the same type of policy from at least five other companies.
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Saving in a Whole-Life Policy Versus the “Buy-Term-and-Invest-the-Difference” Concept $100,000 Whole-Life Policy for a 35-Year-Old-Male Nonsmoker |
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| Age |
Whole-Life Annual Premium |
erm-Life Annual Premium |
Cash Value in Whole-Life Policy* |
Money Market Fund Yielding |
Tax-Deferred Annuity Yielding 10% Annually |
| 40 | 1968 | $ 180 | $ 7,770 | $ 10,892 | $ 11,545 |
| 45 | 1968 | $ 249 | $ 21,490 | $ 26,132 | $ 29,338 |
| 50 | 1968 | $ 367 | $ 39,420 | $ 47,315 | $ 56,726 |
| 55 | 1968 | $ 574 | $ 63,230 | $ 76,469 | $ 98,766 |
| 65 | 1968 | $ 1025 | $ 134590 | $ 168098 | $ 262736 |
| *Dividends have been used to buy added insurance. Keep in mind that the cash values exceed the premiums paid and the policyholder must pay taxes on the difference when it is withdrawn and the policy is canceled. SOURCE: Lifestyle Planners Inc., Brooklyn, New York |
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Types of Life Insurance |
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Policy Type |
Return in Cash Value |
Control Over Investment Mix |
Fees andService Charges |
Flexibility |
Tax |
| Term | None | None | Low | Very flexible: Amount can be changed at will | Premiums not deductible; proceeds not taxable |
| Whole Life | Poor: Avg. 5%-7% | None | Not disclosed but very high | Poor: Money locked into cash value | Same as term; cash value tax-deferred. Interest on loan only deductible as other interest under 1986 tax return |
| Variable Life | Varies: Tied to stock and bond markets | Some: Client may choose from mutual funds managed by company | High commission and service fees | Average: Withdrawal of money is very complicated | Same as whole life |
| Universal Life | Varies: Tied to selected financial indexes such as T-bills | None: Company sets interest rates | High in first years; decreases in later years | Good: Dividends can be withdrawn and premiums can be varied | Same as whole life |
| Source: Warren, Gorham & Lamont Inc., Boston | |||||
