Market Recovery Program
It's legal, it works, and it's guaranteed!
Chapter 11
UPSIDE-DOWN LIFE INSURANCE FOR THE LIVING
In this era of low interest rates, how can the insurance company give a guaranteed 8% return on the funds in the income account?
Outside the context of the income rider, the insurance company wouldn’t be able to offer anywhere near 8% annual interest.
The first time I saw the amazing numbers generated by the income rider, I asked myself the same question: How can they do this? How can the insurance company guarantee an 8% rate of return when the rest of the financial industry can only promise about 1-3%?
The best way to explain why they are able to do it is to describe the income rider as upside-down life insurance.
Take a typical 35-year-old father of two, married, who earns $75,000 a year, which pays the mortgage, buys the food and clothing, etc. for his family. If that father unexpectedly dies, this would no doubt be emotionally devastating to his family. But from a purely cold, hard economic perspective, his death would trigger an economic loss for that family because the $75,000 a year is no longer available. So what do tens of thousands of 35-year-olds in the same position across the United States do?
They buy term life insurance.
Yes. Thousands upon thousands of 35-year-olds are pooling their funds in order to minimize the economic loss that would be triggered by death.
Let’s suppose that each of those 35-year-olds buys a 20-year term life insurance policy, with a million dollar death benefit, costing each one $40.00 a month in premiums. Thus, if one of them were to die within the 20 year period, the insurance company would pay the beneficiary (usually the surviving spouse) the death benefit, the idea being that the million dollars would replace the $75,000 per year lost when the father died.
However, even if the deceased may have only had the policy for 3 months and
BACK TO TABLE OF CONTENTS NEXT CHAPTER
---
