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Can you imagine receiving a check from your life insurance company for $20k, $30k, even $40k – and you’re still living?
Hi. My name is Jon Marcroft. I’m the founder of Simplis Life and author of the book, The Life Insurance Marathon. I’ve been in the life insurance business for 23 years. But it wasn’t until my experience working as an investigator in the financial regulatory industry that I began to formulate a life insurance plan called, The Balancing Act.
One of the most common concerns I’ve heard from people over the years is that life insurance has no value. It almost feels like gambling, except it’s the bet you don’t want to win!
Most people have a life insurance plan they purchased because an agent recommended it to them. That’s understandable. But it’s almost always just one policy. The policy may be just pure protection, or it may be a policy that has an investment component that gains or loses value over time.
The pure protection type of life insurance is called Term Life. It’s very inexpensive for most people, but it literally has no value. At the end of 20 years, for example, after you were faithful in making all of those premium payments, you have nothing to show for your purchase – no benefit, except the peace of mind that your loved ones were financially protected during those 20 years. And that’s how term life insurance works.
The type of life insurance with an investment component is usually some type of variation of non-guaranteed life insurance. I do not recommend this type of life insurance to anyone. I’ve seen so many of these policies go backwards in value when people get into their 50’s and 60’s, due to the much higher cost of insurance, internal to the policy. They also perform poorly in bad market conditions. By the time you find out that there’s no longer enough money in the policy to carry it, for most people it’s too late to save the policy, because it’s just too expensive to turn it back around. Non-guaranteed life insurance sets up a win/lose scenario. The life insurance company wins, and you lose.
So, what’s the answer? Well, I developed a budget-friendly life insurance plan that sets up a win/win scenario – so you can win too! It has two primary goals:
1. Create real value for you, by returning all of your life insurance expenses to you after you’ve outlived your protection need.
2. To provide your loved ones with the protection they need regardless of market conditions, by using only guaranteed policies.
My plan is called The Balancing Act, because it seeks to balance your protection need with your available budget in order to create a guaranteed life insurance plan that will return all of your money to you. It also seeks to find the right balance between the two types of policies that work well together to accomplish these goals.
So how does The Balancing Act work? There are just two things you need to do:
1. Understand how much protection you need
2. Understand how much money is in your budget for this monthly bill?
Let’s start with “Understanding how much protection you need”
I personally designed the life insurance calculator on this website. It’s a very simple and straightforward life insurance needs analyzer. You can develop your protection need within minutes by using my calculator. Go to simplislife.com/calculator, answer a few simple questions and you’ll know your protection need.
The next thing you need to do is, “Understand how much money is in your budget for this monthly bill”
This is an important part, because your answer will help to determine, whether or not, The Balancing Act will work for you. You may be tempted to purchase a life insurance policy that is the cheapest you can find. However, if you’re willing to pay a bit more so you can receive a much larger benefit from your purchase, then you’re a good candidate for The Balancing Act.
Life insurance companies make a lot of money by selling cheap life insurance policies. There’s nothing wrong with buying one of these policies, but, if you outlive your protection need, you’ll have nothing to show for it. The life insurance company collected all of that money from you, and it was basically pure profit for them. By paying a bit more, you can receive all of your money back by using The Balancing Act.
Just to review, there are two things you need to do:
1. Understand how much protection you need by using our Calculator tool.
2. Understand how much money is in your budget for this monthly bill.
At Simplis Life we specialize in finding the right balance for your situation. We fine tune that balance to create a guaranteed life insurance plan that will deliver real value to you after you’ve outlived your protection need.
Let’s continue with how The Balancing Act works.
There are two types of life insurance policies that work well together to make this happen for you: Guaranteed Term Life and Whole Life that pays dividends.
Guaranteed term life is pure protection, and it’s very inexpensive. With The Balancing Act, most of your protection will be in a term life policy.
Whole life that pays dividends has the strongest guarantees offered in the life insurance industry. With The Balancing Act, you don’t need very much of this type of life insurance, because it has a strong savings component that pays you a guaranteed interest rate that is always significantly higher than banks, and it also pays you a dividend whenever the life insurance company is profitable. The dividends can be significant. The companies I work with, that offer this type of whole life, have paid dividends to their policy holders every year for over 100 years.
Essentially, your whole life policy will be your savings engine that will grow enough for you can recoup all of your life insurance expenses for both your term life and whole life policies.
By joining the right balance of a large, guaranteed term life policy together with a small whole life policy that pays dividends, your balancing act plan will be created, and you’ll be well on your way to recouping all of your life insurance expenses.
Read our next blog post, “The Balancing Act ℠ – Case Study 1”, to see for yourself how this strategy works in real life terms.