The math behind life insurance basically means: Why are people buying life insurance? Why is there is six trillion dollars worth of Life Insurance in force? There must be some profitable reasons why.
The bank’s analysis goes like this: If you are age 80, your life expectancy is going to be 10 years, you buy a life insurance policy, and the cost of this policy is $130,000 a year, you will put in $130,000 x 10 years = 1.3 million dollars. So, at death you will have about 2 million dollars, which is a $700,000 profit. As an addition, the funds you earn are delivered to you tax free, and, based on your situation, could be worth another 35-50%, meaning another $700,000-$1,000,000. So, if you look at your return on investment, it is actually a great deal, and it is back by an A-rated life insurance company.
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