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Layering Term Policies
Layering term life insurance policies can save clients tens of thousands of dollars. Also, known as stacking or ladder strategy. As an independent life agent, I am focused on making sure my clients have enough life insurance to protect their families. The amount of life insurance they need today may not be the amount they need tomorrow. For instance, as you get older life insurance rates get costlier. Especially when you are purchasing life insurance over 60. Also, as you get older, you’re athigh risk of health impairments that can prevent you from getting the best rate. These include high blood pressure, diabetes, heart disease just to name a few. So how can you have enough but don’t overpay years later for something you don’t need anymore? The solution is layering life insurance policies!!
You can save over 50% on Term Life Insurance with a Layered Strategy
Layered Term Life Insurance Policies
If I told you that you could save over 50% on your life insurance, would you be interested? What if I told you that if you were shopping for life insurance in your 20’s, your 30’s, 40’s or 50’s that you would save tens of thousands of dollars. Would you believe me? How about a hundred thousand dollars? You want to know how to don’t you; it’s easy. Below I will explain how a simple solution can put thousands of dollars back in your pocket. You will pay less, get more, and never pay for something you don’t need down the line.
Why would you need Layered policies?
That’s the million-dollar question. When you purchase a term policy, you want the most coverage for the most affordable term lifeinsurance price. In fact, the longer term you buy, the costlier the rate is. That is because the longer you live the closer you are to mortality age or dying. So, the layered policy strategy would give you the opportunity to lock in your age and health today. Above all, not be committed to paying a higher premium for twenty or thirty years long after the “why” you bought it is gone. More importantly, getting more coverage today, for a lesser cost, with the costs going down every ten years. Sounds too good to be true, right?
How does Layered term life policies work?
First, instead of buying one term policy for 20 to 30 years, you buy multiple policies with different terms. Remember, the lower the term the most cost-effective life insurance coverage is. Next, you must figure out exactly how much life insurance you need. Thirdly, we must proactively figure out the most crucial time frame for that coverage. In fact, the most critical decade is the first ten years of the term. Usually, that’s when you have children, buying a house, and getting established. Eventually, your kids will grow and the older they are, the less you need to protect them. Because you are outliving income that you were protecting, make sense? On the day your kids will be all out of school, and it takes about 20 years until they are. So, one question, do you need as much coverage when your youngest is in college than when he/she was in diapers? Probably not, because the last 20 years you are making more money, you paid down your house, and usually, you don’t need to protect as much. Now the last decade is generally getting you to retirement. However, should you be paying the same as you did when you kids were young and when you first bought your home?
The Layered Policy Strategy
Now I am going to show you how you can save tens of thousands of dollars over thirty years. For example, we have a 40-year-old couple names Linda and Bill that have been married for a few years and have children ages 4, 2 and a few months old. So I always focus on the youngest, because that’s the person relying on the primary breadwinner the most. Bill makes $50,000 a year and has a small policy at work. Probably not enough to cover his family for more than one year. So he wants to make sure he can have coverage well into retirement and beyond to adequately protect his family.
Example of layering policies
Bill needs about 20 times his income because his youngest is not even a year old. Based on his income of $50,000/yearly, he would need about $1 million. In other words, if Bill dies anytime in the next few years, his paycheck dies with him resulting in leaving family in a financial disarray.
To achieve his goal of protecting his family and getting past retirement, we will price out a 30-year term.
Total financial outlay over the next 30 years if he outlives the policy is $34,336.80. Now, remember, after ten years Bill already survived about ten years of his income. Also, when his youngest graduates he would have outlived 20 years of his salary, so why pay for something you don’t need anymore. How about having 1 million in coverage the first ten years. Than $500,000 in coverage over the next ten years. Then when all kids are grown having $250,000 to get you through retirement.
$500,000 10yr term, total financial outlay over ten years $2167.20.
$250,000 20yr term, total financial outlay over 20 years, $2142.00
$250,000 30yr term, total financial outlay over 20years, $10,681.20
Total financial outlay over 30 years, $14,990.40
To compare, total monthly premium if Bill purchased a $1,000,00030-year term would be $95.38.
On years 1-10, with the layered policies total premium for $1,000,000 would be $65.58. That’s a savings of 29.80 a month, or $3,576 over ten years.
On the 11th year, the ten-year term would expire, and your coverage would come down to $500,000 for the next ten years. However, your premiums would come down to $47.52. The total savings from year 11-20 is $6,103.20 over ten years.
On the 21st year, the 20 year term would expire, and your coverage would come down to $250,000 for the remaining years of the 30 year term. However, your premiums would come down also to $29.67. This is nice because you’re coming up to retirement, total savings from year 21-30 is $7,885.20 over ten years.
Total savings over 30 years with the layered strategy is $17,564.40, about 51% compared to one policy for 30 years.
Now again, you buy term life insurance not for when you die, but if you die. You need to protect the loved ones that depend on you.
Layered Term Life Policies
Other Benefits of the Layered Policy Strategy
This strategy works very well and here are some of the benefits of using it.
1. Very flexible, and you can customize it based on your goals.
2. Savings of over 50%
3. You purchased at an early age and optimal health
Danny Ray & Lisamarie Monaco Contributed To This Article
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FL W147978 AK 100119344 AL 714298 AR 16997242 AZ 16997242 CA 0K00204 CO 467414 CT 002478270 DC 3076605 DE 1381485 GA 2994314 IA 16997242 ID 530050 IL 16997242 IN 1003077 KS 16997242 KY DOI-879537 LA 639982 MA 1970287 MD 2156161 ME PRN251094 MI 16997242 MN 40409915 MO 8337117 MS 10383789 MT 1001135505 NC 16997242 ND 16997242 NE 16997242 NH 2318626 NJ 1568469 NM 16997242
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