX FREE inheritance to his family of 343,000.

That is a total payout of 1,083,000 or a 451% return on premiums paid.

Par Whole Life insurance not only is a no brainer but should be the FOUNDATION of any plan.

I agree----I love it!
 
The only way the IRR calculation is accurate is if the benefit is all paid out at the end.

You can calculate the IRR based on the timing of money in (premiums) and money out (income and ultimate DB at a certain point in time) but you won't be able to do it as simply as "PV at int rate = FV.
 
The only way the IRR calculation is accurate is if the benefit is all paid out at the end.

You can calculate the IRR based on the timing of money in (premiums) and money out (income and ultimate DB at a certain point in time) but you won't be able to do it as simply as "PV at int rate = FV.

I used excel. -6k years 1-40, +37k years 41-60 and assumed the DB paid at year 61.
 
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