Introduction Of How To Start A Small Business With Small Insurance About In 2022
How To Start A Small Business With Small Insurance About In 2022. Can you have a whole life insurance policy that is designed for maximum cash value if you’re only paying a small dollar amount? The answer is absolutely yes. Now to provide some more detail to that when I say small amount of money.
If you’re considering paying perhaps $100 per month $200 per month maybe $300 per month can you still have a policy that is designed call it $250 per month let’s use that number total of $3,000 per year can you have approximately $300 per year directed toward the premium a.
And everything else toward PUAs [Paid-up additions] to maximize the cash value to the same degree that someone would if they’re paying in $100,000 per year and they have a $10,000 minimum premium? The answer is yes.
A whole life insurance policy
Now there are factors that can have an impact on that such as company and product minimums our age the health rating on a product but generally speaking we can easily have a policy where we can have maximum cash value even with a smaller dollar amount going in.
So in this case study we’re going to look at a situation that is similar to where I started with my first policy. We’re going to look at a 25-year-old individual considering $3,000 per year or $250 per month. When I started my first policy I was right around 23 or 24 years old the total dollar amount I had paid in was just under $200 per month but it actually was a combination of a whole life insurance policy and a convertible term policy.
If I could go back in time just with the knowledge I have now and go back then I would not have done the convertible term policy I’m not a huge fan of them because when you convert them to whole life there’s limitations .
Advantages
Where you can’t customize it to the same degree that you can with a new policy a fully underwritten one but there are advantages to convertible terms as well and at the time I didn’t know as much but anyway my point is my whole life policy was even smaller than $200 per month because I had a term policy as well.
And what I also want to add in this is when I started that first policy it was a stretch for me there were times I almost lapsed it I almost had to cancel it because I couldn’t afford it. Why I took it out was mainly because I wanted to walk the walk .
As I’m discussing whole life insurance with potential prospects trying to convince them to open a policy it’s much much easier to say hey I own this as well here’s my policy here’s what it’s set up for here’s how it works as opposed to saying it’s a good idea but I don’t own it because I can’t afford it or I don’t believe in it whatever it might be.
A profitability standpoint
No, I wanted to walk the walk so I took that chance it was a struggle but I’m glad that I did it as I look back in time. And also what I’ll add just about our company is over the years we’ve considered the idea a lot of people have recommended this to us working with people.
That have larger amounts of money going into policies and mainly because of my background working on modeling policies for corporations that are typically paying a lot of money into whole life insurance policies for maximum cash value individuals like to do that as well and from a profitability standpoint it can make sense.
But with all that said you know working with someone starting where I started regardless of their age if they say hey I can only afford $250 per month maybe it’s $100 per month right now it’s a smaller policy but I’d like to get started .
$250 per month
If that was me at that point in time asking someone for help I’d appreciate it if they helped me if they said no I would understand it but at the same time as a company we have made a decision to really serve everyone.
As we continue to grow it fits into our mission statement as a company as we continue just to push forward in the industry like we want to make it a point to help everyone regardless of the dollar amount. But anyway I did want to make sure I interjected that because we discussed it as a company recently and we always have discussions on it but no we work with everyone.
This is very similar to where I started I still have this policy actually you have to start somewhere and everyone should be treated equally in my opinion. So his desired funding in this particular scenario $3,000 per year we’re going to look at $250 per month .
Funding period of 7 years
Now he wants to see the same options as the person funding $100,000 per year so as he sees different content and such on her channel we see examples with $100,000 per year I see a funding period of 7 years what does it look like if I pay into the policy for 7 years and stop? That’s what he would like to see so we’re going to show him that.
Then looking at the same policy and different products where I fund it for 15 years that’ll take them up to the age of 40 and then also what’s it look like if I fund it for 30 years? We almost put an option together funding it for 50 years but he can easily do that with this option we’re just going to show 7, 15, and 30 in this particular case all of $3,000 per year. You Can Also Read 2022 Dividend Rates of the 4 Major Mutual Companies For Insurance.
So company selection we’ll look at options with MassMutual and Guardian MassMutual easily allows a policyholder to adjust payments 1 time per year every year on the anniversary date without any medical underwriting there’s a bit more to that on some of our MassMutual content.
Payment adjustment
And Guardian’s great if he says hey I’d like to be able to get $3,000 per year in but I don’t know if I could always hit that there’s some months where things are a bit tight and I get that 100% as I’ve been there.
I had my first policy the $180 or $190 per month I had was tight sometimes so what we’re going to look at from a design standpoint is some designs where he has a minimum premium of just over $300 per year that can be paid monthly as well.
He can pour excess funds into PUAs so Guardian does allow that with that PUA flexibility Mass is great with a 1-time per year payment adjustment and if he wants to keep max funding it for something like 30 years MassMutual has a sweet spot for that type of design .
The policy design
And the type of funding in my opinion. Loans he does want to look at loans for future car purchases and retirement as well so as he continues to build this up over time what’s the cash value potentially look like and then what can I pull from it down the road?
So we’re not going to look at these 2 loan scenarios however that is what he plans on using the policy for we do show that kind of stuff to everyone we work with as well especially when they want to see it before and after they start the policy.
So with the policy design where is your money going? The fun part premium or the PUA component the premium piece $300 so it’s not quite at $300 the lowest we were able to get it in one particular example is right around $320 that’s the annual premium which does not show up in cash value in the 1st year beginning the 2nd year it does show up in cash value.
Now we also looked at some other products which had lower or higher minimums some were $800 minimum premium some were around $1,100 minimum premium but those would be the minimums where he can still pay up to $3,000 per year.