Best Life Quote

Buy Term, Invest the Difference, and Create a Future Retirement Income

Written By Doug Mitchell

Doug Mitchell, CLU holds a BA degree in Finance from Auburn University as well as having obtained a Chartered Life Underwriter (CLU) designation from The American College in Bryn Mahr, PA.  Doug has spent close to 30 years in the insurance and financial planning industry and has held licenses to sell securities, long-term care insurance, health.  Doug is also a financial blogger addressing the topics of life insurance, annuities and retirement income planning.

Holly Mitchell  &

Holly Mitchell’s background in life insurance insurance goes back to 1985 when she worked for her father who was a New York Life agent. Holly has a marketing degree from Auburn University and has had a life insurance license since 2008. In addition to advising life insurance for customers all around the country, Holly is our website fact checker.

Rob Pinner   &

Rob Pinner is the founder and CEO of Pinner Financial Services servicing all 50 states. Rob started his insurance career in 2002.

Louis LaBash

Results-driven and innovative life insurance professional with 30 plus years of life insurance industry sales and marketing experience. Recognized as a pioneer in the field, leveraging phone and internet channels to exceed personal sales of over $100 million during the first decade of the 21st century. Creator of a highly effective intuitive IUL life insurance sales software that facilitated the sale of millions of dollars of indexed universal policies by numerous life insurance agents. Proven track record as a Managing General Agent (MGA), Life Agent, IUL Life Insurance Sales Software developer, and leading-edge creator of insurance marketing tools, educational content, and delivery systems.

Table of Contents

Life insurance should be considered a part of any financial plan.

The proceeds from a life insurance policy can provide numerous benefits. The most obvious include the payment of the insured’s final expenses, the balance of a mortgage, or the funding of a child’s future college education. Life insurance would also provide ongoing income to a surviving spouse so that he or she will not have to drastically reduce their current lifestyle.

Just like with every other major purchase, there are going to be options. It’s not as simple as going out and buying some “standard” life insurance plan.

If you’re going to have this plan for at least 10 years or for much, much, longer – then you need to put a lot of thought and planning into your life insurance investment.

In this article, we are going to make a case for buying a term life insurance plan. The debate between whole vs. term is something heavily discussed in the insurance world. We are going to give you our two cents.

Why Term Life Insurance and Invest the Rest?

When purchasing life insurance protection, the policy should be considered in much the same way that you would determine a policy for other important coverages such as homeowners or auto.

In other words, you want to opt for the highest amount of protection for the lowest premium cost. This is why in most cases, term life insurance makes the most sense.

Term life insurance will give you the most amount of life insurance per premium dollar. You won’t get some of the additional benefits, but you get the most insurance.

In choosing term life insurance coverage, policyholders will typically be able to obtain the protection. While at the same time accumulating savings and investment assets for the future.

Saving On Term Can Lead to Big Changes

Most people have heard the phrase, “buy term and invest the difference.” So, once you’ve purchased a term life insurance policy, the question becomes, “What is the difference?”

In most cases, this refers to the difference in premium that you would have paid on a comparable permanent life insurance policy – and oftentimes this difference can be quite substantial.

In today’s tough economy, though, many people may not have a lot of extra funds to invest. But the truth is, even just investing $30 per month (the equivalent of $1 per day), can add up over time. Especially if you stick with an ongoing and consistent strategy over the long term.

Years 5% Compound Interest
10 $4,677
20 $12,381
30 $25,071
40 $45,969
50 $80,391
60 $137,085
70 $230,460

Regardless of where you are financially right now, it is important to set aside personal funds for your future. And most importantly, to protect those funds. Over the next couple of decades, the largest population segment in U.S. history – the Baby Boomers – will be retiring. Yet, most of these 76 million individuals will face numerous challenges such as:

  • Longer life expectancy. Due in large part to improved medical technology, people are living longer now than ever before. While this is good news, it also means that retirement assets must be stretched in order to last much longer.
  • Decreasing Social Security benefits. Because of the increased number of retirees, the funds in the Social Security program have seen a negative impact. This could mean a lower amount of benefit for future retirees.
  • Disappearing company pensions. Many companies have done away with the guaranteed income benefit pension plans of the past in exchange for today’s 401(k) plans. Although 401(k)s offer many tax advantages, they shift the responsibility of having enough retirement income from the employer to the employee. This means that individuals may need to supplement that income with funds from personal savings or investments.

If you haven’t started planning for your future, it’s not too late, but the sooner you get started, the better.

It can be hard to go ahead and start planning for retirement, especially if it’s a long way in the future, but not making those preparations is an awful mistake.

As you can see from the example above, choosing a term plan and investing what you would pay for a whole life policy can end up being a large investment when you hit retirement. You don’t have to invest thousands and thousands of dollars every year.

Just simple investments can make a huge difference in the long-run.

Converting Savings into a Long-Term Retirement Income Stream

Over your many years of saving for the future, there will come a time when you are ready to move from the “accumulation” stage to the “decumulation” stage. This is when you will convert your savings over to a retirement income stream.

Oftentimes, retirees will use an annuity for this purpose. Annuities are actually a type of insurance product that can also serve as an effective vehicle to provide a stream of retirement income.

Technically, an annuity is a contract between an individual and an insurance company.  In return for premium payments or a lump sum deposit, the insurer promises a series of guaranteed periodic payments for a specified period of time.

That time period can be either a certain number of years, until the recipient reaches a certain age, or for the remainder of the income recipient’s life.

An annuity can also be structured to pay out based on the lives of more than one person. So, for instance, if a couple purchases an annuity, they could set it up so that the income payments would be received throughout the lives of both spouses.

Annuities have often been deemed as being able to “provide an income that you cannot outlive.” These products are ideal for those who are concerned about the risk of longevity. Because they can literally protect you financially against the “risk” of living too long. And this is certainly an important risk to protect!

Buying Term Life Insurance is Easy

Hunting down a quality policy can be like searching for a unicorn. You can spend days and days searching through the weeds of companies.

There are thousands of companies. Do you want to search through all of them? We’re guessing no.

So when it comes to term life insurance, getting an expert in your corner will give you a huge advantage.

If you want to get free advice and free quotes, we recommend giving one of our brokers a call. With one easy phone call, you’re going to get expert recommendations and a whole list of life insurance options.

The difference between our agents and your standard broker is the ability to sell from more than one company.

Let’s say you called your typical insurance agent. They are going to take you through all the questions, give you a list of two plans they sell, and that’s it.

If you call us (or use the form on the side of the page), we’re going to ask those same questions. But at the end, you’re going to get access to more than 30 quotes.

Call us today for a quote at 1-800-712-8519.

Picture of Doug Mitchell, CLU

Doug Mitchell, CLU

Doug Mitchell, CLU holds a BA degree in Finance from Auburn University as well as having obtained a Chartered Life Underwriter (CLU) designation from The American College in Bryn Mahr, PA. Doug has spent close to 30 years in the life insurance and financial planning industry and has held licenses to sell securities, long-term care insurance, health. Some other notable items about Doug: Top of the Table Million Dollar Round Table member (MDRT). (MDRT is a global, independent association of the world’s leading life insurance advisors) | Premier Partner with Lincoln Financial and Cabinet Member | Served two years as President of the Auburn/Opelika Association of Financial Advisors | Life Millionaire status at Horace Mann Insurance Company and was awarded the Life Agent of the Year Award | New York Life, Executive Council Member | Currently serves as President of Ogletree Financial, a life insurance General Agency. | Doug is also a financial blogger addressing the topics of life insurance, annuities and retirement income planning.

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